Mourning the lives lost in the atomic bombing, we pledge to convey the truth of this tragedy throughout Japan and the world, pass it on to the future, learn the lessons of history, and build a peaceful world free from nuclear weapons.
Hiroshima National Peace Memorial Hall for the Atomic Bomb Victims
Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes. (2) To accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.
Article 9 of the Japanese Constitution
The legendary investor Warren Buffett, often the world’s richest man, who had essentially invented the private equity marketplace with an attention span that only rivals his longevity and seldom found among today’s Wall Street investors who look like children afflicted with Attention Deficit Hyperactivity Disorder (ADHD) when compared to him had presciently cautioned about financial weapons of mass destruction in 2002. He knew about it all too well, first hand, because he had bailed out, once upon a time, Salomon Brothers from the excesses of the Wall Street bond trader John Merriwether who had subsequently gone on to found Long Term Capital Management (LTCM) which had threatened to bring down the global economy to it knees in 1998, a year after Robert Merton and Myron Scholes, LTCM’s board members, had shared the Riksbank Prize in Economics in Memory of Alfred Nobel for their work on valuing derivatives.
Sovereign debt levels in the G7 advanced countries are at their highest levels today. Their saving grace is that the G7 is perceived as the relatively more stable economic game in town. The other countries are worse, either because of their stage of economic development (India, China and Brazil) or because they are simply too many other social and political problems they have to contend with. The G7 includes Japan, the only Asian member of the elite club and more importantly the only de jure non-militant nation since the end of World War II.
The U.S dollar has served as the global anchor since the end of the system of fixed exchange rates tied to the gold standard in 1971. Now that anchor has stumbled. Japan is also indebted, more indebted than the United States, but its debt uses US treasuries as a hedge. Crisis in America would be a crisis for Japan, not only because of the Japanese investment in the United States, but because Japan is a small country, similar to its World War II nemesis and victor, the United Kingdom, both eclipsed by the rising China, a major nuclear power and a member of the United Nations permanent security council since it was recognized in 1972, a privilege neither Japan nor Germany have been granted. And China is vying to become a global reserve currency with mostly America’s help since Nixon, a relationship that has become very tense in the last several years because post- Cold War China is not the post World War II Japan, politically yet. When economic competition is clouded by ideological political differences, establishing mutual trust can be a deeply discomforting and trying exercise in geopolitics.
China has been lobbying the international monetary system for a new global currency anchor. It wants the International Monetary Fund’s Special Drawing Rights (SDRs), a synthetic currency no different in concept from the Chinese exchange rate basket, to take the dollar’s place. It is a clever idea. Though it may not be necessary.
America and Europe need to stop issuing new debt to extricate themselves from the current economic crisis. They can buy back all of their outstanding debt and use their currencies at home for the much needed domestic investments to create jobs to ensure stability in this century. Dollars, euros and pounds in the foreign markets will also return to the United States, the eurozone and the UK respectively as a result.
Japan, a nation committed to real technical change, competitively toe-to-toe with the rest of its G7 peers, since the end of World War II, can then be freed up to anchor global transactions in its currency, the yen, in the place of war-motivated technical change in the United States which is currently at its highest levels as a share of US government spending at a full one-third (not to forget economic confrontation and military-motivated financial innovation whose safety net from the Federal Reserve is currently at 50 per cent of US GDP or about $7T of monetary easing since 2007, far surpassing the Great Depression levels).
Japan, as a country, needs to export technology and financial capital to grow in Asia Pacific and elsewhere in the emerging markets. The emerging markets need Japanese technology and the natural resources of Canada and Australia, and their own in the Middle East, Russia, South Africa and Latin America. It would be a timely and natural geopolitical alliance made in heaven that can preserve global economic stability and sustain the growth of all toward peace and sustainability, for a nation constitutionally committed to global peace and nuclear disarmament can be most trusted of all.