BOJ’s Ueda isn’t the only central banker succumbed to political pressure

TOKYO, March 21, 2024—On a cold February evening, Japan’s most prestigious private club was quiet as usual as a few small groups of mostly ex-Japaneses bureaucrats sat cozily in the bar chairs sipping cocktails and discussing global politics and economy almost inaudibly. Kazuo Ueda walked in to the premises flanked by his board members and instead of going to the bar, he was hastily ushered into a private dining room. Those accompanying him did not want people to come close to Ueda, let alone chat with him.

Ueda is not alone. He was joined by Federal Research chairman Jerome Powell on March 20, 2024.

Before he became the Bank of Japan governor, reportedly on his own will, on April 9, 2023, 72-year-old Ueda was known as a frequent visitor to Tokyo’s Ginza and Roppongi night life districts. After his 5-year central banker term began, he has been surrounded by dark-suited vice governors and advisors instead of night club hostesses.

Ueda announced on March 19, 2024 that the Japanese central bank was ending its negative short-term interest monetary policy for the first time since the bank took the policy in April 2013 as a means of shoring up the Japanese economy from deflation.

Over the intervening years, that translated into a weak yen against the U.S. dollar, euro and other currencies, and the impact has has been showing up in crawling goods prices, un-visible to casual eyes. After the Covid-19 pandemic erupted in 2020, the bank further relaxed monetary policy whole the government pumped trillions of yen to businesses in distress. And in 2023, businesses began raising wages by a few percentage points, and in 2024 doubled what they raised in 2023. By headline anecdotes, Japan’s consumer prices nearly doubled over the pst two years.

Compounding the price pressure, a massive influx of foreign tourists filled up hotels, restaurants, and other tourist spots, and the CPI upward trend gained impetus.Businesses and consumers say that Japan has entered a new round of inflation.

Against this backdrop, Ueda on March 19 made the announcement to to end the negative rate policy but he emphasized that the bank’s next policy move depends on whether CPI will continue above 2 percent sustainably and dismissed further tightening. Why is he so adamant about refusing to tighten further when taxpayers are complaining about rising goods and service prices? Ueda the scholar is surrounded by bureaucrats who prioritize inflation over price stability partly because a more visible interest rate rise requires additional issuance of Japanese government bonds. A one percent rate rise demands about 40 trillion yen (266 billion) fresh JGB issuance.

It’s the pressure Ueda is feeling from the Japanese bureaucracy, and on top of it, pressure from politicians to help sustain the spiraling stock market surge that rely on campaign finances and other forms of political money from big businesses at a time when the ruling party of prime minister kishida is being rocked by financial scandals and he may call for a general election.

It’s a similar election-related political pressure Fed Chairman Powell is feeling now, the reason why he said about three rate cuts this year. Political pressure is that powerful now that central bank independence is being eroded, almost replaced by policy to accommodate money rolling machines.

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Noto earthquake slow rescue underscores Japan’s total ineptitude

TOKYO, Jan. 18, 2024—No matter how cumbersome it is, the cold truth is Japan is slow and incompetent. And that holds true in its defense.

On Jan. 1, 2024, a massive earthquake measuring 7.6 hit Noto Peninsular on the Japan Sea coast. As of this writing, more than 230 deaths and more than 20 missing had been confirmed by local municipalities. The number of houses and buildings that collapsed was over 22,100. Water mains, electric power, gas and Internet signals have yet to be restored sufficiently. Save a few main arteries, roads and train tracks remain disrupted. The number of people in temporary shelters and other evacuation locations was more than 17,600 as of Jan. 16, fewer than over 23,000 at the peak period during the first week of the quake. More than 400 are living in isolated areas inaccessible from outside as of Jan. 17. The Noto Airport will remain closed until Jan. 24.

More casualties are likely as rescue and restoration operations progress given that the trembler hit the peninsular when people who had moved out of the area returned to join their folks for New Year might be found. Rescue and restoration work is progressing only slowly as the area is known for steep cliffs and hilly terrains with little flat space.

Even so, in ‘one of the most advanced economies’ of the world, rescue efforts should have begun in large-scale and faster, in particular, by the 250,00-strong Air, Maritime, and Ground Self-Defense forces.

Yet the reality has been that the government of the prime minister, Fumio Kishida, had been able to dispatch only by the trickle for reasons of logistics, the area’s geographical, and weather conditions. Certainly, the SDF crew on the scene did their best at digging out survivors from collapsed houses, Japanese television footages showed. Firefighters who were sent from remote areas of Japan worked by turn at rescue operations too. But the scale of rescue operations was overwhelmed by the earthquake’s impact. So, even nearly three weeks after the quake, many residents are still collecting meals and from municipal and volunteer canteens, television footages showed.

Why this slowness? In a word, lack of leadership. Kishida visited the area Jan. 14 but stayed there less than two hours. Hiroshi Hase, governor of Ishikawa, where Noto is located, also visited the disaster area on Jan. 14 for the first time. ‘In other countries, head of state and other top officials visit disaster areas as quickly as possible,’ Mari Oshima, a New York City resident, said. ‘Even though he’s old, Biden did that to victims of a hurricane a few days after the storm hit the state.’

Xi Jinping must have seen this Japanese clumsiness as a huge Japanese defense blindspot he can exploit if he decides to take over Senkaku Island in the East China Sea as a foothold for his pan-Asia hegemony aspiration.

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Kishida and bureaucrats order ending a cabinet member wife’s murder investigation

TOKYO, Sept. 2, 2023—The script is different but the film’s title ‘The Bad Sleep Well’ is a snug fit to the unresolved murder case now unfolding in Prime Minister Fumio Kishida’s official residence.

The 1960 Akira Kurosawa film, known to be influenced by William Shakespeare’s Hamlet, was highly politically-oriented and clearly was intended to remind moviegoers about the ubiquity of corruptions and briberies of politicians and bureaucrats pervading during the period when Japan was rebuilding the war-ravaged country to prepare for the 1964 Tokyo Olympic games.

The film portrayed acts of chivalry and cunning performed by the Seven Samurai actor, Toshiro Mifune, against the head of a giant governmental housing development company, yet was outsmarted and killed. The mogul prevailed and smiles at the end.

Thanks to the film or not, Japan gradually began ridding itself of the centuries-old ignominious practice of ‘under-the-armpit’ gift-giving to government officials in ensuing decades, elevating its business ethics to the developed economy level and, though superficially, bribery-free.

The 2023 summer revelation can reverse course of political modernization and transparency, and throwback of the country to the nearly 300 years of Edo period bureaucracy grip of society that would empower politicians to do whatever they want yet even they can be entrapped in that legacy. There already are signs that all parties concerned are haunted: Kishida, for one, is totally powerless on this case and top bureaucrats have no choice but to suppress it with administrative power.

Here’s what’s happening: Deputy cabinet secretary Seiji Kihara, 53, widely recognized as Kishida’s right-hand like Walt Nauta for Donald Trump, leads ‘a dual family life’ of commuting between his mistress and her son and his real wife and family, according to the weekly Shukan Shincho’s June 22 edition. On a March 2023 day, Kihara went to Tokyo Disneyland to celebrate the mistress’s daughter’s birthday with her and daughter and three of them stayed at a nearby hotel. The next morning, they visited the adjacent Disney Sea and Kihara left for the prime minister’s official residence around 10:30 a.m. The mistress, 47, is a single mother who previously worked as a bar hostess. Kihara earlier had denied the relationship with the mistress as well as that the daughter was his own, but over time, he confirmed that the daughter as his own, according to the magazine. Kihara’s lawyer told the magazine that he would tell his wife when visiting the mistress’s residence.

This itself is a major scandal even in Japan, where sexual relationships are far more lax than in other countries, particularly for a political heavyweight. 

But the drama – the real story – takes a further turn: His wife, 44, was also a bar hostess working in Tokyo’s Ginza and remarried with Kihara in 2014 – that was 8 years after her previous husband, Taneo Yasuda, 28 (at the time of his death), a night club employee, died a mysterious death in his home in Tokyo’s Otsuka district on April 10, 2006, according to to the magazine’s July 13, 2023 edition. The first finder of Taneo’s body was his father, who reported to police that his son was lying in a pool of blood.

Kihara’s wife, who police later identified as Ikuko, told the father that she was sleeping alone in the second floor bedroom. She had two children with the dead husband. Taneo was stabbed from head to throat and autopsy revealed a large dose of stimulant from his body. The knife was placed – not discarded somewhere like in most murder cases – neatly by the dead husband’s body. 

Ikuko did not show up in her husband’s funeral.

Police continued investigating the case and followed Ikuko, who started working as a bar hostess, and in the spring of 2018, interviewed a man who was detained by police for stimulant possession. He eventually admitted hearing from Ikuko, ‘I’ve killed him’ and that when he visited Ikuko’s house, Taneo was lying bleeding blood.’

On October 9, 2018, the same police investigators swooped Kihara’s apartment in suburban Tokyo but did not question Ikuko because her children were home. A month later the police officers were relieved of the assignment, and they told the magazine that it was a message from police higher-up to close the case.

Taneo’s father and his sister submitted an appeal to police to continue investigating the case yet police continues to stonewall. National Police Agency commissioner Yasuhiro Tsuyuki has told reporters that their investigations turned up nothing suspicious and Taneo committed suicide, according to the national daily Asahi July 25.

In the August 13 edition, Shukan Asahi quoted Makoto Sato, former chief investigator of the case and now retired, sharply challenged Tsuyuki’s comments saying that Tsuyuki ‘fooled us and our investigations.’ Sato said police had been investigating the case with a 40-person team because of the extraordinary circumstances.

Tsuyuki’s NPA is threatening to sue Sato for violating municipal public workers’ confidentiality law. Sato told the magazine that if this case, for which so many investigators were mobilized over so many years, is closed by the authority, it would have an irreversible impact on the public trust of Japanese police – which has indeed over years been damaged by police officers’ errant conducts and acts, such as arresting wrong people as criminals and losing arrested suspects from police stations.

Bureaucracy controls widens. NTA commission Tsuyuki, 60, is a so-called ‘career bureaucrat’ who graduated from Kyoto University Law School and joined NPA hopping highly visible posts such as prefectural police headquarters and NPA criminal divisions. He was the chief of a team examine former prime minister Shinzo Abe’s shooting death. 

Tsuyuki is a stark contrast to Sato, a so-called non-career cop who chases criminals like a hound dog. Shukan Bunshun and other media warn that if the Kihara case is closed and Kihara, his wife and other accomplices are not nabbed, it would cause serious consequences not just on police moral but government in general as career bureaucrats, many of them eventually join politics, would opt to widen their administrative grips.

For now, Tsuyuki and other career bureaucrats, including another deputy cabinet secretary, Shunichi Kuryu, 66, are seeking evidence of Sato’s public servant confidentiality law violations, such as whether he received money and grafts from Shukan Bunshun and other media outlets. They have failed to date but their men are chasing Sato almost every day, the magazine said.

On the media, that Shukan Bunshun winning the case is all the more important now as it is the single news outlet that confronts the government head-on. All national newspapers have keeping mum on the case.

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