TOKYO MEDIA REACTION - GLOBAL MARKET REACTION

UNCLAS TOKYO 003821 SIPDIS SIPDIS STATE FOR I/RF, PA/PR/FPC/W, IIP/G/EA, EAP/PD, R/MR, EAP/J, EAP/P, PM; USTR FOR PUBLIC AFFAIRS OFFICE; TREASURY FOR OASIA/IMI; SECDEF FOR OASD/PA; CP BUTLER OKINAWA FOR AREA FIELD OFFICE; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR E.O. 12958: N/A TAGS: OIIP KMDR KPAO JA SUBJECT: TOKYO MEDIA REACTION - GLOBAL MARKET REACTION TO U.S. SUBPRIME LENDING CRISIS AND SIX-PARTY TALKS - TOKYO LEAD STORIES: Front-page stories in Monday morning papers included press remarks by Prime Minister Abe, who said he will reshuffle his cabinet on August 27. ¶1. "Can U.S. Rate Cut Stop Worldwide Stock Plunge?" The top-circulation, moderate Yomiuri editorialized (8/19): "In the wake of the downturn in global stock markets, the Federal Reserve cut the discount rate on its loans to banks, and this has helped the U.S. bourses rebound. Optimism, however, is still not warranted.... The Fed apparently wanted to send a message to financial markets that the emergency measure was only meant to deal with the turbulence in the stock market and should not be taken as a turnaround on monetary policy. The credit crunch associated with the subprime mess, however, is extremely serious, and some observers are predicting that the effects of the rate cut will be limited. There is also concern that the U.S. economy may be slowing down. If market anxieties are rekindled, the stock and foreign exchange markets could become volatile, and the Fed might be pressured into making additional rate cuts." ¶2. "Complete Denuclearization Must Be Pursued" The conservative Sankei wrote (8/19): "A six-party working- group meeting on denuclearization of the Korean Peninsula was held in Shenyang, China. While North Korea expressed its readiness to implement 'at the appropriate time' measures in the 'next phase' of denuclearization, Pyongyang did not reach any agreement with the other five parties, all of whom are calling for complete denuclearization.... It is imperative to have North Korea declare all of its nuclear facilities, programs, and materials, including its alleged highly enriched uranium program, and those programs must be swiftly dismantled. To that end, it is critical that the other five parties further enhance their unity in order to press the DPRK to respond sincerely to their call to denuclearize." DONOVAN