Saturday, March 31, 2012

Such A Hullabaloo!

It is one thing to resign.

It is another to deliver a letter of resignation knowing that the boss will not accept it.

I have no idea what Prime Minister Noda Yoshihiko is going to do with the resignation letters of the four sub-cabinet members of the government who resigned last night to protest the Cabinet's approving a bill raising the consumption tax to 10%. He may accept them, he may not. Ridding the government of the influence of former party leader Ozawa Ichiro might be tempting.

As for the resignations of 15 or so members of the group of Democratic Party of Japan legislators close to Ozawa from their party posts, Secretary-General Koshiishi Azuma did as it was guessed he would do: he said he would refuse to accept them. (J)

Have Ozawa loyalists given the Liberal Democratic Party and the New Komeito excuses for refusing to enter into negotiations with the DPJ over a smoothing of the way for the bill's passage? Sure they have.

Will it matter? Possibly not much.

The LDP's party manifesto commits its members to voting for a raising of the consumption tax to 10%. LDP President Tanigaki Sadakazu called the DPJ's bill unacceptable not because of its content but because it is contrary to the DPJ's campaign promises.

We will have to see how "They are delivering to us what we demanded! This is an outrage!" will fly with the electorate.

That the cabinet's decision to approve the bill sends those loyal to Ozawa scurrying away, albeit not very far away, is probably a boost for the bill, given the public's level of trust in Ozawa.

Do the voters like public debate over bills to be clean, quiet and orderly? Possibly. It is also possible that they know that a clean, quiet and orderly outcome on the surface can only be achieved through a lot of greasy and nasty dealmaking underneath. Watching the LDP in power for fifty plus years cannot have left the electorate completely ignorant of the way politics really works.

All involved have the two day weekend to calm down (though today's weather is going to be awful). The various parties, aggrieved or not, will have the Sunday morning talk shows to either vent their spleens or puff out big clouds of smoke.

Come Monday though, the first day of the new fiscal year, the legislators will have to go to work. They are starting the new year on the wrong foot, having missed the deadline for passing the FY 2012 budget, requiring a bridge budget until the actual vote of the House of Councillors on the 6th (J).

As for the consumption tax kerfuffle, huffing and puffing about about a bill's being unsuitable may not be the same as rejecting it.

1 comment:

Troy said...

I had a friend buying a house in Tokyo last year (before 3/11) and I was trying to diplomatically bring up the point that a rising tax burden on Japan's wage earners is going to come out of land values in the end.

But he's at least paying less now on a monthly basis for his nice new house than his UR rent was.

I'm not a doomer about Japan's future prospect but it is certainly an interesting intellectual exercise trying to tease out how things are going to evolve and/or devolve.

Japan's "savers" are mostly just buying JGBs, but come 2020 when the baby boom hits 70, this is going to reverse bigtime. ~35M people can't eat their JGBs, they've got to start cashing them in, and that cash has to come from the Japanese wage earners of 2020.

To get its budget deficit down to zero by 2020 is basically impossible now, not without massive tax rises which are extra-deflationary.

Or Japan can just start borrowing money from China and the gulf. Worked for us here in the US, 1995-2010. Russia has money to lend too . . .

Japan could print, too, to get the yen back up to ¥150 or so, but losing all your nuclear plants (!) was a real plot twist for that story:

putting Japan Inc back into its total dependence on energy imports that it thought it had solved, and of course a weaker yen exacerbates that.

Japan does have $3T of net foreign holdings -- $30,000 per man, woman, and child -- so the situation is not as dire as it can seem.

But what a mess.