Koizumi's disastrous submission to U.S. -- Akahata editorial, February 20, 2002
Japan's Prime Minister Koizumi Jun'ichiro in the recent Japan-U.S. summit talks stressed that he will never slacken the structural reform efforts, and pledged to take a new set of measures to deal with the deflationary spiral, including monetary measures and write-offs of non-performing loans held by major banks.
U.S. President George W. Bush at a news conference after the talks said that he was convinced that the Koizumi Cabinet will stay the course in the structural reform strategy. He said that he believes in the prime minister's promise to take necessary steps in what he called "three regions": non-performing loans, deregulation, and deflation.
Crisis began under Koizumi Cabinet
A government estimate shows that demand will decline by an extraordinary amount of 20 to 30 trillion yen, and that Japan's' economy is in a vicious circle of declines in personal consumption, production, and income.
Japan is now at a crossroads over its economic policy: either accelerate this vicious spiral, or get out of this spiral and change policies to support people's livelihoods.
The first item the prime minister promised to the president was that he would be more fervently committed than ever to write offs of non-performing loans, which caused a sharp increase in bankruptcy and unemployment. It was a promise leading the Japanese economy to a catastrophic position.
Barely a year ago, the Japanese government stated that personal consumption and industrial investment are the two main pillars of economic recovery, and stood for efforts to boost private demand on a sustainable basis.
The government has abandoned even its stated principle in order to give the disposal of bad loans top priority, a prescription that will pour cold water on domestic demand. That was in response to the pressure from the U.S. Bush administration. In the summit in the spring of 2001, the United States urged the Japanese government to do everything possible to dispose of the non-performing loans in order to meet the desire of U.S. businesses to acquire failing Japanese firms cheaply.
This is the promise which the Japanese government made to the Bush administration at the summit in the spring of 2001. And the Koizumi Cabinet started with this public promise to the U.S. Bush administration as the main thrust of the cabinet's policy.
This has led the Japanese economy to the present crisis.
The Japanese economy has been distorted by the Liberal Democratic Party government which is always yielding when the U.S. government tries to force Japan into accepting its unreasonable demands. The Japan-U.S. alliance which makes Japan subordinate has been used as a lever.
The 1985 Plaza Accord is one such example. Also, the so-called "Japan-U.S. Structural Impediment Talks" in 1989 and 1990 worked out a public investment program using an enormous amount of tax money and deregulation measures that allows for any activities by large corporations. These agreements brought about a historic misgovernment marked by the strong yen and the unprecedented bubble economy, the fiscal crisis, and the prolonged and deepening economic recession, which is a heavy yoke of the economy.
The present major recession has been triggered by the Japanese government carrying out what it promised the United States: write-offs of non-performing loans. It would be the height of folly for the government to promise the United States to speed up the write-offs at a time when the cause and effect of the economic recession is so clear.
We must not overlook the easy money policy which the prime minister promised the United States as part of the efforts to cope with the deflationary spiral. It has the danger of a crash in the price of national bonds.
Need is shift to supporting people's living conditions
The prime minister has emphasized that he will not slacken his structural reform efforts under any circumstances. This should be taken as an expression of his firm resolve to carry out what he promised to the United States no matter what sufferings the people may have to endure. Prime Minister Koizumi's submission to the United States is more conspicuous than that of any past prime minister.
The Koizumi Cabinet shows complete incapacity to face up to the deepening economic crisis. The need now is to bring to an end the Koizumi government, which is leading the people's livelihoods and the national economy to a catastrophe as a result of the prime minister's submission to the U.S. president, and to achieve a far-reaching change in politics to help improve the people's living conditions. (end)