In this edition of TPR News: Abe resigns, possibly due to both mental and physical illness; Aso and Fukuda fight it out to succeed him; the MSDF’s mission in Afghanistan may well be over; Nova’s in big, big financial trouble; NHK has a huge surplus; and Nintendo’s Wii pulls farther ahead of it’s rivals.

Politics

This has been a big, exciting week for politics.

The big story, of course, and the one on which we’ll focus here, is the resignation of Prime Minister Shinzo Abe on Wednesday and the race to succeed him.

At 2:00 p.m. on Wednesday the 12th, Abe held a press conference confirming the reports that had been flying around for a couple of hours at that point and announced his intention to resign. Officially, Mr. Abe said he wanted to make way for a new Prime Minister who’d be better able to secure an extension to the anti-terrorism special measures law, which makes the SDF’s logistical support of the US and its allies in Afghanistan possible. The opposition Democratic Party of Japan was gearing up to push for a general election and its leader, Ichiro Ozawa, had said he would not allow a renewal of the anti-terrorism special measures law, thus guaranteeing a tough extraordinary Diet session.

Unofficially, many commentators see his resignation as a sign of his having used up all of his chances. To put it bluntly, the public perception of the Prime Minister as being ineffective and captaining a ship lousy with scandal, as well as his insistence on pushing his vague “Beautiful Country, Japan” initiative at the expense of issues, such as the fiasco at the Social Insurance Agency, which were more important to voters, played a large part in the Liberal Democratic Party’s loss in the July 29th House of Councillors election. Following that, on August 27th, Abe reshuffled his Cabinet, garnering a spike in approval ratings for having brought more experience on board, but watched that approval fizzle as his second Cabinet showed symptoms of the same problems that plagued his first. A week into the new Cabinet, Agriculture Minister Takehiko Endo followed his two predecessors in leaving office under the cloud of a political fund scandal.

Endo was not alone - other LDP members resigned due to scandal and Abe’s time was up.

On the night of July 29th, following the electoral loss, Abe was visited by three senior LDP members, including then-LDP Secretary General Hidenao Nakagawa and kingmaking former Prime Minister Yoshiro Mori. They asked him to consider stepping down. Abe declined.

This time, he must have known he wouldn’t have the choice.

The story grew more odd, though. On Sunday, the Prime Minister apparently told LDP Secretary General Taro Aso, the early odds-on favorite to succeed Abe, he wanted to resign. At a press conference on Monday, Abe vowed to do his utmost to ensure the renewal of the special measures law - at first appearing to stake his job on it, but quickly backing away from such a gamble. However, also on Monday, the UN was notified that Abe would not attend a high-level climate change meeting. Nothing on Tuesday, then the resignation on Wednesday, wherein Abe gave the aforementioned reason for his decision.

What he did not do was claim ill health. That fell to Chief Cabinet Secretary Kaoru Yosano, who said that Abe resigned because he was suffering from illness and had been losing weight. Followed by TV news crews, the Prime Minister’s motorcade made its way to Keio University Hospital on Thursday, where his doctor told a press conference he was suffering from a functional gastrointestinal disorder. In addition to this ailment, Abe was reported to be suffering from general fatigue, which most commentators see as the more likely health problem.

Without a doubt, the Prime Minister was under enormous stress - from ultranationalists unhappy with his decision not to visit Yasukuni (OK, admittedly a minor component), from his party, due to the steady disintegration of his government and authority, and the stress of being Prime Minister of Japan in general. By the beginning of September, he was out of the loop on some important issues, apparently not involved in Yosano and Aso’s handling of the Endo affair. Was he even a fully functional Prime Minister anymore?

So the question is only whether he left primarily for health reasons or political reasons.

Hand in hand with the Abe’s resignation, of course, goes the race to succeed him. The early front-runner appeared to be LDP Secretary General Taro Aso, whom many, including TPR, called the “man to beat.” The LDP initially announced streamlined election procedures, in which only regional party chiefs and Diet members would get to vote, leaving out the rank and file, who would vote in a normal party presidential election, for a September 19th election.

Some of the wind has already begun to leave Aso’s perhaps prematurely inflated sails, though. He has long had a number of enemies within the LDP and, while he might prove to be a stronger leader than Abe was, which the LDP needs, he’s generally considered to be less palatable to voters than some of his challengers, especially Yasuo Fukuda, who pulled out of contention for the LDP presidency last summer.

The cast looks similar to that of last September: In addition to Taro Aso, Sadakzu Tanigaki has thrown his hat back in the ring. Fukuda is actually going to campaign for the job, despite a year older than the “too old” he was last year, and current Finance Minister Fukushiro Nukaga has also joined the fray.

The big challenge to Aso is coming from Fukuda, who has been amassing support among the LDP’s more powerful factions - most important being the Machimura and Mori factions. (It’s no secret that Yoshiro Mori can’t stand Aso and would love to have Fukuda, who might give a good bit of weight to Mori’s opinions, in the top job.) As of Friday night, though, Aso remains the front-runner, having secured the support of twelve prefectural chapters (in return for which, Observing Japan let us know, the chapters received Taro Aso tote bags filled with world’s most powerful otaku’s favorite manga.) Aso also came in second in last year’s election, which will help him this year, and, and this is important, is a tough guy, one who will show leadership, which the LDP really needs right now.

On the other hand, maybe unity is more important for the LDP. So that’s the question: Is it more important to unify the party and put up a good face in the event of a general election? If so, the so-called “anyone-but-Aso” camp wins and Fukuda is the next PM. If leadership and a strong presence are important, Aso wins.

Abe’s resignation probably took away a good bit of the LDP’s momentum in the current extraodrinary Diet session, but it also pushed the DPJ’s dream of a general election farther away. We here at TPR see no reason why the new Prime Minister would call an election unless he really thought it would increase the LDP’s number of seats in the House of Representatives, which would be a monumental task. The LDP also faces a rough extraordinary Diet session now and a possibly rougher ordinary Diet session next year, in which they’ll need a tough guy to fight for their agenda or they won’t get anything done. These considerations may well outweigh the apparent majority of Diet support Fukuda enjoys at the moment.

Hence, for now, TPR predicts an Aso victory. (We’re not backing him, mind you, but we think he’ll win.)

So what will become of the anti-terrorism special measures law? Well, LDP Diet member Taku Yamasaki, most famous, recently, for having spent five days in North Korea last year, which riled the Cabinet, has said new legislation on the matter would be postponed until the ordinary Diet session, which begins in January, which is more than two months after the current law expires. So perhaps Ozawa is getting his way the easy way.

Business and the Economy

It looks more and more like TPR’s own Ken Worsley was right. In BizCast #7, he said publicly what he’d been saying privately for months: ailing foreign language school Nova will be dead by early November. If you’re working for Nova, or about to start, we’ll repeat here Ken’s much-criticized advice of a few months back: Quit now, get out of your Nova apartment, and start looking for a new job this very minute. Things will not turn around and you do not have the luxury of waiting a couple of months to plan your next move. You should have done that when Ken first told you to.

It appears that Nova is continuing to divvy up the paydates of its employees. Some teachers, those in the Tokyo and Osaka areas, were paid on the 14th as scheduled (12 hours late actually, but that was expected.) Instructors in smaller areas of the country are expecting their wages on Tuesday the 18th of September. Higher-ranking members of the teaching staff have been asked to wait until next Wednesday.

The likelihood of another payday looks slimmer than ever for Nova employees. This fiscal year started out horribly and has only gotten worse. The first quarter of this year (April to June) saw Nova bleed 4.5 billion yen in operating profit! To put this number in perspective, remember that Nova posted a 1.2 billion yen loss for the entire 2006 fiscal year.

Throwing gasoline on the fire that is Nova is its President, Nozomu Saruhashi, who blew offers from Benesse and H.I.S. to save the company by refusing to step down. Now, Nova’s largest shareholder, the company itself, is demanding an explanation from the company’s second largest shareholder, Mr. Saruhashi, over eight million missing shares out of 19 million that he borrowed. The assumption at this point is insider trading. Our man Ken has a prediction about Saruhashi as well, but we’ll let him make that public himself in the next BizCast Japan.

Add to this Nova’s new habit of not paying its business partners, and what you have is a dead pink bunny.

Japan’s consumer confidence level is currently lower than it has been in 32 months. December 2004 was the last time that pessimism was this great. This month’s consumer confidence index is 44.0 (-0.4 compared to last month).

New Chief Cabinet Secretary, Kaoru Yosano, has signalled a more cautious approach to tinkering with the nations’s assets. The Ministry of Finance reported that Japan’s foreign reserves reached an all-time high of 932 million US dollars. That easily beat July’s record stash of nearly 924 million. Yosano’s attitude is the exact opposite of his predecessor, Yasuhisa Shiozaki, who pushed for investments that would yield higher returns and, naturally, involve greater risk.

The Board of Audit of Japan discovered that public broadcaster, NHK, amassed a surplus of 88.6 billion yen by the end of 2005. The surplus was uncovered after an independent audit of NHK and its myriad affiliates. NHK is expected to face pressure to lower its fees in response to the surprisingly large “earned surplus”.

United Parcel Service, Inc. (UPS) reported that it would start daily flights to Nagoya, Japan from the United States. These flights will be in addition to their Osaka and Tokyo routes. With a new hub opening in Shanghai in 2008, the Nagoya to Shanghai route will allow UPS to bolster its reach in the Asia-Pacific region. UPS had been awaiting approval, which it received Thursday, from the US Departments of State and Transportation for the expansion of its Japan-bound routes. The agreement should benefit other carriers as well.

As if playing a game of tennis without the air conditioner on wasn’t exercise enough, Nintendo plans to release the Wii Fit to compliment its very popular Wii game console. The Wii Fit is a balance mat that houses two hyper-sensitive scales that translate the user’s movements and send them to the main console. It will allow users to do everything from dancing to yoga to taking headers in a soccer game. Microsoft’s XBox and Sony’s PS3 will have a hard time catching up if the female 40-something demographic is reeled into the world of Wii due to Nintendo’s newest add-on.

Society

The Prime Minister resigned. Politics is Society this time.

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