Tuesday, July 04, 2006

My Sadakazu Tanigaki Scrapbook

Japan's MoFo's were at it again today, issuing warnings that deflation might not have been whipped yet, and that the BoJ should refrain from raising rates from their current Zero level despite the lowest unemployment rate in the OECD, rising asset prices, a 7% of GDP fiscal gap, as well as robust capex and rising housing starts, and, yes, eight consecutive months of positive inflation numbers. All which reminds me of Monty Python's "Dead Parrot" sketch. Given Mr Tanigaki's variant perception, I thought it would be a good time to break out my Tanigaki Scrapbook.

Here is Mr Tanigaki one of his partners in crime, Mr Kuroda, looking very cheerful indeed at a recent ADB meeting. Notice the smiles and the confidence. It is interesting to note that in pitched battles between the Finance Ministry (or the Treasury, Exchequer etc.) and the Central Bank, in any country (except where the Chief Banker is a toad), the Finance Minister almost always resembles the cuddly toy, while the Central Banker is always cariacatured as Darth Vader. This is because the Finance minster typically tells "the people" that they can "have their cake and eat it too".

Here, we see Japan's Finance Minister Sadakazu Tanigaki, shaking hands with his Chinese counterpart Jin Renqing in the Chinese port city of Tianjin. Tanigaki was in China to attend a meeting of Asian and European financial leaders. Notice how tightly Mr Tanigaki is holding Renqing's hand. It was reported by those present that following the photo-opp, Tanigaki refused to let go, and security had to be called to pry their hands apart. Though it was hushed by reporters, he was reputed to have lost his typical decorum revealing the honne behind his tatamae by screaming: "We will follow the RMB where-ever it goes, we will NEVER revalue without you, whatever the cost, to the ends of the earth and the end of time.....we will not let it go...."
Apparently, my sources tell me, PBoC Chief Zhou Xiaochuan was observing Mr Tanigaki's rather uncharacteristic outburst, and was seen here grinning broadly at the mad-hatter-like behaviour of the Minister, reputed to have said: "Hasta la vista, baby!"

Here is Mr Tanigaki displaying faux-concern for the impoverishment of the "Mr & Mrs Sato" that might result if the Bank of Japan raises interest rates to where they should be given that Japan has the lowest unemployment rate in the OECD, is running a 7% of GDP fiscal gap, experiencing a boom in asset prices, with commercial rising rents, eight consecutive months of rising consumer prices, and robust housing starts. Observers are asking why, with all the problems in the world, and reform issues on his plate at home, Mr Tanigaki has made it a personal crusade to undermine the Weberian bureaucrats steering the BoJ. Answer: One might think it was to hide the immense incompetence within his own ministry and his inability and unwillingness to do anything about the huge and persistent fiscal gaps. But the real reason might be, that higher rates, though prudent and necessary, might ruin the MoF's grand Macchiavellian plan to trash the Yen to insure Japan's currency remains competitive with its Asian neighbors.

Ah yes, "Plan B". Mr Tanigaki is shown here with his vision of the future: A Yen that has been debased so thoroughly by persistent 7% of GDP fiscal gaps, and through years of ZIRP and quanititative easing, that the only thing the YEN will be good for is framing and hanging on one's sitting room wall. Observe the Elvis-like hair-do on the pictured figure on the note.

But Tanigaki is wily and always prepared. Here, he is seen executing "Plan C": Pray Pray Pray that the BoJ will continue to neglect it's fiduciary responsibilities. No matter that China remains vastly poor by comparison. No matter that the USA has [perhap unwittingly] donated many jobs and much wealth to the cause of Chinese development. No matter that Japan, though vastly rich is unwilling to give a competitive inch to China or its Asian neighbors, putting the vast burden of global adjustment squarely upon the Americans and the Europeans. No wonder the Chinese detest the Japanese. But can it last? He is praying it can and will.

Finally we see Mr Snow giving advice to Mr Tanigaki on post-governmental careers. Mr Snow tried the less oblique route to international financial reconciliation, but was undermined (like Mr O'Neill before him) by an American Congress pandering for votes and a political system dominated by special interest campaign contributions, an administration that spells Economics with a "K", and by the helpful assistance of "friends" such as Mr Tanigaki, Mr Renqing.

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