In Japan, Bush said at a press conference that "there are some nations in the world which want to develop weapons that will hurt the United States and/or our friends and allies, and we've got to stop them from doing so." Another purpose of the U.S. president's trip was to pressure the Japanese rulers to carry out major economic reforms to try to head off a collapse of the country's banking system.
"Make no mistake about it," said Bush, "we will defend our interests and I will defend the American people." He later said Washington is "more committed than ever to a forward presence in this region," speaking of the massive U.S. military forces armed with nuclear and other weapons of mass destruction that are stationed in Japan, south Korea, and on warships in the Pacific. "We will continue to show American power and purpose in support of the Philippines, Australia, and Thailand,." and "will press on with an effective program of missile defenses," he said.
Bush also aimed his fire at remarks by several leaders of imperialist governments in Europe who have questioned Washington's new campaign. He told them not to fear "a state of war tomorrow," and in the same breath, added, "Let's not swoon." At the same event Prime Minister Junichiro Koizumi endorsed the "axis of evil" campaign, even though Japan has formal relations with Iran.
Vice President Dick Cheney voiced with particular clarity and arrogance the strength of U.S. imperialism vis-a-vis its rivals across the Atlantic. During a February 15 luncheon of the Council of Foreign Affairs he said, "America has friends and allies in this case, but only we can lead it. Only we can rally the world in a task of this complexity against an enemy so elusive and so resourceful. The United States and only the United States can see this effort through to victory."
Four days later, Cheney appeared at the Richard Nixon Presidential Library and on the Jay Leno show as part of a tour through California. "A few of our friends in Europe are hesitant to join in condemning what the president has called the 'axis of evil' states and terrorist allies arming to threaten the peace in the world. But evidence is compelling," he said. He had earlier made the point that once Washington starts military action somewhere, the "friends" will have little choice but to go along.
In one speech Cheney claimed that Saddam Hussein's regime "harbors terrorist groups, including Abu Nidal and the Palestine Liberation Front." He repeated similar claims against Iran, calling the government the "world's leading exporter of terror, directly supporting Hamas, Hezbollah, and the Palestinian Islamic Jihad terrorist groups." He also accused the Iranian regime to being "committed to everything it can do to destroy the process for peace in the Middle East."
'Pound on Iraq'
When France's foreign minister, Hubert Vedrine, called the "axis of evil" threats "simplistic," Secretary of State Colin Powell shot back that Vedrine was "getting the vapors." His remark was later repeated by Bush. Powell said, "My European colleagues should be pounding on Iraq as quickly as they pound on us when the president makes a strong, principled speech."
One of the unspoken differences between Paris and Washington is the debt that the Iraqi government owes to France. Paris also sees the country as a potential source for investment of tremendous exploitable wealth.
After Christopher Patten, the European Union's foreign affairs commissioner, accused Bush of taking an "absolutist" approach to the world, Powell retorted, "I shall have a word with him, as they say in Britain."
The German foreign minister accused Washington of treating "coalition partners" like "satellites," implicitly comparing it to the former Soviet Union and the Eastern Bloc countries.
The governments in the workers states of China and Russia have also raised concern.
While administration officials have matched their arrogant tone with sugar coating by making offers to negotiate with the governments of Iran, Iraq, and north Korea--but under conditions that would violate their sovereignty and dictate what they can use to defend themselves--the administration is seeking to build bipartisan support for an assault on Iraq.
Several big-business commentators have pointed to the 1980 raid by Israeli forces against a nuclear power plant being built by the Iraqi government as an example for Washington.
To bolster the longer-term course of U.S. imperialism in the world, the administration announced it was making permanent an office it set up to provide positive news and information about the United States. The Pentagon is developing plans to provide false news items to foreign media organizations as part of the latest effort to advance U.S. political interests in countries it considers allies and enemies. Although Washington has carried out disruptive actions both inside the United States and abroad for decades, the defense department wants to legitimize its right to carry these measures out in the open.
Japan on verge of banking collapse
Reuters reported that during his meetings with Japanese prime minister Koizumi, Bush called for the Japanese government to "clean up its billions of dollars in bad loans, overhaul regulations of the banking sector, and address deflation, the spiral of falling prices and falling wages.
The Japanese economy--facing its fourth recession in a decade--is in the midst of an accelerating deflationary spiral, a contraction that will not be fundamentally reversed by the regular ups and downs of the business cycle. In face of declining profit rates and overcapacity in construction and other industries, capitalists in Japan are forced to drive down the price of their commodities to try to undercut domestic and foreign competition and in order to stay afloat. In an attempt to shore up profits, they are laying off workers, attacking health and safety on the job, and speeding up production.
Japan's official public debt has risen to 130 percent of the gross domestic product, and Koizumi's proposed budget will drive that ratio above 140 percent within a year. The Japanese government expects to accumulate $5.2 trillion in long-term debt, and banks are already holding billions of dollars in bad loans. Moody's Investors Service warned that it may downgrade the world's second-largest economy's debt rating to "single-A" status, the same rating as Botswana, Chile, Latvia, Poland, and South Africa.
The country's stock market prices and the estimated market value of real estate make up the bulk of Japanese banks' money reserves that are supposed to serve as a buffer against defaults on loans. Land prices, which shot through the roof in the 1980s, have come tumbling down, falling by more than 75 percent by 1999. The Nikkei stock market, which peeked at 40,000 points in 1989, now languishes at around 10,000. Banks have built up more debt from loan defaults than they can cover from their declining reserves. As a result, the potential for a banking collapse and financial meltdown in Japan is growing by the day.
Japan has faced a sharp decline in industrial production and capital investment in building new factories and machinery. The Economist reports that many companies will never make a profit, but the banks continue to prop them up to avoid bankruptcies, praying that one day they will see some of the money and accompanying interest on billions of dollars in loans. More than 19,000 companies went belly-up last year and corporate giants like Fujitsu, Hitachi, and Toshiba are carrying out massive layoffs as their profits sag.
"As they [banks] continue to cling on, meanwhile, the walking dead drive down prices and capture business from healthier rivals.... The corporate zombies are perpetuating the deflationary spiral," the Economist reported.
Unemployment at record levels
Official unemployment now stands at 5.6 percent, the highest since World War II, and workers face ongoing layoffs and wage cuts. Consumer prices have fallen for more than two years, cutting deep into the capitalists' profit rates. Japan has faced declining retail sales for more than three years straight in spite of companies driving down commodity prices. Working people and the middle class have cut back on spending as the fear of an economic free-fall is spreading and the social wage is declining.
The rulers admit they plan to squeeze working people substantially more. The union bureaucracy of Rengo, the main Japanese trade union federation, has said that for the first time since World War II it will accept wage cuts in exchange for promises of some "job security" in negotiations this spring.
Japan's rulers, however, face another great challenge--an aging workforce, dwindling population, and a small percentage of immigrant workers. The bosses have a more difficult time pushing through assembly line speedup, cutting corners on safety, and suppressing wages to increase productivity. Unlike the imperialist countries in Europe and North America, which have encouraged an explosion of immigration of workers and peasants who are forced to come to metropolitan centers to eke out a living and send money back home, only about 1 percent of Japan's population are foreign-born. The other imperialist powers have driven down working conditions and extended working hours as they treat immigrant workers as second-class citizens with little or no rights, laboring in the lowest paid and most dangerous jobs.
Many bourgeois economists and politicians have called on the Japanese government to bail out the banks through a massive infusion of cash. Others call for a government takeover of the banks that would demand companies pay on their debts, a step that would drive many companies under. Prime Minister Koizumi is pushing for cuts in the budget--a move that will include cuts in the social wage--raising taxes, and privatizing state-owned corporations.
Growing threat of panic
Less than four years ago the government injected $79 billion into the banking system, a move that only postponed the crisis that finance capital faces today. This time around, bad bank loans are estimated at double to quadruple the level that set off the savings-and-loan crisis in the United States in the 1980s. There is a consensus among the imperialist powers that Japan is on the verge of a banking collapse and they are uncertain whether Tokyo is capable of buying some more time.
Yoshihiko Miyauchi, chairman of a Japanese government deregulation panel, pessimistically told reporters, "In the last five years, Japan's best contribution has been to not have collapsed."
Japan's national currency, the yen, has fallen 25 percent against the dollar over the last five years. The government announced it will faze out insurance on bank deposits over the next year.
Many fear that this move and the impending financial crisis will threaten their savings accounts. A growing number of people are cashing in their yen and buying gold to try to protect their wealth. If these fears turn into a panic, millions could rush to banks to withdraw their money, bleeding many banks of their cash reserves and sparking hyperinflation.
The playing out of Tokyo's crisis--whatever the outcome in this round--will immediately affect the economies of semicolonial countries in Asia, many of which carry out the majority of their trade with Japan. Bush, during his recent visit to Japan, also voiced concern over the effects on the U.S. economy if there is a financial meltdown.