Fifteen years after the collapse of the economic bubble, Japan's longer-term economic prospects look fairly promising. One reason for this is that Japanese banks, particularly big ones, are making good progress in their efforts to clear up their nonperforming loans. Another reason is that manufacturers -- the prime mover behind industrial Japan -- are regaining confidence.

Three banking groups -- Tokyo Mitsubishi, Mitsui Sumitomo and Mizuho -- are doing better than expected. In the first six months of fiscal 2004, April through September, they halved their ratio of bad loans to total lending, thus achieving the government-imposed target half a year ahead of schedule. Now they are in a better position to lend more money to needy clients.

Even more encouraging is the revival of manufacturing. With the economy on the mend, this is a good time to reaffirm the importance of making goods. "To produce well is to live well," as the saying goes. Indeed, Japan's economic prosperity depends on its ability to produce and export quality products. That ability needs to be refined if manufacturing is to continue to serve as the main engine of economic growth.