International -- Readers Report
INSIGHTS INTO THE 21st CENTURY (int'l edition)
In "The 21st century economy" (Cover Story, Aug. 24-31), BUSINESS WEEK forecast the next decade's major economic and resulting social trends.Your reporters and editors have done a magnificent job of collating hundreds of varying data sources into comprehensive and understandable articles of faith.
The spirit of the issue is vigorous and optimistic. But meanwhile, the planet outside the U.S. is seething with economic, social, religious, and ethnic problems and mismanagement on a colossal level that not only remain unsolved but also open new, terrible wounds almost daily. If BUSINESS WEEK sees itself as a preacher for "let's believe in better days," it did a great job. But I can hardly see BUSINESS WEEK in that cloak.
Even in the European edition, most if not all articles focus on the U.S. Yet Americans are but 4.5% of the world population, and the onus of providing leadership for most of the remaining 95% grows by leaps and bounds. I am vainly trying to locate in this issue a forecast of the effects on the U.S. of the rest of the world's situation.
Haifa, IsraelReturn to top
IN JAPAN, `LET'S PRETEND' IS A WAY OF LIFE (int'l edition)
Your article "Japan: Invisible jobless" (Special Report, Aug. 17) shed some light on an issue most Japanese (officially, at least) tend to ignore: the rising number of homeless and unemployed. Until now, a lot of Japanese could not buy or rent at Japan's inflated prices, so they ended up living in company dormitories, which was considered a nice perk. But when these laborers lose their jobs, they end up losing the housing that goes with them. Loss of face is a big humiliation in Japan, but denying the illness only tends to delay the cure.
Japan's list of invisible woes is long: To the invisible jobless, you can add invisible nonperforming loans that banks refuse to write off, rescheduling them at 0% even when they know they have no chance of recouping their money. This leads to invisible bankrupt banks kept alive through accounting gimmicks. Also add invisible Nikkei 225-listed companies, listed even though they hardly trade and at prices below 100 yen.
The Japanese boom was achieved by keeping problems under a tight lid, with strong companies shouldering weak affiliates. But when things turn bad, big companies "unload" their excess employees into weak affiliates or business partners who cannot afford to say no to "big brother." That leads to invisible losses: Big companies show rosy figures while losses and employees are absorbed by affiliates. This way of doing business has been exported all over Asia. Japan is sinking, and the Liberal Democratic Party is describing the water.
GenevaReturn to top
ARE INVESTORS UNFAIRLY DISCOUNTING AUSTRALIA? (int'l edition)
Regarding "There's no wishing this crisis away" (International Business, Aug. 24-31), consider the situation in Australia, where Asia's economic problems have also generated heavy currency devaluation. Geographically part of Asia, Australia's political and economical models are more akin to the U.S. and Europe. Australia enjoys the benefits of strong resource and agricultural industries, a fast-growing services sector, and high rates of technology adoption.
However, despite the healthy domestic economy, reductions in exports to Asia and Asian tourism have lowered the Australian dollar by about 28% in 12 months--a greater fall than the Thai baht or Japanese yen. Yet Australia is not burdened with bad debt, interest rates remain low, and the government has announced further tax cuts as part of a package introducing a consumption-based goods-and-services tax.
The dramatic fall in the Aussie dollar partly reflects the importance of agriculture and resources and the high level of economic ties to Asia, but this cannot easily account for an exchange-rate fall similar to that of the baht. The conclusion is that rather than considering Australia a safe haven in Asia, international investors have discounted the Australian dollar to perhaps 10%-15% below its "real" value. It will be interesting to watch whether investors start to consider it undervalued or keep tying it to many of the ailing Asian economies. Overseas visitors may be able to look forward to a very cheap Olympics.
Sydney, AustraliaReturn to top