Aso calls for more action to bolster economy

Thursday 09th October, 02:20 PM JST

TOKYO —

Prime Minister Taro Aso, alarmed by an escalating global financial crisis, called for more action Thursday to bolster the country’s faltering economy.

Kosuke Hori, policy chief of Aso’s Liberal Democratic Party, said that the prime minister asked ruling coalition leaders to consider crafting a new emergency package beyond the 2 trillion yen economic stimulus plan proposed in late August.

The current batch of measures, expected to gain parliamentary approval next week as part of an extra budget for this fiscal year, includes assistance to small businesses and other pump-priming measures to shore up Japan’s economy.

But it was introduced before a financial tsunami unhinged Wall Street last month, triggering a series of calamities in its wake, including the collapse of Lehman Brothers, frozen credit markets, teetering European banks and growing prospects of a global recession.

Even Japan, whose financial companies so far have weathered the financial crisis relatively unscathed, is showing signs of vulnerability.

Government data released earlier Thursday showed that a key barometer of corporate capital spending in Japan plunged in August to its lowest level in more than five years, exacerbating concerns that sluggish exports are edging the world’s second-largest economy closer toward recession.

Core private sector machinery orders, which exclude often-volatile orders from electric power firms and shipbuilders, fell 14.5% from the previous month to 891.7 billion yen, the lowest amoung since April 2003.

Japan’s stock market on Wednesday suffered its worst one-day loss in two decades, with the benchmark Nikkei 225 index plunging 9.4% in a regional rout.

Markets recovered somewhat Thursday following interest rate cuts overnight by six central banks including the Federal Reserve and European Central Bank.

Since Aso took office last month, local media have focused on when the prime minister would dissolve the lower house of parliament and hold general elections. Newspapers had predicted early polls could come as early as November, though it now appears they will be pushed back.

Aso has repeatedly said that ensuring legislative approval of the proposed stimulus package outweighed political demands for early elections.

Growth in the world’s No. 2 economy has come to a virtual halt against the backdrop of higher energy and materials prices, slowing exports and the global credit crunch. Second-quarter gross domestic product, which contracted at a 2.4% annual pace, suggests that the country teeters on the brink of recession.

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7 Comments

proxy at 05:57 PM JST - 9th October

Good job, Mr. Aso, you managed to sink Japanese stocks all by yourself!
slappayuki at 10:31 PM JST - 9th October

Why don't he get off his arse and do something ?
Altria at 11:28 AM JST - 10th October

How about creating some more debt and re-concreting a few rivers!
memyselfI at 12:49 PM JST - 10th October

Great !!!!! He is wise and smart !!!! Go get them Tiger !!!!! But how can you do this ? Tell everybody to go to Uniqulo and buy sweaters ? Yes I know the department store is spelled wrong on purpose.
usaexpat at 11:34 PM JST - 10th October

Hey Aso, the US promised $700 billion to shore up banks, cut interest rates and the DOW still continues to drop like a stone. I would sit it out and wait to announce any plans until we find a bottom.
Simon_Foston at 08:53 AM JST - 11th October

Hey Aso, the US promised $700 billion to shore up banks, cut interest rates and the DOW still continues to drop like a stone. I would sit it out and wait to announce any plans until we find a bottom.

Indeed, but Aso needs to make sure the owners of small businesses keep getting their bribes just in case they decide to vote for the DPJ. He's called for another ¥2 trillion supplementary budget apparently, which will include bigger debt guarantees for small and medium-sized businesses. Just another pointless waste of money that Aso is hoping will keep the LDP in power.
LIBERTAS at 06:27 AM JST - 12th October

Aso wants to extend loans even further through his friend's ShinTaro Ginko!