EDITORIAL : THE JAPAN TIMES

Orientation of Nagoya politics

In Sunday's Nagoya city assembly election, a local party led by Nagoya Mayor Takashi Kawamura became the No. 1 party. Although his Genzei Nippon (Tax Reduction Japan) failed to gain a majority in the 75-seat assembly, each of the traditional parties lost assembly seats.

Genzei Nippon's strength increased from one seat to 28. The Democratic Party of Japan, which used to be the No. 1 party with 27 seats, garnered only 11 seats and became the No. 4 party. The strength of the Liberal Democratic Party fell from 23 seats to 19 seats; Komeito, from 14 seats to 12 seats; and the Japan Communist Party, from eight to five. The Social Democratic Party lost its only seat.

The election was held after the assembly was recalled in a Feb. 26 referendum. In late August 2010, Mr. Kawamura had started a signature collection movement to hold the referendum. He aimed to change the composition of the assembly so that it would approve his call for making permanent a 10 percent residential tax cut and for halving the number of assembly seats and the amount of assembly-member salaries. In one month, he collected 369,008 signatures from voters, enough to hold the referendum.

The election loss Sunday dealt a serious blow to the DPJ ahead of "unified local elections" in April. Mr. Kawamura is expected to field candidates from his party in various parts of Japan in the elections and deepen cooperation with former DPJ chief Ichiro Ozawa, the rival of Prime Minister Naoto Kan.

Mr. Kawamura's maneuvers have had the effect of making traditional city assembly members examine whether they have seriously tried to address citizens' needs and aspirations. But his populist style in favor of tax cuts could lead to the deterioration of city finances and public services for citizens.

Mr. Kawamura's drive has the potential for turning the city assembly into a rubber stamp. While traditional parties must rethink their policies and attitude, voters must carefully think whether his politics is democratic in its basic orientation and will enhance their well-being.

Equities markets struggle

Worries about the economic impact of the devastating earthquake as well as the nuclear power plant crisis in Fukushima cast a cloud over the Tokyo equities market Monday. Before Friday's massive quake, the Nikkei Stock Average at the Tokyo Stock Exchange was trading around the 10,500 level. But it fell more than 6 percent to close at a four-month low of 9,620.49. The 633.94 drop is the largest since Oct. 16, 2008, when the Nikkei index tumbled by 1,089.02 following the collapse of Lehman Brothers Holdings Inc. At one point Tuesday, the index fell more than 1,000 to below 8,500.

Many factors are causing the worries. The quake has hampered economic activities in large areas of the Tohoku region. Major manufacturing firms, including Toyota Motor Corp. and Honda Motor Co., have announced temporary production stoppages after some of their facilities were damaged by the quake. The firms are also facing difficulties in procuring parts from Tohoku and other regions because of traffic disruptions.

The trouble at Tokyo Electric Power Co.'s No. 1 Fukushima nuclear power plant on the Pacific coast has given rise to power shortages, hampering industrial activities. TEPCO Monday began planning rolling electricity outages — the first in TEPCO's history. They are likely to continue for some time.

In an attempt to alleviate fears that the quake will cause serious problems for banks and other financial institutions, the Bank of Japan injected ¥15 trillion into money markets on Monday, with an additional ¥6.8 trillion injection the following two days.

Despite the Nikkei index's plummet two days in a row, Japan's current account balance recently has been in the black, indicating the ability of Japanese firms to make profits from business activities abroad, especially in emerging economies.

After the quake, the yen grew stronger rather than falling in value. Japan, the largest creditor nation, is regarded as a stable, rich country. But post-quake reconstruction will be extremely costly. The government must act prudently in deciding how it will raise the necessary funds from bond issuance and other sources.