Customer Reviews

The Weight of the Yen: How Denial Imperils America's Future and Ruins an Alliance

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This book is a must read for anyone interested in knowing how the Japanese financial world works, but is so well written that it should be on the bookshelf of anyone who cares about the US-Japan bilateral relationship. Especially if you want to know the truth about how the Japanese economy and financial market has been manipulated by the powerful beaurocracy, this is your book. For those mystified by Japan's "Lost Decade" and why it persists, this book will provide some surprising answers.

Just as interesting is the author's analysis of the financial straight jacket that the US and Japan locked themselves into without truly understanding the consequences. Fans of the Reagan Administration will think twice about their hero when they realize the legacy that Supply Side Economics has left in both the US and Japan.

At the risk of sounding pretentious, this book really is a true tour-de-force.

A brilliant account of the developments leading to one of the greatest financial bubbles of all times. Must read for anyone interested in Japan, or financial bubbles, or currencies, or international trade and politics, etc. Murphy makes important references to Karel van Wolferen's The Enigma of Japanese Power: People and Politics in a Stateless Nation, and that is also a must read to understand how Japan power works.

To study Japan as I do without studying its economic side would be like studying Europe but neglecting England, France, Germany, and Italy. This book gave me a great introduction to the nature of the exchange rate's importance and what factors cause its fluctuation. It largely fills one key component (economics) of one's overall study of Japan. As with most outstanding books, reading this one has led me to many other books. You don't need a Phd. in Economics to read this one!

This is a good example of that.

Mr. Murphy (an investment banker, BTW) sounds like Eamonn Fingleton when he talks about the loss of the "good manufacturing jobs."

Some things that were not mentioned in the book:

1. A nation is a "debtor nation" when foreigners purchase a lot of its assets. But this debt is more similar to what happens when you put money IN the bank. For every deposit, the bank goes deeper into debt because people feel safe parking their assets there. This is similar to the USA, where foreigners feel comfortable putting their assets here, necessarily resulting in a trade deficit. Until very recently, over 90% of the US trade deficit was driven by capital investment.

2. Trade deficits are ONLY contingent on the level of domestic savings and investment. In the case that the latter is greater than the former, a trade deficit will result. Note that in the last several years of Japan's economic crisis, the trade surplus has actually *increased.* People in Japan are finding anyplace else to put their money but Japan, and the trade surplus is the result of that and not the cause.

3. Many authors have pointed out that capital and labor productivity in the USA are a LOT higher than they are in Japan. The system of keiretsu has actually resulted in Japan's having a significantly *lower* domestic productivity than in the US. And as we all know, the ultimate determiner of standards of living is productivity-- NOT exchange rates. When looked at in terms of productivity, the US standard of living is about 50% higher than what it is in Japan.

4. Some have made the case that Japan's exporting industries, which really WERE subject to market discipline developed in spite of (and not because of) the keiretsu system. ("Can Japan Compete?" Sakakibara/Takeuchi/ Porter). Another worthwhile read may be "Japan, the System that Soured," by Alex Katz.

5. Fiscal policy: In just the short space of ten years, the miraculous system has gone from being set to take over the world to having a credit rating about the same level as South Africa. Now *that* took some doing. And this is at the same time that the Congress that coincided with the Clinton administration put the budget back into surplus. Trends, whatever they are, are quite reversible.

Time has not proven his fears founded in reality. The biggest lesson from this has been to NOT pay attention to people who shouldn't know what they are talking about.