Repeating what they did is not the point of this note. Reminding you what Japan COULD NOT do is, however.
The Japanese central bankers "welcomed changes, but kept rates unchanged."
I bet they “welcomed change”. The Japanese are in a politicized box of negative real rates and have zero flexibility to do anything else. This is the central problem associated with the market’s respective US Fed and global central banking manias altogether. Market participants do not respect history. Cutting interest rates to zero (or negative) on a real basis ends up putting your country in a sad sad place.
I don't have to have my office across the street from the Yale Economics department to remind you of Economics 101 here. If you are Japan, you are the equivalent of a man standing on the shore waiving aimlessly at capitalist boats as they engage in free market trade warfare. No one is going to come to your shores and invest if you don’t issue them some positive rate of return.
Having a compromised and constrained country balance sheet is the result of this manic behavior. That's why the USA needs to wake up and smell the coffee here and raise interest rates, or else our Titanic lender (China) is going to be leaving Americas shores for good.
The current Bush administration clearly doesn’t get this. They are too busy reacting to economic scenarios that they didn’t proactively prepare for. Obama is going to have to bring in Volcker and get all hands on the USS Capitalism’s deck again.