ONE by one, the landmarks of Japan's boom-years are falling. The latest is the implicit floor under the Tokyo Stock Exchange that was once thought rock-solid.
The dip of the Nikkei Stock Average to under 20,000 early this week - a level not seen since early 1987 and down nearly half from its peak in late 1989 - has pushed business and political leaders, who thrived off the "bubble economy" of rising stock and real estate prices, to look for an easy culprit.
The presumed villain is Yasushi Mieno, the Bank of Japan governor who openly admits he has tried to wring inflation out of an over-juiced economy by raising interest rates since 1990, while aiming for a "soft landing" for the economy.
While he did start to lower the bank's discount rate last fall, some politicians want him sacked for not easing credit further. With their paper assets depleted, many corporations now long for the days of the late 1980s when credit was cheap.
To his supporters, however, Mr. Mieno is seen as a monetary savior. Many financial analysts predict he will drop the discount rate in coming weeks by either 0.5 or 1.0 percent.
Yesterday, aided in part by speculation that the interest rate cut was imminent, the Nikkei moved back above 20,000, rising 421 points to close at 20,185.
The stock market's long slide into the doldrums has been matched by a weakening economy.
Officially, Japan entered a "growth recession" late last year, moving up at an annual rate of about 2 percent, which may be the lowest in 18 years.
Business bankruptcies have been rising for over a year, and were up 56 percent last month from the previous February, according to a private credit agency, Taikoku Data Bank Ltd. Capital investment has dropped 1 percent and urban land prices are down 20 to 30 percent. And the Bank of Japan's own survey of business confidence showed a sharp drop of 18 points in two months, with more pessimism than optimism toward a once-buoyant economy.
"The situation is fairly serious," says Noboru Hatakeyama, vice minister for international affairs in the Ministry of International Trade and Industry (MITI).
He especially notes a 4 percent drop in the industrial production index from a year ago. He says that while some firms overexpanded investment in the late 1980s, others invested wisely and are not suffering from excessive inventories.
IN fact, Japan's trade surplus continues to soar, and may reach $100 billion this year, touching off more friction with the United States. In January, the surplus more than quadrupled from a year earlier.
"If this trend [of rising trade surpluses] continues," says Mr. Hatakeyama, "it will cause a lot of trouble." Some analysts say the slowdown in the Japanese economy will tempt some firms to unload inventories abroad at below-cost prices, risking charges of illegal dumping.
One unknown is how the stock market slide will affect Japanese commercial banks. They have counted on their securities portfolios to enable them to reach a capital-to-assets ratio of 8 percent by this time next year, the deadline set under new rules of the Bank for International Settlements.
The economic slowdown already has put the hook on Japan's overseas reach. Japanese investment in the US real estate, for instance, fell by 61 percent last year compared with 1990, according to the accounting firm of Kenneth Leventhal & Co.
The political heat on Mieno to lower interest rates forced Prime Minister Kiichi Miyazawa to come to his aid last week and remind colleagues of the central bank's independence. And Finance Minister Tsutomu Hata, like Mieno himself, asserted Monday that Japan's economy is poised for recovery by year-end.
"Even though more and more people feel the economy is slowing, economic fundamentals look relatively strong," Mr. Hata said.
In fact, the prime minister said the stock market dip was a "temporary" phenomena as companies unload stocks before the end of their fiscal year, March 31, in order to make their financial accounts look good to stockholders.
Still, Mr. Miyazawa hopes to stimulate the economy by speeding up government spending on public works.