And the Prime Minister seat goes to… Mr. Naoto Kan! Japan was finally able to wave goodbye to that period of political and economic uncertainty prior to the elections as Kan was re-elected Prime Minister and head of the Democratic Party of Japan. His strongest rival, Ichiro Ozawa, garnered a measly 51 votes from their fellow DPJ members against Kan’s 249. Overall, Kan scored a total of 721 points, outpacing Ozawa’s 491 points. So much for trying to unseat Mr. Kan!
It seems that many lawmakers believe that Kan’s policies on creating jobs, minimizing debt, and warding off deflation are grand enough for the economy. So what else does he have in store for Japan?
Well, just last week, Kan and his DPJ homies announced the release of a new economic stimulus package worth $11 billion. The majority of the funds will be allocated towards stimulating domestic demand and jobs creation. This is right in line with the DPJ’s goals set out last year, when it said that it wanted to create more balance in the economy by reducing dependence on exports.
In addition, while Kan did lose some support in previous months by saying that he was open to a sales tax increase (In a time like this? C’mon!), he does plan to cut corporate taxes. So aside from having hi-tech gadgets, raw fish and hot pop stars, Kan plans to attract foreign investors via lower corporate taxes, which in turn would help create jobs domestically.
That’s all fine dandy, but can he really do all these in his term? After all, the parliament is still divided, and the promise of… Cowabunga! What in tarnation happened with USDJPY?! The pair just rose by 170 pips in one hour, just after it dipped to a low of 82.88!
Calm down, kiddos! It looks like the Bank of Japan FINALLY put its money where its mouth is. After weeks of hot air about directly addressing the yen’s rapid appreciation, the BOJ finally launched its first currency intervention since March 2004. Wow, it looks like Kan’s getting down to business already!
With the currency intervention, tax cuts, and stimulus package already out in markets, what will Kan do next to boost the economy? Can he be as crafty in his policies as the BOJ is creative in their “closely watching the yen” speeches? As the optimists say, “Yes he Kan!”