JCP chair warns of massive unemployment and bankruptcies

Japanese Communist Party Chair Shii Kazuo gave a lecture on "Bad loans and Japan's economy" at the Foreign Correspondents' Club of Japan in Tokyo on July 16.@(Details of Shii's speech are expected to be posted during the fourth week of July.)

Analyzing the serious consequence the write-offs of bad loans -- Koizumi Cabinet's main policy -- will have, Shii made the following four points:

(1) Most of the present bad loans held by major banks and planned to be written off are those of small- and medium-sized enterprises that find it difficult to repay their loans due to the prolonged economic recession. Economists predict that the write-off of these loans will cause a spirally increased number of bankruptcies.

It is tyrannical for a government to implement a national policy of wrecking several hundred thousand such enterprises, which is without a precedent in Japan.

(2) The write-offs, the main pillar of the Koizumi Cabinet's "structural reform" plan, is intended to increase the profitability of major banks. The present low profitability and lack of new borrowers, however, arise from the gloomy economic prospects. The Bank of Japan governor asserted that funds are over-abundant.

(3) The government policy of using a social safety net to deal with the adverse effects of the reform is unacceptable, because it is based on the premise that there would be massive bankruptcy and unemployment. If the government can create 5.3 million new jobs, why are there 3.4 million jobless people today? The government should be ashamed of citing a safety net, because unemployment benefit and its period of eligibility in Japan is far more inadequate than those in European countries.

(4) The JCP has an alternative proposal for economic recovery. It is one of supporting the household economy and small- and medium-sized enterprises which are the basis of Japan's economy. The JCP is convinced that this prescription will resolve almost all the troubles of Japan's economy. (end)