Sunday, March 28, 2010

I Would Be Happy to Be a (Paid) Pundit and/or a (Professional) Journalist; That Said…

“That said” has become one of my favorite expressions lately. That said…

The other night, I was having a conversation with a professional political analyst whose judgment I value highly, and one of the subjects that happened to be fit for this family-friendly blog—it was a Friday dinner fueled with cocktails and wine—was the noticeable difference between op-eds and even reporting in mainstream journalism on one hand and analysis on the other. Our first conclusion was that the former dug up facts that suited conclusions dictated by ideology and conventional wisdom while the latter tried to let the facts dictate the conclusion.

Confession: We were being unkind and judgmental; we both know many a journalist or talking head who is more than a match for the better-than-average political analyst. (on fact, some of our best friends are…) And you know how badly financial analysts failed their clients during every economic bubble. Perhaps, then, the takeaway is this: The facts, ma’am, just the facts.

But no, the analyst had a further insight: It’s the context created by the analysis that matters, since the consequences of any investment accrue to the investor and the investor alone. At the end of the day, the call is almost trivial,, since it is the responsibility of the investor and the investor alone. The analyst can only provide the context.

Is that a copout? I don’t know. You make the call.

A collateral point that I noticed later is that it’s much easier to agree on the context than on the conclusion. And that, my friends, is the fundamental basis of a civil discourse. JM, with whom I so often have to agree to disagree, will agree to that.

Saturday, March 27, 2010

Why Losing the July Election Can Be a Blessing in Disguise to the DPJ

I’ve been saying that the DPJ must dump the SDP in order to bring more coherence to policymaking. But the latest uproar over the joint official announcement on Japan Post by cabinet ministers “Anything But” Shizuka Kamei and Haraguchi to raise the JP deposit limit from 10 million yen to 20 million yen and insurance limit from 13 million to 25 million among other things—I’ll come back to this later if time and professional obligations allow—is yet another piece of proof that the PNP (actually Kamei’s one-man show since Tamisuke Watanuki and Hisaoki Kamei lost their seats in the 2009 Lower House election) is a more expensive drag on the DPJ policy agenda.

Kamei is one of the shrewdest political operators around. He makes outlandish demands, but will settle for what he can get. He has been supremely successful in this game—except for a once-in-lifetime miscalculation in 2005, when Prime Minister Koizumi made good on his threat to toss the LDP Lower House members who voted against his JP privatization bill. Fast-forward to 2010, when the first two rounds of contradictory statements among coalition notables have taken up the better part of the last two days: Kamei’s announcement, the complaints from the other cabinet ministers, Hatoyama’s attempt to play both sides of the debate, Kamei’s counterclaim I had the prime minister’s consent!, Hatoyama and his chief cabinet secretary’s counter-counterstatements---but you get the picture.

However, if the DPJ loses enough seats in the July Upper House election to prevent the current three-party coalition to command a there, the SDP and PNP can become useless, since Komeito—at a minimum likely to break even—will be able to give the DPJ a majority all by its lonesome self. And as I’ve been saying for some time now, Komeito is the natural coalition partner for the DPJ. Now, Komeito may decide to stay out of the cabinet and cooperate on a case by case basis. But how can that be as bad as cohabitation with incompatible bedmates?

Thursday, March 25, 2010

I Further Interrupt My Work to Bring You This Warning


I received a very authentic-looking email from the "GOOGLE TEAM" telling me that they were going to block my account for "unusual account activity" and that I'd have to type in my username and password in the sign-in box, the usual one, except that it appeared in the email. The email address of this "GOOGLE TEAM"? NOREPLY at glmail .com! HAR! I rebooted the browser and immediately received it again, so someone (or more likely something) may have planted a cookie or spyware on my PC. Their objective is obvious. Thought I’d pass this on.

So You wanted to Watch Me Quack Like a Duck?

Here you are, courtesy of Temple University Japan Campus—and AGM, who alerted me to it. It’s SFW (and no, it was not directed by Jefery Levy, though he might have given me an appropriate title) but it does have sound.

You have been warned.

Wednesday, March 24, 2010

Will the Domino Tiles Fall and If So When?

My metaphors of the month: The “gravity well (for the Yoshida Doctrine)”, and the “domino tiles (for the Ubukata-to-Ozawa sequence).”

I was asked a question related to the second one, namely: When and how likely is it that Yukio Hatoyama will resign—before the July election, or after? My answer was-is: Before the election in late May or early July if, as is highly likely, it becomes clear that the Futenma helicopters revert to their fifteen-year, in situ, default position while the US military embarks on the multiyear redeployment of 8,000 Marines and their dependents to Guam before the Japanese Government has second thoughts about its multibillion dollar send-off. This is guaranteed to leave everyone, including locals whose livelihoods depend on business from the Marines, unhappy. More important to the DPJ, this will create negative headlines and talk show rakings that will push poll numbers down. Hatoyama goes down for squandering political capital on a useless endeavor, taking Ozawa with him by assuming responsibility for his own political financing scandal. There’s a good chance that the better part of this scenario will come to pass, but can Hatoyama take a hint? Nothing that we’ve seen so far suggests that he can, or, on a not unrelated point, that he’s feeling any pressure. Does “blithely nervous” make sense?

After the election, though, the odds of his going any time soon becomes worse since, in my view, the DPJ won’t lose enough seats to make media demands for his resignation so strong that the DPJ can no longer resist.

Tuesday, March 23, 2010

From Dismissal to Reassignment to Good Job, Yukio: The Rehabilitation of Yet Another Yukio and What It Means

On 17 March, Yukio Ubukata, one of thirteen DPJ deputy director-generals—off topic, but that’s lot of DPJ deputies, a revealing detail in itself— gave an interview to Sankei Shimbun, the nationalist/free-market conservative daily, in which he offered a scathing criticism of the concentration of power in the hands of Ichiro Ozawa, the director-general, and the stifling effect that it had on DPJ policy-making. He went on to take Ozawa to task for failing to provide an adequate explanation of his complex political financing operations that brought criminal indictments to three of his political assistants past and present including an incumbent Lower House member, saying that “I guess [Mr. Ozawa] can’t explain.”

Retribution appeared to come swiftly. By the 19th, two days later, Ozawa had reportedly given the nod to Ubukata’s dismissal, which would be formalized at a couple of regular party leadership sessions on the 23rd. As the media unanimously came down against this decision, the decision was downgraded over the weekend to a less punitive “reassignment.” Today, the DPJ canceled the leadership meetings, Ozawa and Ubukata kissed and made up—okay, made up—and Ubukata agreed to stay on, with Ozawa’s blessing.

Now here’s the DPJ’s problem:
Ichiro Ozawa has serious, multiple, political financing issues that brought criminal indictments on three of his aides past and present. He dismisses questions with the assertion that the Public Prosecutors Office has given him a clean bill of health. Only a small proportion of the Japanese public swallow that claim or what little explanation he has given in the past. Few if any mainstream figures outside the circle of DPJ Diet members loyal to him are willing to defend him publicly.

Prime Minister Yukio Hatoyama has serious political financing issues that have brought a criminal indictment on a couple of his (now) ex-aides. Hatoyama claims innocence, but doubts remain. Nevertheless, there’s a widespread public perception that Hatoyama is just flaky enough that he may actually have been unaware of the goings-on. In any case, the public is more forgiving—if more scornful—of Hatoyama, since the million-dollar plus equivalent of illegal cash flowing annually into his political coffers came from his mom’s bank account and his own.

Tomohiro Ishikawa is Ozawa’s ex-aide Diet member under criminal indictment. He has left the DPJ of his own volition, but has not resigned from the Diet.

Chiyomi Kobayashi is a Lower House member from Hokkaido whose ex-deputy campaign manager is appealing a conviction for election campaign violations. If his appeals are rejected, Kobayashi will automatic lose her seat under Japanese law. Her fortunes took a further turn for the worse on 22 March when, in a different case, the Hokkaido Teachers Union and two of its leaders were indicted for making illegal campaign donations to Kobayashi, who was called in for questioning but was not indicted. She held a press conference the same day, in which she stated that she would not resign or leave the party.
Public opinion aside, it becomes evident why the DPJ cannot dismiss/reassign Ubukata, or otherwise punish anyone else who speaks up or otherwise embarrasses the party short of a criminal sentence whose appeal has been rejected conclusively by the Supreme Court of Japan. The DPJ has a train of political domino tiles.

Couple this with the rise of the Your Party in the polls and its ability to find willing candidates—not up around twenty—for the July election is making my bet that the DPJ won’t lose more than five seats a little shakier than I had thought. However, I strongly suspect that some of the Your Party gain will come out of the LDP, so I’m still willing to take that wager for, say, a nice lunch—with each of the first five takers?

I’ll slice the odds to four seats for the first person who guesses the name of the “Other Yukio.”

Forgot to post the title. Out of practice, I guess.

Monday, March 22, 2010

What, We Worry? Or, China as a Non-Threat, Revisited

This is for the most part a memo that I wrote in the course of certain work that I do. Since it’s not going to see the light of day, I won’t be violating any professional obligations if I post it here.

I have spent the better part of the 21st Century arguing against analyses from the Japanese right and even not-so-right regarding China as a threat that increasingly emanate a sense of urgency. Given this experience, I do not pretend to be able to force on you a radically different perspective. Therefore, I am merely using this opportunity to gather my thoughts and see you what you make of them.

The Japanese, for better or worse, are not Koreans, not Pakistanis; they are comfortable playing second fiddle. For the first millennia and a half of its existence as a nation, Japan willingly paid (non-tributary) tribute to China. There is no reason to believe that it cannot settle into that East Asian role once again—if it comes to that. In the meantime, after an initial outburst of alarming rhetoric and the high-profile fumbling of the Futenma Air Base issue, Prime Minister Hatoyama has been sucked back into the Yoshida-Doctrine gravity well, naming the United States as Japan’s undisputed No.1 squeeze.

Japan: We’re No.2, so we try less harder.

Pop history aside, China currently does not pose anything approaching an existential threat to Japan. China disputes Japan’s sovereignty over the Senkaku Islands, but has made no overt move to challenge Japan’s possession. It also disputes Japan’s claim that is an island—a charge, if sustained, would cause Japan to lose a big chunk of its EEZ—but has not taken its claims to the Hague. There is a large swath of EEZ/continental shelf that both sides lay claim to, but China has carefully avoided encroaching on the disputed area in developing gas fields there while Japan is unable to do so economically. China, like Japan with regard to the Northern Territories and Takeshima, tacitly recognizes the reality behind the maxim that possession is nine points of the law and sees no advantage in changing the status quo.

Therein lies the falsehood in an Israeli analogy, a juxtaposition of two nations isolated from their neighbors with scant prospects of reconciliation. Israel was born into an overwhelmingly hostile environment. It has improved its security situation considerably since making peace with Egypt and Jordan, but continues to face grave existential threats to this day as a Euro-American—but increasingly nativist—outcrop in a sea of Moslem Arabs. By contrast, the high seas have long served Japan as a natural barrier to China’s imperial outreach. Technology has tamed and shrunk those waters, but has also transformed them into a super-gateway for commerce and interchange. Speaking of which, short of a military blockade, how is China going to seal off Japan’s sea lanes without strangling itself, since both countries are resource-poor economies that depend for the most part on the same trade routes?

Of course it’s always good to plan against capacity, not intent. And we cannot forget the aggressive moves that the Chinese military made in the 1990s against Southeast Asian neighbors regarding disputed islands as they affected claims on seabed resources. Japan does have a substantial navy in its Maritime Self-Defense Force, but just to be sure, all but the left-most politicians in Japan want the US 7th Fleet to stay, if nothing else.

But enough about national security. As I indicated with regard to the Israeli analogy, as China has grown, so has the economic relationship. Some thinkers like to see the rise of China as an undesirable outcome of some kind of a zero-sum game. But most of their arguments confuse ratios with sums. No doubt they will have their followers to the right, but the reality is that, economically speaking, a strong China is a desirable China.

But does China have other ways to crush Japan on the economic front? Could it demand, for example, that ASEAN member countries buy Chinese nuclear reactors in exchange for access to the Chinese market for their own goods? Plausible, if not probable. But remember, China and ASEAN member countries are members of WTO in good standing. More important, a Japanese nuclear power play is a US and quite likely European play as well, as would be an aircraft deal; such is the situation of so many large-scale, high-tech undertakings today. In taking a mercantilist position against Japan, China would be going up against the rest of the West as well. (I have more to same from what I would guess to be the ASEAN perspective, but I’ll leave it to the Southeast Asia analysts to argue the case on its behalf.)

Of course it need not come to that. And it won’t. Akio Toyoda, beleaguered president of the quasi-eponymous Toyota, went straight from Washington to Beijing—not London, not Paris, not Bonn, but Beijing—on a pilgrimage of penitence for his company’s braking mishaps. Make no mistake, Japanese businesses know where the next big thing is coming from, and they are determined not to miss out on it. And where Japanese businesses lead with their money and their time, Japanese politicians will follow. And China will welcome it.

The handwringing that you see on the Japanese right is just that, handwringing. And pundits will do well to avoid association with such thinking.

Sunday, March 21, 2010

“Tremors of an Age of the Warring States in International Trade”

Here’s a look into what goes on in the minds of many people here—probably more in the media and political ranks than the business world—regarding the US treatment of the Toyota recalls.

Yasuhiko Ohta, a member of the Nikkei board of editors, has a column in the 20 March edition entitled “Tremors of an Age of the Warring States in Trade(通商戦国時代の響き)” that criticizes the Japanese Government for staying above the fray on Toyota’s braking problems in the United States. He thinks that “the Toyota bashing in the US carried an element of political and diplomatic problems from the outset,” citing LaHood’s role as a member of the Obama cabinet in “setting fire to the US consumer’s sense of unease through [his] congressional testimony,” the “leading role played by the US Transportation Department’s National Highway Traffic Safety Administration in criticizing Toyota,” and the prominence of congressmen and senators from regions that have strong connections with the UAW and US auto manufacturers as the angry voices in Congress. He goes on to claim that “the pressure leading to trade friction is in the danger zone, where a small incident can lead to a blowup.” He takes President Obama’s State of the Union address and sees Obama’s goal to “double our exports over the next five years” as leading to a push to “take away shares of emerging markets from corporations from other countries by force if necessary.” He closes with the following two parargraphs:
“The curtains are rising on an Age of Warring States in Trade. Shouldn’t the uproar surrounding the recalls be understood within that larger context?

Toyota tripped on its own regarding the safety problems of its product. But it is also true that pressure to trip up competitors is mounting on a level other than safety. Since the Hatoyama administration does not have the diplomatic power against the US to resolve the issue, Toyota must work on the Obama administration on its own.”
Americans probably don’t need me to tell you how incomplete and misguided this analysis is with regard to Toyota’s predicament. But this is no nationalist or conspiracy theorist blogger, but a member of the Nikkei board of editors. So, even discounted for Nikkei’s dislike of the Hatoyama administration and its budget-busting handout policies, you have to believe that this is the kind of thinking that is fairly common in the Japanese establishment. Now, some things that these people miss:
1. LaHood’s personality as a big reason why he wings it, his political cachet as a Republican in a Democratic cabinet as the reason why he is allowed to do so.
2. The NHTSA’s need to cover its butt.
3. The UAW’s grip over the Detroit Three contrasted to its lack of influence over the largely union-free Japanese manufacturers.
4. The countervailing congressional voices from constituencies with Toyota operations.
I hope this helps anyone who has to explain what’s going down over there. And the real trade war story, if there is going to be one, will of course be a US-China story.