Japanese package fails to impress market

Japan unveiled its latest in a long line of stimulus packages this week and once again the market greeted it with a yawn. More worryingly, Moody's responded by cutting Japan's credit rating from AAA to AA1. And this is the most far-reaching package it has come up with yet - the total amount is 24 trillion yen (£134.3 billion) which covers both spending and tax cuts and, if that doesn't do anything, it's hard to see what on earth will. Some 8.1 trillion will be spent on social infrastructure, 1 trillion on jobs and 0.7 trillion on those gift certificates.

The government expects growth of 0.3 per cent in the next fiscal year which isn't exactly a runaway economy, although some commentators are being a little more optimistic and predicting up to 1 per cent. The Japanese department stores aren't waiting for the hoped-for surge in spending power, though, some of the major stores ran a "no-sales-tax" promotion last week in an effort to drum up some business.

The stores - many of which had objected to the increase of the government's sales tax last year - from 3 per cent to 5 per cent - were pleased with the results of the promotion.

Sales were 40-50 per cent higher during the promotion and frozen-food sales were up 120 per cent. Plenty of food being stored for the winter months, obviously. No mention on how well sake sales did.

Meanwhile, Japan's biggest general store, Daiei, is running another campaign whereby customers receive a voucher for 500 yen every time they spend 10,000 yen and they, too, are reporting higher sales.

It seems that resentment over the original increase in the sales tax still runs high among the Japanese consumer and many people now say that a cut in this tax would be a lot more beneficial than all of the other measures put together. But the government is still not in favour of the idea, despite promises by the opposition that they will ask for a temporary reduction of the tax to zero.

It goes to prove (as if anyone in Ireland needed to be told) that once a tax is slapped on something it's damned difficult to remove it. The rest of Asia continues to be a hotpot of trouble. Riots in the streets of Jakarta don't exactly inspire confidence in Indonesia and Prime Minister Mahathir of Malaysia is under huge pressure given the tone of the Asia-Pacific summit.

Madeleine Albright, the US Secretary of State, met the wife of Anwar Ibrahim, the opponent that Mahathir had imprisoned on a variety of sex and corruption charges which didn't go down too well with the authorities. I liked the snappy little interchange between Ms Albright and the Malaysian Trade Minister, Mrs Rafidah Aziz, though.

Mrs Rafidah commented that if she went to the States it might be interesting to meet Ken Starr. Albright rather cuttingly remarked that Mr Starr wasn't in prison.

Mind you, with Bill's remarkable comeback (yet again), the departure of Newt Gingrich (what was his mother thinking of when she stood at the baptismal font?) and the final settlement of the Paula Jones case, Madeleine Albright might feel that things are improving somewhat on the domestic front. Bill was also able to announce that Iraq had "backed down" on the issues of UN weapons inspections although, with Iraq, who knows? Still, it gave Bill the opportunity to look globally statesmanlike and announce "victory" over Saddam. Again.

Someone who didn't exactly look statesmanlike last week, although I'm sure that wasn't the main thing on his mind, was Peter Young, an ex-fund manager of Morgan Grenfell Asset Management, who arrived at a court hearing dressed as a woman.

Actually, he didn't look too bad (at least in the photo) kitted out in a skirt, high heels and a pink handbag. The photo was in black-and-white so I'm going on the written report on the colour of the handbag.

Young's wife had already told the newspapers that her husband had begun to act strangely following his dismissal. Morgan Grenfell thought he'd been acting strangely before that - the Serious Fraud Office has charged him with creating 13 Luxembourg companies to hide unlisted securities he'd bought for the fund after he'd busted through the limit he was allowed for them. This particular lapse cost Deutsche Bank (the asset management company's ultimate parent) around £400,000 sterling in fines.

I can't help feeling that Mr Young has been watching too many episodes of MASH and took the view that the Corporal Klinger defence might work for him. Although, if memory serves, Klinger never did get discharged from the army for wandering around in women's clothes.

Anyway, think of David Beckham. Nobody is suggesting that he can't play football just because he likes to stroll around with Posh Spice wearing a sarong.

Football is on my mind this week, courtesy of a couple of discreet bruises on my shins following the great NCB mixed-football event at the weekend. This was the second year of what has all the hallmarks (and the teeth-marks, bruises and sprained ankles too) of becoming an annual event. A motley crew of NCB people turned up, and yours truly distinguished herself by both scoring and saving a penalty. (Not at the same time, I hasten to add.) Since only the women on the team were allowed to score, you were in the danger area any time the ball came anywhere near you as determined blokes used "fair shoulders" to block any chance of shooting.

Nevertheless, guile and cunning meant that myself and my striking partner, Ann, amassed enough goals to bring the deciding match to penalties. Nerve-wracking stuff, but we did it. And a special mention must go to our wonderful mid-field player, Dave (Kid) Cowhey for his words of comfort and support. And especially for his technical expertise in telling us to "just kick it".

We then did what is customary after all footballing events and repaired to the bar for much back-slapping and male bonding kind of discussions.

If only Peter Young had played more football when he was at Morgan Grenfell Asset Management, he might not be in the situation he's in now.

Sheila O'Flanagan is an investment funds specialist at NCB Stockbrokers