Japan's Short-lived Recovery

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TOKYO: It was good while it lasted, but it didn't last long. Wednesday saw the Japanese prime minister unveil plans for a $15.46 billion income-tax cut, which earned a stock market vote of confidence; Thursday, however, profit-taking sent Tokyo stocks back into the hole. The Nikkei 225 index fell 379.42 points, or 2.3 percent, to close at 16161.64. The previous day's party had the index jumping 3.5 percent.

The general feeling in the country, say analysts, is that the generous tax slashing might not be enough to re-animate Japan's economy. Economists suggest the country needs a tax cut of up to three times that magnitude.

Meanwhile, there were further indications that Japan was succumbing to regional woes: The government reported that Japan's trade surplus was up 59 percent in November from the previous year, yet exports to Asian neighbors dropped for the first time in more than three years. The reason: Weaker Asian currencies are making Japanese goods more expensive, while slower economic growth in nearby countries is cutting into demand for goods.