Japan monthly review: Trying to remain standing after a difficult November

By David Azócar

Four major communicational errors by the prime minister (accompanied by the obligatory retractions),  the "official" entry of Japan into the worldwide recession following two consecutive quarters of negative growth and the beginning of the hunting of whales in the Antarctic were three of the events that marked a difficult November for the leading economy in Asia.

The penultimate month of 2008 has been both economically and politically complex for the world's second largest economy. A financial crisis that has build into a negative growth of 1.0% during the past six months and Prime Minister Taro Aso’s drop in popularity marked the month as being best forgotten.

The first of these incidents occurred Nov. 17, when the PM mentioned that toll road revenues should be distributed to local governments without restrictions on their use. His fellow LDP members received the news quite badly. Only months earlier, the party had worked towards restricting the use of these funds to public works projects. 24 hours later, Aso had to back-pedal on his comments and indicate that the revenues would, in fact, be destined for said use.

Not a day passed before Aso again torpedoed a flagship project of the LDP, the privatization of the Japan Post Service. The controversy arose from a comment the leader made regarding the sale of Post shares. Aso stated: "At a time when stock prices are falling, who would be foolish enough to insist that the shares must be sold off? It is only natural to sell off shares when stock prices are high."

The reaction to his comments was not long in coming. After discussions with the LDP membership, the PM had to again change the tenor of his comments. Aso stated that he was only referring to the fact that shares should not be sold when prices are so low.

Not content with the aforementioned gaffes, Nov 17 was the scene of Aso infuriating Japanese physicians by quipping that most were "badly in need of common sense." Minister of Health, Yoichi Masuzoe, had to quickly triage the situation, saying it would be very regrettable if the president's statements discouraged doctors from continuing their efforts during such difficult times.

The leader of the ruling coalition concluded his series of unfortunate statements on Nov. 21. The PM criticized the elderly for having increased medical costs and being a tax burden. His comments were made during a ministerial meeting on economic policies. “They are always limping about and visiting the doctor,” Aso said, adding that "they should be reproached for their lack of exercise."

His comments resulted in immediate and fierce criticism in the media, which led to the prime minister apologizing only days later. Aso told reporters that he had been trying to refer to the value of preventive medicine and that he had simply highlighted the gap between people who care about their health and those that do not.

In economic news, Japan suffered heavily from the US slowdown. The US is its largest trading partner and consumer of Japanese manufactured goods. This is reflected in its 1.0% negative growth of late. Given the last two semesters, Japan is now considered to be in recession.

The first to be hit was the Nikkei, losing one quarter of its value since last October. As for the crisis itself, Japan also sees the international situation as an opportunity. Lending a hand from its abundant reserves, Japan announced Nov. 12 that it was willing to lend $100 billion to the International Monetary Fund, in order that it might help countries most affected by the crisis (and thereby ensure a debt during the next few years).

On Nov. 21, the Bank of Japan announced that it will maintain interest rates at 0.3%, indicating that monetary policies alone are not sufficient for economic recovery.

Another of the hardest hit has been the automobile sector. Most of Japan’s major carmakers have announced production cutbacks. The company reported Honda will reduce its annual production by nearly 150,000 vehicles. Its rival Toyota said it will halve its workforce by eliminating many of its temporary employees. It will also close all its plants in North America for two days during December.

Finally, November ended with a story that revives criticism by environmentalists, an issue which marked the first quarter of this in Japan. We refer to the hunting of whales. On November 17 the Japanese whaler, Nisshin Maru, sailed from the Japanese coast to the Antarctic seas to begin Japan’s annual whaling season.

Despite having no official confirmation of the departure, Greenpeace reported the ship’s departure. Authorities limited their statement to the fact that the 2008 whaling quota would remain unchanged from that of 2007.