Friday, March 31, 2006

They cannot even die properly

Maehara Seiji is resigning as head of the Democratic Party of Japan, taking responsibility for the Nagata email forgery scandal. This marks the second resignation of the Democratic Party's leader in six months, coming on the heels of Okada Katsuya's resignation in the aftermath of the DPJ's disastrous performance in the September elections.

DPJ secretary-general Hatoyama Yukio will be joining Maehara in a well-deserved act of virtual seppuku.

Ozawa Ichiro and Kan Naoto, who only last year looked like yesterday's men, now emerge as credible candidates for the post of DPJ party leader.

In terms of reform, Ozawa and Kan are more likely to cooperate with whatever policy line Prime Minister Koizumi Jun'ichiro adopts during his last months in office. Maehara, 20 years Koizumi's junior, wasted his energies and eventually blew himself up trying to establish himself as Mr. No to everything the Koizumi Cabinet proposed. In so doing he scrambled the grand bargain Koizumi proposed last year--bringing DPJ reformists into the government as a Fifth Column against the princelings jostling to succeed Koizumi in the fall.

The redecapitation of the DPJ is likely to a positive development for the economic expansion--and by extension, the strength of the yen.

The Democratic Party's official line on fiscal policy under Okada Tatsuya was contractionary--suicidally so. Under Maehara it was only slightly less self-flagelatory.

Kan or Ozawa--or almost anyone else with even a smidgeon of a reputation in the DP--would be far less likely to obstruct or cast doubt onthe economic main line of Koizumi confidant Takenaka Heizo and Koizumi ally Yosano Kaoru.

DPJ support or at least non-interference could still be crucial in the establishment of a grand alliance with the Bank of Japan and Prime Minister's Residence against the LDP rural budget hogs on one side and the consumption tax fantabulists in the Ministry of Finance on the other.

Under the alliance agreement, the BOJ would agree to restrain its desire to raise interest rates even if the current mild inflation accelerates slightly. In return, the Prime Minister's Residence, the LDP urban reformists (the Koizumi Children) and the DPJ would handcuff the government into an accelerated timetable for cutting the national budget

All of this would be pure blasphemy for the “"post-Koizumi" crowd of Chief Cabinet Secretary Abe Shinzo, Foreign Minister Aso Taro, Finance Minister Tanigaki Sadakazu and Fukuda Yasuo. All of them are city boys (Did their pater familia serving in the Diet leave them in the sticks? Hell, no! Look at where they went to high school--Abe: Seikei Gakuen; Aso: Gakushuin; Tanigaki: Azabu Gakuen; Fukuda: Azabu Gakuen). They are just itching to prove their country boy bona fides by showering the decaying rural districts with urban taxpayer money--blowing out the budget and providing the Finance Ministry with a casus belli to resume its neverending war on economic growth.