Friday, March 14, 2008

The Next BOJ Leadership? You Tell Me.

The DPJ is not going to back down from its opposition to Toshirō Mutō as BOJ Governor. It knew what the media and big business had wanted, and went and vetoed him anyway (as well as Takatoshi Itō, who lost his only chance for the job of his dreams - the DPJ Upper House majority is likely to last at least until the 2013 election). The LDP may appear to make some attempt at reconciliation after the Lower House vote, but that would be just for show. The search for a replacement will begin, unless there’s been someone else lined up all the while. With that, attention should turn to the gasoline tax revenue/road construction expenditures.

Speaking of which, one name that keeps coming up is Haruhiko Kuroda, President of the Asia Development Bank. Mr. Kuroda, like Mr. Mutō, is also a MOF lifer, but that association could be explained away if the DPJ so desires. He hails from the former financial and international side of MOF, so he cannot be directly identified with the mainstream, public revenues and expenditures side, whose dominance over BOJ was at the heart of the post-bubble BOJ reform in 1997 that, among other things, gave an equal voice to the Lower House on the Governor and Deputy Governor appointments.

Mr. Kuroda also has more than enough international experience to engage in verbal combat with US and European bankers and finance ministers in the G-8. More specifically, as a top internationalist bureaucrat, he can and will recite by heart in both languages every line in the playbook. That is a skill that also makes him one of the most predictable and boring public speakers on the planet, a definite plus for a head of a central bank.

Of course the DPJ could just as easily claim that an administrative background in banking and finance is just as bad, since it came with jurisdiction over the BOJ. But who else is there?

It’s too bad that Toshihiko Fukui, the incumbent, is a non-starter. He is a career BOJ official and once worked the media perfectly, two qualities that Mr. Kuroda could never hope to match. He is also articulate in the two most important languages. Thus, he should have been acceptable to the DPJ. Unfortunately, his is far more complicit than Mr. Mutō to DPJ eyes (or so the DPJ must claim) for the hyper-low-interest policy that robbed deserving widows and retirees of the modest fruits of their hard-earned savings. Add that investment scandal that once threatened to cut his tenure short, and you can see why the DPJ will reject him even as a stopgap measure while the LDP looks for a suitable replacement.

As for Masaaki Shirakawa, the one Deputy Governor who was acceptable to the DPJ, he simply does not look Gubernatorial.

Sorry. It’s difficult to imagine anyone of Mr. Mutō’s stature, network and experience stepping in at the last minute and announcing himself as the second choice candidate, when he doesn’t even know if the DPJ will accept him or not. Unless there’s someone else that we haven’t heard of at all, I think that it’s Mr. Kuroda’s job by default.

Have fun. Ladbrokes must love this one.

No comments: