Investors' hopes rest with Obuchi

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The Independent Online
THE WORLD'S financial markets are relying on Japan's new prime minister Keizo Obuchi and his ageing finance minister Kiichi Miyazawa to bail them out of the current crisis.

Yet the Japanese have given the new government the lowest opinion poll rating in decades.

Mr Obuchi, 61, the foreign minister in the outgoing government of Ryutaro Hashimoto, is a dyed-in-the-wool old-school machine politician. One of his party members, Yoshimasa Hayashi, was quoted as saying: "Obuchi is kind of a weird figure. Nobody dislikes him, but nobody is enthusiastic about him."

He insisted that "now we need more top-down leadership than consensus- building, but building a consensus is Obuchi's style."

However these are extreme times. Japan is in its worst recession since World War II. Its collapsing currency is pulling down Asian markets.

The economic "slump" is posing a threat to the global economy starved of Japanese demand and investment.

Mr Obuchi makes no claims to knowing anything about economics. He brought back into office someone who has headed the finance ministry not once, but twice, and served as prime minister.

Kiichi Miyazawa, 78, reluctantly agreed to take on the job of finance minister again. He said he was too old and had "no will" to take up the post. However Mr Obuchi was insistent. "I will not be able to form a cabinet unless you agree," he told him.

English-speaking Mr Miyazawa has an impressive range of American connections. His son-in-law is the second most senior official at the US embassy in Tokyo.

One opposition member described Mr Miyazawa as a "war criminal" for having approved loose monetary policies during his tenure as premier. This sparked an orgy of speculative land-buying, producing a price bubble.

When land prices crashed in the 1990s, banks were left burdened with an estimated $529 billion in bad loans.