Ruling party concedes defeat in Japan election

[ray245]

AP

TOKYO – Japan's Prime Minister Taro Aso conceded defeat in elections Sunday as media exit polls indicated the opposition had won by a landslide, sending the conservatives out of power after 54 years of nearly unbroken rule amid widespread economic anxiety and desire for change.

"These results are very severe," Aso said in a news conference at party headquarters, conceding his party was headed for a big loss. "There has been a deep dissatisfaction with our party."

Aso said he would have to accept responsibility for the results, suggesting that he would resign as party president. Other LDP leaders also said they would step down, though official results were not to be released until early Monday morning.

The left-of-center Democratic Party of Japan was set to win 300 or more of the 480 seats in the lower house of parliament, ousting the Liberal Democrats, who have governed Japan for all but 11 months since 1955, according to exit polls by all major Japanese TV networks.

The loss by the Liberal Democrats — traditionally a pro-business, conservative party — would open the way for the Democratic Party, headed by Yukio Hatoyama, to replace Aso and establish a new Cabinet, possibly within the next few weeks.

The vote was seen as a barometer of frustrations over Japan's worst economic slump since World War II and a loss of confidence in the ruling Liberal Democrats' ability to tackle tough problems such as the rising national debt and rapidly aging population.

The Democrats have embraced a more populist platform, promising handouts for families with children and farmers and a higher minimum wage.

The Democrats have also said they will seek a more independent relationship with Washington, while forging closer ties with Japan's Asian neighbors, including China. But Hatoyama, who holds a doctorate in engineering from Stanford University, insists he will not seek dramatic change in Japan's foreign policy, saying the U.S.-Japan alliance would "continue to be the cornerstone of Japanese diplomatic policy."

National broadcaster NHK, using projections based on exit polls of roughly 400,000 voters, said the Democratic Party was set to win 300 seats and the Liberal Democrats only about 100. TV Asahi, another major network, said the Democratic Party would win 315 seats.

The LDP's secretary-general, Hiroyuki Hosoda, said he and two other top officials plan to submit their resignations to Aos, who serves as president of the party.

As voting closed Sunday night, officials said turnout was high, despite an approaching typhoon, indicating the intense level of public interest in the hotly contested campaigns.

"We've worked so hard to achieve a leadership change and that has now become almost certain thanks to the support of many voters," said Yoshihiko Noda, a senior member of the DPJ. "We feel a strong sense of responsibility to achieve each of our campaign promises."

Ruling party leaders said they were devastated by the results.

"I feel deeply the impact of this vote," former Prime Minister Shintaro Abe, a leading Liberal Democratic Party member, told television network TBS. "Our party must work to return to power."

Even before the vote was over, the Democrats pounded the ruling party for driving the country into a ditch.

Japan's unemployment has spiked to record 5.7 percent while deflation has intensified and families have cut spending because they are insecure about the future.

Making the situation more dire is Japan's aging demographic — which means more people are on pensions and there is a shrinking pool of taxpayers to support them and other government programs.

"The ruling party has betrayed the people over the past four years, driving the economy to the edge of a cliff, building up more than 6 trillion yen ($64.1 billion) in public debt, wasting money, ruining our social security net and widening the gap between the rich and poor," the Democratic Party said in a statement as voting began Sunday.

"We will change Japan," it said.

Hatoyama's party held 112 seats before parliament was dissolved in July.

The Democratic Party would only need to win a simple majority of 241 seats in the lower house to assure that it can name the next prime minister. The 300-plus level would allow it and its two smaller allies the two-thirds majority they need in the lower house to pass bills.

Many voters said that although the Democrats are largely untested in power and doubts remain about whether they will be able to deliver on their promises, the country needs a change.

"We don't know if the Democrats can really make a difference, but we want to give them a chance," Junko Shinoda, 59, a government employee, said after voting at a crowded polling center in downtown Tokyo.

Having the Democrats in power would smooth policy debates in parliament, which has been deadlocked since the Democrats and their allies took over the less powerful upper house in 2007.

With only two weeks of official campaigning that focused mainly on broadstroke appeals rather than specific policies, many analysts said the elections were not so much about issues as voters' general desire for something new after more than a half century under the Liberal Democrats.

The Democrats are proposing toll-free highways, free high schools, income support for farmers, monthly allowances for job seekers in training, a higher minimum wage and tax cuts. The estimated bill comes to 16.8 trillion yen ($179 billion) if fully implemented starting in fiscal year 2013.

Aso — whose own support ratings have sagged to a dismal 20 percent — repeatedly stressed his party led Japan's rise from the ashes of World War II into one of the world's biggest economic powers and are best equipped to get it out of its current morass.

But the current state of the economy has been a major liability for his party.

"It's revolutionary," said Tomoaki Iwai, a political science professor at Tokyo's Nihon University. "It's the first real change of government" Japan has had in six decades.

[Vympel]

Wow, 54 YEARS since 1955. That's got to be some sort of record (for a legitimate democracy, in any event), surely?

[Serafina]

Wow...did not know that Japan's ruling party ruled that long!

We have something similar in Bavaria (>40 years without coalition), but Bavaria is just a single state which is pretty backwards politically (though not economically).

[phongn]

Wow, 54 YEARS since 1955. That's got to be some sort of record (for a legitimate democracy, in any event), surely?

If you consider Mexico to have a legitimate democracy, the Institutional Revolutionary Party (PRI) was in power from 1929-2000.

[ray245]

Wow, 54 YEARS since 1955. That's got to be some sort of record (for a legitimate democracy, in any event), surely?

Well, they did build up the Japanese economy from scratch after world war 2, and make Japan one of the most economically powerful nation on earth.

Although I have ask people who are familiar with Japanese politics about this question. Did any opposition party even try and offer any concrete policy to fix or improve the Japanese economy throughout the last 50 years?

[Fingolfin_Noldor]

I will cue the Yes Minister, Yes Prime Minister shows first. Japanese Bureaucracy from what I hear is incredibly byzantine. I wonder if they will work with their new masters or fight against them.

On the other hand, they really need new blood. But fear not, there are other parties in power who are in the running for the longest running ruling party...

[ray245]

I will cue the Yes Minister, Yes Prime Minister shows first. Japanese Bureaucracy from what I hear is incredibly byzantine. I wonder if they will work with their new masters or fight against them.

On the other hand, they really need new blood. But fear not, there are other parties in power who are in the running for the longest running ruling party...

Meh, new blood is hardly the only thing Japan needs.

[MarshalPurnell]

The major opposition to the LDP before the 1990s was the Japan Socialist Party, which advocated (unsurprisingly) socialism and neutrality in foreign affairs. There were also the Communists and a few other third parties, the only really important one being the Komeito, which was the party of a particular Buddhist sect. The LDP could usually command at least a comfortable plurality of the votes even in the worst elections, which due to the bizarre way Japan allocated representatives meant that they would remain in majority control of the Diet. This changed in the 1990s, when the first forerunner of the Democratic Party was organized by a merger of elements of the LDP and the JSP, creating an opposition party that managed, for 11 months, to take control of the Diet. Unfortunately the opposition was only really united by a hatred of the ruling LDP factions so it fell apart pretty quickly, and the LDP won its way back into power in short order.

Japanese politics are driven by faction and personality, with political ideals and policy views a decidedly less important factor in internal alignments. It should also go without stating that Japanese politics, specifically the internal politics of the LDP (although the JSP was by no means immune to the same tendencies), were insanely corrupt and driven by alliances with vested power brokers. This means a specific politician would establish a local support group, where businesses and elites in his home area would provide funding in exchange for his patronage of the area in the Diet. This is why so many rural areas with nothing around have bridge and train connections to Tokyo, by the way. The politician in turn would become a client to a more established faction head, supporting that leader in the internal power struggles in exchange for help with re-election and obtaining the money his locality required. Time in a faction would let him develop ties to other major political forces, like ex-politicians in the bureaucracy, major corporations, and the yakuza (oh, yes, organized crime was a political player in Japan) and position himself to either take over the faction after the present head retired/died, or strike out and form his own faction. Junichiro Koizumi was a break with that tradition, by cultivating popular political support through appeals to the masses, and managed to piss off a lot of the factional leaders of the LDP by doing so.

I'm not as well versed in the dynamics of the opposition after the 1990s though they have seemed to develop into a more cohesive platform over the years. I am by no means certain that they have a coherent view of the economic problems facing Japan, and the part about further coddling Japan's incredibly subsidized farmers does not bode well for that, but one can hope they will break with the old paradigm of self-interested, insular rule by unaccountable political elites. That said I'm not even sure what Japan could do to spark real economic growth or get out of the demographic death spiral they are in right now.

[Pelranius]

Another thing that has continually distorted Japanese politics is that since the 1950s, they have not redrawn the constituencies, which results in undue power given to the rural areas, who usually support the LDP disproportionately.

[Haruko]

Maybe because I'm American, I read Liberal Democratic Party, and the thought that they were conservative didn't cross my mind until I read about their philosophy on Wiki. Liberal and conservative sure has different meanings outside the States. In fact, first I heard of "liberal conservatism" was in said Wiki article.

[tim31]

So I know this might seem like a minor issue to some, but what are the chances we're going to see some proper, unconditional apologies for certain atrocities committed in the 1930s and 40s?

[Pelranius]

So I know this might seem like a minor issue to some, but what are the chances we're going to see some proper, unconditional apologies for certain atrocities committed in the 1930s and 40s?

The DPJ is more friendly to China and Korea, but they probably have higher priorities like trying to fix the economy.

I expect something might happen in the next six months, though.

[Teebs]

Maybe because I'm American, I read Liberal Democratic Party, and the thought that they were conservative didn't cross my mind until I read about their philosophy on Wiki. Liberal and conservative sure has different meanings outside the States. In fact, first I heard of "liberal conservatism" was in said Wiki article.

If I remember correctly the Russian Liberal Democratic Party is actually neo-fascist.

[J]

And this is where it gets fun should they carry through with their pre-election promises.

BBC link

Japan 'would avoid dollar bonds'


Japan's opposition party says it would refuse to buy American government bonds denominated in US dollars, if elected.

The chief finance spokesman of the Democratic Party of Japan, Masaharu Nakagawa, told the BBC he was worried about the future value of the dollar.

Japan has been a major buyer of US government bonds, helping the US finance its Federal budget deficits.

But, he added, it would continue to buy bonds only if they were denominated in yen - the so-called samurai bonds.

"If it's [in] yen, it's going to be all right," Mr Nakagawa said in an interview with the BBC World Service.

"We propose that we would buy [the US bonds], but it's yen, not dollar."

However observers say that, while the move would be a remarkable policy shift, it was unlikely that Mr Nakagawa's party will win the forthcoming election, due before mid-September, despite the unpopularity of the ruling Liberal party.

Risk

Such yen-denominated bonds would mean that America, rather than Japan, would be exposed to the risk of future falls in the value of the US currency.

Mr Nakagawa's demand echoes doubts about the future of the dollar expressed earlier this year by the Chinese Premier and the governor of China's central bank.

Both China and Japan have run large trade surpluses with the US for many years and have tended to invest the dollar surpluses in safe US Treasury bonds.

But both countries are worried that the value of these foreign exchange holdings could be jeopardised by a fall in the dollar.

Beijing, for example, has said it will issue its own bonds to fund any further lending to the International Monetary Fund and is believed to be diversifying out of dollars and into euros.

Japan faces a particularly difficulty because unlike China, its currency has been floating freely on international markets and the fall in the value of the dollar, relative to the yen, has hit Japanese exporters hard.

However a rapid exit from holding dollars would weaken the US currency further, making Japanese exports even more expensive in the US.

This means that any decision to switch to samurai bonds would have to be carefully managed so as to not exacerbate the situation, economists say.

If they carry out this policy I don't see it ending well for anyone. It leads to currency swings, likely in the wrong direction which will really mess up trade for Japan and many of its trading partners.