Is Japan's Takenaka a reformer or destroyer?
Reviewed By Hitoshi URABE
"Is Japan's Takenaka a reformer or destroyer?"
By George Nishiyama (Reuters), Yahoo
"Anatomy of a Crackdown -- How Takenaka may push weak borrowers over the edge"
It is almost unbelievable that it has been only two weeks since Mr. Takenaka succeeded the position of Financial Services Minister while retaining the rank as Economics Minister, effectively making him the strongest figure in directing the future of Japan's wealth creation and the welfare of its people. And it is also almost unbelievable that just in this two weeks, ten percent of the value of shares in the Tokyo Stock Exchange has evaporated, marking a record low in more than nineteen years.
There was in fact a certain level of skepticism in delegating such an enormous power to a scholar, having no experience in bureaucracy or politics, and not a member of the Parliament. But there were those who looked forward to Mr Takenaka's this unrestricted position where he would be able to act more freely based on his knowledge and belief and not to bog down in the middle of quarrels among interested parties and vested interests.
Two weeks ago, it seemed there were more commentators who take the latter position than the former. But the sentiment of the people shifted drastically in a fortnight. Many of the comments heard on the street now describe Mr Takenaka as a determined destroyer, set to straighten out the bad loans at the cost of massive corporate failures and a surge in unemployment.
The initial anxiety of the people was exacerbated by a number of incidents. First, a team was set up to support Mr Takenaka in cleaning up the financial mess which included Takeshi Kimura, president of KPMG Financial Inc., who is believed to be one of the most tough-minded in dealing with the bad loan issue, not afraid of any adverse side effects it might generate. Then it was reported the Minister had declared in a news conference that no company is too big to fail. By that time, before any action in line of policy realization was taken and no formal policy statement was publicized, the anxiety turned to fear, then to panic, and the stock market collapsed. The Businessweek article introduced above explains this mechanism very clearly, that how an attempt to cure the financial problem may destroy the whole economy along the way.
The article by the Reuters above states, "For Takenaka, the change in the market's view is a mystery." Perhaps so, but it is in fact so, then Mr Takenaka clearly lacks a sense of politics, a resource needed very badly in pursuing a goal, which could have been formulated academically but must be realized in a real world.
It has been pointed out in a number of occasions that the Prime Minister Koizumi has not since taken office explained his assessment or prescription on the economy in his own words. The Reuters article above also quotes a comment by an economist, "Koizumi's just left it all up to Takenaka." Perhaps Mr Koizumi is not well equipped personally to discuss economy. This does not mean he is not qualified as the Prime Minister, of course. But since it would be only the Prime Minister who as the last man could direct Mr Takenaka if and when necessary, it might help to regain people's confidence by Mr Koizumi showing even a small indication that he does have some level of sensitivity and receptiveness in economics.