We’ve been away, but we haven’t forgotten you, dear listeners. Thanks for sticking around - don’t forget to check out some of TPR’s other recent releases while TPR News has been away, viz. a couple new installments of Japan’s (self-declared) finest political podcast, Seijigiri.

In this edition of TPR News: More bad news for the PM; the gas tax fight continues as government waste comes to light; the opposition rejects three for the BOJ; North Korea might make it off the terrorism sponsor list; KFC prices to rise; kafunsho is bad for GDP; ShinGinko Tokyo, Shinsei Bank, and Resona Bank in trouble; and acquittals.

Politics

Things are just not looking up for Prime Minister Yasuo Fukuda. According to a Yomiuri Shimbun poll last weekend, support for the Cabinet dropped to a new low of 33.9% as disapproval climbed to 54%. The leading reason for disapproval of the Cabinet was “Cannot approve of the Cabinet’s political stance,” followed by “Cannot expect much from the Cabinet’s economic policy” and “Cabinet lacks stability.”

With the contentious gas tax set to expire at the end of the month, the opposition DPJ may have the public on its side. In an Asahi Shimbun poll, 59% of respondents said they opposed the ruling coalition’s bill to extend the three-decade old temporary tax. The same percentage said revenues raised by the tax should be considered general funds and not be earmarked for road construction. The same poll saw Prime Minister Fukuda’s disapproval rating climb over 50% for the first time. In the aforementioned Yomiuri poll, 64% of respondents opposed extending the gas tax beyond its March 31st expiration date. Interestingly, though, 63% of the respondents to the Yomiuri poll also said the ruling and opposition camps should make concessions to reach an agreement on the gas tax bill - a process that, because of the ruling coalition’s supermajority in the Lower House, would seem to favor the extension of the gas tax that the ruling coalition seeks.

The LDP has said a failure by the DPJ to approve either an extension to the tax or a stopgap bill would cause confusion as gas prices would fall, then rise again as the LDP used its supermajority in the House of Representatives to force an extension through. The temporary gas tax and the massive public construction projects it funded have formed the backbone of LDP power since the administration of corrupt Prime Minister Kakuei Tanaka.

99.5 billion yen of gas tax revenue was spent on the construction of 14 parking lots under highway overpasses, most of which sit empty most of the time, that are managed by the Japan Parking Facilities Promotion Organization (JPO), a foundation under the jurisdiction of the Ministry of Land, Infrastructure, Transport, and Tourism drawing over five million yen a year from the road construction account. As the road construction accounts and questionable spending in many government agencies have come under scrutiny of late, a reform panel was convened on February 22nd to review the uses of road construction money and is set to issue a report in April. Among the panel’s recommendations, according to Transport Minister Tetsuzo Fuyushiba, will by the dissolution of the JPO by fiscal 2009 and of the Japan Bridge Engineering Center (JBEC), which has been criticized for taking contracts for research on unrealistic projects.

The Ministry also ordered executives of yet another foundation, this one dealing with land acquisition, to repay about half of some 20.8 million yen spent on employees’ travel expenses.

In total, 50 foundations, such as the JPO and JBEC, received 67.3 billion yen from road construction accounts in fiscal 2006, accounting for two percent of the 3.5 trillion yen in road-specific tax revenues.

In another standoff between the ruling and opposition camps, on Wednesday the 12th, the DPJ rejected outgoing Deputy Governor Toshiro Muto, the LDP’s choice as successor to outgoing Bank of Japan Governor Toshihiko Fukui. The DPJ said publicly that Muto’s years as a bureaucrat in the Ministry of Finance would interfere with the Bank’s independence. However, many observers have pointed out that the DPJ is also irked by the ruling camp’s persistent attempts to out maneuver or rail against opposition control of the House of Councillors, blaming the opposition for every impasse, instead of including the opposition in political processes. The LDP did not tell the opposition whom it would nominate beforehand, instead presenting Muto and leaving the opposition with no choice but a simple yea or nay.

The following Tuesday, the LDP put forth Koji Tanami, another former Finance Ministry bureaucrat, as its nominee for the BOJ Governorship, again without consulting with the DPJ first. On Wednesday, a week after voting down Muto’s appointment, the opposition nixed Tanami.

At the same time that it rejected Muto, the House of Councillors rejected the nomination of Takatoshi Ito as one of two Deputy Governors, but approved Masaaki Shirakawa as the other Deputy Governor. On Tuesday, the DPJ decided to accept the nomination of Kiyohiko Nishimura as the Bank’s other Deputy Governor.

As the terms of the current board of the BOJ expired on Wednesday, Fukui departed, a vacuum at the top ensued and Deputy Governor Shirakawa was made acting Governor until an acceptable nominee could be found.

As the wrangling over the appointment of a new Governor continues, rumors have begun to surface that the Government is considering a change to the clause of the 1998 Bank of Japan Law that requires the approval of both Houses of the Diet for high-level appointments. Although Prime Minister Fukuda has said he doesn’t think such a change is necessary, some observers see such a change as being in line with the way in which the LDP has dealt with an Upper House in opposition hands so far.

After a spate of initial cooperation, the gyoza that sickened ten people in Japan caused Sino-Japanese relations to return to normal, which means clouded by mistrust and a marked enthusiasm for using the other as a scapegoat. The affair might now be affecting matters of state, as Chinese President Hu Jintao’s visit to Japan, planned in December for “the time when cherry blossoms bloom,” widely interpreted to mean April, will be postponed until at least mid-May as the Chinese Government asks think-tanks to examine when Hu should visit Japan.

Two weeks ago, though, when the Chinese National People’s Congress opened, Premier Wen Jiabao said, for the first time, that relations between Japan and China had improved. China is seen to be angling for improved relations with Japan, both because of the fast-approaching Beijing Olympic Games and because of Prime Minister Fukuda’s relatively sympathetic stance toward China.

In a move Japan is not exactly looking forward to, US envoy to the Six Party Talks, Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill, said the US was ready to remove North Korea from its list of state sponsors of terrorism and loosen sanctions imposed under the Trading with the Enemy Act as soon as North Korea gave a full and complete accounting of its nuclear programs and activities, a report the DPRK was supposed to issue by the end of 2007, but failed to.

Hill expressed patience and a willingness to stand fast and repeat the US-Japan-South Korea alliance’s refusal to allow the DPRK to hold on to any nuclear material as many times as necessary, saying, ‘’I think the really problematic element is we don’t have a commitment from the DPRK to provide a complete and correct declaration. They would rather have one that misses a few elements - that is rather incomplete.
“And if they give…an incomplete declaration that skips elements of the nuclear program, it is not politically sustainable, for us or for other members of the Six Parties.”

Is it because of the whaling?

In a story that has not grabbed headlines in Japan, but has had the Australian press abuzz, new Australian Prime Minister Kevin Rudd, in his first trip abroad, will make the rounds of the US - one of Australia’s closest allies and the world’s largest economy, the UK - the head of the Commonwealth, and China - one of Australia’s biggest trading partners and the country in which the Mandarin-speaking Mr. Rudd cut his teeth. Conspicuously, Australia’s biggest customer, Japan, is not on the list. According the Australian press, Japan is outraged. Without reading the Australian press (or the always-enlightening, subliterate, rabid rantings of 2-Channelers), one could be forgiven for not knowing such a perceived slight had occurred.

Business and the Economy

Just in case you might have been considering applying for a loan at the cash machine otherwise known as ShinGinko Tokyo, it has been announced that the Financial Services Agency intends to keep a “closer eye” on the bank’s lending activities, according to the Nikkei.

ShinGinko Tokyo, which apparently loaned money to some 2,300 firms that went bust between April 2005 and January 2008, now lists 28.5 billion yen of its initial 100 billion yen of capitalization as unrecoverable. The bank is also running a deficit of 93.6 billion yen, partly due to spending decisions such as 12.4 billion yen for seldom-used computer systems, including a network of 126 ATMs in subway stations around the city.

Tokyo Governor Shintaro Ishihara, who pushed for the creation of the bank, is now pushing for a 40 billion yen bailout, but Assembly members from the DPJ, the Japan Communist Party, and the New Komeito don’t buy into the idea that the bank will see a turnaround in fiscal 2011 and point to liquidation of the failed enterprise as a better idea. Currently, the bank’s deposits are less than half of what was projected and it is having trouble recovering numerous bad loans.

Albeit for different reasons, private sector banks are having problems, too.

Apparently burdened by heavy subprime-related losses, Shinsei Bank has announced the sale of its Tokyo head offices to a real estate fund connected with Morgan Stanley. About a month ago, Morgan paid about $440 million to acquire Citibank’s Tokyo headquarters in Shinagawa. Shinsei’s headquarters, located across from Hibiya Park, went for about $1.18 billion.

Shinsei appears to be in a bit of trouble, with a steadily eroding share price - down about 34% since the end of January - and about $2 billion still owed to the Japanese government, thanks to a bailout about a decade ago, when the bank was known as Long Term Credit Bank.

Shinsei apparently intends to remain in the building for now (and hopefully they keep that Starbucks on the ground floor), but will be looking to move to a new location in about three years.

Earlier this week, it was announced that Resona Bank would also be putting their Tokyo headquarters up for sale, at a price in the $1.75 billion range. Resona is also burdened with repayment obligations to the government, and also intends to move office within the next few years. Resona’s share price has fallen about 16% since the beginning of 2008.

Stock up on your extra crispy soon. Kentucky Fried Chicken Japan Ltd. has announced that it will raise prices on April 24th for the first time since April 1992 due to an increase in the prices for flour and cooking oil. All you unhealthy eaters out there (you’re not alone) can expect to pay roughly 40 yen more for your chicken and sandwiches.

Finally, it turns out that no amount of antihistamines, masks, tissues, goggles, or special sprays can make up for feeling bad. According to Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute Inc., this year’s unusually high pollen count, the result of last summer’s copious sunshine, will pull down GDP.

Yes, kafunsho hurts GDP.

While hay fever sufferers spend money in attempts to alleviate their misery, they also refrain from going out to eat, drink, make merry, and - most of all - shop, which hurts the economic activity as a whole.

Society

Know what’s weird?

Well, yes, your dream about having a steamy affair with the kappa is odd, but I mean really weird.

On March 5th, 60-year-old Mitsuko Katagishi of Kyushu was acquitted of murdering her brother and torching his house. The police had arrested her first, then planted a cellmate with her, who cajoled her into confessing to the crime. Nothing odd about that, but when the case went to trial, the judge said the evidence was not credible and even scolded the police for planting the cellmate.

This follows the even more bizarre acquittal of 11 senior citizens on vote-buying charges, also in Kyushu. That there had been no vote-buying, much less by the defendants, need not necessarily pose a problem. Alhtough one of the defendants had died, and another had spent 400 days in prison and 700 hours in interrogation for a crime that never took place, the judge acquitted all of the defendants and chastised the police. Unfortunately, none of the police officers involved have been charged with criminal conduct.

What does Japan’s ever-clever Justice Minister, Kunio Hatoyama, he of the Japan-keeps-the-death-penalty-because-it-values-life-more-than-the-West argument, say? The vote-buying case is not a false prosecution because there was no crime. Had it been a false prosecution, those guilty of vote-buying would still be out there, but they aren’t because no one bought votes in Kagoshima.

Him aside, increased attention paid to Japan’s farcical criminal justice system, in which 99% of cases that go to trial result in convictions, almost always based on sometimes dubious confessions, appears to be paying off. Just a few days ago, in Suzuka Hatakeyama’s conviction for the murder of her nine-year-old daughter and a seven-year-old neighbor boy, a video recording of the defendant’s confession was used in court - a move long urged by defense attorneys and human rights activists, but resisted by police. Although prosecutors had demanded the death penalty, Hatakeyama received a life sentence instead.

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