<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By William Pesek</p> <p>You can feel the sense of panic rising in Japan in perfect sync with the yen.</p> <p>Exporters were bellyaching when the yen was 120 to the dollar a few years back. Their griping grew when it hit 100. Sleep patterns were disrupted when it breached 90. Now, with the yen around 76 to the dollar, Corporate Japan is entering into crisis mode. Or so we're told.</p> <p>The government is responding with plans to spend an extra 4 trillion yen ($52 billion) to help cope with a surging exchange rate and spur job creation, according to documents obtained by Bloomberg News. It's the wrong thing to do at the very worst time.</p> <p>It's disheartening that after all these years of yen strength, executives still look to the government. In December 2002, then U.S. Treasury Secretary Paul O'Neill said good chief executives don't live and die on exchange rates. His point was that companies should use the opportunity to become more competitive and increase productivity.</p> <p>Germans don’t obsess about exchange rates; they adapt and make money. Yet Japan is in crisis, we are told with growing drama. Growth is doomed, deflation is accelerating, and all hell will break loose if the yen keeps rising.</p> <p>Japan should embrace the good that can come with a strong currency. Capital flows brought on by rising exchange rates boost equities and help keep bond yields low, giving companies more latitude to raise funds. Greater purchasing power would help Japan harness growth overseas.</p> <p>And make no mistake about it, the odds favor the yen being even stronger a year from now. Former Japanese Finance Ministry official Eisuke Sakakibara, who's known as "Mr. Yen," said this week that the yen may breach 100 per euro and strengthen to the low 70s versus the dollar.</p> <p>Japan may intervene to weaken the yen, but it will only work if coordinated with other nations. Unless U.S. Treasury Secretary Timothy Geithner is on board, intervention will fail. So might this latest effort to lavish 4 trillion yen on Corporate Japan. Talk about throwing good money after bad.</p> <p>(William Pesek is a Bloomberg View columnist.)</p> </body> </html>