Head Start on Japanese Elections: What About the Economy?

For regular observers of Japanese politics (which does not include yours truly), this will be something of a non event. In fact, it has been brewing for more than a while given the rising unpopularity of the ruling LDP and its stifled leadership (a wobbly minister at a G7 meeting springs to mind). However, it is still significant, I think, that the troubled PM Aso and his equally troubled party, the LDP have decided, in all probability, to throw in the towel.

Now, one would imagine, begins a political war over economic policies, consumption taxes, pension systems etc. The economic effects of this may be important once we get an indication of what the opposing parties have in store. Clearly, the Aso and the LDP in general look set to suffer a crunching defeat come August, but I won't even dare to venture a formal prediction. According to Reuters (see below), markets appear dissapointed that the elections would not come sooner, but then again; August sounds pretty soon to me.

Clearly, much of the debate (and analysis) will center on the issue of why the ruling party headed by Aso has chosen to seek a renewal of its mandate at this particular point in time when it seems that it is bound to get mashed. But then again; desperate times and desperate measures ...

TOKYO (Reuters) - Japanese Prime Minister Taro Aso plans to call a general election on August 30, a top ruling party official said on Monday, despite the prospect that his long-ruling conservative party is headed for a big defeat. The decision to dissolve the lower house for a vote follows a crushing loss for the unpopular leader's ruling bloc in a Tokyo assembly election on Sunday that was seen as a barometer for the national poll, which is due no later than October.

Parliament's powerful lower house would be dissolved next week to set the stage for the election, Hiroyuki Hosoda, secretary-general of the ruling Liberal Democratic Party (LDP), told reporters. Moves within the LDP to replace Aso had been expected to grow after the party and its junior partner lost their majority in the Tokyo assembly but Hosoda said he saw no such moves now. A Democratic Party victory in the national election would end half a century of nearly unbroken rule by the business-friendly LDP and raise the chance of resolving political deadlocks as Japan tries to recover from its worst recession since World War Two. Chaos has gripped the LDP, with Aso's critics inside the party speaking of ditching him while the party's campaign strategist had tried to draft an ex-comedian for its ticket.

"It's clear if parliament is dissolved now, the result would be the same as the Tokyo election," Natsuo Yamaguchi, policy chief of the LDP's junior coalition partner, the New Komeito, told a TV Asahi program. The Democrats have pledged to pay more heed to the rights of consumers and workers than those of corporations and to pry policy-making decisions out of the hands of bureaucrats as a way to reduce wasteful spending.

If you have more info and comments please do feel free to drop them in the comments section. Like I hinted in the beginning, this is not a blog on political analysis, but given the huge amount of issues which are looming I am interested in the way the discourse evolves once the gridlock is officially absolved and the fight begins.

Comments

[Mad Hedge F...:]

Whoever wins, there's not much they can do about it. ) I drove over the Benicia bridge today, passing over ships unloading Toyotas from Japan. Toyota’s entire product line was there, from Lexus to Prius to Corolla, baking in the sun, still wrapped in plastic, and unsold by the thousands, the victims of a 40% YOY sales drop. So it was no surprise when the Bank of Japan informed us that wholesale prices in June fell a gob smacking 6.6% YOY, confirming the most dire forecasts that the country is still in the grips of a nearly 20 year economic ice age.

Jul 13 09:02 AM

[Claus Vistesen:]

Hi,

Thanks for your comment on my articles.

"Whoever wins, there's not much they can do about it."

Well, if this isn't comment of the week I don't know. I completely agree; it is all very depressing this.

Jul 13 09:08 AM

[Claus Vistesen:]

Basically, it is all likely to be rearranging deck chairs on the Titanic. However I do think that a change in discourse on the fertility issue would be a most welcome change ... yet, this is very unlikely in the current situation.

Thanks for the visualization of the problem through Toyota and this, mind you, is supposed to be one of the best companies they have.

Nobody wants to be a perpetual prophet of doom, but Japan is in a bind and unless people and her politicians wake up to why this is; well ... then it is going to be a lot of the same.

Claus

Jul 13 09:12 AM

[Ryu Mei Co:]

You said it right, it is a "non event", and nobody cares. Well, at least not in my family, relatives and friends. We just sit idly on Sunday afternoon and switch off the TV report on the election result.

Aso is going to be replaced since he has never accomplished any thing worthy of praise. Well, what can you expect from a guy who is considered a spoil rich kid with the backing of strong family name with no intellectual and leadership ability, hey, that sound like the ex-president Bush!

In any case, Nikkei fell partly because of the election, but seriously, it is simply an excuse to take profit before the really important earning reports start to flood the market with bad news.

Will give more whatever I know......

Jul 13 08:32 PM