Japan’s Leadership Change

August 27, 2011 by staff 

Japan's Leadership ChangeJapan’s Leadership Change, Japan should get a new leader next week, with the movement potentially helping to pave the way for decision-making and end the paralysis that has frustrated attempts to heal the economy.

Current chief minister of Japan, Naoto Kan, confirmed Friday he is resigning as leader of the Democratic Party of Japan, according to Japanese media.

“I did what I could, and did what I had to do in difficult circumstances,” said Khan, according to a translation by Dow Jones Newswires.

The widely expected decision clears the way for the election of a new party leader, scheduled for Monday, which would become the new prime minister.

A change of leader can help the Democratic Party of Japan, in power since 2009, the storm of criticism following his handling of the earthquake and tsunami that devastated the country in March and was one of the worst nuclear disasters in the world.

In DPJ lawmakers expected to compete for the leadership, former Foreign Minister, Seiji Maehara, has gained popularity among most Japanese voters, according to a

Other leading candidates include Finance Minister Yoshihiko Noda, former Environment Minister Sakihito Ozawa, Minister of Agriculture Michihiko Kano, Economy Minister Banri Kaieda, Osaka and Nara Tarutoko Shinji legislator legislator Sumio Mabuchi, according to the Nomura Research Securities.

Kan Minister successor would be the sixth country in the first five years, and the rapid rotation in the direction of the fire was cited by Moody ‘s Investors in its downgrade of credit in Japan on Wednesday.

Moody criticized “the frequent changes in government” that hampers the development of long-term policies needed to reduce the pile of the country’s debt.

The agency lowered the rating of Aa3 from Aa2 to Japan, also citing the large deficits and the accumulation of public debt since the beginning of the last global recession. Read more about the lowering of Moody.

Takahide Kiuchi, senioranlyst at Nomura, said: “The markets had thought it would be only a matter of time before Moody took this step, which we believe was designed to send a message to the new government on the need for fiscal discipline.”

Another change of leadership could herald fresh zeal towards the solution of economic problems, someanlysts believe.

“Any further cooperation between the leaders and the opposition parties would mean a reduction in traffic congestion and a greater likelihood that the adoption of laws. It has been forced cooperation … but that’s not really a that can last forever, “said Naomi Fink, equity strategist at Jefferies Japan.

Fink said that Khan had made his resignation contingent upon approval of a bill of deficit bonds and a draft renewable energy law through parliament, saying that “no other [Japanese] outgoing leader has thought ‘I have really nothing to lose and went ahead with key legislation that can not be something else happened. ”

Nomura Kenichi Kawasaki said Khan’s successor is likely to continue to try to implement key economic policies that are already under consideration. However, the strategist also thinks “the installation of a new administration to speed up decisions on major economic policies that have been delayed.”

The Japanese government has introduced two supplementary budgets in March to finance reconstruction efforts after the earthquake. A third of the budget is set to be introduced at the end of the year;anlysts at Nomura said announce the introduction of 13 billion yen (168 billion and) spending over five years.

Nomura Kawasaki also hopes that the stalled discussions on increasing the consumption tax to go ahead with a new leader, which could in some way to calming concerns about current fiscal policy.

“Long-term debt continuously in the vacuum is not a productive enterprise and is not sustainable,” said Fink.

“The focus of the expansionary fiscal policy is an engineer for growth and that growth must take place to justify the issuance of debt, and for 20 years is not. So far, you have very little to show for it, “he said.

With the country’s gross domestic product growth running well below the average for the developed world, at 0.5%, Fink said, “From the standpoint of investors, the scales fell from his eyes long ago. “

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