Japan Press Weekly

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2008 January 23 - 29 [POLITICS]

Stop subservience to U.S. in dealing with financial crisis

Akahata editorial

A global stock market meltdown hit the world economy at the beginning of 2008.

The stock plunge appears to have been stopped for the time being, but no fundamental problems have been solved. Further stock and financial crises may occur.

US-originated crisis and recession

The global stock market meltdown occurred in the wake of the U.S. sub-prime mortgage meltdown that begun last summer, followed by the U.S. real economy gradually entering a recessionary stage since late last year. It is obvious that the current global financial crisis started in the United States.

The U.S. economy has prospered though absorbing funds from around the world by taking advantage of the strong U.S. dollar. However, the world is entering an era in which more and more investors are selling dollars. The need now is for the United States to drastically review its economic and financial policies that have done nothing to put speculative money under control while allowing the dollar to flow out massively due to its snowballing deficit in international balance of payments.

However, when the sub-prime mortgage crisis broke out in August last year, the U.S. Bush administration was saying that the US economy was fundamentally strong.

This year, amid the serious concern triggered throughout the world by stock plunges, the United States announced an economic package of 16 trillion yen on January 18. On January 22, the U.S. Federal Reserve announced a 0.75 percent cut in the federal funds (FF) rate. However, the Bush administration remains reluctant to take steps to regulate speculative funds in defiance of international calls to do so. This makes it impossible to solve the present problems using a long-term perspective.

In Japan, Prime Minister Fukuda Yasuo in his policy speech to the Diet stated that the need is to respond “to the impacts on our economy triggered by the U.S. sub-prime loan issue,” but stopped short of implementing specific measures. He just said, “We will aim to make Japan one of the core global financial centers by further enhancing the international competitiveness of Japan’s financial and capital markets.”

At the February 25 House of Representatives Budget Committee meeting focusing on the issue of global stock plunges, he just said, “The key is how other major countries will deal with this problem.” Thus, he failed to show what Japan will specifically do on this issue.

In complete disregard of international calls for common efforts to curb speculative money flows, the Fukuda Cabinet has put cooperation with the United States before anything else. When the control of speculative funds was discussed at the G-8 Summit in Germany last year, Fukuda showed reluctance to regulate them. The Fukuda Cabinet also has a similar stance on the question of environmental policy. The Fukuda Cabinet’s subservience to the United States in monetary and environmental policies and its support for the U.S. war in Iraq, which is under strong criticism even in the United States, are two sides of the same coin.

Stop serving U.S. and financial circles and adopt people-first policy

Prompted by the present international financial crisis, the world is beginning to stop relying on dollars and moving towards a new international financial order. In sharp contrast, the Fukuda Cabinet’s monetary and financial policies placing importance on the United States are further distorting the Japanese economy. It should immediately move away from these policies.

At a news conference on January 10, the final day of the Diet session, Japanese Communist Party Chair Shii Kazuo stressed the need to make “a shift in the political emphasis from one of serving the interests of the United States and business circles to one of caring for the people.”

To tackle the worldwide financial crisis triggered by the United States, the JCP also calls for a shift in monetary and financial policies that are truly independent and prioritize the public over the U.S. and the business world.