Showing posts with label financial scandal. Show all posts
Showing posts with label financial scandal. Show all posts

Re Dr. Nakano's Sadness

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Nakano Ko'ichi is a rarity in Japanese academia: a scholar with a brilliant command of the literature of his field, a disarmingly frank and reassuring manner, an ability to examine Japan's contemporary problems in the context of broader flows of world history and fluency both in his mother tongue and English.

And a man, without shading or hedging, of the Left.

He has published a stark and lucid essay on a potential harsh turn in Japan's economic and foreign policy at CNN's Global Public Square:

"Japan: Get ready for a rightward shift"

As is known, I reject the thesis that the "ditching most of its main campaign manifesto pledges and letting the country’s bureaucrats redefine the policy agenda" was the primary reason for the collapse in the popularity of the Democratic Party of Japan as reflected in public opinion polling. Instead, I lay most of the blame at the feet of Ozawa Ichiro and his inability to accept or understand the concept of "party over person" as inextricable to the process of running a party government. Collaboration with the bureaucrats on policy was forced upon the DPJ by the need to fight against the Liberal Democratic Party and its 50 year legacy of misrule. Ozawa Ichiro tried to fight both the LDP and the bureaucrats at once, with the inevitable result of allowing both to make up the huge losses of power and legitimacy they suffered in the elections of 2009.

The DPJ's current leadership had been much, much smarter in dealing with bureaucrats, ceding on some matters of policy, while inflicting deep cuts in salaries and recruitment.

These serious woundings of the bureaucracy have been insufficiently publicized because the DPJ still needs the bureaucrats in their corner. "Look at how we have roughed up the bureaucrats!" is hardly the message you want to be shouting unless you want the bureaucrats to undermine your every move.

As for Dr. Nakano's take on the relations between nationalism, deregulation and unraveling of the social fabric, I am still not convinced of the direct responsibility of government policy in a worsening of social inequality and social disfunction, or, conversely, the capacity of government to remedy the situation.

Take, for example, Dr. Nakano's citation of Japan's stunning suicide rate (which, if you consider it the murder of oneself, makes Japan one of the most dangerous places to live on Earth). The number of suicides soared in 1998, the year the financial system finally lost government support, leading to the spectacular failures of banks and Yamaichi Securities. The levels have stayed high ever since.

It is that "ever since" that has me skeptical. Certainly if unsteadiness of the economy was the trigger for rises in the suicide rate, improvements in the economy should lead to lower levels of suicide -- especially since the post-2008 rise has been almost entirely due to increases in suicides of men, women committing suicide at the same basically the same rate over the last 35 years.

Something else is going on...and the lead probably needs to be taken by non-profit organizations rather than the government.

As for income equality, I have greater faith in the ingenuity of the people of this blessed land than either Nakano or Finance Ministry bureaucrats seem willing to admit. In the absence of a tax registration number system -- the likelihood of the death of a bill establishing such a system, there is still a great deal of leeway for transfers of wealth across the generations, with the asset-rich older generations supplementing the income of their children and grandchildren, with the government's draconian estate taxes as all the incentive older citizens will ever need to hand down their wealth to their descendants.

I also think that international statistics on levels of Japanese poverty vastly underestimate the differences in price levels in between the urban and rural areas, skewing the estimates of rural poverty higher than actual purchasing power should reflect. I may be wrong on this point, however.

As for Hashimoto Toru's programs, Abe Shinzo's programs and Prime Minister Noda Yoshihiko's programs, lumping them together under the rubric of the exploitation of nationalism, you insults Noda's and Hashimoto's intelligence...and ascribes to Abe an intelligence he simply does not possess. As for the accusation that Prime Minister Noda is contributing to the escalation of territorial disputes with Japan's neighbors, that is simply untrue. He made a fairly admirable effot to calm the waters -- sending the Hong Kong activists home without charging them with anything, forbidding the landing of Ishihara Shintaro's land survey team upon the Senkakus -- while reiterating what are the existing policy positions of the government of Japan.

Words Are Not Enough

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Hmmmm...
Japan's AIJ chief admits loss cover-up, apologizes
Reuters

The president of Tokyo-based money manager AIJ Investment Advisors admitted to Japanese lawmakers on Tuesday to covering up losses of $1.3 billion in clients' pension money, but said he had no intention of cheating his clients.

In his first public comment since the scandal broke in February, Kazuhiko Asakawa apologized to clients and the financial industry for the cover-up and said he had been confident that the losses could be recovered.

AIJ lost the funds through bad bets on equity and bond derivatives, wiping out the bulk of the $2.4 billion in client assets it was managing, Japan's financial regulator, the Financial Services Agency (FSA), said last week.

More than 90 corporate pension funds, mostly smaller ones, were invested with the money manager, which was handling pensions for about 880,000 people.

"I want to use this opportunity to apologize to all beneficiaries who believed in our funds and purchased them," Asakawa told a financial committee of parliament...

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I was watching snippets from the hearing yesterday on NHK -- and I would not characterize the attitude of Mr. Asakawa as apologetic. Oh, he may have mouthed phrases that when translated by a machine would scroll out as apologies. His attitude, however, said, "Yeah, I lost your money. But then you were stupid enough to give it to me. Who is the jackass here?"

As for the other executives called to testify, including Old Boy advisor from the old Social Insurance Agency, when they claimed that if they had to choose between calling themselves victims (higaisha) and perpetrators (kagaisha), they would call themselves victims -- that was rich.

Prior to yesterday's performance, I was thinking, "For their sakes, Asakawa and his cronies had better hope beyond hope that none of the small- and medium-sized companies they bilked has ties to organized crime." After last night's performances, I found myself thinking, "For their sakes, they had better hope beyond hope that none of the 880,000 investors whose savings they destroyed watches television."

AIJ Is Not A Lousy Investment Company...

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...it is a truly excellent Ponzi scheme. (E)

The Bernard Madoff scandal barely made the news here in Japan. So it is not surprising that an investment company reporting steady returns for over a decade, even as the globe was rocked by the greatest financial meltdown since the Great Depression, was not flagged by regulators or corporate pension fund managers as suspect. Now, according to The Asahi Shimbun, many of the 120 corporate pension funds that invested in AIJ are on line to writing off half of their asset base, meaning they will not be paying out their corporate retirement benefits (kigyo nenkin) or even the full amount of their employees pension (kosei nenkin). (J)

Greed makes simpletons of us all. If something sounds too good to be true, it probably isn't. A fool and his money are soon parted.

Yes, the clichéd admonitions could just go on and on.