Friday, October 31, 2008
The Market this morning for the most part shrugs, not disappointed...but not heartened either.
In the midafternoon today, the Bank of Japan, eager to reclaim the title of "That Silly Place Where They Make All Kinds Of Really Dumb But Also Really Timid Moves" pulled out all the stops, lashed itself to the mast, took a chill pill...and announced it will be lowering the target rate of interest by 0.2%
The Market throws an absolute tantrum in response, knocking another 5.01% off the Nikkei 225.
So much for Economic Recovery Plan B. Got killed it did by Plan C.
What was Plan D again?
Of course, Adam Richards' post raises the possibility that the BOJ's risible action today is in response to the government's vile attempts (via leaks to the Nihon Keizai Shimbun) to bullrush the central bank into cutting rates.
A pretty costly way (what's the difference between 0.2% and a full quarter point?) to assert one's authority and autonomy, if that is what the nation's central bankers wanted to do.
Thursday, October 30, 2008
The New Kōmeitō, the Liberal Democratic Party's partner in the ruling coalition, really, really, really wants to get the House of Representatives election over and done with by the end of this year. It wants to concentrate on pounding the pavement in support of its candidates in the April municipal elections.
Open warfare is also likely to break out between the ruling-coalition controlled House of Representatives and the opposition-coalition controlled House of Councillors. The LDP sort of promised to hold an early election in return for the Democratic Party of Japan's cooperation on legislation and appointments -- cooperation that was seen in the recent smooth votes on the candidacy of Yamaguchi Hirohide for Deputy Governor of the Bank of Japan.
The LDP's reneging on its sort of promise has already led to a breakdown in Diet comity.
Should Francisco and the LDP find a way to overcome these two decidedly not small roadblocks to their planning, the next House of Representatives election could be put off until September 2009. Granted, a few months of not-entirely-humiliating governance by thePM and his Cabinet will likely do little to convince the public that it should forget the LDP's fifty years of semi-tyrannical misrule and malfeasance--especially with the country several months into a once-in-a-lifetime (and Japanese citizens tend to live a long, long time) economic slowdown.
However, with the LDP staring defeat in the face, why not delay the election?
Which brings up the question of Ozawa Ichirō's mortality.
I know I am probably I am reading too much into posture, facial features and skin tone...but dang it sure looks as though he is getting through each day on willpower alone. I have not seen a shot of him flashing his wide, black bass grin in an age. What I have seen at the press conferences from DPJ headquarters is an old man, his hair artificially dark, sitting upright in his chair, dispensing insults from behind a mask of incongruous imbecility.
His "colds" requiring hospitalization are growing more frequently and his absences more prolonged--or at least that is the impression.
If the election is indeed put off until September next year, will Ozawa be around to contest it? His lifelong quest has been to overturn and smash the LDP. Is he destined to get the hook just at the moment his dream is about to become a reality?
Later - A noted scholar of Japanese politics and history has very gently pointed out to me the absurdity of asserting that the overturning and smashing of the LDP has been Ozawa's lifelong quest. Prior to 1993, Ozawa was a made man of the Tanaka Faction.
How does "half-a-lifelong quest" grab you?
Even later - Sorry about the readability of the original post. Syntactical errors abounded.
Wednesday, October 29, 2008
The PM, hemming and hawing, replied:
"Well, when Nisshin first put out the product, I thought is was fantastically cheap. Back then it was several tens of yen. I guess it's about 400 yen now, what?"
Oh, purportedly-out-of-touch-with-the-less-well-off Francisco! Not exactly right. Not even close.
The average cost is 170 yen.
But don't make things worse by saying anything like...
"That's all it is? Guess it's because I have not bought them myself for a while."
Oh, Francisco! Way to lose the convenience store-lurking, living-surrounded-by-empty-plastic-food-containers Akihabara otaku vote!
And oh yes, it is The Asahi Shimbun that is making a big deal out of this exchange.
Monday, October 27, 2008
All of a sudden last week he began to say all kinds of weirdly responsible and self-aware kinds of stuff:
Aso indicates reluctance to call election anytime soonAccording to this morning's Nihon Keizai Shimbun, Prime Minister Asō yesterday decided to drop the pretense of being undecided. By sometime this morning his emissaries will have informed the other parties the Prime Minister will not be dissolving the Diet in the immediate future.
BEIJING, Oct. 26 — Prime Minister Taro Aso indicated his reluctance Saturday to dissolve the House of Representatives for an election anytime soon, saying he wants to prioritize his "international role" during the global financial crisis.
"Rather than the domestic political situation...I again feel the greater need to prioritize my international role," Aso, who took office in late September, told a press conference held after he attended the Asia-Europe Meeting summit in Beijing.
But he added that there are "still various issues" he has to consider and that he cannot say anything more because he has not "yet decided at this stage whether I will or will not" call an election.
Aso made the remarks amid speculation that he is close to deciding when to dissolve the lower house, as he is expected to finish compiling a further economic stimulus package by the end of the month in the wake of the global financial crisis.
During the press conference, he also stressed the need for countries to take coordinated actions to deal with the problem and that Japan needs economic-boosting measures.
"Japan has been depending on exports in the past eight years and this part will apparently see sluggish growth, so from this perspective there is the need to expand domestic demand," the 68-year-old prime minister said...
How will the DPJ and the Kōmeitō react, after they have had a few days to think? Both have cooperated with the LDP these last two months, muddying their political messages in the process, under the tacit agreement that an election would be called for November.
My guess is that the two parties will not react with insouciance.
As for the structural reformists - it looks like they blew their best chance at a return to political relevance. The Prime Minister seems to be embarking on an improbable quest of recasting the LDP as the party of intelligent fiscal spending and effective crisis response -- the heart of the structural reformist way.
Saturday, October 25, 2008
Somehow in the first 28 nights of his prime ministership he managed to hit 32 eateries and drinking establishments. He actually went straight home 4 times during that span, was overseas on three days and dined one night with the Emperor and Empress, making the record of his remaining nights all the more remarkable.
That most of the establishments he visited were restaurants and bars in top-flight hotels has struck more than a few folks as living a little too large as the world comes down about everyone's ears.
I thought about the Prime Minister and his night wanderings to the Okura and Imperial Palace Hotels the other night as I stared over the 580 yen limited-time-only mabo dofu/mabo nasu special at Matsuya.
I was not depressed at how I little could afford with my paltry dinner budget. Indeed, I felt quite the opposite: I was deeply embarrassed at how much food I was served for such a small amount of money. A steaming cup of miso, rice, salad and a piquant meat, tofu and eggplant dish...for a pittance.
Looking through the rising steam at the pair of graveyard shift cooks, a man and a woman in cheap but clean yellow uniforms and matching baseball caps, I felt shame at the thought of how little Matsuya must be paying them, when a full meal costs less than 600 yen.
What made it all the harder, of course, were the names on their uniforms. That night it was Min and En. Other nights it is Sui and O. Other still it is Lin and Chō.
What a strange fate cross a broad sea in the name of study and end up working the midnight shifts it the kitchens of cheap chain restaurants.
It is not just the brigades of young Chinese, though they cook our food, wait our tables, and pick out lettuce and vegetables. It is the Brazilians who have come to work in the assembly lines of the auto parts factories and at the makers of electronic devices—and who are being laid off in droves because of the current economic slowdown.
It is the two men I found shoveling out the muck in an artificial stream in Kawasaki, with their names in a Turkic script scribbled upon their helmets.
To come across the deserts, the Gobi and the Taklamakan, to be ditch diggers in the land of the Rising Sun...
Come with me, Francisco. Leave your fancy high-class establishments, your cronies and powerbrokers, your bars where they hand chip ice blocks into spheres for the ultimate "on the rocks" experience. Put the wads of 10,000s away; you won't be needing them.
Come to supermarket still open at 11:00 p.m. where not even the manager is Japanese.
Come to the family restaurant where a Japanese client is surrounded by a team of Indian engineers, all explaining, in perfect Japanese, the product they have developed.
Walk with me though the leaning streets of Shimbashi or Ikebukuro, where you'll be accosted by sibilant Fujianese with tangy offers of comfort.
You seem to have the time, Francisco. Let us walk together; sit at a counter together. Come and see all the people I know. They have come here from far away, labor in silence for a meager reward, lack a vote and are without the protection of law or clan.
They are counting on you to not screw up.
Maybe, just maybe, you could have the country say thank you to them, for their contribution. A simple verbal "thank you for coming here" would be a start.
Just for one day.
Friday, October 24, 2008
Among the issues near and dear to those of a bureaucratic mindset is the need to provide for the special medical care and needs of the baby boom generation. This army of tens of millions, currently in their early sixties and late fities, is expected to become a mass of frail and sickly septuaginarians. According to the panicked headlines of today's newspapers (none more panicked than The Asahi Shimbun, unsurprisingly) the fiscal typhoon of the costs of caring for these elderly boomers will reach maximum strength in the year 2025.
This distant crisis has provoked fearful, knee-shaking and lip-trembling about the need to raise the consumption tax.
Prime Minister Asō Tarō, somehow not losing his cool over a crisis seventeen years down the road has suggested that maybe, just maybe, the economic problems his government should be confronting are the ongoing international credit crisis and the incipient global collapse in demand. Sure the government will need to raise the consumption tax to pay for the needs of the boomers, he admits, "but not before the economy has improved, say in three years time."
This, even if inadvertent, is brilliant.
In the absence of a stimulus package, either tax cuts or fiscal outlays or both, the near-term threat, even an idle one, of a significant consumption tax rise is a great kick in the pants. With big numbers being batted about (a doubling of the tax to 10% seems the consensus) consumers and businesses have a strong incentive to get purchases done now rather than wait for better prices later.
Which I find somewhat amusing.
Rational expectations, the behaviors that thwart or subvert the policy intents of changes in the rules, are being harnessed to produce a positive policy outcome -- the autonomous support of consumption in the midst of a downturn -- despite the best efforts of individuals to evade paying for a social good.
Thursday, October 23, 2008
(a) beyond stupid, or
(b) the economics editor of The Asahi Shimbun?
If you answered (a) -- then you must be the economics editor of The Asahi Shimbun.
If you answered (b) -- then you must be beyond stupid.
Honestly, where do they find these people?
EDITORIAL: Funding tax cutsSo what are you arguing about then?
The Asahi Shimbun
Let's assume that a passbook for a bank account with 1 million yen unexpectedly turns up in the drawer of a family that is 50 million yen in debt. Using that money to pay back part of the debt would lower the balance owed, slightly easing the repayment burden. That would be the smart thing to do. But rising commodity prices have cut into the family's daily budget, making it tough to make ends meet. Why not forego the payback plan and use the cash to shore up living expenses?
This analogy helps explain the plan by the government and the ruling coalition parties to use money stashed in special accounts to fund envisioned fixed-amount tax cuts totaling 2 trillion yen.
Corresponding to the passbook's deposit, the reserve for interest rate fluctuations is set aside in the special account for the government's fiscal investment and loan program, under which it lends money to its affiliated institutions and independent administrative agencies. This reserve was created to cover possible losses the government may suffer from "negative spread." This occurs when interest rates at which the government lends money drop below those at which it procures the funds by issuing fiscal investment and loan bonds.
Surpluses in reserves and other deposits held in such special accounts are nicknamed maizokin (buried treasures).
The basic requirement, dictated by law, is that surpluses in these reserves and deposits cannot be used in the annual budget. Instead, they must be used to redeem government bonds. In the example of family finances, this makes perfect sense.
Yet, the ruling parties aim to use these surpluses to finance tax cuts and other fiscal stimulus measures. The thinking, apparently, is that this approach will not harm the nation's fiscal health because it does not rely on floating new government bonds. The main opposition Minshuto (Democratic Party of Japan) also plans to use maizokin.
There is no difference, however, between diverting maizokin for tax cuts and issuing additional government bonds. Both options just delay the inevitable payback scenario. Whether the government appropriates surplus reserves to lower taxes or issues new bonds for tax cuts after it redeems its national bonds with the surplus reserves, the government debt balance remains the same...
If there is "no difference" between "diverting maizokin for tax cuts and issuing additional government bonds" then why are you opposing of the diversion of the maizokin? As long as some kind of stimulus not adding to the debt burden is enacted, does it matter how that stimulus is packaged?
But it gets worse:
Given the current global financial crisis, effective measures are needed now. But thinly spread, across-the-board tax reductions would be sheer folly, especially when there is no telling how far the economy will sink.Soooo...because the situation could become serious, we should not rush into doing something minor, immediate and simple...because...it might distract us from enacting more dramatic economic proposals at a later date?
All right, bring us home.
This nation's fiscal standing is the worst among leading industrialized nations. The government needs to implement economic stimulus measures while rebuilding the social security system so that it covers future generations. Japan must go down this steep and narrow path.O.K. here there is a a translation problem. The final sentence in the original is:
With a Lower House election expected soon, Prime Minister Taro Aso repeatedly says that it will take three years for the nation's economy to recover. Flying in the face of such math, however, is his apparent intent to forge ahead without resolving the critical issue of how to bankroll that revival.
「日本経済は全治３年」。総選挙を控えて、麻生首相は得意の言い方を使いながら、財源問題を避けて通ろうとしているように見える。Pulling out the parenthetical from the last sentence and stapling it to the thought it is completing, the passage reads:
"The healing of the Japanese economy will take three years," is the special phrase Prime Minister Asō has been using. Faced with a general election, it looks as though he is trying to take a detour around the national's problematic fiscal situation.O.K., that takes care the Sirius Cybernetics* problem with the passage. As for the fundamental design flaws, what the heck does the author think the "steep and narrow path" could be?
There must be fiscal stimulus, yes.
The social welfare system has to be reformed so that it will still be standing in the future, yes.
However, in the face of a severe downturn in the global economy and Japan's economy there is no "steep and narrow path" or any path at all that tackles both problems at once.
The whole point is that someone has to make a difficult and unpleasant choice -- between fiscal stimulus now, with the concurrent worsening of the nation's longterm debt position, or retrenchment, with an inevitable shrinkage of the economy and the possible reemergence of deflation.
Both are bad. Leaders in government have to decide which is worse.
I remember during the mid 1990s when Nobel laureate Paul Krugman was arguing almost daily that the Japanese government should embark on unreasonable and untried monetary measures, anything to prevent the emergence of deflation and continued shrinkage of the economy. The Asahi Shimbun opposed Krugman's ideas on the grounds that quantitative easing, as it would later be called, would make individuals and companies less eager to leave their money in sitting in savings accounts -- because it would not be worth their while.
Really? Because that was the point of Krugman's suggestion!
[Eventually the Bank of Japan under Governor Fukui Toshihiko did what Krugman had suggested. Six years too late...]
Writer of economics editorials for The Asahi Shimbun: the world's easiest job.
* That is to say, where "the fundamental design flaws are completely hidden by the superficial design flaws." For more information on the Sirius Cybernetics Corporation and its products, visit the Wikipedia entry.
Just a reminder of how quickly a decade slips by...and how far we have managed to crawl in the interim.
Wednesday, October 22, 2008
After having been so accommodating for weeks (oh, how they rubbed their hands together, thinking all the while they were accelerating the arrival of the electoral day of reckoning for the Liberal Democratic Party!) the Democrats are waking up to the possibility that they have been played for fools.
Until yesterday, the Democrats believed that Prime Minister Asō Tarō was ready to dissolve the Diet in the waning days of this month, setting up a long-delayed electoral clash on November 30. The only impediments to the implementation of his plan were the financial crisis, the supplementary budget bill and the bill renewing the dispatch of Self Defense Forces ships to the Indian Ocean.
While there was little the Democrats could do to calm the markets, they did resolve to not delay the passage of the two pieces of legislation. The Democrats indeed joined the government in supporting the supplementary budget bill, while resisting the obvious temptation to use delaying tactics to slow down the passage of the renewal legislation.
The eager facilitation of the passage of item after item on the government's agenda prompted the cartoonist at the Sankei Shimbun to caricature a smiling Democratic Party leader Ozawa Ichirō as taking part in a bucket brigade, receiving bucket of legislation after bucket of legislation from Prime Minister Asō -- and passing each on to a shocked Hatoyama Yukio, the DPJ's #2 leader -- an image of Ozawa literally "carrying the water" for the ruling coalition.
Prime Minister Asō Tarō holding a packed suitcase with the words "ASEM Conference : Will Attend" stamped on it and an invitation card with the words "Emergency Financial Summit Called by President Bush" with "Will Attend" circled on it. Behind him are further cards, "APEC Summit : Will Attend/Won't Attend" and "Dissolve House of Representatives Early : Will\Won't." On these neither choice has been circled.
Courtesy: Yomiuri Shimbun, October 22, 2008, morning edition.
The Democratic response: "What the...?"
That it was impossible for both sides to prevail an early election should have set off alarm bells. Someone should have bleated out that while, yes, it was possible that the ruling parties had no clue they were running pell-mell into the Valley of Electoral Death, that it was also possible that the ruling parties were lying when they went through their repertoire of nods, sighs, blinks and winks at every mention of the need for an election in November.
Not that an election cannot happen in November. It just would be damned peculiar for the LDP do be doing the DPJ any favors...and doing the Democrats a favor was at the base of the "quick passage of legislation in return for an early election" quid pro quo.
Tuesday, October 21, 2008
Asō Tarō on the income effects of deregulation:
As for the dispute over income inequality (kakusa), another commonly used phrase is "the black hat side of deregulation." The examples that are trotted out are, due to deregulation, the low levels of income among taxi drivers and the shrinkage in the number of permanent employees and the increase in the number of part-timers sent by personnel services companies.Source:
Now it certain that due to deregulation the number of taxis has increased and the fare prices have dropped. It is said the median incomes of taxi drivers have fallen.
Even if that is the case, let us think about this, not just concentrating on the negative side. If deregulation had never happened, it is probably true that the incomes of the then existing taxi drivers would not have fallen. However, on the other hand, that would have probably meant that those in their middle age or in their senior years who had been laid off due to the economic slump would not have found new work opportunities as drivers. Would those persons have simply become "the unemployed" or been forced to take jobs featuring even worse conditions? Probably. In those cases, income would have been a) zero, or b) less than what they are making now.
If there had not been a deregulation of the taxi industry, it is possible that income disparity (shotoku kakusa) would be even greater than it is now. Because the number of part-timers and those sent by personnel services companies has increased, the income disparity between those individuals and permanent employees has grown larger. If, however, the number of unemployed has decreased by that fraction (of persons employed part-time or via personnel services contracts), it is not possible that for society as a whole, inequality has decreased?
Tarō Asō, Totetsu Mo Nai Nihon (Tokyo: Shinchosha, 2007), pp. 95-6.
Competition is good. More flexible labor markets are good. Unfortunately not increasing the ability of individuals to put greater competition to their own advantage -- i.e., without giving taxi drivers the right to work harder and more, if they want to -- the only result is lower median incomes. The bias, given the fixed hours of operation, would be toward more aggressive driving (to chase down more fares) and poorer point-to-point service (in favor of rides beginning and ending on major thoroughfares) -- both of which are net social negatives.
The above passage from your book also places your little visit to the Takadanobaba Station roundabout in a whole new light.
Monday, October 20, 2008
首相、スーパーを視察 物価高を実感?Note the question mark, present in the title of the original article. When not even the staid Nihon Keizai Shimbun can conceal its contempt for a pathetic display of cluelessness and false bonhommie, you have a problem.
Prime Minister inspects a supermarket, gets a realistic sense of rising prices?
In order to gets a "skin-sense" of rising goods prices, Prime Minister Asō Tarō on the 19th inspected a supermarket in the Nishi Waseda area of Tokyo. He walked around the flour products, the dairy products and the fresh fish sections. "It seems that recently there were shortages of butter, there is butter today!" he shouted to the store owner. After the inspection tour, the PM told reporters, "(Prices rise) on different products in different ways. I confirmed that you should not rely just on what the newspapers say."
After that, the prime minister went to the area in front of Takadanobaba Station, where he asked the drivers of the taxis waiting in the rotary area in front of the station about their sense of the state of the economy and about their incomes. When the taxi drivers made an appeal regarding the difficulties they were having in making a living, the prime minister gave them encouragement, telling them to "Hang in there!"
Or a whole host of problems.
First of all Francisco, the butter crisis abated four months ago. We have had plenty of butter on the shelves for months.
Second, you spent all of 20 minutes comparison shopping in the supermarket. What the hell could you have "confirmed" (kakunin shita) in such a short span of time -- if you even knew what it was you were looking for?
Third, as anyone has ever asked knows, the government undermined the incomes of taxi drivers through an incomplete liberalization, allowing a flood of new entrants into the market while keeping onerous limits on the number of hours and days a taxi driver can work during a month. The taxi drivers in front of Takadanobaba Station were beseeching you because government was screwing up their lives, making it hard to earn a living.
Francisco, you and your party could actually do something to eliminate the regulations that condemn the drivers to marginal existences...and you blew them off.
Verily, from out of what pit of sordid ignorance and uncaring did the PM draw out that "ganbatte"? How did he find the gall to say it, the tanned princeling?
After the "Incident in Nishi Waseda" small indeed will be my surprise should this begin to gather a fearsome momentum.
Sunday, October 19, 2008
Arrrrgh...the amounts in these cases are piddling. In the prefectural case, the auditors found 5 million dollars' (USD) worth of fraud and abuse in 12 prefectures over a five year span...ridiculous! As for the direct selling scandal, current Minister of State for Consumer Affairs Noda Seiko once in 1996 asked questions in the Diet about the government's treatment of direct sales organizations... and Amway Japan bought a total of 8 tickets (total costs 160,000 yen) to her fundraisers...in between 2002 and April 2008.
No one is his or her right mind believes that anyone is going to jail or has been made ill or has died as a result of these ethics violations, if they can even been so classified.
Get back to the tough issues, boys and girls!
Friday, October 17, 2008
Here is how the Nihon Keizai Shimbun, the nation's primary business daily, reported the thinking of those inside the circles closest to Prime Minister on whether or not he will dissolve the Diet and call for an election to be held on November 30:
首相の最大の懸案は解散までに、金融市場が安定するかどうか。市場の混乱が続くなかで選挙戦に突入しても、有権者の理解を得られない可能性が大きいためだ。Gee, ya think so? The ruling coalition would not win the understanding of the voters for going out on the campaign trail in the middle of a crisis? You think that that is a distinct possibility? And that abandoning ship when the country needs leadership would look bad?
"The Prime Minister's greatest concern is whether or not the financial system will be stabilized by the time of the Diet dissolution. The reason for his worry: if the country is thrust into an electoral campaign in the middle of continuing market turmoil, there could be a significant possibility that the understanding of the voters would not be gained."
[I am holding out the hope that the Nikkei's dry reporting of this idiotic line of reasoning might reflect an ironic editorial stance. Amaterasu, I hope it does.]
Anyway, if there were ever a time to say:
"Japanese citizens deserve better leaders, ones whose actions are rooted in economic and strategic reality, not in trying to game the electoral system. We are in a crisis, with a need for commitment and sacrifice from our politicians, and all Prime Minister Asō Tarō and Democratic Party of Japan leader Ozawa Ichirō can think about is when they are going to hold 'their' election."
...it would be now.
Thursday, October 16, 2008
Now let us see if Nagatachō can curb its outbreaks of irrational exuberance and instead work to keep the Japanese economy from imploding.
...and yet, for some reason, I have not seen a single Yosano Kaoru poster near where I work. Tons of Kaieda Banri posters, nada for the incumbent.
Or is Kaieda running for something else?
Wednesday, October 15, 2008
Aso May Call Japan Lower House Elections Nov. 30, Yomiuri Says
By Sachiko Sakamaki -- Oct. 15 -- Japan's Prime Minister Taro Aso may dissolve the lower house by the end of this month and call elections on Nov. 30, the Yomiuri newspaper reported, citing ruling-party officials it didn't name.
Aso's administration may announce a second economic- stimulus package Oct. 24 and then dissolve the lower house before it's approved, the newspaper said, citing the same Liberal Democratic Party officials...
A breathtakingly tight minuet will be necessary if the Liberal Democratic Part and the Democratic Party of Japan are to wipe up all pressing Diet business before the end of October.
The 2+2 schedule for Diet consideration of the Indian Ocean dispatch bill worked out between the ruling coalition and the DPJ has been thrown into disarray by the DPJ's allies in the House of Councillors. The ruling coalition and the DPJ agreed that there would be only two days of debate of the legislation in the House of Representatives, followed by a vote passing the bill. The bill would then go to the House of Councillors where, after two day's debate, it would be rejected. The House of Representatives would then override the decision of the upper house using the ruling coalition's two-thirds supermajority.
The DPJ's allies in the House of Councillors, the Socialists and the New People's Party, are now pressing the DPJ to renege on the deal. The Socialists and NPP want to have several days of debate on the bill in the House of Councillors, seemingly in order to prove to the populace that the Socialists and New People's Party do indeed still hold seats in the Diet.
The new schedule for the Maritime Self Defense Forces dispatch bill has the House of Representatives voting for its passage on October 21. The Prime Minister climbs aboard his plane on October
Of course, the opposition would really like to drill Prime Minister Asō in a party leader Question Time session at least once before he dissolves the Diet. The timing of this event is still under discussion, with the DPJ having already refused the government's first offer of the morning of October 22, just prior to Francisco's boarding his plane for Latin America.
Of course there is also the matter of trying to pass a second supplementary budget. We are, after all, ostensibly in the midst of a major financial crisis sure to impact the broader economy. Passage of a second supplementary budget, supplying the economy with a jolt of fiscal stimulus, could lessen the coming pain.
Now some clever puppies in the political world have suggested that the Prime Minister submit a second supplementary budget bill on October 24. The bill would then die a pathetic, patriotic death, giving up the ghost as a result of the Diet dissolution.
I fail to see what message the ruling coalition hopes to be sending by first submitting a second supplementary budget, then killing it. "There is nothing we will not do in a bid to cling to power!" perhaps?
Of course, all this calendar calethenics smells strongly of wishful thinking. Politicians probably got ahead of themselves yesterday, reading way too much into yesterday's record 1171 point rise of the Nikkei Average. The big jump upward probably made everyone a little giddy, dreaming of a mild and brief economic slowdown.
Today's middling result (the Nikkei Average rose less than 1%) may already be rearranging the fall Diet calendar. Should the recovery in stock prices stall out before reaching the 11,000 level --- 2000 points below the Nikkei's closes in August -- the ruling coalition will lack a "happy story" to wrap around their rather poor electoral prospects. The lack of a compelling narrative on the economic front would leave the LDP only one reason to hold an early contest: to get the election out of the way before Asō's popularity ratings sink like the ratings of his two most recent predecessors.
Is it just me, or is the thought of members of the LDP and the DPJ coordinating their work schedules in order to free up dates for a snap election not peculiar? A loss in the next election will likely lead to the implosion of the losing side. For political rivals with no common enemy and possibly no future post-election, such amiable collaboration is...bizarre.
Tuesday, October 14, 2008
「同盟国の国民の命を助ける協力をしない裏切り行為」Oh, please. Give me and all those who dwell in this fair land a break.
"This is the treachery of a country that will not collaborate in saving the lives of the citizens of an allied nation."*
You want to talk about betrayal? How about...
- The government of Japan's (Dare we say the LDP's? Or was it only Kanemaru Shin and the Takeshita Faction's doing?) complete burial of the testimony of Kim Hyon Hui, the North Korean operative who blew up KAL 858 in 1987 -- that she had learned how to impersonate a Japanese from a Japanese woman abductee?
- The Socialist Party's passing on to the government of the DPRK the postcard Ishioka Tōru and Arimoto Keiko had managed to have sent to Japan via a Polish contact - which was immediately followed, according to official DPRK accounts, by their and their child's accidental deaths from carbon monoxide poisoning?
- The families, having been on the left, allying themselves with some of the ugliest elements of Japan's recidivist right, thereby facilitating the fantabulists's use of the rachi mondai to cower more moderate politicians and bureaucrats in order achieve their ultimate goal of political power?
- The Japanese government's failure to round up and hold on to the members of the Red Army Faction, some of whom later participated in the DPRK kidnappings in Europe?
- The reliance on compromised Republican neo-con lobbyists to be the advocates of the abductees in Washington, leading to the abductee issue becoming one facet of those lobbyists' own beligerent politico-military agenda?
Listen to the barking of the fools if you want to. Their spectacular record of achievement speaks for itself.
Just do not single out the United States for your ire.
Those trying to nail down some part, any part of the North Korean nuclear program are the only real protectors Japan has.
* Sankei Shimbun source article here.
Sunday, October 12, 2008
This is not surprising: it is in the interest of these analysts to talk up Japanese companies.
It is true that the companies, the banks included, of Japan are worth far more than their current stock market valuations. It is also true that the punishment of Japan's markets is not due to a lack of confidence in Japan but to international investors cashing out their Japan positions in order to fill holes in their balance sheets.
However, it is not entirely true to say that Japan was a totally innocent bystander.
A tremendous amount has been written about the venal and possible criminal mispricing of risk by finance companies and accountancies, particularly in terms of the value of bundled U.S. housing mortgages. Overcompensation of executives, under-regulation of derivatives markets, deregulation of the financial system have all been given their day of excoriation.
However, greedy financiers, corruptible politicians and deviously creative ways of leveraging up have always been with us. What made the catastrophe possible were
1) the complete collapses of the mechanisms pricing risk and
2) the failure of the main government indicators of economic stress
in what was believed to be the best regulated and most transparent economy in the world.
And what made those breakdowns possible was...the misallocation of Asian savings.
In particular, the decisions of the governments of Japan, then China, to pay any price to keep the dollar value of their currencies low, this in order to preserve the price competitiveness of their export industries.
The building up of Himalayas of currency reserves, much of them recycled into U.S. Treasuries, Agencies and U.S. coporate bonds, made it possible for Americans to buy East Asian-produced goods with money borrowed from East Asia (vendor financing, ooooh baaaaddd) without suffering a fall in the value of the dollar.
The low dollar cost of Chinese-produced goods kept U.S. measures of inflation low, confusing the U.S. Federal Reserve and lulling it into complacency about ferocious asset inflation. The lack of a rise in interest rates made assets, particularly houses, seem far more affordable than they really were. Persons who had no business lending offered loans to persons who had no business borrowing.
Catastrophe ensued. Surprised?
Now the Bank of Japan got out of the active currency intervention game in the year 2004, making it possible for Japan to claim something of an innocent bystander status in this crisis.
Nevertheless it was the East Asian export model pioneered by Japan which made this particular crisis possible. China and up-and-comers like India have been keeping their own currencies artificially low, emulating the conditions that fostered the so-called Japanese miracle economy -- which in retrospect looks a heck of a lot less miraculous now that South Korea, Taiwan, ASEAN economies and China have pushed their economies into the upper reaches of the league tables at even faster rates. American consumption may have been the locomotive of world economic growth this past decade -- but it was the East Asian economies that shoveled way too much fuel underneath the locomotive's boiler...
...which, given the severity of the screwup on the other side of the Pacific, means that the nations of Asia including Japan will need a whole new growth-and-sustained-prosperity model.
Saturday, October 11, 2008
Rather than letting things be, Ozawa has, in the midst of a global economic meltdown, come out roaring against Asō Tarō's plans for a second and possibly a third supplementary budget. In Ozawa's view, what Japan really needs is a dissolution of the Diet and a House of Representatives election.
It's fall festival time, and Prime Minister Asō Tarō and members of his economic team are carrying a mikoshi topped with a yen symbol down the street. The rowdy group shouts out, "Let's lift the up the economy!" "We're throwing money all around!" and the like**. Democratic Party of Japan leader Ozawa Ichirō, dressed as a policeman, blows his whistle and tells the revelers, "Your presence is a pain in the butt for everyone, so hurry up and break it up (dissolve the Diet)."
From the Tokyo Shimbun morning edition of 11 October 2008.
Given the vertiginous collapse of world stock markets; the freezing up of the credit markets in Europe and North America; rising unemployment; a soaring yen and a rapidly deceleration U.S. economy -- all threats to the livelihoods of millions of Japanese -- Ozawa's calling for an election NOW seems, on the surface, remarkably inappropriate (I could also say, "Narcissistic, pig-headed and moronic." There, I said it). The government's planning to use taxpayer yen in order to guard against a severe downturn's becoming a depression is entire apt, intelligent and forward-thinking. If implementing these emergency fiscal measure delays the election -- well, them's the breaks.
Now Ozawa might be coming out against smart policy making due to having truly been incapacitated this week. Perhaps the hospital in which he was staying had no televisions or newspapers, leaving him unaware at the market chaos transpiring across the globe.
The DPJ as a party is certainly not unaware of the severity of the crisis. A special team has been monitoring the situation for weeks, developing policy proposals in response to the deteriorating conditions. DPJ crisis team members have indeed criticized the government for a lack of imagination about how serious the crisis could be, for an an inadequate sense of urgency about the crisis and for an insufficient pace of shoveling money out the door and into the financial system.
Unless someone in the party leadership tells Ozawa to stop stamping his feet and demanding his fall election, the DPJ could face a serious loss of face and momentum. The LDP is always opining that the DPJ is untested, unsound and cannot be trusted to rule the country. Ozawa's post-hospitalization tantrum, seemingly oblivious to a truly dangerous level of world instability, could lead a lot of worried voters to say, "Hey, perhaps the LDP guys are right. The DPJ leaders really cannot be trusted with the serious stuff."
* I really need to buckle down and write a full post on this subject
** The cartoon has a lot of ancillary wordplay based on the general term matsuri sawagi, literally "festival noise" but meaning "boisterous merrymaking." The Chinese character sei ("politics, government") has been given the spurious pronunciation of matsuri ("festival"). Spurious pronunciations are a frequent feature of the work of this particular cartoonist.
Thursday, October 09, 2008
Ken Rogoff of Harvard cheekily characterised the vast Chinese accumulation of US Treasury bonds over the past five years as the biggest foreign assistance programme in history. Why not push that further? Here is a thought experiment.Wait a minute, let me try to reason this one out.
The Chinese government could offer to lend up to $500bn (from its current stock of $1,800bn) to the US government for the rescue of its financial sector. Its previous assistance – buying US bonds – was indirect and unconditional. Not so in this case.
China's loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China.
Subramanian is suggesting that China ("Japan" might just as well be inserted here) bailout the U.S. financial sector with its currency reserves...which are held, for the most part, in the form of U.S. Treasuries and Agencies (i.e., bonds issued by Fannie Mae and Freddie Mac)...meaning that China will be lending to the U.S government...the I.O.U.s of the money it has already lent the U.S. government.
I do not understand this at all.
I guess this is why I am not smart enough to write Op-Eds for the Financial Times.
And how about those Japanese basic science researchers? Talk about Totetsumo nai Nihon! Yeah! Let's Science!*
Things to consider other than the evaporation of trillions of yen's worth of wealth yesterday.
If you can.
* Not the official motto of the Science & Technology Bureau of the Ministry of Education, Science, Technology, Sports and Culture. All rights reserved.
Wednesday, October 08, 2008
According to the Sankei Shimbun, the Democratic Party has agreed to a perfunctory two days of debate of the legislation in the House of Representatives, followed by a vote on the bill. Even with only the votes of the Liberal Democratic Party, the bill will pass the House of Representatives. The bill will then be transferred to the House of Councillors where, after an equally brief and perfunctory debate, it will be soundly rejected by the DPJ-led majority. The bill will be then sent back to the House of Representatives where the LDP and the New Komeitō must engineer a "two thirds of the Diet members present" Article 59 override passage of the bill (see Okumura Jun on a tricky way they might do this), renewing the dispatch for another year.
A smooth maneuver, really.
Truncating debate on the bill will force the New Komeitō into make a public statement in this Diet session -- i.e. prior to an election -- clarifying its stance on the dispatch of the Self Defense Forces in support of U.S.-led international security operations. This will expose the chasm separating the New Komeitō's leadership from the party rank-and-file on this issue.
Truncating debate will also allow the DPJ to reiterate its stated position on the dispatch -- that the party opposes the dispatch as a matter of principle, the details of which have already been argued ad nauseum in previous Diet sessions. Speedy action in both Houses will inoculate the DPJ against the accusation that it is tieing up the business of government to the detriment of the common weal.
Hmmm. That's not just good politics; that's great politics.
An accelerated passage of the supplementary budget bill and an abbreviated House of Representatives discussion of the bill renewing the Indian Ocean dispatch may not be much in the grand scheme of things. The spirit of comity also may not last. However, the members of the Diet and the leaders of the major parties do deserve a small round of applause.
Tuesday, October 07, 2008
Francisco has been given a huge gift in political terms -- a worldwide economic crisis -- and seems likely to wring from it the paltriest of victories. Terrible economic data on the homefront and hideous news from bourses around the world last week ("Events, dear boy, events.") seem to have turned the tide, making it suicidal for the DPJ to try to delay the stimulus package. If Harris is right, and there is no reason he should not be, the House of Councillors will pass the bill before the end of next week.
This should be great news for the PM: the DPJ will have buckled on one of the points he outlined in his provocative policy speech to the Diet.
However, by voting for the stimulus package, the DPJ wins. The size of the package is insufficient to put a dent with the crisis at hand, much less put the brakes on the coming severe economic slide. The markets continue to tumble. In real economic terms, the stimulus package will likely be a damp squib.
Nevertheless , by showing that it is capable of putting aside its concerns in an emergency situation and vote for something while holding its nose, the DPJ has shown maturity...which the LDP has been arguing the DPJ lacks.
Point for the DPJ.
Of course, it remains to be seen how the public will react to Ozawa Ichirō's sudden and untimely hospitalization for a cold, demonstrating in the most physical way his chronic inability to "hold his nose and vote for something,"* a characteristic Koike Yuriko, a former ally, has recently highlighted as a character flaw rendering Ozawa unfit for higher office.
The passage of the stimulus bill opens the door for Francisco to revive the government's Plan A - "Pass the stimulus package and run for the exits." The PM may well dissolve the Diet, as few of the other possible issues his government could tackle would have much impact at the ballot box.
Nevertheless, it would be unlikely for him to pull the trigger now - for two reasons. One, because the chaotic world economic situation demands that Japan have a government right now (actually a non-trivial point, in electoral terms) and two, because the LDP's election strategy has been to portray the DPJ as being unreasonable and thus unworthy.
Which will would be somewhat difficult in the immediate aftermath of the DPJ's having shown itself willing to compromise and go back on its word for the public good.
* Yes, I know Ozawa is in the House of Representatives. Cut me some slack here.
Which makes his latest thought piece a bit...problematic. If you were to ask "the Japanese" what they would want "the United States" to be using as the template for their relationships with the countries of East Asia, "Mongolia" would probably not be the first word to issue forth from Japanese lips.
As for Dr. Auslin's lament that realism as a guide for policy is insufficiently active and inspired -- I think that the last eight years of U.S. foreign policy, when realism has been given short shrift, have ended up being a bit too active and inspired, if you know what I mean.
On the other side of the globe -- and on quite a different level of thinking -- Tanaka Hitoshi has almost singlehandedly redeemed the AJISS Commentary newsletter with an essay outling a simple set of low-cost actions the next U.S. admnistration could undertake to improve its standing in East Asia and the world. Of course, the "Abductees Now; Abductees Forever" crowd will find Tanaka's prescriptions lacking in pointless vindictiveness and ineffective grandstanding -- but you just cannot please everybody, you know.
Friday, October 03, 2008
Save the Fat CatsConsider once again how Kristof starts off his last sentence: "Whether in Japan or the U.S..."
In the early 1990s, when I was a foreign correspondent looking for my next overseas posting with The Times, I sought Japan. At the time, Tokyo was an awe-inspiring economic titan, arguably the most important capital outside the United States.
Then Japanese politicians, acting with the same sublime ineptitude that our own House of Representatives displayed this week, ignored a growing banking crisis and dithered on a bailout. And so I watched from Tokyo as a mighty economy melted like an iceberg in the Caribbean.
Japan's failure to respond urgently and decisively to its banking mess caused the country to endure a "lost decade" of economic stagnation. If America wants to avoid Japan's decline, the House should follow the Senate's lead and approve the bailout — immediately.
Just as in the U.S. today, most Japanese did not initially appreciate how devastating a banking crisis could be to the real economy. Banks and real estate tycoons in Japan were corrupt, profligate and unsympathetic figures, and no one wanted to help them. On corporate expense accounts, they sipped coffee with gold leaf and patronized "no-panties shabu-shabu" restaurants, which had mirrored floors and miniskirted waitresses.
In short, the businessmen involved were jerks. And, whether in Japan or the U.S., it's challenging for politicians to frame a bailout with the slogan: Save the jerks!
Such a tiny revolution in thinking, pattering in on little cat's feet!
One of the assumptions (prejudices) of U.S. officials and academics over the last 15 years has been that the U.S. would never have a crisis commensurate with The Bubble. America's capital markets were too deep and sophisticated; America's market players had a superior ability to quantify and disperse risk; America's officials were pro-active, not reacitive and specialists, not bungling generalists; its corporations not governed by a "expand at all costs" mentality but by a concern for steady returns to shareholders.
In sum that for the United States, because of its superior qualities, the outcome would be different.
However on Tuesday, when the confidence of the markets hung in the balance, when the piecemeal efforts to shore up the weakest links in the chain of financial counterparties failed, when the Treasury and the leadership of Congress begged the members of Congress to bail out the venal and the corrupt, the representatives of the people could not bring themselves to vote for a bailout...
...just as the democratically elected Representatives in the Diet could not bring themselves to do. Instead, the members of the Diet voted for stimulus packages--a policy mimicked by the U.S. Congress and the U.S. Administration this spring.
Ah, the years of half-measures and lies in Nagata-chō, years of supplementary budget after supplementary budget...
In the U.S. the Administration and the Congress tried to kick start the economy through a tax rebate. In Japan, the LDP-led governments colluded with their supporters in the construction industry to issue government bonds to build infrastructure in places nobody lived and nobody worked.
Perhaps American commentators on Japan...or Euro-American economic policy commentators will finally cut the people, politicians and bureaucrats of Japan a little slack. It seems it was not The Japanese System that failed to deal with the immovable mountain of rotten bank assets hobbling the Japanese economy down from 1990 to 2001. It was The System, period - the System where politicians and bureaucrats buy so deeply into no-holds-barred Wild East mentality they cannot extricate themselves from it; where where the social value of limitless aggrandizement is unquestioned; and where the resentment the average citizen feels for the conspicuous and titanic waste of public resources is belittled by a super-remunerated elite of "those who know what is good for the country, thank you very much."
Will the "Japan failed because Japan is different" crowd roll up their tents and get out of town? I hope so. Because it sure looks like the new mantra should be, "America failed because AMERICA IS JUST THE SAME."
Perhaps soon some other clever chap or sheila will find the connection between Japan's history and Bush Administration's preventive war in Iraq...because the Bush Administration seems to got and still gets the who-is-who in the "Japan has lessons for the U.S. invasion and occupation of Iraq" metaphorical all mixed up...
...but that might just too provocative a thought...for now.
Wednesday, October 01, 2008
A Yoimuri Weekly headline posted up in the subway that is probably warming the cockles of Okumura Jun's heart:
"Hosuto, spirichauaru, Koizumi-san -- 'Hito wa naze damasareru no ka?'"Yep, the celebrated Mr. K is on a level with the beautiful boys pouring drinks for ladies of means and those who claim communication links with the spirit world.
"Male escorts, spiritualists, Mr. Koizumi -- 'Why do people let themselves be fooled?'"
Looks like Yomiuri Newspaper Group Chairman Watanabe Tsuneo (here -- no wait, sorry, here) will never forgive former Prime Minister Koizumi Jun'ichirō, Mr. K having told the nefarious and notorious meddler to keep his pointed beak out of politics and just report the news.