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Japan's PM Outlines Reform Plan

With the fervor of a preacher out to convert the doubters, Japan's new Prime Minister Keizo Obuchi on Friday laid out his economic recovery plan before a special session of Japan's Parliament summoned to deal with the country's economic woes.

Saying the economy could be cured in as little as two years, Obuchi offered this prescription, according to CBS News Correspondent Barry Petersen:

  • Massive corporate and personal tax cuts of more than $40 billion.
  • Create a system to help ailing banks sinking under bad debts that by some estimates may total $1 trillion.
  • Spend on massive public works as a way of cutting Japan's unemployment rate, now over 4 percent. That may seem low by American standards, but it's twice what it was in Japan just a few years ago.
  • Cut government spending and government payrolls by up to 30 percent.

The speech came while Japan's market was open for its afternoon session. It's reaction was not reassuring. The 225-issue Nikkei Stock Average was ahead for the day at that point, but slipped into the red and never fully recovered. The index fell 47.05 points, or 0.30 percent, to close at 15,829.17 points.

Obuchi said Japan should learn from America and Europe, where recession early in the decade gave way to economic boom.

It was a rare admission that this country - which once looked set to dominate the world's economy in the 21st century - is not even sure its economy can stagger back to health by the millennium.