Japan's Recession - A glimpse into a different world

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Japan's Recession - A glimpse into a different world
Washington diary: Japan's recession

 

By Matt Frei

BBC News, Tokyo


Living in America one gets used to the exuberant despair of the economic crisis.

 

Entire neighbourhoods ravaged by the cancer of foreclosure, the
feverish ructions of the stock market, the high-pitched protests of
politicians channelling popular anger, the low pitched moans of Wall
Street titans who claim to be more sinned against than sinning.

Japan, by contrast, suffers quietly, stoically.

The land of the rising sun has, after all, been in it for the long haul.

Here, the bubble burst as long ago as 1990 and the Japanese economy has
been as flaccid as a half-inflated airbed ever since.

Before the burst, the Nikkei (Japan's share index) had
reached a dizzying 39,000 points, Japanese shoppers trawled the world
for Gucci and Louis Vuitton - how we miss them now! - and the large
patch of land which housed the Imperial Palace and its gardens in the
centre of Tokyo was worth more than the entire economy of California.


Lost decade

The excesses of the bubble era are a distant memory, dimly and guiltily
remembered like a frat party that resulted in too much fun, too many
indiscretions and a mind-numbing hang-over.

These days, the Nikkei is languishing around 7,000.
Property prices are down about 80% in the capital and you will be hard
pressed to find Japanese shoppers fighting over handbags in Florence or
Rome.

Japan had just emerged from its so called lost decade -
the 90s - when it was pummelled by what is commonly referred to here as
"the Lehman shock".

 



Japan is a country almost uniquely torn between post-modernity and deep-rooted tradition


The decline of recent months has felt like a particularly cruel punch in the stomach.

The country had already paid for its past irrational exuberance.

It had been wearing the hair-shirt of abstinence for most of the 90s.

There were no sub-prime loans here. Credit card debt is virtually
unknown in a culture that still clings to crisp bills of cash.

The Japanese had been scrimping and saving for years.
With interests rates at zero they had been stuffing money under beds
and into safes.

I came here in 1998 to do a story about the brisk trade
in household safes, because no one really trusted the banks to look
after their money.

Ironically, Japan has been punished because it is good
at producing things like cars, computers and cameras that other
countries want to buy, or rather wanted to buy.

Exports are down a staggering 47% on last year, which is devastating for an economy that relies on them.

Toyota, the car giant, had never had a year in the red until 2008.


'Collapsed'

But it is not just the big names that are suffering. Small companies
employing less than 300 employees form the backbone of the Japanese
economy. They employ 70% of the workforce and they have been going to
the wall by the hundreds every week.

We spent a day in the Ota ward in Tokyo. This warren of
tiny factories, "mom and pop" workshops and miniature residential
houses is typical of Japan.

The narrow streets are meticulously clean. Beautifully
manicured trees stand next to ubiquitous vending machines. The tofu
seller pulls his cart through the ward every Wednesday blowing his
trumpet.

Despite flat-screen TVs, broadband wi-fi connectivity
and cutting edge technology, the place feels like an ancient village
steeped in conservative ritual. Flowerboxes with geraniums adorn
workshop fronts humming to the sound of electronic chainsaws and
hydro-hammers.

 

Mr Iino loves the Beatles and wears round John Lennon specs. He grew up
above the one-room factory where he and four other employees now make
metal joints and hinges for sophisticated glass-cutting machinery.

They are skilled craftsmen, masters of a niche market.
The atmosphere in their workshop is almost reverential, the attention
to detail intense, yet graceful. The four workers dance around each
other in this tight space like acrobats in a space station.

They bow deeply when we arrive, briefly interrupting what had turned out to be a very busy day. An order had just come in.

"Had you come the day before, you would have found us all idle and
smoking," Mr Iino admitted. "Business has collapsed," he added.

"I have never seen anything like it. I have no idea how we will cope."

I asked him if he will have to lay anyone off. The other workers
listened in silence. One of them, a friend from junior high school
days, smiled faintly.

"That will never happen," Mr Iino said quietly. "We are all family."


Sacrifices

His resilience is admirable and I am not sure whether this tightly-knit
family business culture is a strength or a weakness.

It means that companies like his are far less flexible when it comes to weathering the storm.

On the other hand, they can also call on each other more easily to make
sacrifices, like putting up with lower wages in hard times or working
shorter hours.

In Ota ward alone there are almost 5,000 such small
factories. Some 1,500 have already disappeared - who knows how many
more will follow?

Japan is a country almost uniquely torn between post-modernity and deep-rooted tradition.

The images are everywhere.

 

Kimono-clad geishas waiting for the bullet train in Kyoto while twittering on a bluetooth phone.

Sushi bars near the Tokyo fish market, where the knife-wielding chefs
greet you like travellers from a distant age, where credit cards are
not accepted but where the Nikkei scrolls electronically above the fish
counter.

Hotels and restaurants in which you have to take off
your shoes and put on slippers, but where the toilet cleans itself (and
you) with a digital automation that can be, frankly, intimidating and
invasive.

It does not help that the instructions are only written in Japanese.

The most poignant place I have seen all week is the cybercafe in Walabi city on the outskirts of Tokyo.

Mr Sato, the dapper owner, who used to be in real estate, will not just
give you a computer and a quiet room for an hour. He will also sell you
soap, shaving equipment, towels and food.


Cyber homeless

On the floor, pairs of slippers have been carefully placed in front of tiny booths.

When you turn down the piped jazz, you can hear snoring.

Of the 68 coffin-sized, airless, windowless booths, 60 are permanent homes.

Peek over the top and you can see washing hanging up to dry, teddy bears and family photographs.

The tenants are commonly referred to as "cyber homeless".

Most of them are unemployed or partially employed, but manage to scrape
together the $500 (£358) a month it costs to live in one of the booths,
a fraction of what they would pay for even the cheapest hotel room in a
place like Tokyo and preferable to sleeping rough.

They can use the address of the cybercafe when applying for jobs, thus escaping the stigma of being homeless.

It is a clever idea, but this is still a place of quiet despair,
intense loneliness and the personal shame of collective economic
failure.

It is just one of the many Japanese responses to a global crisis.

 


Matt Frei is the presenter of


which airs every weekday on BBC News, BBC World News and BBC America (for viewers outside the UK only).

 


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