Re Dr. Nakano's Sadness

PLEASE WAIT LOADING ,,,,,,,,, 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.

Why Noda Chose The Consumption Tax Or How Rick And The SSJ Meet Dracula's Daughter

PLEASE WAIT LOADING ,,,,,,,,, There are two major list-serves on contemporary Japan, the NBR Japan Forum and the SSJ-Forum. Many of the same individuals contribute to both, with the NBR Japan Forum being heavier on economics and security and the SSJ-Forum, unsurprisingly, being more often on society, culture and politics. Of the two, the SSJ-Forum is generally the more useful, as a large number of the posts are events schedules, calls for papers or book release announcements. Also the SSJ-Forum does not tend to get clogged up with long-winded debates over issues relevant to the participants but irrelevant to contemporary Japan (Rod Armstrong and Mike Smitka, I am not talking about you. Keep up the good fight!).

However...

On August 4, Richard Katz of the Oriental Economist newsletter posted a question to the SSJ-Forum:

I'm curious to know how rational choice theorists would explain PM Noda's single-minded devotion to pushing the unpopular consumption tax hike.

My understanding of rational choice theory is that it borrows its methodology from economics in which actors try maximize their utility in the narrow sphere of the
marketplace, and utility is defined by some fairly well-specified objective function, e.g. firms try to maximize profits, consumers try to maximize materal (sic) living standards and so will buy a $300 TV rather than a $400 one if the two are perceived to be identical. In the case of rational choice theory about politicians, as I understand it, the objective function is usually said to be to gain power by getting elected and re-elected, rising in the ranks of their party and office, and being part of a ruling party. Ideology, principles, beliefs are all laid by the wayside.

How can any of this explain Noda's actions? As a result of the tax hike and his mishandling of the nuclear restart issue, the Democratic Party of Japan is headed for a calamitous defeat. Most surveys (as well as my own personal conversations with DPJ and LDP Diet members) suggests the DPJ would win about 100 seats if the election were held now whereas the LDP would win 200. One first-term DPJ Diet member from western Japan, a genuine reformer, bitterly told me he may need to switch to Hashimoto's party if he wants to survive the next election. Needless to day, Noda will no longer be head of the DPJ in the aftermath of such an electoral disaster (assuming he remains PM in the run-up to it). Whether these numbers turn out to be right or not, depends on the Hashimoto party and other factors, but I don't know of anyone who believes the DPJ will win.

[snip]

So, how does rational choice explain Noda's willingness to sacrifice his own career and his party's fortunes in order to "do the right thing" as he saw it?

If one says that "doing the right thing" is now part of the objective function, then rational choice theory is basically left with saying: "he did it because he wanted to do it." That, to me, hardly seems like a contribution to either explanation or prediction.

BTW, this is not a rhetorical question on my part. I have little doubt that rational choice theorists do have an explanation for Noda's actions; I just can't
figure out what it would be. I'm hoping that its advocates on the list can help me out.

The question has prompted a number of luminaries in the field -- Aurelia George Mulgan, Thomas Berger, Ellis Kraus, Okumura Jun -- to post partial answers to Katz's question. These having been popping into my mail box at the rate of about one every 18 hours.

All of which makes me feel like Dracula's daughter -- at least as she is portrayed by Lily Tomlin in her one-person sketch, "Lud and Marie Meet Dracula's Daughter" of, oh, way too long ago.

Have a listen.

OK, now that you are back -- here is problem with the question -- which is the problem with the discussion.

When asking about how a given theory explains how a certain choice is made, it is helpful if the choice actually existed. To whit, asking, "I'm curious to know how rational choice theorists would explain why men prefer apples with blue and white Kusama Yayoi-style polka dots on them?" would be worthwhile if there were apples with blue and white Kusama Yayoi-style polka dots on them.

[An aside, but it always fascinates me that 99% of the articles promoting one of Kusama's exhibitions or analyzing her work manage to avoid mentioning that she is clinically insane. She lives, voluntarily, in an assisted living community as she is well aware that she is bonkers.

Her insanity informs her art, I think. Keeping her mental condition under wraps is a real disservice.]

Now in the case of Noda's choice, Katz has, in his written work for the Oriental Economist and his two public presentations in Japan, one at the Foreign Correspondent's Club of Japan and the other at Temple University Japan, taken at face value Prime Minister Noda's claim or insinuation that he had three major projects to undertake in the near future to bolster Japan's economic health:

1) begin formal, unequivocal discussion on joining the Trans Pacific Partnership

2) restarting Japan's nuclear power plants as soon as possible

3) raising the consumption tax in order to stabilize the funding of the nation's welfare and pension systems

For a Japan optimist like Katz, who sees Japan's output gap and suppressed domestic spending as criminal and reversible, the prime minister's decision to pursue option #3 at the expense of options #1 and #2 is perverse. The Japanese government's current borrowing costs are among the lowest on earth. The currency is one of the world's strongest. There is no crisis in confidence in Japan's ability to finance its debts. Furthermore the previous raising of the consumption tax in 1997 contributed to a crushing of domestic GDP growth, helping trigger the financial meltdown of 1998 and in the end reducing overall tax receipts (I think the little matter of the Asian Currency Crisis of 1997 had a little more to do with the 1998 crisis than the consumption tax rise -- but my memory is perhaps faulty).

Why pursue an end that will likely damage rather than strengthen the economy?

As Katz's question indicates, he also cannot see the political value of pursuing a rise in the consumption tax. Every single past instance of the tax either being imposed, raised or even talked about (2010) has led to the ruling party getting hammered in the next election.

However, if you look carefully at the three major policy programs listed above, it is clear that only the third, the consumption tax, was real. The first and second options, however economically sound, were political red herrings or lead balloons (choose your metaphor).

Any analysis of the "choice" a DPJ prime minister makes or may make must consider paramount the control the Liberal Democratic Party has over the passage of legislation through the House of Councillors. If the LDP does not like a policy, it has no chance of being implemented.

Looking at the TPP, one can immediately see that no matter what the government or the Nihon Keizai Shimbun may be saying, it is dead on arrival. The liberalization of the agricultural sector makes the TPP anathema in the rural districts, which are as ever overrepresented in the current Diet. Voting for the TPP would kill the reelection prospects of a DPJ representative in a rural seat. As for the LDP, which wants to regain the rural seats it lost to the DPJ in 2009, the TPP is also poison, though the LDP leadership, in pandering to the business lobby that also abandoned the LDP in 2009, keeps the TPP among its verbal bag of tricks.

So pursuing the TPP was a hopeless endeavor, especially after it turned out that the gatekeeper to Japan's joining the discussion was the U.S. Congress, particularly the U.S. Representatives and Senators from the state of Michigan and other U.S. auto producing states. There is only one thing negotiators of this blessed land want to show the legislators from the states dependent on America's bailed-out auto industry, and that is their naked backsides.

Restarting the nuclear power plants was also political poison. The country is in the grips of a deep and irrational fear of nuclear power and the nuclear power industry. Any politician speaking up for the restarting of nuclear power would be suspected of being in the pocket of the nuclear village.

Noda rational expectation was that Japan's industrial and commercial interests understood that this was their fight, not his. It was up to Japan's economic actors to make the case to the public that dangerous and unpredictable as it may be, the nuclear power plants had to be restarted, lest the country suffer economic damage or even catastrophic blackouts.

This industry pointedly failed to do. Perhaps it was unaccustomed to doing heavy political lifting by itself, having always relied on the bureaucrats of the Ministry of Economics, Trade and Industry to do their dirty work for them. Perhaps the elites in both the bureaucracy and industry, unaware that the political ground had shifted underneath their feet, thought that they could cow the populace into silence with just the hint that an interruption in the reactors restarts could hurt output and thus employment and remuneration.

Whatever the reason, industry failed to convince anyone that the country was on the brink of disaster. It took a personal intervention by the prime minister, at the last minute, and a chancy game of chicken with political maverick Hashimoto Toru, to persevere in a struggle to just get the Oi #3 and #4 reactors back on line before this summer, which has turned out to be a scorcher.

That prime minister Noda paid deeply for this intervention was made clear yesterday when he had to invite into the Prime Minister's Residence representatives of the crowds of anti-nuclear protesters who have been making his Friday evenings deafening affairs. In pointed contrast, representatives of the Japan Chamber of Commerce also paid a visit to the Residence yesterday to limply present the prime minister with a unwelcome written request that the government do more for the security of power supply.

As for the consumption tax, here was a policy program that had a chance in hell of succeeding, specifically because it was not a DPJ program but an LDP one. On the face of it, the LDP could not vote down one of its own campaign promises, when given the chance.

It is indicative of the intellectual and ethical rot in the LDP that the party nearly succeeded in convincing itself to negate the implementation of its own campaign program, even after the DPJ blew itself into to pieces in an act of self-sacrifice in order to accommodate the LDP.

So the answer to the question initially proposed is simple: Noda chose the consumption tax option because it was real. Governments have to do something, even seemingly stupid stuff, lest they be accused, and rightly so, of doing nothing.

"Rationality" had nothing to do with it.

Now, I will go listen to Ms. Tomlin one more time. I need the laughs.

He Did It

PLEASE WAIT LOADING ,,,,,,,,, That is the takeaway for this weekend.

Decades ago this blessed land's bureaucrats and the research arm of the Liberal Democratic Party established that government finances faced a demographic wall, where the European-style social welfare benefits and United States-levels of taxation would collide with a wave of retirees, necessitating either:

1) mass privatization of government functions

2) reversals in the promises made to the citizens

3) higher taxation

4) potentially hyper-inflationary levels of government indebtedness, or

5) a combination of the above.

The solution the bureaucrats and the LDP proposed was a consumption tax, with an initial target rate of 10%.

It has taken thirty years to walk the walk from realization to realization. At least three prime ministers have had their heads handed to them over the tax, first for the imposition of a nominal 3% tax, then for each step of the march up to 10%.

However, on Friday, with every political instinct and a slug of economic analysis pulling in the opposite direction, Prime Minister Noda Yoshihiko managed to drag an opposition-controlled House of Councillors over the goal line.

The political costs have been enormous. Noda will most likely be rewarded, as he should be, with reelection as party president in September. However, he will preside over a much diminished Democratic Party of Japan, over 60 members of which have decamped in one way or another over the consumption tax. The Cabinet's and the DPJ's opinion polling numbers are in the cellar, with an election looming.

One can hate the raising of the consumption tax...and a lot of folks do, for reasons both intellectually sound and transparently selfish.

However, one cannot, no, one must not deny the bravery and tenacity of the prime minister, who sacrificed political blood and capital his party could not spare. When all the sirens are singing sweet songs about how cheaply the government can borrow money, Noda and his wounded party have sent a signal to the holders of Japan's bonds that the government of this blessed land will make good upon its debts through a willingness to both inflict pain and accept annihilation.

Where It's At At The Asahi

PLEASE WAIT LOADING ,,,,,,,,, It may be just one long "just-so" story...but what a story!

Keio University professor Oguma Eiji offers The Asahi Shimbun's English-language AJW a rollicking, wide-ranging take on what's going on (Hurry up and copy, before link rot sets in).

Yes, Oguma's old university home page was way cooler.

Well, So Much For That Eternal Verity

PLEASE WAIT LOADING ,,,,,,,,, I once issued a definitive proclamation regarding Peter Tasker, a founding partner of Arcus Investments.

It turns out I was wrong.

In his latest opinion piece for the Financial Times, Mr. Tasker has nothing interesting to say (Link).

It seems that sometimes even the best just phone it in.

For a better look at the short-term and mid-term consequences of the consumption tax legislation, read this Bloomberg report (E). Ignore the title (titles on wire service reports are too often misleading) and concentrate on what the analysts are saying about 2013, the election year. The looming threat of a tax rise in April 2014 will likely increase consumption over 2013, stimulating overall economic growth, as companies and individuals pick up big ticket items before the 3% jump in prices. The likelihood that consumers will shell out for goods and services at current prices, staring as they are at whalloping, regressive tax rise in 2014, will likely stabilize prices, nullifying, even if only temporarily, the long-term deflationary trend. Whether the halt in deflation triggers a spike in equities investments, given the sudden crash in real returns on bonds, is a question best put to Naomi Fink, a.k.a the Smartest Person In Tokyo, of Jefferies.

I am not as sanguine as Adam Richards (E), I certainly cannot be convinced that in a world where every country's bond yields are low -- some even lower than Japan's -- and a rock hard yen that is killing exporters, that a tax rise taking a first stab at stabilizing the nation's fiscal health is a really bad idea.

The BOJ's Holding The Line And Why Diet Members Do Not Like It

PLEASE WAIT LOADING ,,,,,,,,, Someone has finally printed an article in English which defends the Bank of Japan's independence and policies. Predictably, the responsible publication is the Financial Times (E) which as recently as yesterday I was chiding for its tendency to plunge its Japanese interview subjects into hot water.

Amidst all the noise "that the bank should be doing more" it is refreshing to read an article observing that the BOJ is doing all that can be done and still maintain the appellation of "bank." The BOJ is not a berserk ATM responsible for counteracting the incredibly bad fiscal policies of countries around the globe. Since the BOJ cannot succeed in this endeavor it is pointless for the bank to attempt it.

And a cleverly run bank the BOJ is, having posted in fiscal 2011 an unexpected and tidy profit in its bond dealings. (E)

As for reports that Diet members are preparing legislation to rein in the BOJ's independence, regranting the Finance Ministry the powers the MOF lost over the BOJ's policies -- or merely to terrify the BOJ into pre-emptively ceding part of its independence from government interference so as to preserve the larger portion of its independence -- the drafting of legislation is what lawmakers do, whether or not such legislation will have significant effects on the economy's performance or not. (E)

Frankly, noting that legislators are preparing bills with the intention of curbing the BOJ's independence is a little like noting that bonobos have sex. (E)

That legislators would want to be seen as doing something, anything, to arrest deflation is understandable. Deflation, as analyst extraordinaire Naomi Fink recently pointed out, diminishes the willingness of companies to borrow (increasing, as it does, the real interest rate borrowers pay) and hammers the stock markets (by inducing companies to raise funds through the issuance of new equity, diluting the value of the holdings of existing shareholders).

That deflation simultaneously delivers real, nontaxable returns on savings is something legislators possibly do not know, have forgotten or ignore as it has no impact on their being able to hit up corporations into paying for fundraising party tickets or for candidates to win the votes of those who live on the margin and are thus unable to save.

So rather than being about doing something, BOJ bashing seems to be about appearing to be doing something.

Armageddon Can Ruin Your Whole Day

PLEASE WAIT LOADING ,,,,,,,,, The most hilarious line I have read in a long while:

"If Japan's finances collapse, social order would collapse as well. That would be a tough environment to raise children."

You can find it a huffing-and-puffing Reuters piece on a heretofore unknown sweeping social trend: Japanese buying overseas real estate and non-yen currencies in order to have a safe haven to which they will flee prior to Japan's descent into chaos. (Link)

I know that it is in the writ of wire journalists to alert their most important readers (private investors and money managers) as to emerging social trends. That way said readers can get in on the opportunity before everyone else does. It is in the writ of editors, however, to cool the jets of journalists with "Uhhhh, how sure are we that we are not being sucked into someone else's marketing scheme?"

As for the book whose sales supposedly validate the trend of Japanese seeking security oversees, Escape from Japan (Nippon dasshutsu), check out the home page of its publisher, Asa Publishing (Link - J).

Yes, there's the link, that jittery thing on the right.

He Always Has Something Interesting To Say

PLEASE WAIT LOADING ,,,,,,,,, The Nihon Keizai Shimbun at one point chose Peter Tasker as the best equities analyst in Japan for five years running. That is not the best foreign analyst of equities. The best analyst of Japanese equities markets, period.

In an essay for the Financial Times, he proposes a very, very long-term solution to Japan's debt and stagnation crises.

Always a worthwhile read.

Japan As A Normal Nation - Bic and Kojima

PLEASE WAIT LOADING ,,,,,,,,, A profitable competitor in an overcrowded market swallows up an unprofitable rival. The merged company will become #2 in the market, even after closing 40 to 50 underperforming units of the merger target. The founding family of the merger target is told to go stuff it. (E and J)

Which country is this happening in?

And In The Other Japan...

PLEASE WAIT LOADING ,,,,,,,,, ...the one that is fabulous, successful and full of youthful energy, a shock: Maeda Atsuko (20) is "graduating" from AKB 48. The gigantic group's pivot point, two-time winner of the title of Party Leader (sosai) announced her retirement/ascension/eviction at the end of the group's concert on Sunday (J and SP -- I cannot help myself: the news sounds so much more poignant and significant en español).

Serious discussions must have already begun on whether the fans of AKB 48 can be brought together for a snap election of a new Party Leader, so as to avoid leaving the group, the fandom, the marketers, the makeup artists, the clothes designers, the lighting crews, the semi-closeted nympholeptics leaderless.

Questions will also now grow ever louder as to whether Shinoda Mariko, the oldest member of the group at 26, should not also announce her departure.


Later - Oh dear, I was pipped by Japan Probe. Oh well.

Later still - And yes, they can sing beautifully, when they try (Link).

My Friends Call Me Keith But You Can Call Me John

PLEASE WAIT LOADING ,,,,,,,,, Or you could call me Al (Link).

In a story I am amazed has not made the "Japan is so weird" circuit, the Osaka Prefecture city of Izumisano (pop. 102,397) is so close to bankruptcy that it is considering putting the naming rights to the city on sale.

The contract would be for 1 to 5 years. The preferred customers are corporations whose products would be associated with the city, a spurious imitation of real company towns like Toyoda City. Non-Japanese companies are welcome to offer their bids, which can be placed anytime between June and the end of November this year. (J)

Osaka City mayor and former Osaka Prefecture governor Hashimoto Toru thinks Izumisano City's idea to be pretty nifty (J). Minister of Internal Affairs and Telecommunications Kawabata Tatsuo, by contrast, is not amused. He thinks that having a municipal area with a possibly constantly changing name would be disconcerting (J).

Of course, these naming-for-money schemes can also go awry, which is why we have such abominations as the GoldenPalace.com Monkey (Callicebus aureipalatii) (E). Ostensibly, someone with enough money could name the city after himself or herself. I am not sure that the news of the Izumisano City offer has reached Steven Colbert -- but given his past attempts to have a bridge in Hungary named after himself, among other things (E), I am sure he could be convinced to offer up Suteifuenkoruberu as a new name for the city.

As the new name would end in the title for city (shi), one temptation for the person or organization with the winning bid would be to have the new name be a joke name, such as Ekusuta(shi) or Puraiba(shi).

What would I call it, if I had the yen? What else? Emutei(shi).

Why I (Don't) Love Conservative Think Tanks

PLEASE WAIT LOADING ,,,,,,,,, The below are links to two papers on Japan's economic policies, one from the American Enterprise Institute and the other from the Heritage Foundation.

AEI - Is Japan set to boom?
by John H. Makin
(Link)

Heritage - Japan's National Budget: Time to Give Up on Keynesianism
by Derek Scissors and Kumi Yokoe
(Link)

Two papers, each offering a completely different set policy prescriptions for Japan to follow to grow again.

Both wrong.

For critiques of the AEI paper (no one has bothered touching the Heritage paper, yet) see the NBR Japan Forum posts by:

Arthur Alexander

Richard Katz

and

Mike Smitka

(Full disclosure: I have had communications with Mr. Alexander several times and two years ago had dinner with Mr. Katz and Dr. Smitka at an Asian fusion restaurant where the food was...indescribably bad.)

Why link to papers that offer bad advice? Because the intense focus of Japan's elites on the goings on in Washington can result in these damn things confusing the policy debate in Japan.


Later - Troy supplies a wonderful comment. Please click on the link.

Lightning Strikes Twice

PLEASE WAIT LOADING ,,,,,,,,, Demonstrating that last year’s victory in the World Cup was not a fluke, the Japanese women’s soccer team, Nadeshiko Japan, defeated the U.S. 1-0 in a match at the Algarve Cup in Portugal. Considering that last year’s final was decided by penalty kicks, yesterday’s victory was the first time Nadeshiko Japan had outscored a U.S. team, having had up to yesterday a record of 4 ties and 21 losses in head-to-head competitions.

It is hard to overemphasize the importance the continued brilliance of Nadeshiko Japan has had on raising the spirits of the people -- not only because the men’s team, the Samurai Blue, play The Most Boring Soccer In The World ™. The World Cup victory last year was a first ray of light into the psychological and physical dark passage the country was lost in following not just the triple disaster of 3/11 but all the other longer-term failures – the lost promise of the 2009 change in governments, the half-cocked sudden stop of Koizumiism and the 1990s collapse of the economic-social-political system. It was not inappropriate or opportunistic for Prime Minister Kan Naoto to award the entire Nadeshiko Japan team the People's Honor Award (a awful lot of medals to be handing out at one time).

So to whomever it was that Kumagai Saki was looking up to on July 18 of last year, thank you again.

Photo image of nadeshiko (Dianthus superbus) courtesy Ayuko0106. Common usage license.

AIJ Is Not A Lousy Investment Company...

PLEASE WAIT LOADING ,,,,,,,,, ...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.

Growth Neither Nominal Nor Real

PLEASE WAIT LOADING ,,,,,,,,, Over the last few days I have had the chance to fulfill a longtime wish: to read Aurelia Mulgan George's Power and Pork: A Japanese Political Life (2006).

It is sobering to read the book six years on, in light of all that has happened since.

At the time of the study's going to print, Matsuoka Toshikatsu, the subject of the study, achieved his life's goal of being named Minister of Agriculture, Forestry and Fisheries, requiring that Dr. George hurriedly insert a few paragraphs on his nomination into the last pages of her manuscript – all which was all to come to naught a few months later when Matsuoka committed suicide, this in order to avoid further Diet inquiry into just the sort of sordid accounting and fund-raising shenanigans Dr. George documents.

"A Political Life" turned out to be a grimly prophetic subtitle.

But it is not only Matsuoka's suicide that provides a somber coda to the work. Nakagawa Sho'ichi, Matsuoka’s predecessor at MAFF and a lifelong antagonist was himself to die at a young age (56) under circumstances that suspiciously looked like suicide, after his untreated alcoholism undid his life's dream of becoming prime minister. If Nakagawa's death was indeed suicide (the investigation into the actual cause of death was willfully unenthusiastic) it was repeat of the death of his father Ichiro, who committed suicide in 1983.

Ichiro's political secretary Suzuki Muneo, who comes across as the sleazeball mentor of Matsuoka, was sent to prison for his funding escapades, but is now rehabilitated as the leader of a regional political movement and a member of the House of Representatives allied with the ruling Democratic Party of Japan – a political marriage of convenience Suzuki parlayed into the chairmanship of the House of Representatives Committee on Foreign Affairs – the committee overseeing and investigating the activities of the Ministry of Foreign Affairs, the ministry Suzuki had so thoroughly and extensively perverted through intimidation and interference during the years covered in the study.

As for the misuse and misallocation of government funds perfected by Matsuoka and Suzuki during the "Lost Decades" that burned a hole in the Japanese government’s pocket, wasting trillions of yen on makework projects whose operations and maintenance costs far exceed any societal benefit derived from the support they gave temporarily to Japan’s GDP figures, "bad" economic stimulus that has left the country in an Alice in Wonderland state where the government has a net debt greater than 100% of GDP, funds half its budget through bond sales rather than revenues, deflation devours debtors and risk taking, government bond yields are but a shade above 1% despite massive debts and deficits and the current government's policy response – which it labels reform – is to cut spending and raise the consumption tax, despite ironclad economic laws mandating that such actions will shrink the size of the economy, thereby further reducing tax revenues, requiring greater bond issuance to fund the same size national government budget...while the reforms of the Prime Minister's Office's powers to determine policy have evaporated away, leaving Prime Minister Noda Yoshihiko buffeted back and forth, a feather in the gale.

It leaves one crying, like the poor father at the end of Coup de Foudre/Entre Nous:

"Quel gâchis! Quel gâchis!"