Who ever said Japanese society was all about “wa”? — the tendency to preserve harmony.
In the space of just three weeks, two of the key figures for financial and economic issues in Japan’s new Hatoyama administration have managed to generate confusion, unnerve investors and rile markets.
Since the DPJ swept to power in the August election, it has been the finance minister, Hirohisa Fujii, making waves on the international front with contradictory statements about the government’s willingness – or lack thereof – to intervene to curb the yen’s recent rise.
But as Bloomberg reports on Thursday, in the domestic context, it is financial services minister Shizuka Kamei who has “sent bank stocks plunging, accused the central bank of sleeping on the job and blamed the nation’s biggest business lobby for increasing the murder and suicide rates”.
Kamei’s comments have drawn rebukes from Prime Minister Hatoyama and other leaders of the ruling DPJ, the report continued, but the 72-year-old former police official remains unfazed, telling the media that Hatoyama “can’t replace me” and that he has the premier’s full confidence.
In two of the latest examples, Kamei this week hit out at suggestions by Bank of Japan officials that the economy was improving, saying “the BOJ sometimes sounds like it’s talking in its sleep.” A day before, in remarks that would be the British equivalent of accusing the CBI business lobby of supporting mass murder, he told a business forum in Tokyo that companies have stopped treating people as human beings, leading to more murders and suicides, and that the Japan Business Federation, or Keidanren, “should feel responsible” for this.
And the week before, Kamei denied his earlier suggestion that the government implement a blanket moratorium on the repayment of loans to small and medium-sized companies. Even so, he added, the government wants to submit legislation to make it easier for companies to seek extensions on debt repayments and alter repayment conditions.
As the FT reported:
The minister’s comments seemed to contradict his earlier assertion in the last few weeks that the government would seek a moratorium of about three years on loan repayments made by SMEs. Those comments had raised concerns that the administration of Yukio Hatoyama, the new prime minister, would pursue anti-capitalist policies, and were blamed in part for a recent sell-off of Japanese banks’ shares.
Hatoyama himself tried to hose down the controversy, saying “there’s no agreement on the moratorium.” But incredibly, the next day, Kamei told reporters the prime minister supported his idea of a debt moratorium.
Kamei’s antics are now beginning to have a more insidious impact. According to a separate FT report, there are “two main reasons for the dismal underperformance of Japanese banking shares”.
The first is comments made by Shizuka Kamei, the new financial services minister, who is seeking to make it easier for small- and medium-sized companies (SMEs) to win extensions on debt repayments. This will make it difficult for the banks to function in a “return-maximising way”, says Peter Tasker, analyst with Arcus Research.
The second, more direct, reason is that investors are concerned about a coming wave of capital raising among Japanese financial institutions.
While Hatoyama has managed to maintain near-record approval ratings in his short time in power, the Kamei-Fujii duo seems hell-bent on changing that.
Related links:
Japan and Kamei – Lex
Japan’s minister of currency fluctuations – FT Alphaville