Prime Minister Mori made a formal visit to Washington last month and promised President Bush that all bad debts will be written off during the next six months. The more the Financial Times and Washington Post report on Japanese politics, the harder Japanese politics becomes to understand, and thus, stock prices keep falling. The biggest obstacle now is the existence of the LDP itself. As much as we have a negative impression of politicians who speak with no vision, we also consider analysts and intellectuals who have no detailed plans quite irresponsible. Regardless of who should be the next prime minister, the project that the government should carry out is obvious.
Some analysts claim it is a strategy against asset deflation.
In the 1980's, Japanese financial institutions expanded loan activity with land and real estate as the bond. After the bubble economy burst, however, land and real estate values dramatically dropped, resulting in huge bad assets. In short, financial institutions wish to temporarily heighten the value of land and real estate in order to deal with these bad assets. They need political measures for this, and they continue to emphasize that any structural reform and deregulation will be meaningless unless such measures are issued. A politician like Ichiro Ozawa first comes to mind, although he will not have a chance for a while, as at present he is the leader of a small political party.