Howzit Howard

Is the Honolulu rail contract to be reconsidered?

The passionate opposition of asphalt huggers to building a rail system in one of the most linear cities in the Republic is nothing compared to the wounds rail supporters inflict on themselves.

Like the young man who kills his parents and then throws himself on the mercy of the court because he's an orphan, rail foes have driven costs up by delaying the project, then complained of rising costs. And they've portrayed rail as a non-solution by applying standards they never apply to highways.

But the monkey wrenches they've hurled are pretty lightweight compared to the spanner that has been thrown into the works by disqualifying one of three bidders in a way that left room for a court appeal.

The possibility of reconsidering the bids of Anseldo Breda, Bombardier and Sumitomo arises mainly because Breda's parent company is having a spot of financial trouble and has considered spinning off Breda as not part of its core business.

Sumitomo objected to the decision to award the contract to Breda but said it would not file a court appeal, contenting itself merely with extending its price offer for 30 days, apparently at the city's request, in case Breda is compelled to drop out.

Bombardier, which was disqualified despite sending in what some would argue was the best bid, did file a court appeal, but today it opened a new channel by sending a letter directly to members of HART, the Honolulu Authority for Rapid Transportation, extending its own price and inviting reconsideration.

Let me start by saying all three companies have plenty of experience with rail transit systems and all three have spent a lot of money studying Honolulu and laying groundwork for doing the system. If any of the three wears a black hat I am unaware of it.

"Bombardier hereby extends the validity of its proposal through October 31, 2011," writes Andrew Robbins, vice president for business development of Bombardier Transportation. "Bombardier will not change the price in this proposal."

The most important part of an eight-page letter comes in the middle of page five, after a civil but passionate argument that it was unfair and bad for residents to disqualify Bombardier over a single sentence that was seen as setting a special condition, without giving the company the opportunity to remove it.

"Bombardier hereby waives the 'condition' in its proposal relating to liability exclusions that the City believes is contained therein," Robbins writes. "The Hawaii Procurement Code clearly permits the withdrawal of any such 'conditions' prior to the City being compelled to disqualify a proposal."

Bombardier echoes Sumitomo is pointing out that most of the funding won't be finalized, so there is time to "get this right."

Bombardier asserts that the true cost of the bids works out to $1.44 billion for Bombardier, $1.63 billion for Breda, and $1.73 billion for Sumitomo.

"When we examined the public file documents shortly after Mayor Carlisle made the award announcement on March 21," Robbins writes, "we were shocked to discover that the disqualification of our proposal swept away what would have been the winning bid."

The disqualification was laid on a single sentence in the Bombardier proposal which Robbins characterizes as "attempting to clarify a poorly drafted provision in the RFP [request for proposals]. The provision involved the City adding language to create an overall cap on liability but then leaving in language that circumvented the cap rendering it meaningless." Robbins says city officials pointed out other areas that could be improved but never mentioned this clause could be viewed as "creating a conditional proposal."

When Bombardier appealed, outside counsel for the city argued that Bombardier conditioned its proposal to gain a price advantage. Robbins denies it and gripes that no evidence was ever presented to back up the theory, which he damns as "clever."

So now what?

The city finds itself in the position of trying to do the best thing for you while defending what it's done already, knowing that whatever it does, or doesn't do, one or more of the bidders will complain, and everything that is said about this, regardless of outcome to the bidders, will provide more grist to the gridlockers who want to kill the project.

Auwe, what a mess.

ATF scandal isn't over yet, nor should it be

Ken Melson, who since 2009 was acting director of ATF - the Bureau of Alcohol, Tobacco, Firearms & Explosives - has been removed from his post and reassigned in the scandal over guns deliberately allowed to be sold to middlemen and resold to violent criminals.

ATF lost track of more than 1,000 guns and three turned up at the scene of a border patrol agent's murder. The project was halted after Brian Terry was killed in an Arizona shootout last year and it has been under investigation ever since. It's not clear why the administration has taken so long to take action against the people who managed the operation, and I think it is reasonable to say the White House deserves criticism for that.

"My one wish would would be that the American people truly understood how dedicated and committed you are," Melson wrote in a letter to ATF employees. I don't know to what extent this reflects any belief by ATF personnel that if we knew more we would get off their backs, but as we shall see, some ATF agents have not been at all pleased with Melson and his management team. The issue appears to have been, not the dedication and commitment of ATF agents, but the intelligence and moral center of their supervisors. If they have a good reason for what appears to be some really dumb moves, we have not heard them after eight months of investigation.

U.S. Attorney for Arizona Dennis Burke has resigned, effective immediately, in connection with the same scandal, following closed-door Congressional testimony about the secret mission called "Operation Fast & Furious," which on Capitol Hill has acquired the new name, "the Gunwalker Scandal." Gunwalking is tracking the resale of weapons rather than seizing them.

"I believe it is an appropriate time for me to step down," Burke wrote, winning any understatement awards being given out this week, given the fact that the operation put weapons in the hands of Mexican gangs and others and have been connected to a dozen violent crimes on U.S. soil alone, not to mention who knows how many in Mexico. Burke is taking the blame for the mission,

Two special agents involved directly in the operation were transferred to Washington - this would ordinarily be considered something of a promotion, but ATF has been at some pains to say these are lateral moves, and said one was transferred to help Congress investigate the debacle. The Justice Department Inspector General is also investigating.

There has been a lot of public sentiment that people should have been fired, not reassigned, and it's possible that the more senior people may have been reassigned in part for not taking harsher action against the people actually managing the operation. But House Government Reform Committee Chairman Darrell Issa, R-Calif., one of the administration's most intractable critics, said he welcomed the transfers. He described the operation as "infamous."

Letting guns into criminal hands might have been a good idea if they could have been definitively tracked and/or set up a trail of proof to get those people. But ATF agents have apparently told Congressional investigators they were repeatedly told not to move in when arms were resold.

This scandal may not involve the fundamental Constitutional questions raised by the Watergate break-in (where White House cabinet members countenanced a break-in of the national headquarters of the opposing political party to look for dirt) or the Iran-Contra scandal (where a sitting president apparently approved the sale of arms to Nicaraguan rebels in violation of a Congressional act barring it, rather than go to court to argue that the law was unconstitional, as may have been the case) but a federal agent died because of it and it didn't even work.

The public has a right to know why officials thought the mission would work, why it didn't, and, beyond that, why it took months to remove the managers responsible from the job.

 

 

A new dawn at Aulani

It sure doesn't take long to drive from Waikiki to Ko Olina at three in the morning. Even at the speed limit. I reported directly there this morning, instead of to the House of Hits on Waiakamilo Drive, to join Ramsay Wharton for the Aulani opening, which featured an oli and some speeches before a guy called out the names of guests one by one, each family applauded like it had won the lottery.

The chairman of Disney's resort division mostly stayed on-message but agreed there were plans for the future if Aulani met expectations. This is the first time Disney has built a resort hotel with no theme park. I would put it another way, though: Hawaii itself is "the theme park." There are a few other places where Disney might make something like this happen. I expect them to.

Dave Rae of the James Campbell Co. put Aulani in the larger context of the Second City, and we agreed that the Kapolei-Ewa area has a commendably diverse economy: Campbell Industrial Park, Ko Olina, recreational businesses, military - it's always going to be a little more insulated from recession than some other places. As we discussed it, a rainbow appeared in the background. Wow.

Hawaii lodging: 70,000 units, no waiting

On Monday, Walt Disney Co. opens the Aulani resort at Ko Olina. A grand opening comes later, but a grand opening isn't an opening at all; it's a contrived event for publicity purposes. Whatever else may be contrived Monday, the resort is really opening and people will start staying there.

Ramsay Wharton and I will both be live from Aulani on "Sunrise" and to prepare for my reports I've been studying the Hawaii Tourism Authority and DBEDT (state Department of Business, Economic Development & Tourism) reports on lodging inventory. Here are my notes.

The state counted 75,048 units in 2010, including hotel rooms, condos, timeshares, B&Bs and any other place where a visitor can stay. As an article in the Sunday edition of the Honolulu Star-Advertiser points out, a suite may be counted as one unit, but if it can be sold as two units by closing and locking a connecting door, it is more often counted as two. So I'll use rounded-off numbers from here on out.

Hawaii lodging inventory has risen by fewer than 2,000 units in five years. Sometimes hundreds or thousands of units may go offline for renovation, then back online as a remodeled hotel or as a hotel converted to condos. In 2010, for example, lower participation in condo hotel rental pools offset the opening of the Trump tower. But it is safe to say 70,000 lodging units are in active inventory, not just available on paper but really ready for you to book today for a stay tomorrow.

State lodging inventory has been around 70,000 or more for the past quarter century, compared to 47,000 units in 1978, the first year I visited Hawaii.

For years we've said half the hotel rooms in the state are on Oahu, but when you count all visitors units Oahu now has 45% of the total. Although Hawaii County has the second largest population to the City and County of Honolulu, it is Maui County which has the second biggest chunk of lodging inventory:

• Oahu 34,000 units.
• Maui 19,000 units.
• Big Island 12,000 units.
• Kauai 9,000 units.
• Molokai 400 units.
• Lanai 350 units.

So how many of these "lodging units" are traditional rooms in traditional hotels? Still most of them, as it turns out, yet perhaps not as large a percentage as you might think:

• Hotel rooms 57%.
• Condotels 19%.
• Timeshares 13%.
• Individual visitor units 9%.
• B&Bs 2%.

There are, with the opening of Aulani, 10,000 timeshare units in the state. (The state counted 9,909 units last year.) It is a substantial part of our lodging industry, though that is fewer than the 15,000 units in condotels and not so much more than the nearly 7,000 individual rental units available across the state.

The importance of timeshares to Hawaii tourism lies in the fact that timeshare owners are more likely to visit during economic downturns because they have in effect already paid for it. Timeshares smooth out our economic cycles to a degree.

Timeshares are more important to some islands than others:

• Oahu 2,400 units, pre-Aulani. Oahu's 26,000 hotel rooms and 5,000 condotel rooms have little competition. All the B&Bs, individual rental units and hostels on the island, taken together, add up to fewer than 1,000 lodging units. Most timeshares are in Waikiki, but there were 800 timeshares on the Leeward coast even before Aulani opened. Hilton edges Marriott as the largest timeshare player on the island.
• Maui 3,300 units. Maui timeshares, mostly on the Lahaina-Kaanapali-Napili-Kapalua coast and in Kihei, compete with thousands of luxury hotel rooms. There almost no timeshares on Molokai/Lanai. Starwood edges Marriott as the biggest timeshare player on Maui, according to the state inventory report.
• Kauai 2,600 units. Kauai has as many timeshare units as hotel rooms, and almost as many individual rentals units. Timeshares are more important to Kauai than any other island. Princeville has the most but they're all over the island. Marriott is the biggest player, though, with about a fifth of the units.
• Big Island 1,600 units, mostly in Kona and Waimea/Kamuela. The Big Island has even more individual rental units than timeshare, not to mention almost 400 bed-and-breakfasts. Hilton alone controls more than a third of Big Island timeshare units.

Timeshares are thought to date back to the 1960s when a ski resort developer in the Alps encouraged people to buy permanent control of a condo for a particular week every year. As a practical matter, modern timeshare owners use a couple of trading exchanges to barter their control of a timeshare in one place to obtain the use of one in another location.

The value of a timeshare goes down sharply after purchase, and it's not for everybody. Many people who want to "live in another place" for a couple weeks rather than staying in a hotel are probably better off renting a condo or home for the vacation, but others like the feeling of making an annual pilgrimmage to a place that is theirs, at least for that period. Fewer than 6% of American households own a timeshare, but that is still perhaps 5 million households.

The American Resort Development Association, whose president has been on "Sunrise" the last couple times he was in Hawaii, counts more than 1,600 U.S. timeshare resorts with more than 150,000 units. There are more than 5,000 timeshare resorts worldwide, so about a third of all of them are in America.

 

 

 

At the Gridiron (2011)

Anya Chang, director of this year's Gridiron satirical revue, complimented her troupe last night and told them to stop considering themselves amateurs, since most of them had been singing and dancing in a professional manner for years, and she scolded them not to ever say they can't dance.

Standing in the back with the other emcees, I reddened, having told people all my life that I can't dance. Watching me cut up on TV you might be surprised to know how up-tight I am about that. It's hard to explain, because I'm comfortable in my own skin, but I'm also more shy than you might guess, and have learned to "fill a room" only in certain ways and on my own unique terms.

Dancing has always been an alien state for me. I learned to gavotte in elementary school - I still remember the nice warmth of the girl's hand, the first glimmer of awakening interest in what Frank Zappa called "the opposite camp." I did the group choreography in a high school production of "Guys & Dolls." Marilyn and I slow-danced at my son Sean's wedding, and Bernadette and I slow-danced at our own. And that's it. I've just told you every dance I've ever done, in 58 wonderful years.

So it is with amazement that I watch what the Gridiron performers do. Standing at a podium and adlibbing or reading words, which is what I do, is nothing. Singing and dancing with a total lack of self-consciousness, is everything. Sometimes I think the main reason I participate in Gridiron is to watch this miracle of life unfold. People I work with, who are serious and calm at work, transform themselves into Broadway stars before my eyes. How do they do that?

I can give an off-the-cuff speech to thousands of people and make them laugh, no notes, no Power Point, no problem. But when someone compliments me on that, what always pops into my head in that instant is what far greater skill that Gridiron singing and dancing requires. I can scarcely speak to these people are rehearsals; I'm not worthy, and I mean that very seriously. I do not regard this as modesty or insecurity; I've got some real skills of my own and I know it; but it is a realistic assessment of how special it is what they do.

Restraint can be a valuable ability, but unrestraint is equally so in its own circumstances. When you need someone who can keep it together, I am your man. But sometimes you need someone who can let go. I appreciate this as only can someone who does not have that natural ability.

Gridiron has two more performances, this afternoon and tonight. It is not merely hilarious. It is a showcase for people who have the most amazing ability to let go and give you their all.

Regular jobs, quasi-jobs and hyper-jobs

The economic progress of the world is often a march toward greater efficiency. And this march toward greater efficiency often involves making someone work harder or finding someone else who will. You control costs by finding a new supplier who charges less, or by reorganizing your work force so the same number of employees can perform more work.

But some enterprises are less engaged in this process than others. Some professions are almost immune to other, while others are more affected than most. We know that U.S. productivity in general has risen in the past couple decades, in part because workers in many professions and trades work more efficiently, or longer hours, than they used to.

It occurs to me in reflecting on this that there are, for purposes of this sort of discussion, three kinds of jobs. There are regular jobs, which have not changed much in our lifetime; there are quasi-jobs, which by their nature cannot involve much in the way of efficiency; and there are hyper-jobs, where pressure for productivity creates a dynamic evolution of duties so you work harder and harder.

An example of a regular job would be a supermarket cashier or a parking enforcement officer. You have set hours, beyond which you are not required to work except for additional pay. You have set duties, which keep you busy, though some periods could be slower than others. There is not a great deal that someone can do to add duties, except by staffing fewer of your colleagues and hoping you will pick the slack.

A quasi-job is one which has long periods of comparative idleness, which it would be difficult to fill with work because of the nature of the job. An extreme example of this is a night watchman. I caution that this does not necessarily mean a lazy job. For example, a police officer may have long periods of idleness, yet must remain alert, which I would argue is in some respects far more difficult than keeping busy for eight hours. The point is not that a quasi-job is an easy or lazy job but merely that it is a job that does not lend itself to modification by the efficiency expert.

A hyper-job is one which may be dynamically modified to add ever-more duties, so that someone working it today does far more than someone working it in the 1970s. The hotel union will tell you that this describes the housekeeping job in a hotel, where work load can be increased not only by cutting the arbitrary job given to do one room, but also by making a room more difficult to clean by adding heavier linens or redecorating with more surfaces that need polishing.

One thing all three kinds of jobs have in common is that everyone thinks he has a hyper-job. Everyone thinks he's overworked, and one resulting problem is that people who are actually overworked sound like everyone else - whining and kvetching. That's too bad, because most workers try to cooperate with employers' need for more productivity or different work duties or goals. Some of your best workers never say how upset they are with work load until they quit for another job.

It is a fundamental aspect of human nature that you understand your own circumstances better than another person's, making it unlikely you will get the sympathy you feel you deserve, or give someone else as much sympathy as they ought to get. And for the employer in search of ever-increasing productivity, it is difficult to know when to stop, since the initial reaction of workers to a reasonable increase in duties is hard to distinguish from their reaction to something unreasonable. After you have met resistance several times, only to have the complainers eventually figure out how to give you what you want, it is tempting to expect this result indefinitely.

Americans put in some many extra hours of work, compared to the past generation, that it is having profound effects on their personal lives. You know someone who professes to love movies, music or the theater, but hasn't been to a film or a concert in months because "I'm just too busy" or "I'm just too tired after I get home from work." (Longer commutes are also a factor, and one you can't blame on your boss, unless it was a loss in real dollar income that forced you to buy a home in Ewa instead of Manoa.) Since working, for most workers, means sitting, there are health consequences.

Productivity also affects product: there is unquestionably an effect on quality, since the most common way of finding time to take on an extra duty is to do other duties with less care than formerly.

The economy is affected in ways that go beyond the increasing efficiency of the employer. If you haven't got any free time any more, you won't just see fewer movies; you'll buy fewer goods for recreational use. In an economy that is 71% consumer spending, that can be as big a deal as the outsourcing of manufacturing jobs (and their paychecks) to other countries.

One of the biggest potential problems is this: the more efficient workers become, the less you can respond to a slump in sales by pushing workers further.

Is there was solution? Not a simple one. The economic imperative to become ever more efficient is very powerful. And I know of no way to make a manager more sensitive to when the limits are reached. In many many cases the manager herself may be overworked and have no time to consider this.

 

Warren Buffett deal backfires for Bank of America

The snarks are in the water, circling Bank of America, after its deal with Warren Buffett's Berkshire Hathaway to get a $5 billion cash infusion.

The snarky comments are directed against the CEO, who made such a big deal about the bank being in terrific shape and not needing cash. Then he makes a deal with Buffett for $5 billion in cash.

One commentator on CNBC said Bank of America agreed to pay 11% for the money and said the CEO was either lying or stupid when he said he didn't need a cash infusion.

Bank of America executives may have thought they would get two things from Warren Buffett:

1. The money.
2. The endorsement of the Oracle of Omaha.

Buffett's endorsement isn't without value. He's been a very smart investor for a very long time, and in addition to that most Americans appreciate his folksy tone and the fact that he lives modestly.

But the snarky commentary is focusing on Bank of America agreeing to a deal on such poor terms even as it claimed with a corporate straight face that it didn't need any more money.

In fairness to the nation's largest bank, how much money it does or doesn't need is not a finite, unchanging amount of dough. It depends on the economy.

Banks have to keep a certain amount of money where it can easily get at it, based on how much money it has lent out and how many loans are "non-performing," which means the borrower isn't keeping up with the payments.

If the economy gets worse, more loans will go bad, and banks will have to keep more money on hand than they do now. If the economy improves, the reverse could happen.

This is why bankers who were attacking Washington by making dire pronouncements about the economy are now says everything is going to be fine. I'm not saying they were telling the truth before and are lying now. In fact, there are several indications that the opposite may be the case. But in one regard it doesn't matter: nobody knows what the economy will do, ever.

Not even Warren Buffett.

The Steve Jobs factor at Apple

Apple cofounder and CEO Steve Jobs, who is two years younger than I am, has been fighting pancreatic cancer for at least seven years and got a liver transplant in 2009. He always said he'd step down as CEO when he couldn't perform the job. Today, he did.

It doesn't necessarily mean he's dying. I don't know if he's dying. He's been pretty successful so far in fighting pancreatic cancer, which is usually not one of the more survivable ones, and if it has popped up somewhere else inside him he's got plenty of options. Anyway, best of luck to him.

So what does this mean for Apple, which lately has been America's Sweetheart, corporately-speaking?

Apple has tended to play up Jobs' role in the company when he's well, and play it down when he's out sick. So let me cover what we're pretty sure we know about that.

There is absolutely no question that Jobs, who actually grew up in Silicon Valley, started his career as an intense micro-manager, who trusted his gut over anyone else's market research. So the real question is to what extent maturity and illness has induced him to be otherwise.

Jobs left Apple for years and cofounded Pixar. When he left, Wall Street was sure Apple would benefit from new leadership that wasn't so meddlesome and mercurial. Instead Apple foundered, and when Jobs sold Pixar and returned to Apple he was hailed as a conquering hero and proceeded to justify it by reshaping the company's direction until it was more successful than ever.

At Pixar, Jobs was not hands-on, leading some to believe he had changed. And there are many who believe that his illness, which affects stamina, may have obliged him to learn to delegate. There seems to be general agreement in Silicon Valley that Jobs has a strong bench.

But it is also true that as recently as a couple years ago, Jobs delayed the iPhone launch by rejecting not one but two prototypes until he got what he wanted. In other words, even older, wiser and sicker, Jobs has bet the ranch on his gut instincts. And it worked.

Jobs will remain as chairman - Apple didn't have a separate chairman before - and his chief operating officer is taking the CEO post. That guy is apparently good at running the company and his team has been especially good at negotiating with contractors and suppliers to keep down the price of Apple's wildly popular products.

So what does happen now? First, Jobs is still working for the company. Second, the new CEO has been executing Jobs' strategy for years and probably had at least some say in it. Wall Street analysts are writing that the company's course is probably set for two or three years at least. After that the deluge, perhaps, but we'll see.

Here is a litmus test for me: watch what happens to the Apple stores. On paper those brick-and-mortar outlets must be a huge cost factor, but for me they are at least as important to Apple's success as the particular features on iPhones and iPads. Most technology consumers are working harder than ever and don't have the time to read thousand-page instruction manuals. The Apple stores are a refuge for these people. Beware anyone who fiddles with that.

Is that a letter of resignation in your pocket or are you happy to see me?

I confess that I have never been a fan of Dick Cheney. In my view, he endangered the lives of American soldiers for a generation to come by publicly defending the torture of prisoners of war. But today I read something new about Cheney that really resonated with me.

To publicize his memoirs, due for release next Tuesday, Cheney is making the rounds of the interview circuit, revealing that through his entire tenure as George Bush's vice president, he kept a signed letter of resignation locked in a safe.

He did it "for a couple of reasons," Cheney said in a taped interview that will air on "Today" on KHNL next week. While there are procedures for handing authority to the vice president if the president becomes incapacitated, "there is no mechanism for getting rid of a vice president who can't function," he told Jamie Gangel. It's a good point, and I might add that it speaks well of Cheney that his heart problems made him take action, not on his own behalf, but for the good of the country.

But's that one reason. Though the story I read did not specify another reason, I cannot help but think that perhaps another situation that might call for such a letter would be a difference of policy so important that the vice president no longer felt he could serve the president. Having a letter ready to go is one reason to discipline oneself not to put it off and lose the moment.

I say this not because I am aware of any major disagreements between Bush and Cheney - at Bush's specific request, Cheney was his consigliere, a la "The Godfather," or, if you prefer, the old guy standing behind the young guy in "Rising Sun" - but in case a situation arose in which the two found themselves totally at odds over something really important. Cheney would not be the first Washington official to feel strongly that when you advise a leader, you do not remain in position if you cannot support your boss's decision 100%.

Why did the letter resonate with me? Because, once upon a time, I carried a letter of resignation in my pocket at all times while at work.

It was decades ago. I was a middle manager at the Mutual Broadcasting System, working for a mercurial boss who behaved differently after lunch than before, and who was notorious for chewing out newscasters and editors for doing something, then, when they stopped, chewing them out for not doing it, because he had forgotten his prior diatribe.

He could dress up even praise as criticism. He promoted me into management by telling me I had no future as an on-air performer. I was devastated until an older colleague informed me that he had made similar pronouncements to Ted Koppel and Charles Osgood. But at about that time I decided there was a good chance an incident would occur in which I would need, for my sanity or my reputation, to be ready to resign on the spot.

So I wrote a simple letter without a date, signed it, sealed it in an envelope, and for several years made sure it was always in an inside pocket of my suit.

While I don't think Vice President Cheney had such negative feelings about President Bush, I wonder if, at any point, even for a moment, he managed to stay calm while something was going on that made him feel better just knowing he had that letter in his safe. I know that having an IFQ letter in my pocket ("I freaking quit," or words to that effect) keep me cool under pressure for a long time.

But it is also true that I have much appreciated having the good fortune to work for many other bosses concerning whom I have not felt the need for such a letter. Good thing, because I no longer wear suits.

 

 

"So what?" Japanese investors after downgrade

We feel your pain, Americans can tell the Japanese, but it doesn't that much, doe it? Moody's Investors Service has cut Japan's sovereign credit ratings one notch to Aa3, fourth from the top.

What this has in common with the S&P cut of America's credit rating to the second from the top: investors are shrugging it off.

What it doesn't have in common: S&P already cut Japan months ago. And: Japan's government finance situation is worse than America's.

The Organization for Economic Cooperation & Development reported - before the March 11 earthquake, tsunami and radiation leaks - that in 2012 Japan could find itself with the world's largest debt-to-GDP ratio, owing more than twice as much as a whole year of Japanese economic production.

It's going to be even worse, since Japan has major rebuilding costs ahead in the quake zone, and probably faces a switch away from nuclear power that will be hugely expensive.

Moody's also whined about frequent government changes, though I'm not sure why, because in Japan the same technocrats tend to pop up again and again in the government, so there is more continuity than might at first be apparent to a casual observer. A credit rating agency is not supposed to be a casual observer, or else why are we listening to them?

What most reports on this development are leaving out is something really important: Japanese citizens loyally buy Japanese bonds in very large amounts no matter how poor the credit rating is or how low the interest rate payoff.