One of the few glimmers of hope for Japan, as far as Katz is concerned, is the increased foreign presence in Japan.
"The lack of true globalization is a big part of Japan's problem," he said.
The increase in foreign direct investment, which was at record levels in 1999 and again last year (although it dropped 18.7 percent in the six months to September), is vital to Japan's recovery, Katz believes.
"If it continues at that rate, Japan will be at global level in seven years," he said.
Katz also regards the increase in the amount of Japanese savings entrusted to foreign fund managers as significant. It is estimated that by 2003, more than 20 percent of public pension funds and 17 percent of private pensions will be in the hands of foreign managers compared to just one percent in 1987.
"It's a tremendous pressure for corporate reform," said Katz. "Financial reform in Japan means the capital markets prevail against the banks."
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