Japan’s postal shake-up approved

October 14th, 2005 at 15:04 Björn Hallberg

At least the reformed entity will still contain safe guards. But the prospect of free flowing capital, especially at non fixed exchange rates abroad may spell trouble.

BBC - The final hurdle had been the upper house of parliament. It was this house which voted down an earlier reform bill in August, prompting Mr Koizumi to call the election.

On Friday, the bill passed by 134 votes to 100 and will now become law.

The sell-off will first see a holding company take control of the system, with separate units for savings, insurance, postal services and a fourth for personnel and property management.

From 2007 on, each will gradually be sold off, but the savings and insurance sides will be allowed to continue cross-shareholdings to protect them from takeovers.

Koizumi of course has been pushing the issue since 1979 and clings to the notion that it will somehow perform miracles on the Japanese economy. “Modernizing”, “stimulate growth”, “opening up” and “competition” are often used terminology. As can be expected. But what lies beyond the fad?

ZMAG - Hara notes the intriguing possibility that the American fiscal authorities have their eye on the postal savings funds. They need massive funds to finance the past few years of big tax cuts and large-scale wars, an unprecedented and unwholesome marriage in American fiscal history. And they will need even more money now that fallout from the New Orleans fiasco has convinced the Bush regime of the need to buy back popular support with big-state spending. With virtually zero savings at home, America has to look abroad to finance its deficits. It has been able to count on the Bank of Japan, Japan’s central bank, for much of this cash, but the BOJ now holds about US$ 800 billion in US Treasury bonds. To see the privatized postal savings get in line with the depleted BOJ at Treasury auctions would likely bring tears of joy to the eyes of US debt management specialists. Yet with the long-term prospects for the US dollar dim, Japan’s postal savings depositors may soon have tears of another kind in their eyes.

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