Reflecting back on the dramas that have led up to the selection of Japanese
Prime Ministers over the years, my frank impression is that luck is not
something one generates, as much as it is the ability to wait for and seize
the moment. This was especially true of the recent meteoric rise of Yasuo
Fukuda to become the Japanfs newest Prime Minister.
There were high hopes that Fukuda would declare his candidacy to run for
the post of Liberal Democratic Party (LDP) President at the previous election
in the fall of last year. Fukuda, however, adamantly refused to throw his
hat into the ring.
His decision not to run was most likely because he gauged the timing to
be premature. This represents a big difference from the politicians who
harshly criticized former Prime Minister Shinzo Abe, urging him to step
down, yet who jumped at the ministerial posts offered to them by Abe when
he was still Prime Minister.
The good and bad luck of Japanese Prime Ministers tends to depend more
heavily upon the global political and economic scene rather than the specific
conditions within the party. For example, consider these recent news story
gDespite the continuation of a prosperous economy that has surpassed the
Izanagi boom of the late 1960s, the national income remains in the doldrums.h
gBig companies may be paying employees bonuses worth 50 percent of their
annual income, but tiny, small and medium enterprises continue to go bankrupt.h
gThe gap between Tokyo and the regional areas continues to widen.h
gThe LDP only cares about the rich, big companies and other major constituents.h
With elections held in the context of these national views, it is hardly
surprising that the ruling party stands no chance of prevailing. Whether
the leader is Abe or whoever, under this scenario defeat is a natural matter
of course. Abefs bad luck commenced when he was nominated to become Prime
Minister and assumed that post at such an adverse juncture.
During Abefs tenure as Prime Minister, major changes occurred in the global
economic and political situation. For one thing, the economies of Japan
and the United States, just as I predicted from last year, began to undergo
major shifts. I have continued to assert that 180-degree changes would
emerge in the Japan-U.S. economic booms that have continued since 2002.
My contention, in short, has been that while brisk market conditions were
being sustained in the U.S. on the strength of domestic demand and similarly
sustained in Japan on the back of foreign demand, 2007 would bring a reversal
in the relationship of dependence reflected in these booms.
In the U.S., the credit crunch spreading worldwide as a result of defaults
on subprime loans and other high risk investment vehicles, This credit
crunch heralds the end of the housing boom that has shored up Americafs
domestic demand for the last two or three years. Housing financial institutions
that continued to extend excessive credit are going bankrupt, with red
ink spreading to investment banks. Against this backdrop, in order to prevent
the U.S. economy from descending into recession, Chairman Ben Bernanke
of the Federal Reserve Board (FRB) and Treasury Secretary Henry Paulson
are under the gun to enact drastic policy changes. The FRB has reacted
by shifting from its conventional ginflation fightingh route of interest
rate hikes to interest rate cuts, while the Department of the Treasury
is moving to a course of increased government spending and tax relief.
As a result of these FRB actions the financial policy characterized by
capital from around the world gathering in the U.S. to orchestrate booms
in housing and the stock market is coming to an end. The next phase will
consist of policy measures in the form of hikes in the federal fund rate
and official discount rate aimed at accelerating growth in the manufacturing
industries ? notably, the defense sector. The adoption of a weak dollar
policy is the natural course of action to bolster the competitive strength
of manufacturing. As I have said in the past, these indicators would point
to a clear shift in U.S. economic activity to reliance on foreign demand
in October. The accuracy of this prediction is coming very evident
Whether the engine of economic prosperity is domestic demand or foreign
demand, demand is a factor that exerts a major impact on the national income.
Under the boom dependent on domestic demand, the incomes of the American
people saw healthy growth, with the public experiencing a solid sense of
In Japan, in contrast, because the boom was dependent on foreign demand,
the national income remained in a slump and the Japanese people had no
sense of sharing in the prosperity. For this reason, therefore, in the
midst of a foreign demand-dependent boom, regardless of how many firm declarations
are made of how gthis strong economy is the work of the LDP,h the results
at the ballot box will be defeat.
For his part, back in 2006 Fukuda showed not a shred of interest in gaining
the post of Prime Minister. When September 2007 came, however, with the
signs becoming clear that the Japanese economy would shift from a boom
dependent on foreign demand to prosperity driven by domestic demand, Fukuda
did not hesitate to declare his candidacy for the LDP President post. Fukuda,
as we can see, truly gseized the momenth as fortune smiled his way.
The Japanese economy will continue to enjoy good times over the next several
years, with the public developing a genuine sense of prosperity.
Under these conditions, the national income will shift to an upturn even
in the absence of policy measures designed to correct income disparities.
The peoplefs reaction to all this will be: gWay to go, Prime Minister
Fukuda! Well done, LDP!h
This is what they mean, then, when they talk about gseizing the luck of
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