"Japan's Future and Risks" Seen from the Results of the House of Councillors Election | Shinobu Naito's "Ways to Become Free from Money" | Moneyクリ Monex Securities' Investment Information and Media Useful for Money

In the House of Councillors election held on July 20, the ruling coalition of the Liberal Democratic Party and Komeito did not reach a majority, including non-elected seats, as most had predicted, effectively giving a "NO" to the Ishiba administration.

However, if we look at the election results calmly, we can gain a different perspective on the future of Japan.

Although the ruling party fell below a majority, it performed better than expected.

This time, the ruling party fell below a majority, resulting in outcomes that were lower than the pre-election goals. However, looking at the results, it can be seen that although they fell short of a majority, it was by only three seats, indicating that public sentiment has not completely abandoned the ruling party.

The Constitutional Democratic Party, which should originally serve as the main opposition party to collect criticism votes against the ruling party, saw its number of seats remain flat and was unable to capture the criticism votes from the ruling party.

It is believed to be the result of a sense of balance where there is dissatisfaction with the ruling party politics, but there is also no intention to leave it to the opposition party.

The Emerging Political Party's Rise is a Symbol of Generational Change

This time, the Democratic Party for the People and the New Party have made significant progress. Both have garnered support from the younger generation under 30, increasing their recognition and approval ratings through internet elections centered around social media.

In the proportional representation votes, following the Liberal Democratic Party, the Constitutional Democratic Party and then the National Democratic Party ranked, and the emergence of the two new parties surpassing the Constitutional Democratic Party was an unexpected and surprising result.

It seems that the National Democratic Party's confusion due to the scandals of its leader and the selection of candidates for the House of Councillors election also led to votes flowing towards other participating parties.

In any case, the fact that the younger generation, which has been said to be indifferent to elections, is heading to the polls and that the overall voter turnout has increased is a positive trend that promotes generational change in the political world.

If promises cannot be fulfilled, expectations will turn to disappointment.

The emerging political party has made significant strides, but expectations for the realization of short-term policies are rising from the enthusiastic boom. If the promises made before the election cannot be fulfilled, I believe there is a risk that expectations will quickly turn into disappointment and they will rapidly lose support.

How will policies be implemented within a minority of seats? There is a possibility that realistic responses may be perceived as a tone-down, causing supporters to drift away.

Japanese Voters Beginning to Face Reality

Another notable feature this time is the struggle of traditional leftist parties such as the Communist Party and the Social Democratic Party. I believe this indicates that there is an increasing number of voters who expect practical solutions rather than idealistic politics.

It is understood that they perceive politics as something that is directly linked to their own lives.

Inflation Progression Is Inevitable Without Financial Resources for Fiscal Expansion

In the election issues, each party has put forward inflation measures as a major theme, but the Liberal Democratic Party proposed cash benefits as a policy. They are in conflict with the opposition parties' tax reduction proposals, including lowering the consumption tax.

Furthermore, among the opposition parties, there is no consensus on how much to reduce the consumption tax, including the scope and the reduction rate.

What is common to both the ruling and opposition parties is that they are trying to respond to inflation with fiscal expansion. However, since this is a demand-expanding policy, it is clear that it will accelerate inflation rather than suppress it.

It is still unclear what kind of policies will ultimately be implemented, but I am concerned that fiscal expansion without financial resources is more likely to lead to deterioration than to solve problems.

The risks of rising bad interest rates and a weak yen are increasing

Moreover, the main issue is that the expansion of fiscal policy raises concerns about the increase in government bonds, leading to upward pressure on long-term interest rates.

I believe that the increasing credit risk in Japan will lead to a decline in trust in the yen, raising the risk of a weaker yen.

Signs and Risks of a Bright Future for Japan

As the generational shift progresses, the demand for realistic policy proposals and implementation in politics has changed, which can be viewed as a positive sign for the future of Japan. The effectiveness of political execution is being questioned.

On the other hand, I am concerned that postponing the fiscal deficit issue may lead to significant repercussions in the future.

Individual investors should continue to be cautious of the weak yen and inflation. I believe the situation where holding yen deposits remains the biggest risk has not changed.