Behind the Headlines August, 2007

Article Excerpt

In recent elections, Japan’s Prime ruling Liberal Democratic Party lost control of the upper house for the first time in over 50 years. Prime Minister Shinzo Abe still controls the more-powerful lower house of parliament, where elections need not be held until late 2009. But the centre-left Democratic Party can now delay government bills. Japan’s Nikkei 225 stock market index is now at 16,871, down 7.8% from the seven-year high of 18,300 it reached in June. Most of the decline is due to the recent setback on global stock markets. However, uncertainty over the implications of the election has also hurt Japanese markets. Japan’s Prime Minister from 2001 until last September, Junichiro Koizumi, cut public spending, sold state-owned assets and lowered the country’s debt. That raised business and consumer confidence. His successor, Shinzo Abe, had promised to continue his policies. However, he focused on reforming the country’s pacifist constitution rather than on economic matters. His government also suffered a series of scandals and mishaps. The change…