Good Morning, Japan!

Tokyo can smell the coffee. Being left off President Clinton's China itinerary appears to have roused the Hashimoto government into finally doing something about its failing economy. Tokyo Thursday unveiled a plan to take control of the country's failed banks and start shutting them down -- a course of action that the U.S. has been pushing urgently. "Our government has been telling Japan they have to get rid of the bad banks to let the good ones prosper," says TIME business correspondent Daniel Kadlec. "Without banks lending money, there can be no economic activity, and Japanese banks haven't been lending."

The spectacle of Beijing being praised for its responsible role in managing the Asian crisis while Tokyo is berated for its failure to act telegraphed an important message to Japanese leaders. "Japan's recession can drag the whole world down with it, and the Administration has been upset with Hashimoto's failure to act," says Kadlec. "Washington has been doing whatever it can to put pressure on Japan to save its economy." Crossing the playground to make nice with Beijing may have done the trick.