Author: Toshio Aritake

TOKYO, Dec. 21, 2022—A Japanese lawmaker Dec. 22, 2022 tendered his resignation as a lower house lawmaker for effectively pilfering and underreporting political donations. He was a member of prime minister Fumio Kishida’s ruling Liberal Democratic Party and was a reporter of the Yomiuri national daily.
Kentaro Sonoura, 50, who had been a lower house parliamentarian for 10 years. The Japanese media are reporting his irregularities and resignation with little analysis and follow-up stories, and touching hardly at all that he was at one time a Yomiuri Shimbun reporter.
Shame on Japanese journalism. But he won’t be arrested.

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TOKYO, Dec. 21, 2022—As virtually the only central bank in the world that has staunchly kept interest rates at zero for nearly 20 years, the Bank of Japan prided itself as the driver of getting Japan out of deflation and guiding inflation above 2 percent. The bank went too far and long, igniting inflation close to 10 percent year-on-year that consumers argue is as high as 30-40 percent. On Dec. 20, BOPJ governor Haruhiko Kuroda raised the bank’s yield curve control target to 0.5 percent from 0.25 percent. It’s the first time that the bank raised the target rate in more than 20 years, and it’s a de facto Kuroda capitulation to consumer and business outcries about soaring prices, which even pro-establishment Liberal Democratic Party politicians of PM Fumio Kishida, whose voter support is sagging to record-lows, cannot oversight anymore as the country heads toward 2023 spring local general elections.
The BOJ shocker unsurprisingly is having a big impact on financial markets around the world: The yen soared, Japanese government bond prices plummeted, and the U.S. dollar’s stand-alone rise against all key currencies was checked. But among many consequences, one impact looms large: the cost rise dreaded by the Ministry of Finance that must refinance the Japanese government debt, now close to $10 trillion, as a mere percentage point translates into more than $10 billion cost increase that needs to be budgeted over coming years.
This refinancing cost increase comes at a time when the Kishida cabinet is gearing to double Japan’s defense budget to 2 percent of GDP from 1 percent with a combination of raising taxes, reducing pensions and public services, and selling new JGBs, the last item at a far more elevated cost than when MoF had been issuing JGBs at near zero percent.
And everyone, including amateur investors know, that once a central bank tweaked monetary policy, the move goes on until the market says ‘enough,’ so by the time Kuroda exists as BOJ governor, another yield curve control might be possible.

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TOKYO, Dec. 13, 2022—Everybody likes sports. Playing baseball, soccer, golf or anything gives you an uplifting feel and watching your favorite national team winning Olympic games with friends at sports bars is the most exhilarating experience in this otherwise cruel yet increasingly predictable society. Yes, sports for many is a contemporary last resort from the daily grinding of work, playing, watching, betting – and lastly, bribing.
The Dec. 9, 2022 arrest of the European parliament vice president, Greek socialist Eva Kaili, and four others, which followed the August 2022 arrest of a Tokyo Olympic board member, Haruyuki Takahashi for bribery not only not looking coincidental but increasingly rooting in sports almost as a given. The International Olympic Committee now has deferred decisions to hold the next winter games in Sapporo, the city that had been considered a top, unrivaled candidate until earlier December 2022, to preempt the recurrence of the massive – and still-widening – Tokyo game corruption scandal.
Years past, Pete Rose, an MLB hall of fame, for one was defamed for corruptive baseball sports betting, which makes it a minor incident when compared with Olympics and World Cup soccer but still is a scandal in a sport that prides itself as an icon of honesty and fairness. He also is accused of rape. Many sumo wrestlers had been implicated in corruptions too. Hundreds of other athletes playing in top international athletic circles like Rose are in the black or questionable camps.Hardly a week passes without reading or hearing about sports corruptions.
Why such prevalent irregularities? Sports, once considered pure and equal for all, has morphed into a money monster: Athletes anticipate millions of dollars and to pay them, organizers build gigantic facilities, and fans buy tickets for thousands of dollars. There’s also huge ad costs. In all, every switching station (part) of sports requires a huge gush or money, allowing guys with good nose to sniff around for a piece. And some famous athletes vie for high office of parliament even though they may be ignorant about politics and policies, like Herschel Walker who lost the December 2022 Georgia runoff Senate election and some Japanese lawmakers who previously were athletes.
This cannot go on for long. Olympic and world cup games should be dissolved and sports should be returned to where they belong to: communities, like little leagues were for kids and parents decades ago.

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TOKYO, Dec. 4, 2022—In Japan, once introduced, a tax sticks to you forever, even after your death. The stamp tax is a good example: It was introduced in 1873 (Meiji Year 6) for a specific purpose, which had been achieved a long time ago, but has been in place since then for nearly 150 years surviving occasional debate for repeal.
That this tax stays in place firmly as a permanent tax is raising doubts among interested parties as to whether the tax bureaucracy will lift many sunset taxes – such as the earthquake reconstruction taxes to rebuild areas affected by the March 2011 earthquake and tsunami disaster – when they become due. The prospects are dim.
The Japanese stamp tax, according to the National Tax Administration’s website, was emulated after the 1624 Netherlands stamp tax for revenue collection for the 80-Year War. The Japanese tax was aimed at rebalancing tax burns on farmers, who footed much of the Meiji era government finances, and raising more revenue from merchants.
Munemitsu Mutsu, the Meiji era foreign minister, enforced the tax for the taxpayer rebalancing policy, as well as for authenticating commercial transaction documents by attaching the tax stamp as certified paper by the government. The missions were accomplished a long time ago: Japanese farmers are known to pay less taxes (some say least) than merchants and legal documents are certified and protected by law. But the stamp tax is sticking to the Japanese society like a stubborn adhesive tape.
In an April 20, 2022 editorial, the Asahi newspaper wrote that the NTA slapped 130 million yen ($950,000) tax underreporting to the Familymart retail company for not attaching tax stamps to transaction documents it exchanged with franchisees – most likely for simply forgetting doing so.
While details were not known, one can speculate that the reason why such a simple fault has occurred arises from the digitalization of legal documents: You cannot attach tax stamps to electrons!
In 2020, stamp tax revenues are estimated to be 300 billion yen ($2.6 billion), not a small sum for Japan. But the stamp tax revenue has been decreasing steadily as digitalization develops, and yet, the tax authority nor its big brother, the Ministry of Finance, has dropped zero hint at lifting the tax.
This is worrisome. There are numerous sunset taxes in Japan, and as the stamp tax has become a permanent revenue source, other taxes might stay in place for good.
The earthquake reconstruction tax, which is added on corporate, personal income taxes for up to 25 years, to raise more than 10 trillion yen ($94 billion) might become permanent as the motor vehicle ‘tonnage tax,’ ‘gasoline tax,’ and others already have become so.
What’s mysterious, though, is that even with the reconstruction and motor vehicle taxes, the earthquake-hit areas are not luring back residents and highways, harbors, and reclaimed spaces in the disaster hit areas look more barren and forlorn than ever before, with the number of tourists visiting quite limited. Road signs, guardrails and road paints in rural areas, which are supposed to be financed for refreshing, are rusted or just abandoned.
Where’s the tax money being used?

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TOKYO, Nov. 10, 2022—As a popular long-time partner of Japan’s most-famous comedian-actor, the late Ken Shimura, Masashi ‘Marcy’ Tashiro had used a toothpick to give a more animated, cute expression on a wooden doll he was assigned to handcraft, when a young warden walked up and shouted, ‘What’s this?!’
When Marcy told the warden that using a toothpick is more efficient in making wooden dolls, the warden retorted, ‘Don’t give me a bullshit, Idiot?!’ Tashiro was ordered into a solitary confinement cell for weeks denied reading, television and other activities except daily meals and once-a-week shower and exercise. At another time, a young warden told Tashiro: ‘Shame on you for being slighted so badly by the young guys (inmates) (presumably for his past self-deprecating comedian acts)!
Tashiro, 66, was one of key partners and disciples of Ken Shimura, Japan’s most popular comedian who died of Corvid-19 in March 2020 at age 70. Tashiro had been appearing in television comedy shows with Shimura since the 1980s. Their shows continue drawing millions of viewers in Japan, Taiwan and Asian countries even after Shimura’s death. Shimura began recruiting Tashiro less frequently over years after Tashiro’s arrest for drug use. He was arrested five times and served three prison terms, the most recent 30 months since July 2020, weeks after his second term. He served the full 30 months at the Kurobane penitentiary in Fukushima province and was released on Oct. 27. Tashiro told his prison experience to the monthly magazine Flash, which published the article on-line on Nov. 9, 2022.
The Japanese prison system ranks inmates 1-5 grades, 5 being the lowest. Tashiro had been stuck at 5 throughout the 30 months. The penitentiary did not even allow visitors to hand color pencils to Tashiro. He also was denied purchasing sweets from outside vendors twice a month. Grade 1 inmates were allowed to buy up to 1,000 yen ($7) equivalent of sweets, and grade 5 were totally denied. Those details are instituted by Japanese prison law.
Tashiro’s horrific story was no exaggeration. Naoki Nemoto, a freelance writer who covered the Kurobane prison, wrote in the Sept. 2, 2020 Diamond Online magazine about a 48-year-old inmate who described some prison wardens for their ‘violent language’ and almost ‘insane’ stares at inmates.
‘If you are watched by what I saw as a troublesome warden, you’ll receive shouts such as ‘I’ll kill you, SOB’ and every other conceivable dirty expressions,’ he said. Japanese prisons, he explained to the author, work outside the rules of law.
That’s exactly what the current Justice minister, Yasuhiro Hanashi, described Nov. 9 night, saying his duty is ‘only for signing off on capital punishment’ to hang death penalty criminals, leaving the rest to the ministry’s bureaucracy for a vast areas of administration regardless of details written in laws and regulations in handling inmates and those in detention and numerous others.
As Hanashi honestly admitted, the justice minister is a post one of the least visible and idle of the Japanese cabinet. The ministry by law supervises the public prosecutors, human rights, juveniles, civil lawsuits and disputes, lawyers and many more, but they all have bureaucrats installed respectively and do not take orders from the minister.

Sri Lankan woman’s death
So it was little wonder that a 33-year-old Sri Lankan woman, Wishma Sandamali, detained in the Nagoya immigration detention center died for not given property medical treatment in March 2021 for overstaying her visas. The decision not to treat her was made by the facility’s wardens, even though laws and regulations provide that she qualifies for treatment. Her family filed a lawsuit demanding damages and punishment of the wardens, but the Nagoya public prosecutors office ruled the unnamed wardens as not guilty.

Leprosy patients facility
A few kilometers away from one of the most famous hot spring spas in Japan, where winter temperatures plunge below 10 degrees Celsius, a vast former leper confinement facility and residential homes spread off the highway shrouded by trees with a narrow entrance and a small facility sign, the National Sanatorium Kuriu Rakusenten. The facility is one of 15 national leper facilities.
Kuriu annexes the Jyu-kanbo National Museum of Detention for Hansen’s Disease Patients. (www.nhdm.jp) where dozens of seriously-affected lepers from across Japan were literally dragged into solitary, unlit, unheated small cells, not allowed to go out at all, for months and years.
Jyu-kanbo was used between 1938 and 1947 when the American occupation forces, horrified by the utterly inhumane conditions, ordered it be shut down to improve leper treatment. During the 9 years of operation, 93 patients were locked in several tiny cells, of which 23 died. No records of the patients, their conditions, causes of death, and other details are available, and the building that housed the cells were destroyed by the Japanese health ministry (probably happily to destroy records) soon after the U.S. occupation’s orders.
I visited the facility on an overcast day of mid-February 2022 when the area was covered by thick snow and temperatures were way below 10 Celsius. The facility’s office was closed for the winter but I somehow persuaded an official to let me in. By standing in front of the re-created Jyu-kanbo, which literally means ‘heavy confinement cell,’
I wanted to know how the poor lepers felt when they were shoved into the cells, 23 of them for no return, and how the wardens that forced the reluctant and resisting lepers into the frigid holes where they were given only a thin lawyer of cooked but unpolished rice with one ‘umeboshi’ or picked plum and a cup of tea twice a day and ordered to sleep on a thin futon mattress with one thin bed cover. The toilet was a hole and nothing else.
The wardens ,whose identities have never been disclosed to this day, must have had the same mindset as the warden of the Kurobane penitentiary, that is, they are charged to punish the lepers for their disease and can do much harm to them to the extent their brutal acts won’t be known publicly. The chief warden was given the full authority and he was the rule of law of Jyu-kanbo. The museum’s archives and/or Ministry of Health, Labor and Welfare documents do no have name lists of Jyu-kanbo officers.
A Jyu-kanbo official told me in a telephone call Nov. 10 that the names of the 93 patients forcefully confined in the cells are kept and exhibited in redacted form in the museum but that the names of officers that served as chief wardens and wardens are ‘scrapped.’ The Nagoya detention center officials’ names, likewise, have not been released to date, even though they effectively killed Ms.
Sadamali.
Many countries, including the United States, are more lenient to public sector workers, including police officers, but Japan is more paternalistic to such workers. It’s a key reason why bureaucrats begin acting with arrogance after reaching mid-career levels.

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TOKYO, Oct. 26, 2022—A general assumption behind Japan’s awkward move on electric vehicle development and marketing has been concerns about potentially huge job losses for workers engaged in manufacturing complex auto parts and components necessary for gasoline-powered engines and drive trains. But that’s not the only reason.
Akio Toyoda, Toyota Motor Corp. CEO who also voices Japanese auto industry views as chairman of the Japan Automobile Manufacturers Association and other influential industry lobbies, has repeatedly said lukewarm comments about battery-powered EVs.
At a May 19, 2022 news conference, Toyoda said, ‘The enemy is carbon dioxide emissions, not the internal combustion engine: CO2 reductions should be achieved in all processes of energy – production, transport, and consumption.’ He said there’s no single path to the carbon neutral goal, urging regulators to keep diverse pro-choice technological options policy, instead of cornering the industry to adopting electric power alone.
Research and development efforts to date, Toyoda continued, have enabled competing automakers to conduct various experiments in concert, reminding them also that the carbon neutral objective is giving them an opportunity to improve their CASE (connected, automated/autonomous, sharing, and electrification) technologies.
If Toyoda is correct, the Japanese auto industry – which was the world’s first to commercially use EVs as far back as in the 1970s – by now should have launched EVs that can compete with Tesla, German and Chinese manufacturers. In reality, the Japanese are trailing woefully behind competition.
Some Japanese automakers, notably Nissan Motor Co. and Mitsubishi Motors Corp., are dead serious about EV development. Yet, they have run into an awfully uncomfortable gridlock that might arbitrarily cool potential consumer enthusiasms for EVs: Taxes.
On Oct. 26, 2022, the Ministry of Finance’s tax commission debated how to tax EVs that currently are classified into the lowest motor vehicle tax class, at 25,000 yen annually regardless of vehicle sizes, or less than half of comparable gas-powered cars.
In the first half of 2020, the total number of EVs sold in Japan was 4,727, or 0.3 percent of 1.669 million cars sold in that year. In the first half of 2022, that number grew to 30,348, or 1.9 percent of total sales during the half-year period, according to the commission’s report.
Commission members told the meeting that if EV sales continue growing, auto-related tax revenue would decrease sharply, threatening financing of road construction and repairs and thus urging them to explore taxing EVs such as collecting taxes according to travel distances cruised.
Japan has set a target to require all new vehicles sold to EVs by 2035. If the government slaps higher taxes to EVs, consumers are likely to slow purchases or hold on to old vehicles or buying gas-powered hybrids and others.

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TOKYO, Oct. 12, 2022—The next calamity could hit the yen and Japanese government bonds markets if nothing palpable emerges to stop the U.S. dollar’s runaway rise from the G-7 conference during the week of Oct. 9. An omen was out on Oct. 12, when the dollar climbed past a 24-year-high to above 146 yen, uncontested.
As part of Prime Minister Liz Truss’s U.K. economy stimulus policy, the Bank of England this week executed a 65 billion pound sterling purchase of U.K. gilt, only to sustain a splurge of selling, sending gilt yields soaring with 30-year surging 0.29 point to 4.68 and sterling sank to 1.1 dollars . It’s proof that in this modern time when financial transactions around the world exponentially grew thanks to computer-based trading, interventions don’t work.
But that’s what the BOE and the Bank of Japan did. The Japanese central bank sold 2.8 trillion yen worth of dollars on Sept. 22, 2022 to stem the soaring dollar against the yen. The result was no visible effect in stemming the dollar’s rise, and the currency rose close to 146.50 yen from around 145 yen on Oct. 12.
Years ago, currency speculators would use their ‘gut instinct’ for executing bids and offers, and central bank interventions were a visible fence of sort for executing their trades. Their thinking was that if they can jump the fence with trades that were more than intervention volumes, then they can continue running.
In the modern computer-based market environment, trades are mostly executed by computers that explore for the timing and market and intervention irrationalities to pour trades – the volumes that are likely to be hundreds of times more than in the past. That seemed to be what happened in Tokyo on Oct. 12, when the dollar jumped from 145.70-80 yen levels to the 146 yen mid-point.
The fence was crossed with no BOJ resistance. Smart computers must be looking for the next fence to cross.
Currency speculators’ trades are closely connected to other currency markets as well as, like in the U.K., the JGB market. On Oct. 11, in an onerous sign and for the first time since 1999, new 10-year JGBs, which are Japan’s bellwether bond, failed to be traded for three consecutive business days since Oct. 7. It clearly showed that wholesale investors want higher yields than what the Ministry Finance offered. The 10-year JGB was offered at 0.243 percent and bid at 0.25 Oct. 11, according to Reuters. The U.S. 10-year Treasury yield was close to 3.99 Oct. 11, resulting in a spread of more than 3.7 percentage points, the gap that’s widening further as the Fed is poised to continue tightening policy.


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TOKYO, Oct. 6, 2022—One after another, a stream of regulations is widening and accelerating in Japan. Ultimately – particularly if/when the national resident numbering system becomes fully functional, the population of 125 million should find themselves trapped in a regulation maze they never can escape.
The latest additions to the already steep mountain of regulations are the compulsory requirements for individual and business operators of leisure boats, such as those for short cruises and small fishing vessels to install the ‘driver recorder’, and school buses to be mounted with devices that automatically checks whether children are left behind in the vehicle after the driver stops the engine and locks it.
The two latest regulations are the Japanese government’s response to the tour boat sinking accident that killed nearly two dozen tourists earlier in 2022 and the deaths of kindergarten children who were left in school buses in scorching heat.
While not compulsory, the drive recorder has become a de facto requirement in purchasing a new motor vehicle in Japan. Insurance companies make it conditional in selling policies at standard premiums and those that don’t install it must pay an extra premium.
There are thousands of similar compulsory government regulations and private-sector in-kind – voluntary self-regulations. The face-mask regulation is typical: When Covid-19 erupted in 2019, it was mandatory for people to wear it in closed, crowded locations. Since then, the government has relaxed the regulation to one observed voluntarily but most Japanese people wear a mask even in outdoors. At Queen Elizabeth’s funeral services, television clips showed that Japanese Emperor Naruhito was the only foreign dignity who was wearing a face mask.
That’s not all. What is encouraged as voluntary safety precautions in most other countries are requirements imposed on the private-sector without questions in Japan. One example is the requirement on forestry workers to wear the safety chaps when using the chainsaw. Absent it, he/she would be banned from working in the forests, not to mention about a helmet.
Creating new regulations is what the Japanese bureaucracy welcomes with open arms as it often means creating industry or business lobbies to execute them – and those lobbies’ heads or deputies are often plucked from government ministries and agencies.
While the bureaucracy and politicians are willing for re-regulations, many of them resulting from accidents like the tour boat and school bus accidents, they are lukewarm to relaxing decades-old, outdated zombie regulations. A classic one is the continuing ban on Uber and other ride-share services in an apparent prioritization of existing taxi businesses. In a 2020 structural and regulatory reform reply, the Ministry of Land Infrastructure and Transport was mum, giving no answer to a proposal to allow Uber in Japan.

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TOKYO, Sept. 30, 2022—Toyota Motor Corp. President Akio Toyoda, his company having dethroned General Motors in U.S. car sales in 2021, Sept. 29 in effect represented the Japanese auto industry’s stance on electric vehicles, saying his company is finding it ‘difficult’ to California’s requirements to discontinue all gas-powered vehicle sales by 2035.
Toyoda said in a Las Vegas interview with reporters that he expected to sell about 3.5 million EVs by the end of this decade, or about one-third of all Toyota car sales in the United States, Reuters quoted him as saying in the interview.
Since Toyoda is the chairman of the Japan Automobile Manufacturers Associations, the industry lobby that represents all Japanese automakers, his voice speaks volumes of the industry’s conditions. He cannot speak about Toyota alone. He’s morally obligated to represent the whole industry when he speaks, including Honda that defied all Japanese and U.S. automakers in meeting what then was known as the 1970 Muskie Act that demanded noxious tailpipe emissions reductions to one-tenth of the previous levels.
Honda Motor Corp. had long been known as a lone wolf when its founder Soichiro Honda was around. It was a small motorcycle-turned minicar maker in the 1970s, an irritating presence for Toyota. Now, however, Honda is no longer a company that stir the stability of the Japanese auto industry. It has joined the friendly, amicable club organized around Toyota. Honda has given up the hope of developing proprietary battery technologies and instead opted to join the GM EV development alliance and cooperate with Korea’s LG Electric – while Toyota continues to struggle for EV technologies and batteries that look years behind European, Korean and Chinese automakers.
So, what Akio Toyoda had to describe as ‘difficult’ Toyota’s EV technology means other Japanese automakers are even further behind Toyota in trailing foreign competitors.

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TOKYO, Sept. 25, 2022–Two days before the late prime minister Shinzo Abe’s state funeral, his nationalist proteges and friends Sept. 25 launched a big balloon to tell the world that Japan will accelerate defense equipment exports with the government initiative.

Abe’s Liberal Democratic Party lawmakers, his supporters, Defense Ministry and other ministry bureaucrats by year-end would amend the 2013 National Security Strategy that he had forced parliament to abrogate the post-war defense equipment export policy of 1) banning arms exports. 2) restrain (not strictly banning) arms exports to countries and regions that are not identified as subject to total exports ban, 3) treat arms manufacturing equipment exports as comparable to arms exports.

The Sept. 25 Yomiuri newspaper article said the government decided to amend the 2013 strategy in light of the dwindling Japanese defense industry that presently can sell only to the Japanese defense ministry. Since 2013, as many as 100 Japanese defense contractors pulled out of the industry, it said. Even after the relaxing of the three export ban principles in 2013, Japan has exported only one defense system — a radar system to the Philippines, it said.

The Japanese business lobby, Keidanren, has been urging the government to crease the Japanese version of the U.S. Foreign Military Sales arrangement allowing Japanese defense contractors to export arms to allies.

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