What is happening to U.S. economy? -- Akahata editorial, June 27 (excerpts)

The Kananaskis Summit of major capitalist countries had to give up a plan to discuss global economic recovery that was to follow U.S. business recovery due to an adverse change in the U.S. market.

New York stocks and the Nasdaq, on which many technology giants are listed, have plunged and the U.S. dollar continues declining, thus shaking markets of Japan and the rest of the world.

The danger is that this may not be a temporary turbulence. The present uncertainty of the U.S. economy has been triggered by the failure of the giant energy company Enron Corporation, which was a star corporation in the middle of the stock bubble in the late 1990s.

The U.S. system based on market forces is the source of public anxieties and distrust.

After Enron, fraud has been found at many large corporations, damaging public confidence in the market propelled by a profit-first policy.

The slump in high-tech businesses, together with threats of a second round of terrorist attacks which will be inseparable from the U.S. government's preemptive strike strategy, are also putting pressures on the market.

There are also widespread public concerns about the budget deficit returning as a result of an increase in military expenditure and tax cuts for the rich together with the ever worsening trade deficit.

The decline of the U.S. market may influence not only Japan's stock price and the yen rate.

Although personal consumption is stagnant due to the worst ever situation caused by corporate bankruptcies and unemployment, the Koizumi Cabinet declared that Japan's economy has bottomed out. The government has maintained this optimistic view and is indifferent to the people's living conditions in expectation of a rise in U.S. share prices.

The Koizumi Cabinet's hope that stock prices in the U.S. will recover, company profits and consumer spending will increase, and consequently Japanese companies will get more profits from exports has ended in failure.

The Koizumi "reform" is modeled on the U.S. economic system based on market forces, a system which Koizumi praises as ideal global standards. The "structural reform" is aimed at creating a system that enables large corporations, including major banks, to maximize profitability in money games on stock markets.

The Koizumi "reform" is failing in the real economy. Prime Minister Koizumi must know that the model he is trying to adapt to his "reform" policy is also losing public confidence. (end)