Japan Markets Roiled As Moritomo Scandal Returns, Abe May Be Forced To Resign

It was exactly one year ago that the previously unshakeable administration of Japanese Prime Minister Shinzo Abe was rocked by a crisis which prompted some to ask if Abe's government was on the rocks, and with it - Abenomics: the crisis was not one of bungled economic policies, party in-fighting or any of the other calamities that have brought down Japanese leaders in the past, including Abe's first administration as prime minister. No, Abe was struggling to shake off a scandal involving a kindergarten.

As we reported last March, Abe had been riding high in the polls and making plans to run for an unprecedented third term as head of the dominant Liberal Democratic Party, when questions first began to be asked about Moritomo Gakuen, a kindergarten operator in Osaka with what was initially described as a conservative curriculum, prompting  the prime minister to declare that he shared many of the philosophies of the school’s president, Yasunori Kagoike.

It would emerge in swift succession that the premier’s wife, Akie Abe, had been named honorary principal of a new school being planned by Kagoike; that the school was being built on land purchased from the government by Moritomo Gakuen for a fraction of its estimated value; that Abe’s wife Akie allegedly donated 1 million yen to the foundation in September 2015 on behalf of her husband, and that the operator’s philosophies imposed upon his young pupils were not just conservative, but tended towards far-right pre-war nationalism. 

The scandal raged for several months, resulting in Abe's approval rate tumbling, however at the last possible moment, Kim John Un's ICBM launches successfully distracted the Japanese population, and Abe's militant response was sufficient for the public to forgive and forget the entire Moritomo incident.

Until now...  because as the Japanese press reported over the weekend, the Moritomo scandal involving PM Abe's connections with the operators of the right-leaning school implicated in fraud are again roiling markets in Japan.

As NHK reports, while Abe is not the focus of the current investigation and his position remains secure for now, fresh allegations that tax authorities involved may have even fabricated reports in favor of Moritomo could force the resignation of Deputy PM and Finance Minister Aso as the National Tax Bureau reports directly to him.

Specifically, Japan's Finance Ministry will admit to the Diet on Monday that alterations were made to documents on the controversial state land deal. As we reported a yea ago, the land in Osaka Prefecture was sold to private school operator Morimoto Gakuen in 2016 for only a fraction of its market value. The transaction sparked allegations of favoritism in part because the wife of Prime Minister Shinzo Abe was acquainted with the school operator.

After the scandal came to light last year, the Finance Ministry submitted to the Diet settlement documents for the deal. But, earlier this month, a newspaper alleged that the papers had been altered before being submitted to the Diet. The ministry has since questioned its employees involved in the matter and concluded that changes were made to some wording in the documents.

In reaction to the Morimoto scandal coming back from the dead, six of Japan's opposition parties will demand Finance Minister Taro Aso step down to take responsibility for the matter, NHK reports. They also plan to demand the government release all related documents and that Nobuhisa Sagawa, who resigned last week as head of the National Tax Agency, be summoned to give testimony at the Diet. He was the ministry's Financial Bureau chief when the land deal was made.

Meanwhile, the ruling parties are urging the opposition parties, which have been boycotting Diet sessions since last week, to make facts clear through the debate in the Diet.

Meanwhile, analysts have already warned that a resignation by Aso would take the legs out of the current Abe administration, perhaps even forcing the PM to eventually resign as well, and forcing changes at the BOJ.

Furthermore, hitting much closer to home, Kyodo reported that Abe’s wife Akie was among names deleted from altered Finance Ministry documents pertaining to the sale of public land to Moritomo, putting Abe himself in jeopardy.

And one look at Japanese markets shows that investors are starting to get spooked with the USDJPY suddenly sliding taking a hit from concern that deepening of a scandal over alleged favors to a school with connections to Japanese Prime Minister Shinzo Abe may prompt a retreat of Abenomics, said David Lu, director at NBC Financial Markets Asia in Hong Kong...

... while Japanese stocks are paring some of their strong early gains; while the implications of any Aso resignation are hard to fathom at this point, many believe the Nikkei would plunge, and risk-off sentiment could return fast, sending the JPY higher once again.

This, according to Reuters, would be especially the case now, with investors already nervous over possible trade wars and recent stock market volatility.


ZeroSpam lloll Sun, 03/11/2018 - 23:48 Permalink

^^^   lloll  <<< CHRONIC  years-long SPAMMER     ^^^

His "disguised" links  (THE LAW THAT CHANGED THE WORLD) will take you to his Trojan- and Spam-laden "Whacked Out Biblicism" webpage.   He also posts as  "stizazz" and has been banned countless times for more than five years with countless log-ons.


Copy and paste the following text and send to abuse@zerohedge.com

"BAN and REMOVE spam accounts  "lloll"  and   "stizazz"   who are more log-ons from CHRONIC Spammers that ZH has been banning for years (that's you,  biblicism KNUCKLE-DRAGGER  &  dailywesterner MOUTHBREAHER)"


In reply to by lloll

MusicIsYou Sun, 03/11/2018 - 23:10 Permalink

I thought about this whole Jubilee idea long and hard. I don't think there's going to be a debt Jubilee, because nobody gave the former Soviet Union a Jubilee, and the USSR was forced to dissolve. And in fact I don't think Russia is going to allow other countries to just say oh the debts all gone, after what happened to them.

Cutter Sun, 03/11/2018 - 23:11 Permalink

"Investors are starting to get spooked."  Why?  If debt on the magnitude of 260 percent of GDP didn't "spook" you and keep you from picking up pennies in front of a bulldozer, why should a political scandal?

Abe, a new replacement, the little green man on the moon, it doesn't matter, whoever might replace Abe won't/can't change a thing.  

The BOJ must keep printing or it will all come tumbling down.


Yen Cross Sun, 03/11/2018 - 23:20 Permalink

  It's always something? 

   Central banks are so buried in debt, the only thing they have left is the infamous, "Tape Bomb".

  I don't have any yen exposure, but I like the pressure this is putting on the $usd. :-D

  I'm amazed the yen is still a "risk off' currency?

HRH of Aquitaine 2.0 Sun, 03/11/2018 - 23:21 Permalink

"[W]ife Akie allegedly donated 1 million yen to the foundation in September 2015 on behalf of her husband, and that the operator’s philosophies imposed upon his young pupils were not just conservative, but tended towards far-right pre-war nationalism. " So there is the problem. Countries are swinging to the right. Is anyone surprised that has been paying attention? I am not.

Let them be nationalists. I don't see a problem with that. I didn't realize that Japan was infested with fucking lefties and the whole open-borders, new world order morons.

MusicIsYou Sun, 03/11/2018 - 23:22 Permalink

Japan is just falling the hell apart, that's what they get for dancing with the devil beneath the pale moonlight. It's phony unemployment rate is 2.5% but it's probably really upwards of 25% like the U.S. Japan's people aren't reproducing their population, and 40% of Japanese women are virgins, and even more aren't interested in marriage. Japan is on it's last leg, standing on a banana peel.

ImGumbydmmt MusicIsYou Mon, 03/12/2018 - 09:14 Permalink

And you've been there to see it falling apart?

we just returned from our third trip to Japan. Definitely not falling apart, like America IS.

Fukouka was an amazing city, cleanest most industrious I have seen in decades. Also listed as the youngest city per capita in Japan.

There are no homeless or unemployed, or Dindus or  gang type latinos or ANTIFAs,  burning the flag to be seen anywhere. Tokyo is over 10 million people and they keep track of the homeless, recently reported at 217 total. that's less than 0.0002% . Have you been to Chicago or Oakland. I have. WAYY the eff more homeless in America.

Bus drivers and train conductor wear white gloves and that policeman/milkman hat from America in the 1950s. and mass transit is clean, you do not eat on a bus or train to leave your garbage.

FWIW, United Airlines is ranked around 72 in the top 100 airlines and Japan's ANA is consistently top 5, and #2 in the world this year, and the difference as a passenger on both within a couple hours flying both in and out of country was EPIC. United staff crews based on seniority. so desirable flights like the SFO to Tokyo hop is staffed by the most Surely Fat old  bitches and old gay dudes, who hate everybody and will let you know in a heartbeat they are United, sit your ass down shut up, don't ask for anything or well get the CHP to kick your ass and drag you off the plane.

I'm 6'3 and United Economy is so cramped the seat ahead hits my knees before the passenger ahead tilts back, so to not have the seat from hell, we have to buy economy plus.

The food was awful, the seat back videos were circa 1998 slow to load tech, armrest headset crackled and buzzed so bad i had to turn on closed captions, and of the flight back to the US in the flight wifi was dead the entire time.


On ANA, all the seats are more Gracios than untied Economy plus, the flight attendants are beautiful gracious petite Japanse women, no men and most appear to be under 30. they bow to you, smell good, have perfect hair and make and bring your kids toy inflatable 777 jet liners 

We visited my wife's elementary school and took our daughter for a tour and it was amazing, clean, with bright innocent face chilrend in neat uniforms and backpacks, eager to meet and greet a newcomer, and they all knew a touch of english words.

There are NO custodians in a Japanese elementary school. Children do all the cleaning. 6th graders mentor first graders, and all the grades in between do the bulk of the work.

There is no crime to speak of. none, not even a hint of it. The only time we felt unsafe was our stay near a US naval/Marine base. The only people we saw being  loud or rude were Americans and Koreans.

The Japanese are so crime free they are easy target for crime.

The only negatives I noticed were, its hard as an american to hail a taxi after dark. They tell me the Navy and Marines have soured the cab drivers enough they they are cautious. Also there is no courtesy on mass transit for a man to give up his seat for elderly or pregnant or women with an infant. I don't know any insults in Japanese so resorted to calling one able bodied guy "Gomi" San (garbage) who did not make room for my wife and two year old and instead an 80 plus year old lady offered her seat.

A fat Japanese girl, or man is a rare sight. but even an overweight Japanese girl presents herself clean and in feminine attire and disposition.

We visited the new home tours, as an architect i can assert the quality of new homes in Japan far exceeds America. I could not find contractors in America to do the quality of work they do. i spoke with some Local architects at a trade show. Here in America, we do custom homes that take 40-50 sheets of drawings for 5,000 SF home, They do over 100 sheet of drawings for under 2,500 SF custom home. And it really shows.


Japanese people still do routine morning exercises.

Exiting an airline full of Japanese citizens is an amazing thing to watch how efficiently they all get there belongings all together and file out in just a few moments.When i saw this i had my family wait. I could see we did not want to get in their way with our kids and all out stuff and let all of them exit first.

America could learn a shit ton from the Japanese.

But its too late. 

Nothing made that more clear than coming back after weeks in Japan.



In reply to by MusicIsYou

Jack Oliver Mon, 03/12/2018 - 04:29 Permalink

Wait until the Japanese realise ALL their retirement savings have disappeared and been replaced with counterfeit QE to infinity ! 

Japan will likely go down before the Zio/US - the US will soon follow !!