ôGreed, for a lack of a better word for it, is good,ö said Gordon Gecko, the fictional 1980s financier of Oliver StoneÆs film Wall Street. With his suspenders and slicked-back hair, Gecko, played by Michael Douglas, became the epitome of Wall Street buccaneering.

Yuji Kage, managing director at JapanÆs $110 billion public-sector Pension Funds Association (PFA), made a similar point last week at a get-together of Asian and North American public-fund executives.

The investment head of the PFA is an unlikely successor to Gordon Gecko, particularly in such a time of crisis and general revulsion against Wall Street mores, but Kage û who made his remarks partly tongue in cheek û has a novel take on the corporate raiderÆs philosophy.

Calling pessimism in Japan the ôenemyö in times of economic strife, Kage says the governmentÆs role should be ôto encourage optimism and encourage greedö. He says greed is of course the cause of the credit crisis. ôBut human greed is also the engine of capitalism.ö

He says regulators should have checked this animal spirit three years ago û as former Federal Reserve chairman Alan Greenspan has belatedly admitted û but now is the time to encourage it, to stimulate investing, lending and market activity, lest Japan and the world slide into a ælost decadeÆ such as Japan experienced after its bubble economy imploded in 1989.

ôThis is half a joke,ö Kage says of his call for boosting greed, ôbut it is also half true.ö

Given his assumption that the economic crisis will continue for several years, governments will need to play cheerleader for a while. Global financial losses have so far amounted to $1.4 trillion and counting, according to data Kage cites from the International Monetary Fund. The US housing market will need time to recover, and banks will need time to resume lending activities.

For defined-benefit (DB) pension plans, the crisis threatens their very survival û even for public ones, Kage says. Even before the crisis, DB plans in the United States and Britain were under tremendous pressure, because of demographics and changes to regulations and accounting rules. Kage calls this autumnÆs market collapse ôanother nail in the coffinö.

The essence of a DB plan is to keep a financial promise to members even as assumptions û about demographics, markets, employment û change. ôThe cold truth is that this is æpromise impossibleÆ,ö Kage warns.

He expects, in the Japanese case, for the government, plan sponsors and employee groups to renegotiate benefits, as they did at the beginning of the decade, a painful experience that saw some plans slash promised benefits by as much as one-third. ôBut getting two-thirds is better than getting nothing,ö Kage notes.

Western markets have different rules regarding when and how plan members are vested, as well as a legal culture that regards promises as set in stone. Kage acknowledges different countries will reach a conclusion tailored to their own conditions û but that in many cases in the West, this implies that more corporate DB plans will simply shut down or companies go bankrupt, rather than appeal to workers to accept cuts.

ôThis flexible treatment should be on the agenda in Asia,ö he says, however.

Kage notes that corporate DB plans can clearly measure the risk to their sustenance. ItÆs less clear for public pension funds, which donÆt share the corporate sense of bankruptcy û but cannot endure indefinite losses, and will face political pressure to be shut down.