"Japan's Mr. Yen on Crises, Bailouts and Friendship"

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Wine connoisseur and scuba diver, Eeisuke Sakakibara earned the moniker Mr. Yen for his ability to jawbone the currency market. The No. 2 bureaucrat at Japan's powerful Finance Ministry has had his hands full lately coordinating the Japanese response to the global financial crisis, and explaining it to impatient U.S. officials. Sakakibara spoke with Tokyo correspondent Donald Macintyre and reporter Sachiko Sakamaki on the crisis and Japan's role in it. Excerpts from the interview:On the global economic crisis:
One trader can, within the course of 30 minutes or an hour, bankrupt a very reputable large financial institution. This is the environment we are in; it is a very risky sort of financial system, with huge amounts of money crossing the borders with enormous speed. What started as an Asian crisis has now become the crisis of global capitalism. Even at the time of the Thai crisis, I said that this is a crisis of global capitalism. It has turned out to be that.On the key issues involved in solving the crisis:
One is how to cope with this huge amount of international capital, particularly short-term capital, crossing borders with such speed. The IMF should monitor those flows. I am not saying that we need controls. At least we have to know what is happening. We didn't know what was happening in Thailand or Indonesia. And we didn't know what was happening with Long-Term Capital Management [the U.S. hedge fund that received a $3.5 billion Fed-coordinated bailout last month]. Their leverage ratio was reported to be more than 200. That's crazy.PAGE 1  |  
There's still plenty of pain to come, but hope is on the rise that the region's troubles may be waning. Japan's bank-overhaul plan and the Fed's interest-rate cuts bolster the new optimism
Eisuke Sakakibara, Japan's Mr. Yen, emphasizes the need for cooperation
Are the region's troubles waning or is the worst yet to come?
TIME's Asian Board of Economists evaluates the chances for recovery in the region
Thailand has better reviews than returns
Korea accepts a bitter pill
David Roche sees trouble, but no depression
 
On Japan's new bank rescue package:
It is an improvement, a great improvement. But we have to implement it to see the light at the end of the tunnel. And I think we can implement it. Last week or two weeks ago I was desperate. But the situation has quickly changed. It is definitely a major improvement. Sure, there are some doubts about the implementation, but if we move the way we moved during the course of the last one week I think we can do it. And we have to do it. We cannot sink, we simply cannot sink. If we sink, the whole world would sink with us.On Tokyo's view of the crisis:
A major change I see among Japanese politicians and administrators is that they now have a sense of urgency. In early September [U.S. Treasury] Secretary Rubin complained to us that we didn't have a sense of urgency. Even at the level of ordinary corporations, they are now really feeling the credit crunch. A major credit crunch and a credit contraction is actually taking place here in Japan and in the rest of the world. I think the sense of crisis has arisen, that something needs to be done. And, very fortunately, we can do it. We've got the money and, if the political will is with us, we can heal this disease very quickly.On the view among some Japanese that the U.S. has an excessive, and not always benign, role in the world financial system:
I wouldn't say that. I have lots of friends in the Treasury and the Federal Reserve. They have done a reasonable job.On his relationship with U.S. Deputy Treasury Secretary Larry Summers:
We talk almost every day. I was just talking to him before you came in. We are determined to cooperate with each other. This is a major crisis not only for Japan but for the United States as well. We need to cooperate. Sure, we have our differences. We have been friends for a long time. We are very frank. We can yell at each other, but the next day we can be friends again. That is very important. But the mood right now is that we've got to cooperate. The crisis is deepening at a very rapid pace.  |  2
There's still plenty of pain to come, but hope is on the rise that the region's troubles may be waning. Japan's bank-overhaul plan and the Fed's interest-rate cuts bolster the new optimism
Eisuke Sakakibara, Japan's Mr. Yen, emphasizes the need for cooperation
Are the region's troubles waning or is the worst yet to come?
TIME's Asian Board of Economists evaluates the chances for recovery in the region
Thailand has better reviews than returns
Korea accepts a bitter pill
David Roche sees trouble, but no depression