Japan's 1980s Boom Gone Bust

On the Japanese currency market, the quick fix was unraveling and the yen sliding again, despite last week's massive intervention by both the Japanese and American governments to prop it up.

The stock market did only slightly better. It barely held it's own and closed at just over 15,000.

In Japan's heyday, property in the fashionable Ginza District was the most expensive in Japan. A square-yard of land here would cost $292,000. Now, it's worth about $90,000, a third less and going down in value every day.

The Japanese didn't realize how bad it was until they saw the president of Yamaichi brokerage in tears at its bankruptcy, begging that someone hire some of his workers.

Someone did: America's Merrill Lynch. It bought up and fixed up Yamaichi branches. And these last few days, America's influence has expanded to virtually setting Japanese economic policy.

Deputy Treasury Secretary Lawrence Summers came here insisting Japanese banks clean up bad loans worth as much as a trillion dollars.

The last time an American arrived in Tokyo demanding dramatic change was after World War II. His name was General Douglas Macarthur.

"The American intervention is quite similar to the occupation days of Macarthur—the days after World War II," says Economic Consultant Koichi Hori. "I think this is not a criticism to Americans. This is a criticism to the Japanese government, which cannot decide anything."

Japan's prime minister took America's cue, promising to overhaul the banking system and clear bad loans using a government agency like the one America set-up to bail-out savings and loans in the 1980s.

But he made no firm policy. So Japan tonight remains long of resolutions and short on results.

For CBS News Correspondent Barry Petersen's complete report, click above.

CBS News Correspondent Barry Petersen