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UNCLAS SECTION 01 OF 12 TOKYO 003010 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 10/29/08 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
4) Defense Ministry acknowledged MSDF refueling ships engaged in 
both anti-terror operations in the Indian Ocean and anti-piracy 
measures near Somalia  (Asahi) 
 
5) Government to focus on verification of uranium enrichment in 
North Korea's report  (Tokyo Shimbun) 
 
Diet conflict: 
6) Democratic Party of Japan attacking the government and ruling 
parties in Diet on Defense Minister issue, delisting of North Korea 
from terror-sponsor list  (Tokyo Shimbun) 
7) Signs of rekindling of political fire in divided Diet  (Tokyo 
Shimbun) 
8) DPJ has seven items to pursue the Aso government on in the Diet, 
including pensions, church-state separation  (Nikkei) 
9) Prime Minister Aso will announce tomorrow formal postponement of 
Diet dissolution  (Tokyo Shimbun) 
10) Aso giving priority to economy over election timetable  (Asahi) 
 
11) Aso tells New Komeito, its coalition partner, of his decision to 
postpone Diet dissolution  (Nikkei) 
 
12) Komeito deeply worried the extended delay in Diet dissolution 
could wreck the party's political timetable  (Yomiuri) 
13) Ruling parties changing political strategy with only a month 
left in the current Diet session  (Mainichi) 
 
Economy: 
14) Government, ruling camp agree on contents of second 
supplementary budget that will include tax cut  (Mainichi) 
15) Lower House begins deliberations on bill strengthening functions 
of financial institutions; Prime minister positive toward revision 
talks  (Tokyo Shimbun) 
16) Bank of Japan revising economic outlook and now predicts zero 
growth for fiscal 2008  (Tokyo Shimbun) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Prime minister plans no general election through end of year to put 
top priority to economic stimulus measures 
 
Mainichi: 
Nomura Holdings posts 149.4 billion yen in midterm net loss amid 
financial crisis 
 
Yomiuri: 
Over 200 million yen in taxpayer money misused for wining and 
dining, slush funds at public organ for helping employment of 
elderly, persons with disabilities 
 
Nikkei: 
BOJ mulling rate cut with concern over economy hit by strong yen, 
stock price falls 
 
TOKYO 00003010  002 OF 012 
 
 
 
Sankei: 
Real estate in Tsushima City being bought up by South Korea: LDP 
study council holds emergency meeting; Group of lawmakers to inspect 
city 
 
Tokyo Shimbun: 
Zero real growth in fiscal 2008; BOJ to substantially revise down 
projection 
 
Akahata: 
Increase in civilian victims in Afghanistan: Lawmaker Inoue at Upper 
House Budget Committee meeting calls on government to urge U.S. to 
end air strikes 
 
2) EDITORIALS 
 
Asahi: 
(1) Tokyo metropolitan government should close down ShinGinko Tokyo 
on its own responsibility 
(2) Itoham Foods: Harsh lessons on corporate ethics 
 
Mainichi: 
(1) ShinGinko Tokyo: Should it to continue to exist? 
(2) Court ruling on Aegis information leak: Appropriate approach 
needed in designating and controlling classified information 
 
Yomiuri: 
(1) Information on Aegis vessels: Sloppy control system condemned 
(2) ShinGinko Tokyo: Tokyo metropolitan government should take 
responsibility by pulling out of operations 
 
Nikkei: 
(1) Stable oil prices hoped for to ease economic setback 
(2) Geopolitical risk and IMF assistance 
 
Sankei: 
(1) DPJ's approach to Diet session: It cannot fulfill its 
responsibility if it goes back to previous stance in Diet 
deliberations 
(2) Aegis information leak: MSDF should be thoroughly aware of 
importance of protecting intelligence 
 
Tokyo Shimbun: 
(1) Court ruling on Aegis information leak: Concern over excessive 
control 
(2) Marathon runner Takahashi retires 
 
Akahata: 
(1) Shouldering of cost for US Marine Corps' relocation to Guam: 
Stop abnormal practice unprecedented in the world 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, October 28 & 29 
 
NIKKEI (Page 2) (Full) 
October 29, 2008 
 
Oct. 28 
07:28 
Met Deputy Chief Cabinet Secretary Konoike at the Kantei. 
 
TOKYO 00003010  003 OF 012 
 
 
 
08:31 
Attended a cabinet meeting in the Diet building. Internal Affairs 
Minister Hatoyama stayed behind. Later, met Finance Minister 
Nakagawa. Then met Construction and Transport Minister Kaneko. 
Followed by METI Minister Nikai. 
 
09:16 
Reported to the Emperor in private. 
 
10:00 
Attended a meeting of the Upper House foreign and defense 
committees. 
 
12:09 
Arrived at the Kantei. 
 
13:00 
Returned to the meeting of the Upper House foreign and defense 
committees. 
 
16:21 
Met Deputy Chief Cabinet Secretary Matsumoto. 
 
16:32 
Attended a Lower House plenary session. 
 
18:46 
Attended a meeting of the Council for Gender Equality. 
 
19:28 
LDP Administrative Reform Promotion Headquarters chief Chuma. 
 
20:04 
Dined with his secretaries at the ANA inter Continental Hotel Tokyo. 
Later met New Komeito Secretary General Kitagawa and others. 
 
Oct. 29 
 
00:11 
Returned to his private residence in Kamiyama-cho. 
 
4) Defense chief admits MSDF fuel given to antipiracy patrol ships 
 
ASAHI (Page 4) (Full) 
October 29, 2008 
 
The Maritime Self-Defense Force, currently on a mission to refuel 
foreign naval ships backing up antiterror operations in Afghanistan, 
has provided fuel to those foreign naval vessels in waters near 
Somalia where the U.S. Navy and other foreign naval forces have been 
conducting antipiracy operations. On this issue, Defense Minister 
Hamada told the press yesterday after a cabinet meeting that the 
foreign naval vessels refueled by the MSDF were alert to pirates and 
concurrently on patrol similar to antiterror operations as a result. 
"So," Hamada said, "it's extremely difficult to take it as a task 
against pirates." With this, Hamada admitted that the MSDF had 
refueled foreign naval vessels on a dual mission for antiterror 
operations and antipiracy activities. He also explained that the 
MSDF refueling mission has been conducted under the Refueling 
Assistance Special Measures Law. 
 
 
TOKYO 00003010  004 OF 012 
 
 
5) Uranium enrichment also subject to verification 
 
TOKYO SHIMBUN (Page 2) (Full) 
October 29, 2008 
 
The government yesterday sent Akitaka Saiki, director general of the 
Asian and Oceanian Affairs Bureau of the Foreign Ministry, to the 
United States in order to request the U.S. government completely 
verify North Korea's declaration of its nuclear programs, including 
uranium enrichment and nuclear proliferation to such countries as 
Syria, since the government is concerned that such activities are 
reportedly not subject to verification and may be left behind. Saiki 
will meet with Assistant Secretary of State Hill and will request 
uranium enrichment and nuclear proliferation be incorporated in a 
verification regime that is expected to reach an agreement at the 
six-party talks. 
 
6) DPJ on offensive 
 
TOKYO SHIMBUN (Page 2) (Full) 
October 29, 2008 
 
The leading opposition Democratic Party of Japan (Minshuto), now 
confronting the ruling parties, launched attacks against the 
government in a meeting of the House of Councillors Foreign Affairs 
and Defense Committee yesterday as well, putting aside a 
government-introduced bill amending the new Antiterrorism Special 
Measures Law to extend the Maritime Self-Defense Force's refueling 
activities in the Indian Ocean. 
 
Keiichiro Asao, the first one from the DPJ to take the floor, raised 
a question about defective panels used for the Shinkansen bullet 
train railroads in Kyushu. The panels were manufactured and sold by 
a company managed by Prime Minister Aso's relatives. Asao pointed 
out that the company had bought party tickets at a total of 3.5 
million yen between 2004 and 2007. The prime minister owned up to 
the facts. Asao noted that the Kyushu Shinkansen construction 
project is mostly covered by taxpayers' money. "That is a reflux of 
taxpayers' money, isn't it?" he asked. 
 
Asao also pursued a scandal over the Defense Ministry's procurement. 
In this case, Yamada Corporation, a trading firm dealing with 
defense equipment, is suspected of having overbilled the Defense 
Ministry. "Obviously," Asao said, "this is a crime." He added, "Why 
do you not report the case?" In reply, Hamada stated the Defense 
Ministry was still in the process of confirming the big picture. 
"The Defense Ministry has been confirming ever since last year," 
Asao said. Time and again, the committee's deliberations were halted 
by his questions. 
 
The second interpellator from the DPJ, Shinkun Haku, took up the 
U.S. government's recent delisting of North Korea as a state sponsor 
of terrorism. "The prime minister has changed. There was an LDP 
(Liberal Democratic Party) presidential election. So you were too 
busy to think about delisting, weren't you?" With this, Haku 
criticized the government. He pointed out the fact that the 
delisting came the day after Chief Cabinet Secretary Takeo Kawamura 
stated that there was no official notification about delisting. 
"That's why," Haku said, "the media says Japan is left out in the 
cold or defeated on the diplomatic front." 
 
7) Prime Minister Aso's decision to postpone Lower House election 
 
TOKYO 00003010  005 OF 012 
 
 
likely to stall Diet deliberations again 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
October 29, 2008 
 
The Diet mood completely changed yesterday, since Prime Minister 
Taro Aso has decided to push back a dissolution of the House of 
Representatives and snap election. The Democratic Party of Japan 
(DPJ), the largest opposition party, which had accepted the ruling 
coalition's management of Diet affairs, aiming at forcing an early 
Lower House dissolution, has now assumed a confrontational approach 
to the ruling camp. The DPJ intends to present various demands. The 
divided Diet, under which the ruling and opposition parties attempt 
to face each other down, will likely return. 
 
The main focuses of attention in the ongoing Diet session are the 
passage of a bill amending the new Antiterrorism Special Measures 
Law designed to allow the Maritime Self-Defense Force to continue 
its refueling mission in the Indian Ocean and of a bill revising the 
Financial Functions Strengthening Law, which would enable the 
government to inject public funds to regional financial 
institutions. 
 
DPJ Diet Affairs Committee Chairman Kenji Yamaoka yesterday told 
reporters: "It will take more time if we take enough time for 
important bills." He was negative about the passage of the two bills 
before the end of the week. To avoid criticism that the party is 
trying to delay deliberations unnecessarily, the DPJ intends to 
assume a stance of holding necessary deliberations. 
 
Regarding the refueling bill, Yamaoka asserted that persons 
concerned should be called to testify as Diet witnesses in order to 
ascertain the present situation in Afghanistan. The DPJ has also 
called for holding five regional public hearing sessions on the 
financial legislation in the two chambers of the Diet. The largest 
opposition party has raised hurdles for the passage of the two 
bills. 
 
8) DPJ to pursue government on seven issues through thorough 
deliberations 
 
NIKKEI (Page 2) (Excerpts) 
October 29, 2008 
 
The Democratic Party of Japan (DPJ) decided yesterday to pursue the 
government and the ruling parties by demanding thorough 
deliberations if the government puts off a House of Representatives 
dissolution for the time being. The main opposition party, fearing 
public reaction, has no intention to try to prolong or boycott 
deliberations, but the party is ready to attack the government over 
seven issues, including falsified pension records and links between 
politics and religion. The DPJ is expected to take a confrontational 
stance against the government, even eyeing the possibility of 
submitting censure motions against Prime Minister Aso and cabinet 
ministers. 
 
In a meeting yesterday of the House of Councillors' foreign and 
defense committees over a bill to extend the Maritime Self-Defense 
Force's refueling mission in the Indian Ocean, DPJ member Keiichiro 
Asao, defense minister in the shadow cabinet, grilled the government 
over the issue of Yamada Corp.'s padded billing. 
 
 
TOKYO 00003010  006 OF 012 
 
 
Later, Upper House Secretary General Kenji Hirata claimed in a press 
conference: "The government's replies were quite ambiguous." Liberal 
Democratic Party's Upper House Diet Affairs Committee Chairman Seiji 
Suzuki met with his DPJ counterpart Susumu Yanase and proposed 
taking a vote on the refueling bill the same day. But Yanase 
rejected the request. 
 
The DPJ had taken a stance of offering cooperation in Diet 
deliberations on the premise of an early Diet dissolution. But 
senior DPJ Diet Affairs Committee members in their meeting yesterday 
decided to switch over to a strategy of pursuing the government and 
the ruling camp by demanding thorough deliberations if the 
dissolution is put off. Party executives, including President Ichiro 
Ozawa and Secretary General Yukio Hatoyama, will meet today to 
determine the party's Diet strategy. Diet Affairs Committee Chairman 
Kenji Yamaoka told reporters: "We will not try to prolong or shorten 
deliberations for the purpose of bringing about early Diet 
dissolution." 
 
9) Aso to forgo Diet dissolution 
 
TOKYO SHIMBUN (Page 1) (Abridged) 
October 29, 2008 
 
Prime Minister Taro Aso made up his mind yesterday to forgo a snap 
election for the House of Representatives in order to deal with the 
financial crisis on a priority basis. The election had been 
anticipated with official announcement scheduled for Oct. 18 and 
voting and vote-counting set for Oct. 30. Aso conveyed his decision 
to the New Komeito, his ruling Liberal Democratic Party's coalition 
partner, through an LDP executive. Meanwhile, there are still calls 
from within the ruling parties for an early election, so Aso will 
coordinate with them and will clarify the decision tomorrow when he 
meets the press to announce an additional package of economic 
measures. 
 
10) Prime minister drops plan to call general election before year's 
end; Priority to be given to economic stimulus measures 
 
ASAHI (Top play) (Full) 
October 29, 2008 
 
Prime Minister Taro Aso has decided to forgo calling a general 
election in November to put priority on measures to deal with the 
global financial crisis. He will hold a press conference on Oct. 30 
to unveil a plan to submit a second supplementary budget bill to the 
Diet to aim at its enactment to prop up the economy. The time of 
calling the general election is likely to slip to January or later. 
 
The prime minister held talks with LDP Secretary General Hiroyuki 
Hosoda and Diet Affairs Committee Chairman Tadamori Oshima on the 
night of Oct. 27. The prime minister conveyed to them a plan to make 
utmost efforts for the enactment of important bills even if the 
major opposition Democratic Party of Japan, which is calling for 
early Lower House dissolution, shifts to a confrontational policy 
course. LDP executives, who had been endeavoring to set the stage 
for a general election in November, indicated on Oct. 28 that the 
postponement of Lower House dissolution was inevitable. 
 
The prime minister met on Oct. 26 with Representative Akihiro Ota of 
the New Komeito, which had been making preparations for an election 
in November. The prime minister also met with New Komeito Secretary 
 
TOKYO 00003010  007 OF 012 
 
 
General Kazuo Kitagawa on the night of 28. In those sessions, the 
prime minister told them that he would prioritize policy over Lower 
House dissolution so as not to cerate a political vacuum. The New 
Komeito is ultimately expected to endorse Aso's plan to postpone the 
dissolution, with an executive saying, "If the prime minister makes 
a decision, that cannot be helped." 
 
The prime minister initially planned to dissolve the Lower House 
after his policy speech and representative interpellations at the 
beginning the current extraordinary Diet session. He later gave up 
that plan and searched for ways to call an election in November in 
the face of the worsening U.S.-originated financial crisis. But 
given the unstoppable tumble of stock markets, as seen in the Nikkei 
Stock Average's fall below its post-bubble low, and the yen's 
appreciation, the prime minister has decided to give priority to 
measures against the financial crisis. 
 
About the dissolution of the Lower House, the prime minister last 
night told the press corps, "Policy should take precedence over the 
dissolution. That's the answer." His decision to postpone the 
dissolution seems to have been affected partly by an LDP election 
survey that showed the difficulty for the ruling coalition to 
maintain a majority. 
 
The prime minister is now likely to search for the timing to 
dissolve the Lower House after the enactment of a bill amending the 
Financial Function Early Strengthening Law and the second 
supplementary budget bill. Possible dates include: (1) in late 
December after compiling a fiscal 2009 budget; (2) at the beginning 
of the next regular Diet session in January; and (3) in April or 
later after the fiscal 2009 budget clears the Diet. 
 
Now that the prime minister has given up on the November plan, his 
grip on power is bound to weaken. It would be difficult to tide over 
the divided Diet in which the opposition bloc is taking an 
aggressive approach. There are no prospects that the upcoming 
election campaign will work to the advantage of the ruling camp. 
Further, the financial crisis is expected to take a toll on the real 
economy in the near future. The prime minister has indicated that he 
would determine the "best timing" for the dissolution, but to do so 
seems difficult. The prime minister's failure to determine an early 
date has even resulted in a view in the ruling camp that he would 
not be able to dissolve the lower chamber until the Lower House 
members' term ends next September. 
 
Meanwhile, the government and the ruling coalition will begin 
discussing an extension of the current Diet session, due to close on 
Nov. 30, with the aim of enacting the second supplementary budget 
and other bills. Depending on how the DPJ moves, the ruling bloc 
will have to envision the application of the 60-day rule which 
regards a failure to take a vote in the opposition controlled-Upper 
House as a de facto rejection under the Constitution. The Diet 
session might go straight through the New Year, as was last year. 
 
11) Ruling camp coordinating for election postponement 
 
NIKKEI (Page 2) (Full) 
October 29, 2008 
 
Preparations are underway to delay the dissolution of the House of 
Representatives for a snap election. Prime Minister Taro Aso met 
with New Komeito Secretary General Kazuo Kitagawa yesterday as part 
 
TOKYO 00003010  008 OF 012 
 
 
of efforts to obtain understanding from ruling party members opposed 
to his idea of postponement by tomorrow, when Aso is scheduled to 
officially announce the decision. The prime minister intends to give 
consideration to policy demands by the New Komeito, which has called 
for an early dissolution. 
 
Liberal Democratic Party Diet Affairs Committee Chairman Tadamori 
Oshima asked his New Komeito counterpart Yoshio Urushibara yesterday 
to approve the prime minister's decision, saying: "The prime 
minister has no intention to dissolve the Lower House in the current 
Diet session. I would like you to understand his intention." 
 
Aso discussed with Kitagawa and others over the timing for Lower 
House dissolution at a Tokyo hotel last night. Kitagawa reiterated 
his view that an early dissolution is desirable. Prior to this 
meeting, he said in a meeting of the New Komeito Parliamentary 
Group: "The idea of dissolving the Lower House on Oct. 30 or 31 has 
disappeared, but the option of an election on Dec. 7 is still 
available." In the party, however, an increasing number of members 
have begun to support the prime minister's decision. One member 
said: "If we try to force the prime minister to change his mind, we 
might come under fire from the public." Another commented: "If 
discord emerges in the ruling camp, the DPJ will be in a favorable 
position." 
 
The government and the LDP have decided to carry out fixed-amount 
tax cuts worth 2 trillion yen. A senior LDP member said of this 
formula: "We accepted the New Komeito's assertion that benefits 
should reach low-income earners." They intend to respond to requests 
related to fiscal issues from the New Komeito in a flexible manner. 
 
12) Lower House dissolution put off; New Komeito having difficult 
time 
 
YOMIURI (Page 4) (Full) 
October 29, 2008 
 
As Prime Minister Taro Aso has decided to push back a general 
election for the House of Representatives, the New Komeito, which 
has called for an early dissolution of the Lower House, and the 
religious sect Soka Gakkai, the New Komeito's main support body, are 
now having a hard time. The New Komeito plans to continue preparing 
for a snap election for the time being, but some party members have 
begun voicing their acceptance of the prime minister's decision. 
 
The New Komeito, the coalition partner of the ruling Liberal 
Democratic Party (LDP), held yesterday a meeting of all its Lower 
House members at party headquarters. Secretary General Kitagawa 
instructed said: "At this stage, we cannot make sure the timing of 
Lower House dissolution. I want you to continue your efforts for the 
election." Party head Akihiro Ota also said: "Let us ready to fight 
in the election!" 
 
The New Komeito's real intention is that the interval between the 
upcoming snap election and the next summer's Tokyo Metropolitan 
assembly election should be as much as longer possible. The party 
envisaged that a Lower House election would be held on Nov. 20 and 
an official campaign would be kicked off on Nov. 18. So Soka Gakkai 
has been preparing for an election. A party official said: "We 
cannot simply drop our plan, even though we are told that the 
election will be delayed." 
 
 
TOKYO 00003010  009 OF 012 
 
 
With Tokyo stock prices plunging to a postbubble low, some in the 
party said that the party should stop for a while preparations for 
the election and start all over again. New members are concerned 
that the distance between a general election and the Tokyo 
Metropolitan assembly election will become close. A senior party 
official said: "Not just putting off the election, we want (the 
prime minister) to show a specific strategy." Some in the party also 
have insisted that if the Diet is thrown into confusion by delaying 
tactics by the Democratic Party of Japan (DPJ), the Lower House 
should be dissolved. 
 
Meanwhile, the Soka Gakkai adopted in an executive meeting yesterday 
a policy of continuing its activities for the election until Nov. 
¶10. This means that the religious sect sees that there still remains 
a possibility that a Lower House election will be held on Dec. 7. 
There is a view in the Soka Gakkai criticizing the New Komeito 
leadership for failing to force an early dissolution of the Lower 
House dissolution. 
 
13) Ruling camp to review Diet strategy, with Aso's decision to 
delay Lower House election 
 
MAINICHI (Page 2) (Full) 
October 29, 2008 
 
The government and the ruling camp are now being pressed to 
drastically review their Diet strategy as Prime Minister Taro Aso 
has decided to delay a House of Representatives election to next 
year. It has become difficult for them to schedule Diet 
deliberations because the Democratic Party of Japan (DPJ) has been 
seeking an early Lower House dissolution, but the main opposition 
party has now begun to call for thorough deliberations on key bills. 
This DPJ stance has made it almost impossible for the government to 
push through the Diet by the end of this month a bill amending the 
New Antiterrorism Special measures Law to extend Japan's refueling 
mission in the Indian Ocean. 
 
In a meeting with Liberal Democratic Party's (LDP) House of 
Councillors Diet Affairs Committee Chairman Seiji Suzuki in the Diet 
Building yesterday, his DPJ counterpart Susumu Yanase declined 
Suzuki's proposal for a vote to be taken on the refueling bill in a 
meeting of the Upper House's foreign and defense committees 
yesterday. The LDP was forced to continue deliberations on the bill 
today and after. 
 
Keeping in mind the possibility of dissolving the Lower House later 
this month, the LDP and the New Komeito were ready to deliberate on 
the refueling bill, a bill amending the law to strengthen the 
nation's financial functions, and other key bills on a priority 
basis. But with the prime minister's decision on the timing for 
dissolution, the session will last for another month. In a meeting 
of the LDP Diet Affairs Committee yesterday, committee Chairman 
Tadamori Oshima indicated his willingness to review the committee's 
strategy early next week on how to handle those bills in the 
session. 
 
The government and the ruling camp intend to intensively discuss a 
bill amending the gun control law, a bill amending the citizenship 
law, since it was judged unconstitutional, and other bills in the 
remaining session, with the aim of pushing them through the Diet at 
an early date. Aso plans to hold a press conference tomorrow, the 
day when the government plans to announce a package of additional 
 
TOKYO 00003010  010 OF 012 
 
 
economic measures. Following this, a second supplementary budget 
bill to finance these measures will also be in focus. 
 
Meanwhile, the DPJ will hold an executive meeting today, including 
President Ichiro Ozawa, to determine what approach the party should 
take in the Diet session. Its initial strategy was to prompt the 
government to dissolve the Diet by agreeing to an early enactment of 
key bills. But the party is now expected to take a strategy to 
pursue the government by demanding thorough deliberations and in 
that way bring about Diet dissolution. 
 
Ozawa met with Diet Affairs Committee Chairman Kenji Yamaoka 
yesterday. They agreed on the view that the party should force the 
government to dissolve the Lower House by demanding thorough 
deliberations but should not prolong the deliberations too long. 
 
14) Government, ruling parties considering including cash stipend 
system in second supplementary budget bill in implementing fixed-sum 
tax break 
 
MAINICHI (Page 2) (Excerpts) 
October 29, 2008 
 
The government and the ruling parties on October 28 started 
considering additional economic stimulus measures with the 
possibility of submitting to the current Diet session portions of 
the package as a second supplementary budget for fiscal 2008. The 
improvement of the credit guarantee framework of the Credit 
Guarantee Association and the loan framework of 
government-affiliated financial institutions will likely be included 
in the bill as a measure to help small- and medium-size businesses 
manage operating funds. The government is also undergoing final 
coordination with the aim of adopting a cash stipend system of 
directly paying cash to tax payers in implementing a fixed-sum tax 
break, the main pillar of the additional economic stimulus package. 
It is now considering incorporating the plan into the bill as well. 
 
 
The government and the ruling parties want to enact related bills at 
an early date, while determining the DPJ's response. 
 
Regarding the adoption of a fixed-sum tax cut, the government and 
the ruling parties first considered a 65,000 yen cut for a standard 
household with a married couple and two children, based on the 
fixed-sum tax cut implemented in 1998 during the then Hashimoto 
administration. It had also intended to pay special cash stipend to 
pensioners and people in other categories who do not pay the income 
and local taxes. 
 
15) Lower House begins deliberations on bill strengthening functions 
of financial institutions; Prime minister positive toward revision 
talks 
 
NIKKEI (Page 2) (Excerpts) 
October 29, 2008 
 
A Lower House plenary session yesterday entered into deliberations 
on a bill amending the Financial Function Early Strengthening Law 
allowing the government to pump public funds into financial 
institutions. Prime Minister Taro Aso indicated that the ruling bloc 
would actively hold revision talks with the major opposition 
Democratic Party of Japan. The focus would be on the DPJ's demand 
 
TOKYO 00003010  011 OF 012 
 
 
for a system to require prior Diet approval for injecting capital 
into the Norinchukin Bank and to question the responsibility of the 
management of financial institutions. 
 
The Lower House Financial Affairs Committee will begin deliberations 
on the revision bill. With the DPJ calling for local public hearings 
and thorough deliberations, it seems difficult for the bill to pass 
the Lower House before the end of the week. 
 
In the Lower House plenary session, the prime minister explicitly 
said: "In the event the opposition bloc presents concrete proposals, 
we would like to discuss them actively if that can help produce 
better plan swiftly through deliberations." After the plenary 
meeting, the prime minister also told the press corps: "If there are 
good (ideas), I think we should adopt them." 
 
A Financial Function Early Strengthening Law revision bill and the 
DPJ's views 
 
 Government plan DPJ's views 
Aim To facilitate lending to small and mid-sized companies. To ease 
the credit crunch, the financial inspections manual must be 
revised. 
Norinchukin Bank Allows the government to pump funds into the bank 
and subsidiary financial institutions via the bank. Prior Diet 
approval and the disclosure of the names of subsidiary financial 
institutions           are necessary. 
Management responsibility Not required for capital infusion. The 
responsibility of the management must be questioned in injecting 
funds for factors separately from the financial crisis. 
 
16) Zero growth in fiscal 2008 in real terms, BOJ to substantially 
revise down projection 
 
TOKYO SHIMBUN (Top Play) (Full) 
October 29, 2008 
 
The Bank of Japan (BOJ) on October 31 will hold a regular 
policy-setting meeting. The central bank is expected to finalize The 
Outlook for Economic Activity and Prices (Outlook Report) 
envisioning the form of the economy through 2010. It will likely 
revise down an estimate for the growth rate of real GDP this fiscal 
year from 1.2 PERCENT , projected in the previous July interim 
report, to the lower 0 PERCENT  level. It will come up with an 
effectively zero growth projection, the lowest level since fiscal 
¶2001. 
 
Behind the harsh projection is the slowing pace of an increase in 
exports in the wake of the slowdown in overseas economies and 
sluggish consumer spending. The BOJ will also likely revise down its 
projection for growth in the fiscal 2009 GDP from 1.5 PERCENT  to 
the upper 0 PERCENT . Projecting economic recovery in fiscal 2010, 
it will estimate growth in real GDP in fiscal 2010 at the mid-1 
PERCENT  level. 
 
In the meantime, concerning the current BOJ policy interest rate of 
0.5 PERCENT  per annum, Deputy BOJ Governor Yamaguchi indicated his 
perception that it is the extremely low accommodative level. 
 
The central bank will likely undergo coordination, based on the 
notion of maintaining the present level. 
 
 
TOKYO 00003010  012 OF 012 
 
 
However, central banks of six major nations -- the U.S. and European 
countries, including the U.S. Federal Reserve Boards (FRB), 
implemented coordinated cuts in policy interest rates by 0.5 PERCENT 
. The BOJ indicated a stance of supporting their action. However, it 
did not fall in line with them. Since the turmoil in the financial 
market is still continuing, there has appeared a possibility of 
their further cutting interest rates. 
 
In response to a situation like this, the BOJ is being pressed to 
cut the rate, with State Minister for Economic and Fiscal Policy 
Kaoru Yosano noting, "Cutting the interest rate from the current 0.5 
PERCENT  to 0.25 PERCENT  would have no economic impact. However, it 
would have a symbolic meaning in terms of international 
cooperation." 
 
SCHIEFFER