Improving the competitiveness of the financial and capital markets is one of the important policy issues that Japan has long been pursuing. Actually, late last year the Financial Services Agency finalized the "competitiveness strengthening plan" as a roadmap for dealing with that issue, where the author actively participated in the discussion to finalize the plan. Along with the current financial crisis originating in the U.S., however, there seems to be increasing argument in Japan that the idea of "strengthening the financial sector" itself is wrong in the first place................If there are no opportunities to reallocate risks, no firm or household would dare take any risk, resulting in a stagnant economy. Therefore, the right thing to do is not condemn risky transactions themselves, but provide the environment in which risky dealings can securely be made.

The new Global Trends 2025 report by the U.S. National Intelligence Council highlighted the ascent of China and India as part of a fundamental global power shift that will play out in the coming decades. A series of events occurring within a week of one another in October sharply illustrated India's potential for great-power status as well as the distance the country still has to travel to fulfill its global ambitions. The events also threw light on the U.S. strategy, so evident during the Bush administration, of building up New Delhi's capabilities to serve as a geopolitical hedge against Beijing................Although Indians dream of their country becoming a rival, economic and otherwise, to China, the gap between ambition and reality is still quite large. And for Americans looking for a new strategic partner to prevent Chinese dominance of Asia, the material basis of Indian power is not as secure as some make it out to be.

China's cancellation of the annual EU-China summit four days before it was to be held in Lyon is explained by French President Nicolas Sarkozy's decision to meet the Dalai Lama in Poland a few days later. But what looks like a diplomatic spat shows European leaders that they need to face up to some hard truths about their relationship with China...............Europe has conceded all the advantages of its open market and system to China, and is still being treated as no more than a diplomatic irritant. Until Europe's leaders get their act together, there seems little prospect of improvement.

As the Japanese economy, along with other countries, is being severely affected by the US recession, triggered by the subprime loan problem, there seems to be a widespread opinion in Japan that the American-style market economy has completely failed. Many are now arguing that all regulations in the fin ancial sector should be strengthened since the subprime loan problem was caused by too much deregulation..............Rather, we should share more positive views on the market system with paying attention to regulations and redistribution policies so as to maximize the merits of market competition.

For the Japanese, how to perceive - or rather keep their distance from - the U.S. is a question that has been lingering since Japan came under what many regard as subjugation to Washington in the wake of its devastating defeat in World War II. Normally, people are not palpably conscious of this. They are used to having their alliance with the superpower across the Pacific constantly lavished by both governments with such eulogy and praise as "irreplaceable partnership," "the most important bilateral relationship in the world," or "the cornerstone of Japan's diplomacy"……

By physically shutting down Suvarnabhumi airport, the People's Alliance for Democracy (PAD) has upped the stakes in Thailand's ongoing political polarisation. It has demonstrated the extent to which it will resort to mob violence to achieve its aims. The PAD is bent on creating the conditions of ungovernability and then to demand the ouster of Prime Minister Somchai Wongsawat on grounds that Thailand is ungovernable. Its tactics have warped into a blatant street campaign of intimidation and fear, of coercion and force……

Professor Takatoshi Ito maintains that just a couple of years ago, very few people expected that the US-based problem in housing and finance would grow to a full-scale financial crisis and global recession which seems almost certain today. There are four, mutually reinforcing channels through which the economic crisis can be transmitted from the US to the world economy: (1) global linkages of stock prices, (2) fluctuations in foreign exchanges, (3) increases in risk sensitivity, and (4) effects on the real economy (consumption, investment, exports and imports)……

Mr. Yutaka Harada argues that the phenomenon of economic disparities in Japan is not a result of the "Koizumi reform," which rather helped more young people find regular jobs due to the recent economic recovery, but a result of Japan's traditional system of life-time employment and seniority wages, which tend to place younger generations in a relatively disadvantaged position with regard to job opportunities. Therefore, policy priorities should be placed on education and employment for younger people, rather than the current system of supporting older people in sacrifice of younger generations, according to Mr. Harada.

Mr. Ralph Cossa gives some advice on Asia policy for President-elect Obama. Rather than suggesting that Mr. Obama take immediate action with regard to North Korea and the Middle East, Mr. Cossa cautiously argues that Mr. Obama should first give a few well chosen words supporting the current six-party negotiating process and associated verification regime and providing reassurance to Tokyo and Beijing.

Brad Glosserman and Bonnie Glaser explain about recent positive developments in the Beijing-Taipei relationship on the official level, but point out various questions in the minds of many Chinese on the both sides of the Straits. It is important, therefore, for the US to support further improvements in cross-Strait relations through the free choices of the people in China and Taiwan, according to the authors.

Brad Glosserman and Bates Gill ask the question: Is the deal a meaningful compromise that protects India's national security interests and the integrity of the NPT or does it give Delhi too much and undermine the NPT? As the authors point out, Japanese officials and strategists are worrying that the U.S.-India agreement could clear the way for a nuclear-armed Korean Peninsula, and are asking if the U.S. commitment to protect Japan is more solid than the pledge to denuclearize the Korean Peninsula. The next U.S. administration must reassert its leadership in nonproliferation matters. It must challenge the perception that proliferation concerns have been subordinated to other priorities. Failure to do so will undermine efforts to build consensus on nonproliferation – one of the top U.S. security concerns – while simultaneously encouraging other countries to follow India's example, according to the authors.

Professor Fumio Ohtake points out that as Japan's baby boomer ("dankai") generation is now entering into the 60s, the median age of Japanese voters, currently around the mid-50s, will soon reach and surpass 60 years old, giving an ever-increasing political power to older population as voters. That is why such issues as public pension and medical care are crucially affecting politics in Japan these days. Therefore, it is important to develop a system that can prevent policy biases in favor of the elderly, who could shift fiscal burden onto younger or future generations, according to Prof. Ohtake.

Mr. Ralph Cossa maintains that the verification of North Korea's June 26 declaration was neither "complete" nor "correct." Overlooked in the delisting debate is a significant potential breakthrough in the six-party process, IF (and this remains a big IF) the verification regime described by Washington is implemented, according to Mr. Cossa.

Professor Toshihiko Kinoshita argues that the US does not possess a superior finance system to prevent the development of a bubble economy and the world leaders from advanced nations, possibly along with some representatives from such emerging economies as China and India, should work together to find a better system of international finance. This is necessary, as the US, looking more and more inward, cannot take bold actions by itself to reform the current financial system which has long been benefiting itself, according to Prof. Kinoshita.

Mr. Yutaka Harada argues that no tax increases are necessary, at least until the baby boomer generation reaches 75 years old or so, if realistic reductions in public expenditures are made on the basis of the "Basic Principles of Budget Formulation," adopted by the government in 2006 and 2008. The Japanese economy will be strengthened and the government budget can be reformed, if public spending is rationalized and reduced, rather than increasing taxes, according to Mr. Harada.

Professor Atsushi Seike examines the current state of employment for elderly people in Japan, and maintains that although elderly employment has been increasing, rather rapidly in recent years, there is much room for improvement in terms of the quality of employment. In particular, the mandatory retirement system remains to be the main obstacle for the elderly to work effectively beyond 60 years old or so, and opposite to the ideal of a life-long working society. It is about time to discuss this matter seriously among management, labor and policy makers, and adopt at least the same kind of rules as those in the U.S. and EU nations, prohibiting age discrimination at work and reexamining the mandatory retirement system in Japan, according to Prof. Seike.

Mr. Robert Sutter maintains that Asia seems to have a serious weakness in terms of governmental leadership, despite its economic success in recent years. Furthermore, he argues that this situation is unlikely to change in the near future, as Asian governments are not willing to undertake the risks, costs, and commitments that come with leadership and seem satisfied with the U.S. role as security guarantor and economic partner for them.

Professor Hideo Fukui maintains that although it is important to realize safety and security and protect consumer's benefits, using wrong means would likely reduce rather than enhance the true benefits of consumers and the general public. Strengthening governmental intervention often hurt those who are weak in social standing, while helping those who have strong vested interest in the economy and society. After examining some of the recent policy measure introduced under the pretext of realizing consumers' safety and security, he concludes that true safety and security and real consumer benefit cannot be protected by loudly arguing for it or asking for governmental intervention. We should rather try to protect our values under the Constitution and our healthy society, where individual rights cannot be violated by any authorities, according to Prof. Fukui.

Michael Finnegan, faced with the news that Kim Jong Il may have suffered a stroke, argues that although how things play out inside North Korea will have much to do with internal power dynamics, a clear international response, led by the most involved parties, could do much to contain and minimize the potential that leadership confusion in North Korea will lead to instability on the peninsula and in the region. The Six-Party Talks have opened up new opportunities for dialogue between the U.S., China, and others.　This opportunity, heightened by the near-term speculation over Kim's health, should be taken advantage of not only during this current situation, but to plan for future contingencies as well, according to Mr. Finnegan.

Mr. Masahiko Ishizuka maintains that despite dwindling work force, the Japanese government as well as the general public evidently are apprehensive about lowering nation's barriers to foreign workers. For Japan to survive as a nation in the future, it is necessary for Japanese people to get rid of the tendency to regard foreign workers as cheap, expendable substitutes for a decline in the domestic labor force, and to socially and culturally reinvent themselves to live with foreigners without apprehension, amounting to a "third opening" in the country's history, according to Mr. Ishizuka.

Victor Cha argues that the Beijing Olympics was China's announcement to the world that it is a global power, and the picture perfect staging of a 17-day performance is now over. However, the biggest political story about the Olympics has yet to be written. This is the extent to which Chinese authorities will meet the world expectations it has set for itself with these Games. With the prestige about the Olympics comes global responsibilities in foreign policy and in domestic human rights, according to Victor Cha.

Professor Takatoshi Ito maintains that the main causes for the current economic downturn in Japan are cost increases and consumption decreases due to sharp rises in the prices of food and energy prices. What we need now is an economic policy package to minimize the degree of economic slowdown in the short term, while avoiding the waste of limited fiscal and economic resources and, at the same time, encouraging a desirable structural reform in the medium and long term, according to Professor Ito.

Professor Soichi Shinohara points out various problems in Japan's economic education at middle and high schools, especially about the content of textbooks in economic and social subjects, emphasizing memorization rather than understanding. Economists, including university professors in economics, can and should play a more active role in improving the quality of economic textbooks and offering training programs in economic subjects for middle and high school teachers in Japan, as in the U.S., according to Prof. Shinohara.

Ms. Meng points out that China confronts a question of dueling national identities, that is, positive patriotism and negative nationalism. The former was seen in the aftermath of the Sichuan earthquake which inspired Chinese people to demonstrate their patriotism through voluntary relief efforts and support for the victims, whereas the latter was shown in defensive reactions to foreign criticism in the case of the Tibetan incident. The Beijing Olympics may reveal which perspective dominates, according to Ms. Meng.

Professor Dinnie takes up Japanese and Chinese Nation Branding, and point out their strengths and weaknesses in establishing a good nation brand. In Japan, an overtly commercial branding approach is adopted with a focus mainly on the development of innovative products and design, especially among small and medium sized companies in local regions to be marketed as international brands for national branding purposes. On the other hand, in China there appears to be more focus upon a public diplomacy approach with special emphasis on the promotion of culture in order to improve the country's reputation as a peaceful nation, potentially leading to the future promotion of its commercial brands. From the viewpoint of Japan, however, China's efforts in public diplomacy toward Japan are yet to be noticed even by well-informed specialists, and some new strategies may be needed to appeal to the general public in Japan, according to Prof. Dinnie.

Mr. Masahiko Ishizuka maintains that Supreme Court's acquittal of ex-LTCB execs conjures up old question of who bears responsibility for Japan's post-bubble financial crisis, and many people, including major newspapers, openly wondered where the Finance Ministry's responsibility lay. The cardinal point in this issue was the relationship between banks and the Finance Ministry that had governed the Japanese banking industry for decades. Although a new financial agency was created to change such a relationship some time ago, the country is not yet entirely free from the problems of excessive governmental power and interference with the private sector, not to mention the question of who should be held responsible once something goes wrong, according to Mr. Ishizuka.

Ms. Chisako Yokoyama points out that Japanese-style filmmaking does not ensure that good movies will be produced, even though enough money can be raised to produce them, as it is often the case that popular actors, as well as a director, are chosen before a good script is written. In addition, Japan's film industry fails to attract talented young people due to its bad working conditions such as low wages and long working hours. However, Ms. Yokoyama appreciates the Japanese government's initiative in reforming the film industry by fostering "producers" in Japan and also the efforts of local cities and regions to develop their own film industry for revitalization of their local economies as well as Japan's movie industry as a whole.

Mr. Masahiko Ishizuka argues that a consumer agency which will take effect next year seems to be ineffective due to resistance from various ministries' bureaucrats to turning their power over to the new agency. It is apparent that bureaucracies are more of a problem than a solution, and a pressing task for Japan is to extricate itself from its bureaucratic straitjacket. It is time to tear down Japan's seemingly indestructible bureaucracies and their close links to industry and other special interest groups for the sake of protection of consumer interests, according to Mr. Ishizuka.

Mr. Jun Okumura argues that although Japanese politicians, bureaucrats as well as businesspersons prefer Republicans, as far as the U.S. administration is concerned, a McCain administration is likely to be more problematic for Japan and probably for the rest of the world as well than an Obama administration, given the current economic and political conditions in Asia and elsewhere. At any rate, it is not in Japan's best interest to indicate or suggest to the U.S. that Japan would prefer a Republican administration to a Democratic one. According to Mr. Okumura, we need to contact and interact with leaders and advisors of the both camps more actively and try to express our positions and objectives more clearly, while working together with the U.S. side to achieve our common goals, regardless of which candidate wins this time.

Weston Konishi compares the U.S. presidential candidates, John McCain and Barack Obama, regarding their policies toward the Asian region, including Japan, and maintains that, among other things, a major difference can be seen on the issue of whether a possible withdrawal of U.S. forces would lead to increased anxiety in Asia about the U.S. strategic commitment in the region. Although no radical shift can be expected in U.S. policies toward Japan, regardless of which candidate wins, Japan should be actively involved in the so-called "League of Democracies" or "Concert of Democracies," which seem to interest the both candidates and would likely have real implications for U.S. policy toward Japan as well as Japan's own foreign policy, according to Mr. Konishi.

Mr. Masahiko Ishizuka argues that Japan's political, economic and social systems are cruel to young people by referring to the accumulated amount of public debt as a burden for younger generations and also to the business practice of not hiring new graduates as protection for elderly workers at the expense of young people, who tend to lack hope for their future, as a result. In order to organize an unsettled mood among the Japanese youth into a viable political force, lowering the voting age to 18 would be a step in the right direction, and young leaders who can inspire their own generations are needed to replace old guard politicians largely concerned about pleasing senior citizens, according to Mr. Ishizuka.

Ms. Sheila Smith maintains that in the first state visit by a Chinese leader to Japan in a decade, Hu Jintao and Japanese counterpart Fukuda Yasuo put aside difficult years of deep confrontation between their two countries and did agree to cooperate on pursuing basic and universal values acknowledged by the international community. In this situation, U.S. should be looking for ways to join in partnership with Tokyo to engage China in a shared agenda for problem solving and Washington can signal to the Japanese people that U.S. is committed to working with Japan to build a shared future with its neighbors in the Asia Pacific, according to Ms. Smith.

Professor Toshihiko Kinoshita explains the significance and implications of Chinese president Hu Jintao's visit to Japan on the future of Japan-China relations. Mr. Hu's initiative to improve China's relationship with Japan was quite impressive while he was in Japan, and is still apparent even after his return to China, according to Prof. Kinoshita.

Mr. Masahiko Ishizuka takes up a recent controversy over the "national interest" argument by the chairman of the board of governors of NHK, and maintains that the role of a public broadcaster like NHK should go beyond "national interests" in the narrow sense. It is about time to form a broad forum to make Japan's position known to the outside world, rather than depending solely on the government's initiative, which might influence NHK one way or the other, according to Mr. Ishizuka.

Professor Hideo Fukui warns that creation or unification of government agencies such as a new consumer agency and a unified government personnel agency would likely result in too much power and authority, leading to demerits due to the concentration of power. Furthermore, a newly created administrative agency tends to become a kind of "mosaic" organization with its members temporarily transferred from various related agencies and, therefore, the fate of such a new agency depends crucially on the availability of those members who can work effectively for their new agency without looking to their original organizations, according to Prof. Fukui.

Professor Atsushi Seike maintains that a higher skill level is being required of public sector personnel in face of structural change in the economy these days, and in that light some of the recent arguments about public personnel system reform seem questionable. "Political leadership" should mean making full use of highly skilled public personnel by politicians, and not suppressing public personnel's power in accordance with politicians' ability. It is up to the public's choice whether costs should be borne to continue employing highly skilled personnel in the government sector, according to Professor Seike.

Mr. Masahiko Ishizuka points out that the Japanese government's failure to appoint a Bank of Japan governor is due to the lack of preparation for the current political situation in Japan, where the problem has been the almost unquestioned assumption that the LDP rule would last forever. While this situation is troublesome especially during the current financial chaos in the global economy, it could give good lessons to all of us including the Japanese media about our role to play in these changing times, according to Mr. Ishizuka.

Professor Fumio Ohtake takes up the addictive behavior of smoking, drinking and gambling, and points out that those who are addictive to such goods are quite unhappy but cannot quit even if they wish to do so. In this kind of situation, raising the prices of addictive goods by taxation or strengthening regulations on such goods would likely increase the degree of happiness for everyone, and Japan should seriously think of higher taxes and/or stricter regulations on gambling like pachinko parlors, according to Prof. Ohtake.

Dr. Rene Duignan argues that the quality of Japan's healthcare service has been declining due to low health spending per person, the "iron triangle" of medical professionals, bureaucrats and politicians, as well as weak patient advocacy movement in Japan. To turn around this declining trend in Japan, Dr. Duignan recommends that private sector activity as well as patient advocacy group activity be encouraged so that healthcare could become a highly productive service sector contributing to consumption and GDP growth rather than being a huge fiscal burden.

Professor Kazuhito IKEO argues that the quality of the regulatory environment is widely recognized as one of the most important factors that determine the international competitiveness of financial and capital markets, where it is not easy to reconcile the aspect of the authorities' uncompromising stance against unfair practices with the aspect of their supportive role to facilitate financial business in the market. Japan's regulatory and supervisory agency should improve the quality of its regulations, especial.ly in terms of the aspect of facilitating business, in cooperation with market participants, particularly by their proactive actions, for achieving better regulations, according to Prof. Ikeo.

Mr. Masaiko Ishizuka maintains that Japan remains insular at various levels, even as it falls behind in this age of rapid globalization. As the renowned Maekawa report proposed 20 years ago, Japan should achieve domestic demand enhancement and deregulation by strong political leadership, according to Mr. Ishizuka.

Professor Takatoshi ITO maintains that that regulations on foreign investment in airport facilities, currently advocated by the Ministry of Land, Infrastructure, Transport and Tourism, seem to be against recent trends toward a more open capital market in Japan, and have negative effects on the image of Japan in the world. Such regulations would not address national security issues, where large shareholders, rather than foreign investors, should be regulated. Monopoly-related economic problems could not be handled that way either. We should be careful about regulations associated with possible privatization of Narita Airport, according to Prof. Ito.

Mr. Yutaka HARADA emphasizes that Japan's economic level depends on not just the competitiveness of its export sector, but the productivity of its industry as a whole, in response to the popular argument that Japan's international competitiveness has been declining in recent years. Comparing Japan and the U.S. in terms of industrial productivity, Mr. Harada concludes that the U.S. has a higher productivity and is improving it over time by creating new industries and abandoning old ones, and thus Japan should have courage to do the same to improve its productivity and quality of life in the future.

Professor Toshihiko KINOSHITA asks why there has been virtually no improvement in managing locally hired employees, especially managerial personnel, at Japanese-affiliated companies overseas for more than a couple decades, based on his recent hearings from foreign managers on a training program in Japan. According to Prof. Kinoshita, Japanese business must be more transparent and accountable in decision making, communication, and human resource management both at home and abroad, and more comprehensive training programs for overseas business should be offered to both Japanese and foreign personnel.

Mr. Izumi HARADA argues for establishment of a joint risk management system between Japan and China to deal with various risks, threatening human security and environment in the both countries as well as the rest of the region, in view of recent incidents in the areas of environmental pollution, infectious diseases, food poisoning, etc.

Mr. Masahiko Ishizuka maintains that pessimism is currently prevailing in Japan where many people are concerned that this could be the beginning of a long-term declining trend in Japan compare to China and other Asian countries. Prime Minister Fukuda must present an innovative policy program to continue reforming Japan for growth and prosperity under the pressure of globalization, according to Mr. Ishizuka.

Professor Koichi MERA makes proposals for Japan to overcome the problem of declining presence and influence in the world and revive itself as an independent nation by strengthening its ability to utilize key information and intelligence to its own advantage. Japan should take a first step now, even though it takes some time to see any substantial change in Japan's capabilities in intelligence and security in a desirable direction, according to Professor Mera.