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Hatoyama quits as prime minister

Posted by Admin on June 4, 2010

Hatoyama quits as prime minister
Futenma fiasco, fund scandals, SDP exit take toll; Ozawa also out
Staff writer

Ending a turbulent eight months in office, Prime Minister Yukio Hatoyama said Wednesday he will step down to take the blame for his Cabinet’s plunging approval rate, brought on by funds scandals and the row over relocating a U.S. base in Okinawa.

Hatoyama also said Democratic Party of Japan Secretary General Ichiro Ozawa, embroiled in a shady transfer of political funds, will step down from the party’s No. 2 post.

Meanwhile, Deputy Prime Minister and Finance Minister Naoto Kan, who is considered the top candidate to succeed Hatoyama, met with him later in the day and told him he plans to run for the DPJ presidency and thus the prime ministership.

DPJ members from both chambers of the Diet are scheduled to choose the party’s new leader at a meeting Friday. That new chief will be elected prime minister at the Diet, where the party holds a strong majority in the Lower House.

“I apologize for the amount of confusion caused,” Hatoyama told a general meeting of DPJ lawmakers held at the Diet. “I thank you all for letting me lead (the administration) for the duration of eight months. I hope you will be able to create a new DPJ and a new government,” he said.

Later the same day, Hatoyama told reporters that he will not immediately resign as a Diet member but will not run for the next Lower House election, indicating he will retire as a politician after the chamber’s next general poll.

Hatoyama also said he had already expressed his intention to step down during Monday’s meeting with Ozawa and Upper House heavyweight Azuma Koshiishi at the Diet building.

On Wednesday, Ozawa reportedly said the new Cabinet will probably be formed Monday and he “regrets” he couldn’t fulfill his duty to support Hatoyama.

Despite the slide in the opinion polls to less than 20 percent, Hatoyama was widely expected to remain in his post with only two weeks left in the ongoing Diet session and about a month until a crucial Upper House election.

But during the surprising farewell speech Wednesday, Hatoyama pointed to two blunders that continued to cloud his administration.

“First is the issue over Futenma’s relocation,” Hatoyama said, apologizing for his unsuccessful bid to relocate U.S. Marine Corps Air Station Futenma outside of Okinawa despite months of searching for an alternative.

Hatoyama’s decision to keep the base in Okinawa resulted in the departure of the Social Democratic Party from the ruling coalition, after SDP chief Mizuho Fukushima was sacked as consumer affairs minister for refusing to sign the Cabinet resolution on the base deal.

The prime minister reiterated the importance of keeping Futenma in Okinawa for regional security, but said he hoped Japan “will be able to provide protection for itself” in the future and free Okinawa from the burden of hosting the bases.

Hatoyama also pointed to the continued political funds scandals that dogged his party as a reason for leaving office.

“I never imagined myself” being embroiled in such a scandal, he said, touching on the unregistered donations from his mother to his political funds management body that led to the indictment of his former secretaries.

Ozawa’s case, involving irregularities related to the purchase of a plot of Tokyo land in 2004, also resulted in his aides being indicted. Ozawa quit the DPJ presidency last spring over a separate funds scandal.

In addition to Ozawa resigning his post, Hatoyama urged DPJ Lower House member Chiyomi Kobayashi, also involved in a scandal involving illegal donations, to step down as a lawmaker.

While Hatoyama in his speech highlighted the new child allowance and tuition-free high schools as his Cabinet’s achievements, DPJ members were quick to move on and look toward the party’s future.

DPJ Lower House member Hajime Ishii signaled that Kan is a strong contender to succeed Hatoyama, saying his party doesn’t “have much time” to look around. “There is no question that he is a candidate, since we need to make a quick decision,” the veteran lawmaker said.

But Ishii, who also serves as the DPJ’s election campaign chief, expressed concern over how Hatoyama’s resignation will affect July’s Upper House election. “I’ve always said that changing the cover of a book doesn’t have much effect” on voters, he said.

Land minister Seiji Maehara, known to have distanced himself from Ozawa, said the two DPJ chiefs probably made “a painful decision,” but one that demonstrates the “clean politics” the party has sought.

While also considered a candidate to succeed Hatoyama, Maehara did not clarify if he will run for the DPJ presidency. But he revealed he exchanged opinions regarding the party’s future with administrative reform minister Yukio Edano and national strategy minister Yoshito Sengoku, who are both vocal critics of Ozawa.

DPJ Upper House member Koji Matsui, who serves as deputy chief Cabinet secretary, said the time is now right for his party to “regain what it once had, change from within and reform itself.”

Meanwhile, other DPJ members were left in shock about Wednesday’s abrupt announcement by Hatoyama.

“I saw the breaking news alert on television, but it could be a false report,” one DPJ lawmaker said heading into the general meeting of party members. “But a plenary session of the Upper House was canceled, which is a sign that there will be a big announcement.”

Chief Cabinet Secretary Hirofumi Hirano said Hatoyama’s decision was “extremely regrettable,” but added that the government will remain composed and fulfill its duties until a successor administration is installed.

Hirano, who served as a key figure in negotiating the relocation of the Futenma base, said he “felt a sense of responsibility” over Hatoyama’s exit.

Health minister Akira Nagatsuma also expressed regret over the development, saying any prime minister should remain on the job for a certain period to properly govern the state.

“It’s regrettable, but the party must build a strong structure,” Nagatsuma said.

Opposition parties meanwhile were swift to criticize Hatoyama’s move.

“The resignation of the prime minister is merely like changing the costumes in order to trick the public,” Liberal Democratic Party Secretary General Tadamori Oshima told reporters.

“We will seek to have the Lower House dissolved now,” Oshima said.

The Japan Times: Wednesday, June 2, 2010

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False Profits…

Posted by Admin on February 8, 2010

False Profits

Sunday 07 February 2010

by: Leslie Thatcher, t r u t h o u t | Book Review


The Neo-Cons

False Profits: Recovering From the Bubble Economy

By Dean Baker

PoliPoint Press, 2010

He who feels punctured must once have been a bubble.

– Lao Tzu, Tao Te Ching, 6th century BCE

As the nation struggled to recover from the worst economic downturn since the Great Depression, the people who got us here are desperately working to rewrite history. The basic story of this economic collapse is very simple. The Federal Reserve Board, guided by its revered chairman, Alan Greenspan, allowed an $8 trillion housing bubble to grow unchecked.

– Dean Baker’s “False Profits”

The delicious double-entendre of Dean Baker’s most recent title is enhanced by the book’s cover photo of a trio of false prophets, Ben Bernanke, Alan Greenspan and Henry (Hank) Paulson, all of whom are thoroughly excoriated within the book’s pages for their responsibility in feeding, prolonging, misdiagnosing and incorrectly responding to the 2007-2009 financial meltdown and the associated economic collapse. However, the book also chronicles the loss of $8 trillion of housing “wealth,” $1.4 trillion in annual demand, whatever financial security the vast majority of baby-boomers ever had, “increases” in homeownership rates and any other widespread economic gains associated to the post-2000 period. Truthout has published Dean Baker’s columns about net job losses for 2000-2010, a decade that also saw a 26 percent drop in the stock market, the elimination of the $236 billion federal budget surplus President Bush inherited and its transformation into a record deficit and the overall deliquescence of any societal and most people’s personal economic “profits.”

While most of us find ourselves economically worse off after the last ten years, some have done extremely well and most of those who bear the burden of responsibility for the American economic catastrophe have suffered no consequences whatsoever: financial, social or professional. Writing about Bernanke specifically, Baker’s remarks are equally apposite to other titans of finance, central banking and the financial regulatory regimes:

It would difficult to imagine someone with a comparable record of disastrous failures being allowed to remain in most jobs. Would a nurse who routinely administers the wrong medicine and causes his patients to die be allowed to keep his job? Would a bank teller who leaves the cash drawer open remain in her position? How about the school bus driver who comes drunk to work?

In most lines of work, a certain level of competence is expected. Unfortunately, this is not the case for those who set US economic policy.

Baker places the burden of blame on regulators and the political establishment because they utterly perverted their mission:

Progressives do conservatives’ bidding when we denounce them as “market fundamentalists.” We should, instead, be exposing their use of government to set up structures that ensure the market works to benefit the wealthy. We could then bring our policies into focus as those designed to ensure that market outcomes will benefit the bulk of the population.

The market is just a tool, like a wheel or a hammer. It would be bad politics and bad policy for progressives to make a big scene attacking the wheel. It is similarly bad politics and bad policy to put these attacks on the market at the center of a political agenda.

Baker never attacks the wheel; instead he demonstrates how it was deliberately allowed to run wild. As Baker himself warned as early as summer 2002, all indicators pointed to the rise in housing prices as a classic bubble, divorced from any tether in reality, yet the regulators, media and most mainstream economists kept pumping hot air into that bubble. Further, Dean Baker exposes the pathetic excuses that the regulators did not have the necessary tools to put on the brakes for the self-serving and specious rationalizations they are. Ever debunking the myth that somehow it was the “free” market at work, he relentlessly exposes how regulation, regulatory bodies and the public officials charged with supervising the financial industry have used their power to favor a narrow swathe of private interests over the public good. And, as always, Baker highlights what alternatives were and are available to turn that equation around. Baker’s relentless exposé of what is actually subsidized and who profits from specific policies, how wealth is transferred and how all this activity is disguised fuels his narrative with “true prophet” power.

“False Profits” combines impeccable scholarship – assembling an array of relevant facts and data totally accessible to non-economists – with Baker’s acerbic, but unforced, wit and verve. His iconoclasm constantly renews its sources and consistently targets those “false prophets” in all sectors who contribute to misleading the American people. Baker is the journalists’ economist, the reality-based economist: whatever other case he may be making, he invariably demonstrates why correct and timely information and clear understanding are essential to economic problem-solving, as well as how “fudges” harm everyone.

The book’s structure begins by a backward look, an analysis of precisely how we reached the present situation and what our present situation actually is (in chapters, “Economic Collapse: It Is Their Fault,” “Surveying the Damage” and “The Terrible Tale of the TARP”), then pivots on an exposition of why correct diagnosis and analysis are so crucial (“Will They Ever Discover the Housing Bubble?”), develops the case he has presented with three chapters of prescription (“Stimulus: It Is Just Spending,” “Real Stimulus: Programs to Boost the Economy” and “Reforming the Financial System”) and concludes with a resounding final call for accountability (“Remember the Housing Bubble”).

Unfortunately, recent events – the absence of any effective policy to slow down foreclosures; the most probably ineffective and unquestionably inadequate stimulus measures in the just-presented budget; financial services regulatory proposals that do not address the causes for regulatory failure – suggest that the present administration is only slightly more willing to learn from Dean Baker’s acute analyses than was its predecessor. And Ben Bernanke’s reconfirmation as Fed chairman is just the most recent and flagrant sign that the administration has no intention of investigating, let alone punishing, the regulatory – and individual regulators’ – blunders that led to the present pass.

Economics is a science of human behavior. It rests on the observation that people respond to incentives. Consequently, Baker’s apparently political argument that there must be consequences for the failures of judgment and action that resulted in the economic meltdown is a quintessentially economic one. With no disincentives for failure and the ever-present incentives for complicity offered by the industry that has captured them, regulators will continue to fail the whipping boy who pays for their transgressions – us.

1. Dean Baker, “False Profits,” p.5.

2. OpCit. p.9.

3. Read the book for the argument, but the unequivocal conclusion is, “The regulators – first and foremost the Fed – had all the tools necessary to combat the bubble. They chose not to.” (p.153)

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This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Leslie Thatcher is Truthout’s French Language Editor and sometime book reviewer.

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