Despite the news, the Nikkei index slipped only slightly Wednesday because the Japanese Diet looked to be making some progress -- albeit slow and circuitous -- toward a critical compromise on banking reform. The ruling Liberal Democratic Party favors maintaining a fairly generous state-sponsored bank rescue plan, while opposition parties (and the West) want to let weak banks and the enterprises they support perish. Somewhere in the middle may be a viable bill, and the latest round of failures may be enough to spur even the often listless LDP to get economic reform out of the hemming-and-hawing phase and into the law books.
Japan's Sinking Ships
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As Japan's politicians fiddle with banking reform, the country's economic rot is striking deep into the flagship industries of steel and electronics. Hitachi has announced its first annual loss since the end of the Second World War -- about three quarters of a billion dolllars -- and it's cutting 4,000 jobs. Did somebody say "lifetime employment"? Meanwhile, steelmaker Toa, sagging under some $2 billion in debt, is reported to be pursuing a liquidation program. It would be the largest Japanese manufacturer ever to fail.