<<<<AGREE. Hope people in Japan vote the right person!
.....they are not voting. the party elders choose--that is the dangeroous part.
Sunday July 19, 5:00 pm Eastern Time
Japan skeptics focus on next LDP move after talks
By Al Yoon
CHATHAM, Mass., July 19 (Reuters) - Bankers and analysts at a symposium here said they remained skeptical Japan will be able to solve its economic woes soon but that the upcoming change in the leadership of the ruling political party may strengthen the resolve for change.
In fact, they affirmed statements from Japanese officials that last week's upset of the ruling Liberal Democratic Party (LDP) in parliamentary elections would not dampen Japan's reform efforts.
''The election helps the reform process and to focus (Japan's) attention,'' said Matthew Goodman, director of government affairs at Goldman, Sachs (Japan) Ltd., who added the leadership race for the LDP raises the stakes in terms of the ultimate size and scope of fiscal stimulus.
The United States and other Group of Seven nations have stepped up calls for stronger, more decisive fiscal reforms in Japan after last week's stunning setback for the LDP and ensuing resignation of Prime Minister Ryutaro Hashimoto.
The LDP is slated to elect its next leader, who would automatically become prime minister, on Friday, July 24.
Financial markets were volatile for the week as fears rose and ebbed that a political vacuum would develop, clouding Japan's economic policy.
Goodman said Japan has had an epiphany of sorts in the past six to nine months in that it recognizes that it needs to take strong steps domestically.
A handful of LDP officials assembled at the two-day informal symposium here said the change would breathe life into the pace of banking reforms, cleaning up some $600 billion in bad loans and in implementing permanent tax cuts to perk up stagnant domestic demand.
Japan Vice Finance Minister for International Affairs Eisuke Sakakibara, nicknamed Mr. Yen for his ability to jolt currency markets, said the change in leadership would be used as a springboard for reform.
''I have argued that this change will accelerate the reform,'' Sakakibara told reporters after he made his keynote speech on Saturday to the symposium held on Cape Cod, Massachusetts.
For all the assurances from Sakakibara, and similar words from LDP member Yuji Tsushima and parliamentary Vice Minister of Finance Yasuhisa Shiozaki, uncertainty over Japan's ability to speed reforms lingered.
''The possibility (of faster reforms) is there in the face of a great deal of skepticism,'' said a Tokyo-based economist at a major U.S. investment firm, who added that ''we've got to see a cabinet that is action-oriented, we've got to see that the FSA (Financial Supervisory Agency) has teeth ... there is a whole series of action that still needs to take place.''
The U.S. has stressed that resuscitated economic growth and a healthier banking system in Japan are key to a broader recovery in Asia.
Senate Finance Committee Chariman William Roth said at the end of the symposium on Sunday that he remained concerned about Japan's reform efforts and reiterated that quick action is needed.
Richard Medley, president of consulting group Medley Global Advisors, said there was a clear consensus at the symposium that the reform process is now unstoppable despite the likelihood there is still part of the LDP that would like to ''plug'' it, or slow it down.
The process has already been manifesting itself in ''micro ways,'' like mergers and takeovers in the Japanese financial sector, said Medley. But he would be reserved on Japan until the LDP better defines its intentions after the new prime minister is chosen and key posts are filled.
''There are real signs of progress ... but no one is hiding the fact that this is a moment of intense turmoil where the party is either going to redefine itself slightly or fall back into the old mold, and it's really too early to tell which one of those is going to happen,'' Medley said.
Despite Japan's proposal for a ''bridge bank,'' which would provide liquidity to sound creditors of failed banks and smooth the clean-up process, skeptics wondered how to make management for fallen banks accountable and if the senior ranks were any wiser after crisis.
Some symposium participants had expressed that the management of problem banks should be changed, which put some Japanese attendees on the defensive, according to one Japanese source.
Medley said the Japanese participants often engaged in arguments with one another during the closed-door sessions, which was a refreshing change from old LDP ways and a good sign that change could come to the party.
The mood of discussions was far from confrontational, however, said Hal Scott, Nomura Professor of International Financial Systems at Harvard Law School and U.S. organizer of the symposium. |
