A warning against the continuing folly of a stupid economic policy -- Akahata editorial, September 7Falls in Tokyo stocks do not stop.
In May 2001, immediately after the start of the Koizumi Cabinet, the Nikkei Stock Average (of 225 issues) rose to 14,500. Now it is below 9,000.
Chief Cabinet Secretary Fukuda Yasuo says that fluctuations are what share prices are about. Under the Koizumi Cabinet, however, share prices have kept falling, and stock markets are further plunging.
We already experienced it under the Hashimoto Cabinet
Stock markets are often referred to as a mirror of the real economy. Although expectations may differ from investor to investor, it is clear that a series of changes in share prices reflects investors' concern over the present and future economy.
While people are suffering hardship from the prolonged economic recession and unemployment, the Koizumi Cabinet is imposing early write-offs of bad loans held by major banks in the name of "structural reform" policy, causing more bankruptcies and job losses. This policy has dealt a crushing blow to the already weakened household economy and forced the nation's economy into the biggest negative growth since the end of WWII.
The prime minister assured the people that they will have a better future if they endure the present hardships. He kept the promise as far as the hardships are concerned. Domestic demand, which is a necessary condition for economic recovery, has been far from increasing. His policy has only helped to destroy the basis for economic recovery. These developments are behind the recent fall in share prices.
As long as the government continues the policy of imposing hardships on the people, it cannot pave the way for economic recovery. Nevertheless, the Koizumi Cabinet's plan for the coming year is one of plundering the people through forcing the people to pay an additional 3.2 trillion yen for social services and taxes. Unmistakably this policy makes people's future more uncertain and helps stock markets plunge even farther.
Clearly, the Koizumi Cabinet's policy of forcing the people to pay more reminds us of the major economic recession under the Hashimoto Cabinet, which was spurred by a consumption tax rate increase in 1997. This makes people even more apprehensive.
Economic experts are beginning to sound the alarm bells. Takagi Masaru, professor of Meiji University, said that the Koizumi "reform" is repeating the folly of the Hashimoto "reform" ("Weekly Economist" magazine). Morinaga Takuro, an economic analyst, on a TV program said he wonders why the Koizumi Cabinet should be repeating the same mistake.
The point is that Japan's economy is much worse than it was five years ago. The stock price (Nikkei average) at the end of 1996 nearly marked 20,000.
The U.S. economy, the last resort of the Koizumi Cabinet, has entered a burst of its own bubble economy. The government's scenario of increasing exports to make up for the loss of domestic demand turns out to have been a complete failure.
A string of corporate scandals involving Tokyo Electric Power Co. (TEPCO) and other major companies is slowing the economy.
If things remain unchanged, Japan's economy will go into a free fall, much worse than what the Hashimoto Cabinet experienced. The Koizumi Cabinet's economic policy is the major disruptive factor to the Japanese economy, and the stock market mirrors that concern.
Cancel plan of plunder
The government and the ruling coalition parties have begun to call for "anti-deflationary" measures to be implemented earlier and a supplementary budget. "Anti-deflationary" measures will be nothing other than the accelerated process of writing off bad loans held by major banks, which will result in more loss of jobs. The other steps which they talk about are use of public money to support the stock market and a bigger budget for public works projects, which have been shown not to worth. It is clear that such approaches lacks either logic or prospects of success.
That the cabinet has no other alternatives shows that the government lacks the ability to run the national economy. No make-shift tricks will work. It is necessary to cancel the plan for a big plunder of the people and drastically change the economic policy into one that cares for the household and its livelihood. (end)