Japan Inc. Sliding In Slo-mo

Hiroshi Kimura sets down his shoes just off the newspaper he is sitting on, in the same way that everyone here removes their footwear when they enter a home. To one side, he places his dinner: a small container of prune juice, a package of yogurt, and a little jar of dried seaweed.

Mr. Kimura will spend tonight under an elevated highway in central Tokyo, alongside men sleeping in boxes or blankets. A thin man with bushy, graying hair, Kimura sits cross-legged and rubs his toes as he tells why he is living on the street and working as a day laborer, when 18 months ago he lived under his own roof and had a job in an office.

He blames greed and capitalism. He blames the president of his company, who took off with the cash, and the gangsters who are after Kimura to pay off his employer's debts. "I don't blame the politicians," he adds. They're just a part of the system and "the fault of those who elected them."

Welcome to recession in Japan. Unemployment is up, along with bankruptcies, suicides, and the number of people whose home is a cardboard box.

The economy is shrinking, as is the value of the currency. And hardly anyone is thinking about changing the government.

To many outside Japan, this situation is just short of catastrophic. If the economy continues to weaken, the analysis goes, it will first hurt Asia's other, even-worse-off economies and then the rest of the world. European, Asian, and American officials and economists are demanding that Tokyo get more serious about fixing its financial industry, whose bad loans are at the core of the country's economic weakness.

On Wednesday, the US and Japanese central banks jointly spent an estimated $4 billion to buy yen, driving up the value of the currency. And at meetings scheduled in Tokyo this weekend, US Deputy Treasury Secretary Lawrence Summers joins officials of the Group of Eight nations, the International Monetary Fund, the World Bank, and the Asian Development Bank to hear Japan's plans for cleaning up bad bank loans and other reform.

The catch is that for most people here, all the gloomy economic news doesn't add up to a full-blown crisis. Despite years of stagnation, things are still OK for the vast majority of the population. This recession is generating concern, but little anger. For Prime Minister Ryutaro Hashimoto and his ruling Liberal Democratic Party, the impetus is to tinker, not tear down and build anew.

"It's a slow decline people are experiencing rather than a sudden transformation for the worse," says Gavan McCormack, a professor of Japanese history at the Australian National University in Canberra. "The perception of crisis will develop slowly ... as the world points its finger and blames Japan for the problems in the region."

If the LDP does well in elections next month, the party will again control both houses of parliament, which may allow for some bold action. But until then, the party's political fortunes will not be served by making tough decisions. The LDP has been in charge for all but a few of the past 43 years: Major reform means admitting major mistakes.

Professor McCormack also argues that the fuzzy distribution of responsibility in Japan makes decisionmaking difficult. The government's resulting inability to manage crises is a constant theme for self-criticism here - at least among the few people who still care about politics. As Kimura suggests, the political antennas of many Japanese are tuned somewhere between resignation and apathy.

'PEOPLE in Indonesia got together and expressed their anger," observes Natsuko Nakajima as she plods back to her dormitory after interviewing for a job she doesn't hold much hope of getting. "In Japan, there's a sort of individualism. People talk about the problems in the economy, they think about them, but they don't go outside and protest against the government." Ms. Nakajima is a senior at Aoyama Gakuin, a private university in Tokyo whose graduates were once assured of employment.

Nakajima says she's "very sensitive" to official policy, since it bears directly on her prospects for employment. But sensitivity is unlikely to yield action. "They wouldn't listen to me, anyway," she concludes - not even if she and a hundred thousand of her friends were to take to the streets.

To be sure, the economic downturn has been unbearable for some. Last year 472 people killed themselves in their offices, about 2 percent of the total number of suicides. The number of at-work suicides has doubled from the 1980s, when the economy was booming.

Still, "we don't have an extreme sense of crisis," says construction worker Haruo Yamaguchi, a steel-frame specialist at a 13-story building going up in the capital. "We're simply worried if the situation is going to get worse or get better."

Yes, he elaborates, wages are down, especially for unskilled workers. And the buildings aren't as grand as they were a decade ago. But he doesn't know anyone who has lost his or her job - unemployment in Japan recently hit a high of 4.1 percent - and says he is fairly certain his company will line up a new building for him to work on when he finishes this one.

As for politics, says Mr. Yamaguchi's foreman, Kenzo Abe, "We think [the LDP] should lead. The opposition is so spineless - they can't make changes."

Standing next to the frozen carcass of a nearly 700-pound tuna - worth more than $10,000 - a fish trader named Katsuhiro Iiyama says he does feel some sense of crisis about the economy. But he doesn't know anyone who's been laid off nor have any of his acquaintances at Tokyo's huge Tsukiji fish market gone bankrupt.

Surrounded by glistening shellfish and plastic-covered packages of sea urchin roe, fishmonger Hiroshi Utagawa does know some bankrupt business owners and he says the fault is the LDP's. At the same time, he can't decide to whom he'll switch his allegiance in the upcoming elections. "I need to sleep on that for a few days," Mr. Utagawa says.

The LDP seems to be picking up on these low-key attitudes. A few days ago, a newly formed group of businesspeople - normally the sort of organization politicians don't ignore before an election - convened a panel to discuss politics and the economy. Several opposition leaders attended, but the LDP invitees didn't show up. On the other hand, only 600 seats were filled in a hall that holds 2,000.