Power And Dollar

What Does Your Wallet Or Your Politics Care If Japan Were Ready For Change?

The 2009 general election in Japan is the first time any opposition party won a mandate with meaningful margin.  Does it matter to the United States/Obama?  What does your wallet care about a Japanese election?

DPJ won this election with a landslide, 60% of the seats.  LDP, the incumbent who lost, still has 20%.  However, its electoral power is greatly reduced.  DPJ should have no difficulty in implementing changes it advocates. 

Election result often is a reflection on the perception of their economic lives for most voters.  This one is no different.  Challengers have no experience in governing.  And the voters do not care.  They want the incumbent out. 

Opposition DPJ promises more government checks for babies to lift fertility rates (negative population growth) and for seniors (20% for Japan vs 13% for US).  How are they going to pay for this when the labor force is shrinking and Japan has been avoiding the talk of an immigration policy?  if you think Obama is irresponsible in drowning your grand children with eternal debts or that French were crazy, then consider Japan’s public debt ratio: 162% back in 2007
and expect to be 200% in 2009.

Japan will eventually do what Obama is already doing, lower the exchange rate.  It will make the bonds they are making worth less (I do not know want to say worthless), not that they aim to cut down the prices of their products (Honda NYSE:HMC, Toyota NYSE:TM, Nissan not trade outside of Japan, Mitsubishi NYSE:MTU, Sony NYSE:SNE).  Will these companies be more profitable?  At least they will have one more factor.  Will Walmart’s (NYSE:WMT) spreadsheet make a dent (Yes it operates in Japan)?  Probably not. 

Reforms to boost productivity is obvious a step they will have to take.  However, the easiest way to score points for DPJ is to shrink the power of bureaucrats.  Opening trade barrier is not one of them.  Americans will probably continue to make most of their money through large heavy industrial sales or trading outposts in Japan.  How much can Obama lean on them? 

DPJ advocates for more fraternity in the face of US led capitalism which makes “human dignity is lost”.  Is DPJ socialist?  The NYT speaks well of Liberty, Equality, Fraternity.  Japan will be more interested at balancing itself between China and US rather than an ideological shift, although US never really helped with Japan’s ambition in the international politics (like getting a seat in UN Security Council).  After all, The NYT editorial mentions America twice and China 9 times.  All references about China are about its economic power.  And China can afford to make large inter-governmental purchase that US cannot in the near future.  Will this be a geopolitical shift?  Hardly, if Japan recovers quickly with great confidence about itself.  If Japan recovers with pace and DPJ wins re-election, then a whole new generation of voters will mature through the benefit of China trade.  That will make a shift.

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August 31, 2009 - Posted by | Current Affairs, Current Events, election, Japan, opinion, politics

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