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New Finance Minister Fukushiro Nukaga Has an Itchy Trigger Finger for Defense - Will he Pull it out in Defense of the Weak Yen?

August 31, 2007
By Ken Worsley


In Monday’s Cabinet shakeup, Finance Minister Koji Omi was replaced by Fukushiro Nukaga, a Waseda University graduate (for those of us who care) and longtime LDP member of the Lower House. Back in 1998, Nukaga served as head of the Japan Defense Agency, though he resigned from that post due to a political scandal. In 2000, then Prime Minister Yoshiro Mori named Nukaga as Minister of State in charge of economic and fiscal policy, though he resigned from that post due to another scandal involving political fund contributions. From October 2005 to September 2006, he served once again as head of the Japan Defense Agency under Prime Minister Koizumi, and left the post when Mr Koizumi’s term as party president expired.

Nukaga has also served as Chairman of the Standing Committee on Finance in the Lower House, as well as twice having held the post of Deputy Chief Cabinet Secretary.

In a January 2006 speech at the Royal United Services Institute for Defence and Security Studies, then Defense Agency Chief Nukaga told his audience:

Japan will develop multi-functional, flexible and effective defense forces in order to cope with new threats and diverse contingencies and to participate proactively in international peace cooperation activities. New threats cannot be effectively dealt with under the traditional concept of deterrence as during the Cold War. Therefore, a transformation of defense forces from deterrence-oriented to response-oriented forces should be further pursued.

Turning to his current post. We know that Japan has not intervened directly in global currency markets since the spring of 2004. In a press appearance on Thursday, Nukaga told reporters, “We must make efforts to avoid drastic changes of foreign-exchange rates to ensure that the economy maintains sustainable growth.”

While that may hint at a possible departure from the path of his predecessor (though do no more than just hint), one thing remains consistent with former Finance Minister Omi’s line of thinking. Nukaga, like his predecessor, seems opposed to the idea of using some part of Japan’s massive foreign reserves as an investment vehicle. At the same press conference on Thursday, he also told reporters:

The priority of foreign-reserve management is to ensure the stability of currencies. We must carefully think before making risky investments.

That, of course, is a carefully worded way to not say yes or no, which is what we should expect from Mr Nukaga until at least his first meeting as a member of the Council on Economic and Fiscal Policy, which is still listed as ‘to be determined’ on their website…

Filed Under Exchange Rates, Finance, Foreign reserves 

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Comments

2 Responses to “New Finance Minister Fukushiro Nukaga Has an Itchy Trigger Finger for Defense - Will he Pull it out in Defense of the Weak Yen?”

  1. Gene Thomas on June 16th, 2008 11:05 pm

    June 16 2008
    Finance Minister Fukushiro Nukaga

    SHUT THEM DOWN (THE SOLUTION)

    Consumers everywhere are being victimized by speculators that run up the prices trading in the poorly regulated British Commodities Futures Markets. Some speculators, of all types, including American brokers, banks, hedge funds, pension funds and others, are predicting oil prices rising up to $250 per barrel and unless strict regulations are enacted and enforced their price maneuvering will work.

    They influence prices on nearly every commodity. Commodity Futures are trading in extreme quantity. To illustrate the growth: Commodity Contracts of all types amounted to $23 billion in all of 2003 and this year has reached $264 billion in the first 3 months of 2008. Crude Oil contracts held by various speculators now control 1.1Billion barrels of oil which is eight times the amount of oil stored in the Strategic Petroleum Reserve in the last five years.

    Ref: http://hsgac.senate.gov/public/_files/052008Masters.pdf
    (Michael W. Masters’s testimony before a Senate Committee on Homeland Security and Government Affairs on May 20th 2008 PLEASE READ)

    Mr. Donald D. Humphries, Vice President at Exxon Mobil, was lecturing at Wharton College recently when the price of oil was at $120. He said their analysts find that oil should be selling closer to $50 per barrel considering the normal factors that might affect the price. His company set a record of $40.6 Billion profit in 2007 and it is headed higher in 2008. It should be obvious to everyone that the price of crude oil is no longer based on supply and demand.

    The $50 oil would mean that gasoline could sell for about $2. A big relief!
    The world needs relief. Misery through unemployment, bankruptcy and malnutrition is growing daily.

    THE SOLUTION
    Lowering the high prices of oil and all other commodities to a normal, livable level can only happen by closing (all) worldwide Commodity Futures Markets temporarily as soon as possible. Cancel all existing futures contracts. Margins and other monies paid by the Investors would be refunded by the Exchanges on all canceled contracts.

    Trading on the commodities futures market could begin again after a one-week period while cancellations and refunds are handled. After that, commodity prices would open at the same price that they closed at on January 2 2003. Commodity Futures trading will begin again with the following limitations. No commodity could change in price more than one percent per month and five percent per year.

    Gene Thomas
    328 Northglen Drive
    Hurst, Texas 76054
    817.485,6121
    gene4nita2@sbcglobal.net

    If current rules will not alow the procedures itemized above ? Correct and change the rules!

  2. Ken Worsley on June 17th, 2008 2:58 pm

    It seems to me that if this really is a speculative bubble, it will crash like all others before it and some will be left holding the bag while others get out in time.

    I’m not sure about this solution. Do we just stop capitalism when price goes beyond a certain level? Who gets to set that level? I certainly don’t trust any government to set that level, and private industry has its own bias. The real problem is the sense that capitalism is fine until some people really start making a lot of money - then it’s bad.

    I don’t see how consumers are being “victimized” by people engaging in fully legal trading activities. If costs rise, they cur back spending and/or stop buying. A correction/crash will eventually follow. I don’t think a state-planed system will do anything other than lead to inefficiencies and waste.

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