By contrast Japan has not been much of a story. The economic recovery was halting with several false starts and only really getting going last year. The stock market, alone among the world's big securities markets, completely failed to join in the global recovery. Only the surge and subsequent tumble of the yen dragged market dealers out of their torpor.
In recent months, however, there has been the rumble of distant thunder. There are two stories round the corner which will unfold over the next 18 months, either of which may well have significant market impact, the first cyclical, the second structural.
The cyclical issue is this: will the plunge in the yen from a peak of 80 to the dollar to a trading range say of 105-130 help secure a sustained, steady recovery similar to that experienced by the US? If it does, Japan will have the breathing space to carry through the complex series of structural and financial reforms it needs to make. It is much easier to make changes in a climate of growth than in one of stagnation.
That leads to the second issue. Are we seeing the early stages of seismic structural change that will make the Japanese economy much more productive in the next century? The analogy would be with the changes in the US and UK economies and which are beginning to happen in Germany.
In market terms, the first could herald the start of the long-awaited recovery in securities prices, while the second would secure any gains. So what is the evidence?
The latest figures from Japan have been distorted by higher sales tax in April. Unsurprisingly, retail sales jumped ahead of the introduction, then fell back afterwards. Equally unsurprisingly, consumer confidence remains low, and the most recent forecasts have been revising growth downwards. Exports are helping - investment and exports are the two buoyant sectors in the economy, but the export sector in Japan is too small to make a big impact on economic growth. We think of Japan as a fearsome exporter but the size of exports proportionate to the economy is the smallest of any of the G7 countries.
So the immediate economic impact of the fall of the yen is much less marked than, say, changes in the value of sterling on the UK. However, there is a second-stage effect, through the profitability of its large companies. In purely accounting terms, foreign income from subsidiaries translates into greater profits if the yen is lower, but there is also a direct and disproportionate boost from physical exports. The experience of seeing the dollar worth less than 100 provoked large companies to take our further layers of cost. It probably does not now matter much whether "lower" is 125 or 110: for most companies exports are very profitable at either level.
If that is right, there is a basis for a recovery in consumer confidence, for it might mean the wave of cost-cutting by large companies is drawing to a close. There is a paradox here. The very success of large companies in cutting costs has been an important factor depressing confidence. This is because the way big firms have cut costs is to squeeze small ones. The pain has been passed down the line. This does not appear in the headlines but friends in Japan point to the very different world in which small and medium-sized firms live compared with that of the brand-name giants.
An essential precondition to a revival of consumer confidence is not general economic growth and a rise in personal incomes (as it would be here) but an increase in the margins of big business.
There is something else. Sustaining the cyclical recovery also requires confidence in structural reform. At the moment Japanese officialdom - not so much the politicians, more the ministries, the research agencies, and elements of big business - has been going through a gigantic exercise in soul-searching. What used to work no longer works. The results have shown up in initiatives like the financial market reforms, the Japanese "big bang". But here, as in its privatisation programme, Japan is simply applying good foreign practice to its own institutions. It is catching up, not pushing ahead.
The real test, and a test relevant to the country's self-confidence, is whether it can indeed push ahead again. Can it? No one can know. What we can see are areas where the outcome will be enormously important. Two examples: demography and creativity.
Demography is enormously important because Japan will in another 15 years become the oldest society on earth. Coping with an ageing population has become a common concern throughout the mature developed world. But it is one thing to try to cope with the problems; quite another to try to turn what might seem to be a competitive disadvantage into an advantage. Older people should in theory be able to bring qualities to an economy which younger people cannot. If the knowledge of its staff has become the main resource of corporations, older workers ought to be a stock of capital, not an unnecessary cost.
It is far too early to claim Japan is discovering answers to this puzzle, but people are starting to ask the questions, and if over the next couple of years interesting ideas start to emerge, these will become building blocks for a revival of confidence.
The other example is the need to foster creativity. Japan has been profoundly concerned at the way in which virtually all the creative software has been written in the US, not Japan. Talk to senior people there and they repeatedly acknowledge that the country has to move from hardware to software, even coining dreadful expressions to try to convey this, like "softnomics". But efforts to foster creativity have been disappointing. The educational system does not encourage it; rather the reverse, hence the saying "the nail that sticks up must be hammered down".
But now the need to encourage creativity, and importantly entrepreneurship, is making Japanese educationalists rethink the way they teach. How to rebalance a national education system is an extremely tough question, as we know in the UK. But at least new thinking is going on, and until a problem is perceived it is impossible to think about fixing it.
There are many other aspects of this soul-searching; much of it will have little impact for decade or more. The key point is that cumulatively the effect will be enormous, for Japan Inc is rethinking what will make it a competitive society in the 21st century. If it can reach convincing answers, that feeds through to confidence now. Suddenly Japan is becoming interesting again.Reuse content