"YEN!: JAPAN'S NEW FINANCIAL EMPIRE & ITS THREAT TO AMER."   Term Paper ID:18649 Click to get this paper

Essay Subject: (Daniel Burstein). Summarizes work on Japan's economic threat to U.S. & recommendations for Amer. response.... More...

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Paper Abstract: (Daniel Burstein). Summarizes work on Japan's economic threat to U.S. & recommendations for Amer. response. Paper Introduction: This study will present a summary of Daniel Burstein's Yen!: Japan's New Financial Empire and Its Threat to America. In "Prelude: A Twenty-First Century Scenario," Burstein offers a frightening near-future in which Japan has established itself as such an international economic power that the United States is forced into a no-win situation. The United States must either enter into an agreement with Japan which will force the United States into receivership in order to receive additional Japanese capital and if the United States defaults on its debts to Japan, or the United States must face withdrawal of all Japanese investments in the United States which would result in the collapse of the American economy and the remilitarization of Japan. The scenario presented by Burstein has it that the United Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. In the same chapter, Burstein goes on to describe the future-thinkingnature of Japanese firms as they prepare for the next century, refusing tostand on the gains they have made in recent years, as opposed to theAmericans who are repeating old habits and failing to alter out-datedpolicies and practices: "The year 2 has a magic pull. The same chapter goes on to argue that the United States, especiallyduring the critical Reagan era, believed and continues to believe that"greatness could be achieved [or reachieved] by doing more of what we haddone in the past rather than undergoing reevaluation or change . 'The Japanese did to us on the long bond what they did to us atPearl Harbor,' fumed a top trader . Yen! . Otherwise, the United Stateswill continue its errors and the Japanese will become increasinglypowerful. In "Rising Sun on Wall Street/Home Boys in Tokyo," Burstein writesthat American financial leaders were given clear warnings about theemergence of the Japanese as global economic kingpins, but the Americanswere so arrogant that they could not believe the Japanese would ever haveso much power. The shortterm result, Bursteinargues, was the 1987 stock market panic and crash. In "Gut Warning: The Great Japanese Squeeze Play in American Bonds,"Burstein writes that the Japanese showed their shrewdness in the bondmarket in 1986 when Japanese investors, unlike in previous bond auctions,refused to sell bonds which were to mature in 2 16. 'In a risingmarket, Nomura's recommendations are virtually self-fulfilling,' says oneexecutive" (171). Unless thischange is forthcoming, the Japanese tide will most likely engulf the UnitedStates, one way or another. It will no longer be simplythe richest country in the world--it will also be the strongest" (2 ). But there is morethan a causal connection . Meanwhile.Japanese banks, securities firms, and insurance companies are fanning outaround the globe to look after the downstream end of the business, gainingunprecedented influence over how global capital resources will beallocated, at what terms, and, most of all, to whose profit" (126-127). . In "Prelude: A Twenty-First Century Scenario," Burstein offers afrightening near-future in which Japan has established itself as such aninternational economic power that the United States is forced into a no-winsituation. In "Hard Choices for Americans," Burstein concludes that there aresteps the United States can take to forestall total Japanese dominance inthe world of the future. The drive for empire is alive and well inJapan, and so too are the intellectual premises necessary to support andimplement it" (76). . As Burstein writes, "With itsprodigious savings capacity, voluminous trade surplus, and strictlycontrolled cost of capital, the Japanese economy is accumulating anincreasingly dominant share of world capital resources. The result was a Japan which, first, was able to concentrate onproducing consumer goods for export, and which, second, was then able toinvest its remarkable profits in the international financial marketplace,so that it now enjoys the position of owning much of the countries whichhad defeated it in the Second World War. In "Foreign Correspondence," Burstein adds a fascinating note: theJapanese may try to end-run the American protectionist threat by opening upmarkets in the Soviet Union, which is sorely in need of all varieties offinancial all from abroad. ." (31). 'A yearago, they just sort of smiled and seemed content that we all acknowledgedthe situation. From Toyotas to T-Bills, Japan's Amazing Transition fromExporting Goods to Exporting Capital," Burstein says the obvious: Japan'sresurgence as a financial power was in large part due to the fact that forforty years Japan had not had to waste any resources on militarization oron outright war. Works CitedBurstein, Daniel. In that dangerousdebtor's prison of tomorrow, an emboldened Japan will hold America's feetto the fire to get paid what it is owed and to reap the rewards of itsinvestments." One powerful Japanese firm reports that "The United Stateswill have to follow a set of austerity measures similar to those imposed bythe (International Monetary Fund) on the debt-ridden countries" (56-57). . Such aconfrontation [between the United States and Japan] . is onlyinevitable if we ignore it as a possibility and fail to take preventiveaction, or if the preventive action we choose to take is of the knee-jerk,protectionist type that could serve to bring the clash on sooner and moredestructively . The suggestions he makes, however, require arevolutionary change in the thinking of American leaders. They merely wanted to let the United States know the powerthat they had in the American financial market. The threat to the United States is not yet apparent as power shiftsto the Japanese, but it will become painfully evident when "At some pointsoon the Japanese suppliers of America's desperately needed capitaltransfusions will insist on being paid back in yen, just as American bankstoday insist on being repaid in U.S. . . In "Sunrise, Sunset: The Talk of the Town in Tokyo," Burstein putsthe problem of the United States it most graphic terms in his descriptionof "yen shock." An American visiting Japan realizes perhaps for the firsttime that the American dollar is amazingly weak compared to the Japaneseyen in that country: "'They've got us by the balls,' said one machine toolexecutive after he had endured a week of negotiations in Tokyo. . Burstein in the same chapter describes the emphasis in Japaneseculture on the "warrior" mentality and the life-long relationship of theworker and the firm for which he works, an emphasis which gives theJapanese a competitive edge over their American counterparts, with thelatter having to struggle in a business environment which emphasizes theindividual over the group effort. financial markets, were enacting whatappeared to be a brilliant, daring strategy no American professional hadforeseen. Only such a reenvisioning canawaken the United States and start it on the path to a complete revampingof its financial processes and structures. Aggregate losses on Wall Streetreached $35 million" (8 ). That is precisely what has occurred in the case ofJapan. Companies andgovernment organizations [in Japan] are bust drafting plans for how theywill function in the next century" (61). Burstein writes thatWall Street was shocked and, essentially, caught with its pants down: "TheJapanese, whom most bond traders had taken for being conservative,predictable and inexperienced in U.S. In "Burnst Teflon: How Reaganomics Sold America's Birthright,"Burstein writes that it was President Reagan's error, executed by TreasurySecretary Donald Regan, that was responsible for the failed policy of theUnited States in the 198 s in terms of its financial relationship withJapan. To continue to pursue [current unrealistic policies]invites the prospect of not interdependence, but of a one-sided and highlydestabilizing U.S. He acted as if the United Stateshad the clout to make such a demand, but, as Burstein adds, "Like thePresident he served, Don Regan was so arrogant in his presumption ofAmerican invincibility that he could not see the fatal flaw in what heproposed. . . As a result of these advantages, Japanin the future will have the power to pull the strings of the financialworld in every country on earth. Japan had taught the Americans a lesson: they could break theAmerican financial market if they wished, but, for the moment, they did notwish to do so. . In "Japan as Banker to the World," Burstein presents specificexamples of individuals and companies in Japan which in only the last fewyears have emerged from obscurity to become the most powerful forces in theeconomic dynamics of the entire world. He lacked so much as a glint of recognition that in the nearfuture it would no longer be clear which economy [that of Japan or that ofthe United States] was Hertz [i.e., Number One] and which was Avis [i.e.,Number Two]" (13 ). In "Twenty Times bigger than Merrill Lynch: A Look Inside NomuraSecurities," Burstein argues that because of the tremendous liquidity ofJapanese wealth, it has the power, through such financial powerhouses asthe Nomura firm, to manipulate the market globally however it wishes andwhenever it wishes: "When Nomura picks a stock, it has the power to rampup its price to where Nomura's research says it ought to be. . dependence on foreigners whose agenda is different fromour own" (23). Burstein concludes the same chapter with a warning that Japan is onthe road to remilitarization, though such a policy has not yet been madeevident: "The link between Japanese nationalism and militarization isnowhere near as inextricable as it was in the 193 s. In "Glimpses of the U.S. dollars when they lend money toforeign countries whose own currencies are unstable . In "Tulipmania or Hidden Assets?: Understanding the JapaneseFinancial Revolution," Burstein writes that there are weaknesses in theJapanese financial empire, most notably those "hidden assets" which theJapanese argue underlie their land holdings and investment portfolios, buthe adds that the United States should not expect to be able to effectivelymanipulate those weaknesses. The scenario presented by Burstein has it that the United Stateswould refuse the Japanese "receivership" plan, and "When the pandemoniumdies down, Japan will emerge as the winner. . Reagan-Regan policy led to the show of power from Japan which, inpart, created the 1987 stock market crash: "Confidence, the key tofinancial power, was badly shaken in the United States, but not in Japan,where Finance Minister Miyazawa publicly proclaimed that Tokyo had nothingto fear from Wall Street's crash other than the inconvenience of a few'aftershocks'" (162). In brief, the author argues that the only hope for a recovery inthe United States is a radical reenvisioning of the world and its nations'relationships, a recognition of the tremendous power of the Japanese andthe relative weakness of the United States. This is likely because the Japanese have suchpower that they are, in effect, able to say what financial reality isitself, and nobody has the counter-power to offer another reality. As Yoshitoki Chino, head of Daiwa Securities, puts it, "If you don'tdestroy your economy in war [as the United States in large part has done,directly in the Vietnam War, and indirectly through its obsessive emphasison building its military to unnecessary levels in the Cold War], and don'twaste productive resources in building armaments, a hardworking nation willbecome rich" (1 1). . Burstein concludes that"The second and more far-reaching result of May's events (in 1986) was thatpublic perception of the United States as a debtor nation reliant onforeign capital made a quantum leap" (96). The events of the 198 s, however, proved them wrong, andthey have still not taken steps to counter the Japanese threat. The United States must either enter into an agreement withJapan which will force the United States into receivership in order toreceive additional Japanese capital and if the United States defaults onits debts to Japan, or the United States must face withdrawal of allJapanese investments in the United States which would result in thecollapse of the American economy and the remilitarization of Japan. In "Introduction: Avoiding the Apocalypse," Burstein writes thatsuch a no-win scenario for the United States in its relationship with Japanis not inevitable, but it could happen unless steps are taken to avoid it,steps which to date show no signs of being taken: ". This study will present a summary of Daniel Burstein's Yen!: Japan'sNew Financial Empire and Its Threat to America. This year, they're squeezing'" (59). Economy in a Nipponized World," Bursteinwrites that the future is even more bleak for the United States than is thepresent. . Nomura, for example, as its ExecutiveVice President declares, "has the capacity to do the job of recycling . In "Money, Power, and Guns: The Birth of the Japanese Empire,"Burstein writes that, despite American naivete which has it that theJapanese are content to dominate in finance and will never remilitarize,the fact is that there are strong indications that Japan could easilyexpress its nationalism in such a remilitarization, and that the UnitedStates could do little to stop it, considering the clout that the Japanesecan exert financially if the Americans did attempt to stop it. .capital and 'apportioning it to the advanced countries, the less developedcountries, and the communist world, to best revitalize the economy of theworld as a whole'" (186). New York: Simon & Schuster, 1988.----------------------- 1 The point Burstein is making is not that the Japanese are out todestroy the American financial market, but that such destruction couldoccur simply as a result of the increasing power of the Japanese and theincreasing weakness of the Americans, in financial terms. The restrictions imposed on Japan after its defeat in World War II,in military terms, has benefitted that nation tremendously in terms ofallowing it to rebuild its economy. AsBurstein writes, "The Japanese have thirty-year plans, while American firmsthink strategic planning means, 'What will we be doing twelve to eighteenmonths from now?'" (219). Regan went to Japan and demanded that the yen be devalued inrelation to the Unite(i States dollar. In fact,such a remilitarization could occur as an outgrowth of American policyitself, which leans toward forcing Japan to take up its own defense ofitself, with American military support diminished. In "Zaitek! Then, the Japanese put their bonds on the market and the crisisdiminished. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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