Propping Up the World : Asians look to the Fed boss for a lift, but they are still searching for their own god of prosperity.(federal chairman, Alan Greenspan)(Brief Article)

If Alan Greenspan is the guru of good times in the United States, he is even more revered in Asia. Never has that been more clear than in the hours after Greenspan announced his surprise rate cut. Suddenly the looming threat of a new Asian economic crisis seemed to vanish. Stock markets shot up throughout the region. A Hong Kong paper splashed the Fed chairman's professorial mug across the front page, under the headline greenspan sends in the bulls. A Seoul paper said America's top banker had "let in the sun" on South Korea's frozen economy. Asian investors seem to believe that "Greenspan shows up--ahh, all your problems are going away. God has appeared," says Morgan Stanley economist Andy Xie. "It's like going to a karaoke bar for a few hours. You forget your problems."

Then you sober up. Before the day was out, Asian economists were pointing out that the threat of an American recession is not gone, and help is unlikely to come from closer quarters. After the crisis of '97, Asia hoped its largest economy would pull the region into recovery like "a locomotive." But Japan remained stuck in place, and Japanese investors sat out the party last week, again. Tokyo fell while other Asian markets were rising, giving added support to a scary new line of argument, articulated most forcefully in a November study by the Fed's own branch in Minneapolis: that Japan's "lost decade" may last indefinitely. The nation's normal growth rate may be slowing to an anemic pace, the Fed concluded, due to weak productivity. That is bad news for all of Japan's neighbors, from Taiwan to Thailand. Without an engine in Asia, they are more vulnerable than ever to consumer confidence and spending whims in the West.

The reaction in Tokyo was glum even by Japan's gloomy standards. The financial daily Nihon Keizai Shinbun wrote that the market fall had exposed "the weakness of the Japanese economy." A decade of growing burdens, including a mountain of corporate debts, made it impossible for Japanese investors to respond enthusiastically to Greenspan's "New Year's gift," said the paper. The same malaise has stymied repeated attempts to jump-start the economy with public spending, says Tokyo economist Yasuharu Ishizawa. "The government has repeatedly given blood transfusions without removing the cancer. Now they have no blood left and the cancer has spread all over the body."

Official Japan also reacted warily. Finance Minister Kiichi Miyazawa warned that Greenspan was moved by predictions that the U.S. economy would "go a little downward," and his deputy ...