Clinton urges Japan to 'be bold'

Traders at the Tokyo Stock Exchange watch share prices plunge

President Clinton has urged the Japanese Government to take bold steps to boost its economy as it fights against a looming economic breakdown.

In the strongest remarks yet from the Clinton administration, the president referred to a "raging battle" between Japan's bureaucracy and its business community.

His comments came as European and Asian leaders met in London to discuss the Asian financial crisis.

Hashimoto: praised by President Clinton

Mr Clinton praised Japan's Prime Minister, Ryutaro Hashimoto, describing him as "an able man who understands the economy."

But in an apparent criticism of Japanese civil servants, he said it was now time to move forward and leave old ways behind.

"The people within the permanent government there, which have always enjoyed great power, have to realise that the strategies that worked in the past are not appropriate to the present," he said.

Clinton said on Friday that the market considers measures to save Japan from recession "insufficient" and urged "aggressive measures."

When asked at ASEM about his country's economic health, Japanese Prime Minister Ryutaro Hashimoto noted that Japan has net overseas assets of $5.9bn, reserves of $1.5 billion and no external debt.

"Do you think a country of that sort is on the verge of collapse?" he said.

Japan is currently facing one of its worst economic crises. On Friday, the yen fell to its lowest level against the dollar for six years.

In another blow to economic confidence, Moody's Investors Service, a leading business firm, cast doubt on Japan's ability to service its international debts.

Moody's action came a day after the chairman of Sony Corp., one of the few firms doing well in Japan despite the current climate, said the country's economy was on the verge of collapse.