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At first glance the grim economic and political situation now confronting Japan sounds remarkably similar to the British scene. There is the same slump in national production, the same factory closures and rising unemployment, and the same highly unpopular prime ministers and weak governments that seem, in both cases, to have lost their way.

But this similarity is only on the surface. Beneath the scary and truly dreadful statistics lie complex causes and conditions that are quite different as between the two countries.

It is important to understand these differences because contained within them may be some valuable clues as to how the global economy can begin to escape from the present dark labyrinth of collapsed confidence, collapsed markets and general fear that has brought the world economy to a standstill.

The basic point is that Britain is one of the most indebted countries in the developed world, possibly level pegging with the United States, while Japan is the world’s biggest creditor nation, with reserves well over a trillion dollars. The British are over their heads in debt — consumers and government alike — and planning to go in even deeper.

In Japan there are still piles of cash around, much of it in dollars, accumulated from years of export success combined with persistent household frugality at home. Japanese government debt is certainly enormous, but British-style universal personal debt, with people borrowed to the hilt on their credit cards, or against house and home valuations that have now shriveled away, is not the Japanese problem.

On the contrary, while British and American households have forgotten what saving means, the whole Japanese ethos is to keep saving for the rainy days that are bound to come again, and have indeed now returned. This means that Japanese government deficits, although large, can be financed not by foreign borrowing but by drawing on the mountain of domestic savings — a mountain that is actually growing larger even in these deeply troubled times.

The Japanese problem is that its exports markets have evaporated — the American market in particular. The world’s mightiest export machine has had an enormous hole punched in it.

While British policymakers agonize on how to separate out all the so-called toxic debts and loans that banks have unwisely taken on over the last few years, and thereby get the banks lending again, the chief Japanese worry now is how to revive demand for exports and get factory production going again.

The same problem, of course, affects China on an even bigger scale, where whole towns that concentrated on exports — often of garments and light electronic products — have seen their sales vanish and have had to close down overnight.

So while the best thing Britain could now do to combat world recession is get its banking sector in order, the best route for Japan would be to give massive help to the nation’s battered and indebted export customers. Getting export demand going again would lift everybody and we might begin to see some kind of equilibrium restored after the years of huge imbalances between Western over-borrowing and Asian cash piles.

The situation is not unlike the Marshall Plan in reverse at the end of World War II. At that time America was the big creditor and it wisely used its cash to pump investment back into war-torn Europe (and Japan), mostly on very generous terms. That got Europe going again, built up productive capacity, boosted the whole world economy and, of course, greatly helped lift American exports. Japan is now one of the overwhelming creditors while America, like Britain, is at the top of the debtor league.

On her recent arrival in Tokyo, U.S. Secretary of State Hillary Clinton made the usual reassuring noises about shared security and prosperity between the U.S. and Japan, and patted the Japanese on the back for their good environmental record. But her real concern may have been something more basic. What “shared prosperity” between America and Japan really means is “please could a hopelessly over-borrowed America have back some of its dollars and please could some of Japan’s enormous claims on the U.S. be canceled or written down.”

The real situation between the busted U.S. and Japan compares to an overdrawn client asking his bank manager to “share his prosperity” by writing off his debts and lending him a lot more.

Certainly some Japanese investors have already taken the initiative and are scooping up overseas assets at bargain rates. If this trend continues, expect to see Japanese financial institutions, manufacturers and even retailers, with their super-strong currency, making foreign acquisitions galore — all of which will pay off in revived demand for Japanese goods and rising incomes all round.

This seems a far more promising course than pushing Japanese households into spending more and more at home on consumer items and gadgets, thereby weakening the commendable savings habit.

Meanwhile, for the British, the unwavering goal should be to claw a way back to being a nation of savers, getting the funds before spending them, living within its means and maintaining the reasonably strong currency that goes with being in credit, in contrast to the present sagging pound. That would be far the best way for the British to help themselves and the world, even if it is going to be a particularly painful course.

Japan cannot escape the global trade crisis that has engulfed almost everybody. But for all their setbacks the Japanese are now far better placed to find a way out, and help the world recover, than the debt-submerged West. They should now take it.

David Howell is a former British Cabinet minister and former chairman of the Commons Foreign Affairs Committee. He is now a member of the House of Lords (howelld@parliament.uk www.lordhowell.com).

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