By Henry Hilton

Commentary Apr. 01, 2009 - 04:00PM JST ( 8 )

Today’s special in Shibuya has the punters lining up round the block. No salaryman can duck a bargain right now and at 330 yen, the lunchtime ramen is well worth the long wait.

The silent, patient queue in an affluent downtown area of Tokyo chimes in exactly with the news that Japan’s exports have almost halved in the past 12 months. The figures are extraordinarily bad and there are surely more nasties in the pipeline. Unemployment is certain to rise further, wage levels may well dip and nearly everyone is running for cover. It is going to take rather more than Prime Minister Taro Aso’s one-off handout of 12,000 yen to each and every resident to crank up the economy.

The nation is clearly in deep trouble. Industry is cutting its labor force with a vengeance. Discount stores are piling on extra discounts plus tokens to persuade hesitant consumers to buy the cameras and playstations that are piling up on the shelves. Jobs of any description are hard to come by with those employees in the public sector enjoying a security that others can only envy.

If the predictions are anywhere near correct, it looks as if Japan and Britain are locked in competition for the wooden spoon award for economic delinquency. Either Tokyo or London is going to end up with the weakest economy by the end of the year and both are guaranteed to have to find massive funds for huge government deficits. Other countries may face smaller tax hikes in the future but the overall picture is equally grim—2009 is sure to be the first postwar year where the world economy goes into reverse.

This week’s London G-20 economic summit is likely to be little more than an opportunity for discussion on where we might head next. President Barack Obama has made this pretty clear already by stating that the United States sees the G-20 meeting as merely “a forum for a new kind of global economic cooperation.” Muted stuff, indeed, that is far from a ringing endorsement of Prime Minister Gordon Brown’s earlier dreams of a great leap forward by one and all. The London summit will probably be strong on words but the prospect of a concerted action plan to get everyone marching in step is hardly on the table. The best we can probably hope for will be to avoid the unholy mess of the previous London economic summit of the summer of 1933 that ended in failure after FDR torpedoed the whole business.

The Aso coalition cabinet deserves praise, though, for its willingness to underwrite new funds to the International Monetary Fund. The Japanese public may not like the idea of its government bailing out others in poorer regions but this commitment underlines Tokyo’s awareness of the current global realities. The message is that, like it or not, we are all in the same boat and that unless international trade can be force fed to grow again, the consequences are dire.

Unfortunately, all the talk of discouraging protectionism, stabilizing key currencies, insisting on tougher supervision of the banking sector and measures to bash tax havens may well end up as little more than talk. The difficulty of policy coordination among so many diverse economies presents almost insurmountable hurdles, unless governments were to accept real limits on their national sovereignty.

President Obama speaks of both working through today’s mess and the establishment of “a new era of economic engagement to prevent a crisis like this from ever happening again.” Fine words. Yet the already known divisions among the London summiteers make digging a way out of the present hole more than a job and a half for now—fixing the future will just have to wait.

The Aso government needs no reminding of the anxieties of the lunchtime salarymen. Yet it, too, has little choice but to wait in line for things to improve, knowing that engineering growth in the international economy is going to be a tricky, long-term task.

It looks like we are in for a lot more bad news. Japan should be preparing itself for the prospect of yet another lost decade.