William Katz:  Urgent Agenda

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CHANGE IN JAPAN – AT 10:33 A.M. ET:  There has been a major election in Japan, with international implications, although it has gone under our radar here.  From Reuters: 

TOKYO - Japan's conservative Liberal Democratic Party (LDP) surged back to power in an election on Sunday just three years after a devastating defeat, giving ex-Prime Minister Shinzo Abe a chance to push his hawkish security agenda and radical economic recipe.

Exit polls by television broadcasters showed the LDP winning nearly 300 seats in parliament's powerful 480-member lower house, while its ally, the small New Komeito party, looked set to win about 30 seats.

That would give the two parties the two-thirds majority needed to over-rule parliament's upper house, where no party has a majority and which can block bills, which should help to break a deadlock that has plagued the world's third biggest economy since 2007.

An LDP win will usher in a government committed to a tough stance in a territorial row with China, a pro-nuclear energy policy despite last year's Fukushima disaster and a potentially risky prescription for hyper-easy monetary policy and big fiscal spending to beat deflation and tame a strong yen.

COMMENT:  Remember when, about 30 years ago, we thought Japan was going to take over the world, at least economically?  Times have changed, and Japan has gone through a rough economic period.  It's now China we talk about. 

But Japan is our most important ally in Asia, and now it will have a prime minister who wants to strengthen Japanese defense and act firmly with China.  I hope Obama doesn't throw the new guy under the bus.

December 17, 2012