UPI Newswire, 28 March 1995

Japanese Cabinet Ministers agreed Tuesday to a series of measures to stimulate the nations flagging economy, which has been battered by a massive earthquake and the soaring yen.

The agreement was reached at an informal cabinet meeting, which was convened a day after Japanese finance minister Masayoshi Takemura made an indirect call for a cut in the Bank of Japan's official discount rate.

The Japanese economy has been stuck in quicksand since its longest recession was officially declared over late last year. Although some improvement has been seen in areas like car sales, many of the more serious problems such as bad debt at banks remain.

"The biggest problem is that money creation has stopped and purchasing power is declining," said Richard Werner, the chief economist at Jardine Fleming Securities Ltd. "The problem has not been on the fiscal side - it's on the money side."

Werner said what the government needs to do is print more money since banks are now handcuffed by huge amounts of problem loans.