Mizuho fundraising

Mizuho is pricing new equity shares at JPY 130/share in order to raise approximately US$8.5 billion in fresh capital, as reported by Dow Jones. This follows other Japanese financial institutions in an effort to shore up capital ratios. There is much talk in financial circles of implementation (finally!) of Basel II requirements in 2011 and sales of non-performing loans. Equity raising is an essential prerequisite to Japan taking this step.

Looking at the results of last weekend's Upper House election and the DPJ's failure to maintain control of both Houses, pundits are claiming fiscal austerity and controlling national debt are again on the backburners. Certainly, Prime Minister Kan's lack of eloquence in framing discussion around a doubling of the consumption tax has been a stumble. On the other hand, the public face of the DPJ's budget-cutting team, Renho, was the top vote-getter nationwide, and more impressively, in the highly competitive Tokyo district, claiming over 1.7 million votes. The second-largest vote-getter nationwide was at the 1 million vote range. This is a show of strong public support for cutting the public budget.

There are other signs that public debt will be tackled; a number of pro-business anti-public debt representatives, such as Kenji Nakanishi, have been voted in. Nakanishi is a former JP Morgan banker and part of the Your Party, was elected on a platform of continuing with Japan Post's privatization and against using Japan Post deposits as a piggy bank for government works. Another data point is a release showing Japan's national pension fund was a net seller of Japanese Government Bonds last year - if the public pension's money cannot be guaranteed to support government spending, perhaps Japan has a chance to rein in national debt.