LONDON -- "What is the difference between Japan and Argentina?" Answer: "five years." That was the riddle, or sick joke, said by the Financial Times in London to be circulating in Tokyo over the recent holidays. My immediate reaction was that the idea behind the question was silly and showed ignorance of both Argentina and Japan. The two countries and their economies were so different that a valid comparison could not be made. But then I began to ask whether my reasons for rejecting the idea out of hand were wholly valid.
Japan has huge reserves, largely in dollars, and there are no signs of these being whittled down. Exports, especially following the recent depreciation of the yen, are likely to remain strong. But even mountains can be eroded. Japanese exports can only grow if there is adequate overseas demand, and another major world economic depression cannot be totally discounted.
The depreciation of the yen could also set off competitive devaluations by other Asian countries. However, assuming that there are no major disasters ahead, the Japanese balance of payments position looks healthy.