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Strategies & Market Trends : Countries

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From: Sam Citron2/17/2009 12:34:17 PM
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Japan’s Finance Minister Quits After G-7 Blunder [NYT]

TOKYO — Japan’s finance minister resigned Tuesday after widespread criticism of embarrassing behavior at the weekend Group of 7 meeting in Rome.

The minister, Shoichi Nakagawa, raised eyebrows for his slurred speech and muddled answers, and for appearing to fall asleep at a news conference in Rome on Saturday. A clip of Mr. Nakagawa in which he appeared to be groggy in front of journalists was posted on YouTube.

After intense criticism from politicians who said he had embarrassed Japan, Mr. Nakagawa stepped down on Tuesday, adding to the woes of a government that is facing a backlash for its handling of the economic crisis.

Mr. Nakagawa, 55, said cold medication and fatigue were to blame for his behavior, but also admitted to sipping wine before the event.

“I apologize for causing great inconvenience over my behavior at the G-7 meeting,” Mr. Nakagawa said at a news conference on Tuesday. “However, I still have a strong commitment to improving Japan’s economy.”

Prime Minister Taro Aso appointed Kaoru Yosano, Japan’s economics minister, to take on Mr. Nakagawa’s role, lending continuity to discussions about Japan’s budget and stimulus efforts.

Mr. Nakagawa’s behavior was a major embarrassment for Mr. Aso, who is under fire for his handling of the economy and whose public support has plummeted ahead of elections later this year.

The long-ruling Liberal Democratic Party and its junior coalition partner are in danger of losing the election, which could set the stage for far-reaching changes in Japan’s political landscape.

Although Mr. Nakagawa’s behavior may not make much difference to voters — Mr. Aso’s ratings in some opinion polls already below 10 percent — “what it does underscore is how unprofessional the Aso government is,” said Jesper Koll, chief executive of Tantallon Research in Tokyo.

Mr. Nakagawa’s resignation comes as Japan is trying to stimulate a flagging economy. Data on Monday showed its economy, the world’s second largest, had deteriorated in the fourth quarter of 2008 at its fastest pace since 1974. The country’s real gross domestic product shrank at an annual rate of 12.7 percent from October to December after contracting for two previous quarters as the country’s mainstay exports slumped amid the global economic crisis.

Some economists believe that the current quarter could be even worse and that added stimulus measures will be needed to haul the economy out of recession. Hiroshi Shiraishi of BNP Paribas in Tokyo on Monday revised his forecast for contraction this year to 5.8 percent from an earlier projection of 3.4 percent.
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