Will the prime minister be next?

Of all things Italian that Japanese could have copied, from Fashion to Cuccina to even Car designs, we HAD to choose politics....
By the end of this year, our TV news will begin with "...Today's prime minister is...." orz

The person belongs to the ultra right-wing of Japan. The only reason he is a darling of the West is that he's pro-US. As a foreign minister, he failed miserably. During his tenure, he stirred up territorial issue with South Korea, Russia and China. And handled every one amateurishly.

The illegal donation Mr. Seiji Maehara got may amount to nothing significant, but this Japan’s foreign minister had it coming for losing his job.

Mr. Maehara did not start off his job very well. Although he proved his royalty to the US being an extreme right winger, he made such a fool of himself and worse, of Japan in his high decibel unbecoming dealings with Russia over the island territories lost during WW2.

The verbally aggressive and abusive Foreign Minister’s stance gave Russia exactly the pretext to re-deploy its presence in NE Asia waters, a development that must have ruffled the game plan of the US. So he is finished in that sense.

Secondly, when he visited Moscow recently over these matters and trade issues, both the Russian President and Prime Minister declined to meet him, shutting him (Japan) out in the cold, an unusual or never heard of diplomatic snub administered by Russia.

So he does not appear to be worthy of any representation of today’s new Japan. That’s another main reason why he got the boot (he was insisting not resigning only a day ago), IMO.

The resignation also cast another doubt on Mr. Kan for his ability to name the right person to the post, or else on his ability to compromise smartly.

From Bill Bonner for The Daily Reckoning

"And now, let's update our Trade of the Decade.

Our "Trade of the Decade" called for selling Japanese bonds and buying Japanese stocks. The bonds go down when the liquor runs out...and then, when Japan can no longer close its budget gaps by borrowing, it will print money. First, the bonds will crash. Then, the stocks will soar.
Has it done well? Not exactly. But the decade has just become. And it looks more promising than ever.
Lord Keynes may not have had the Japanese bond market in mind. But almost an entire generation of JGB (Japanese Government Bonds) investors is living proof that "the market can stay irrational longer than you can stay solvent." For nearly 20 years, they thought rising supplies of Japanese bonds must lead to falling prices. As the quantity increased the quality had to decline. It was irrational to think anything else. And yet, Mr. Market not only remained irrational, he seemed to enjoy it. He was like a drunk with a half-finished bottle in his hand. Everyone knew he would have to sober up some day. But as long as there was still liquor left, why bother? Japan borrowed more and more...and speculators went broke waiting for bonds to go down.
Here on the back page we yield to no man in our appreciation of the irrational. It is practically boundless, as near as we can tell. Nevertheless, sooner or later the booze runs out.
What makes this interesting to readers everywhere is that Japan is a trendsetter. The Japanese stock market headed down 10 years before the NASDAQ cracked in the US in January of 2000. Japan's economy was ahead of the pack too; it went into a long correction 17 years before America's subprime lending crisis. Its central bankers and finance ministers have a long lead too. Every rabbit, currently being pulled out of Ben Bernanke's hat, was hopping around in Tokyo many years ago.
For example, the Japanese have been "zero bound" for 15 years. In an effort to restart the economy, the Bank of Japan went to ZIRP (a zero interest rate policy) in 1995. They've been within 50 basis points of zero ever since. So too did Japan's huge central government deficits begin a decade ahead of those in the US. But the rope that was thrown out as a lifeline has become a noose. Japan can't go back to normal policies; it can't afford it.
Among all the world's nations none now has more debt per GDP than Japan. For every dollar of output, Japan has $2 of central government debt. The figures are much more striking, and meaningful, when you compare debt to the cash-flow that services it. The central government owes about 1,000 trillion yen. It collects less than 50 trillion in revenues each year. In other words, every dollar of tax receipts must support about $20 in debt. If it had to carry its debt at just 5% interest it would take up 100% of government revenues. And its debt is still increasing; the Bank for International Settlement says it will grow to 3 times GDP over the next 10 years.
Pondering these numbers, JGB speculators must have thought they had found a gold mine. Japanese bonds HAD to go down, they said to themselves. What they discovered was that a government can stay insolvent longer than they could stay rational. And now, practically every financial official, householder and investor on the home island is foaming at the mouth. Having avoided sanity for so long, they think they can do so forever.
The descent into insolvency was directed by the Bank of Japan and enabled by bond buyers themselves. It did not bother them that Japan was the most broke nation in the world. Or that the Japanese were dying out, with negative population growth and more people retiring than entering the workforce. Or that the primary sources of funding for Japanese deficits were drying up. Corporate profits are pinched between the forefinger of a strong yen and the thumb of higher energy prices. The savings rate for people over 60 has fallen to zero. And as a percentage of GDP, national savings, net of both public and private borrowing, has fallen from plus 11% in 1991 to minus 5% today.
Lenders must be as stupid or as mad as borrowers. Even today, they give their money to the government for 10 years, at a yield of only 1.2%. But so far, they have been right. The inflation rate in Japan is negative by about 2%, giving them a real yield of 3.5%. And compared to other investors in Japan, bond-buyers are geniuses. Japanese stocks are down 75% since 1990. Real estate is down about 70%.
He (Bernanke?) should get out more. Take a trip to Japan. He would see where $1.5 trillion deficits, ZIRP, and QE lead - to more deficits, more ZIRP, and QE squared. He would see the madness in investors' eyes...and palsied hands of his central banker cronies. They couldn't stop. Neither can he. Not without higher unemployment and falling prices - the very things he fears more than the fires of Hell. Once an economy drinks deeply, it cannot stop until the bottle is empty.”

bernardpalmer says again...
"Unless of course the Japanese mega companies who belong to the Keizai Doyukai and the Nippon Kiedanren decide amongst themselves to introduce a Internet based gold and silver micro payments system using a 99.99% purity to 4 decimal places of a gram and stop being scared of their dying government."
www.cashramspam.com

@Yeahsure Of course, this article is pointless as the position itself was emasculated by the inability of government to deal with basic questions of sovereignty.  I.E. the permanent location of US military bases in Japan, and there long term consequences.  The issue is a non-starter with the US, and whoever fallows will be forced inevitably to resign in shame.

Japanese voters should be even more concerned about their debt, the second highest as a percentage of GDP as shown here:

http://viableopposition.blogspot.com/2011/01/japan-downgrading-their-deb...

Having already suffered from two debt downgrades in less than two years, it looks like the country's fiscal troubles are getting worse by the month.

Maehara's resignation reminds me of the film "Indiana Jones and the Temple of Doom" where the main character tries to cut down a suspension bridge with both his foes and mates on it expecting the foes to fall into the river stream and his mates to survive by clinging to the handrail-like construction of the broken bridge.

Maehara seems to expect either resignation of Naoto Kan and his ministers or dissolution of the Lower House quite soon so that many of his foes and their policies will fall through while his fellow lawmakers will manage to survive.

Accusation against Maehara in the Diet this time that lead him to resig from the foreign minister post could have been a play-acting - provoked by an apprentice politician of Shinzo Abe, a former premier from LDP, who is said to be in alliance with Maehara.

Maehara may further resign as a Lower House MP if he foresees earlier dissolution of the House; he will win the election anyway and also can declare the completion of "political ablution" for the next power game hand in hand with Shinzo Abe and his advocates.

Well, the LDP has opened a veritable Pandora's Box by digging into foreign donations. This could be a rerun of the 2007 pensions scandal when over 100 MPs were found to have defaulted on part or all of their public pension payments. Will there be another Inquisition on a comfy chair in the Japanese Diet?

Anjin-san

Indeed the Japanese did copy pretty much everything from the Italians (especially in the 70’s) and yes.. including the latest political trend, by judging by how many blue cars with drivers there are in front of the Hostess (of questionable age) clubs in Akasaka –though Berlusconi has been hanging on for quite few years now...

What Japan needs, and will never get, is a complete reorg of the society and the economy. Probably half the working population of Japan are utterly redundant and superfluous, kept on as deadwood in big companies or working for the myriad little companies that should go bankrupt and close their doors. In fact, looking over the working population of Japan, the challenge is to find anyone -- one person -- who is employed in a required and necessary job. If there was ever a nation exposing the horrors of overpopulation and socialism, Japan is that country. Let half the population starve to death or take voluntary euthanasis, shut the doors of 90 percent of the small businesses and replace them with large, efficient companies, replace the farming population with machines and better crops, sell the useless, worthless young people to another country, throw out the present school curriculum, and replace it with one that teaches Japanese children the truth about their miserable, wretched, despicable society, decondition the entire country until they know nobles and aristocrats are scum and vermin, and their descendants are the worst people on Earth. . . . Oh, there is an almost infinite list of essential things to do, if the Japanese ever want to have a real country, composed of good human beings. If they did everything necessary, 1,000 years from now they might raise one good generation of decent, respectable people.

@ bernardpalmer 

In addition to all of the financial problems Japan has done 15 years before the US, it also seems like they have at least one political party that is more interested in being in power than really fixing the problems and are willing to put their good ahead country’s good – which sounds to me also similar to the US?

Kan probably will be next. The government is on gridlock! It's a shame to see instability continue to spread across the Japanese government.

@TokyoAndy
Oh, and I forgot to add to the list one more thing; Calccio.

Many thanks to Italy for parting with Alberto Zaccheroni, probably the single greatest gift to Japanese Football since Ivica Osim.

@FirstAdvisor
I didn't know you were a member of Nikkyoso (Japan Teacher's Union)....

Russia took a big departure recently with their announcement to escalate building up the Kuril Islands - both economically and militarily.

http://blog.hiddenharmonies.org/2011/03/seiji-maehara-japanese-foreign-m...

Maehara is likely blamed within Japan for failing diplomacy with Russia. Kruil Islands are likely out of reach of Japan unless Russia collapses.

This silly piece once again proves Economist's pundits basically know nothing about Asian politics and cultures. When they see someone resign, they think like "poor guy lost his job". Neve heard sayings like "step back to move forward"?

Maehara is clearly using this totally non-trivil matter as an excure to sever his ties with an extremely unpopulor PM, to protect his reputation, and prepare for a comeback when Kan is gone. If you can't see through a simple political trick like this .... I 'm not sure why you are still in the business of writing for a newspaper.