The recent Cabinet reshuffling by Prime Minister Fukuda had the intended effect, i.e., it bolstered both the Fukuda government's and the LDP's approval ratings, according to most surveys. The Nikkei/TV Tokyo survey measured an improvement in the approval rating to 38%, from a low of +/-20% in May during the gasoline tax fiasco. Reasons for support include; a) "its an LDP Cabinet: 29% (-8 pct. points), b) new selections were "credible": 27% (-16 points) and c) "it looks stable": 21% (+5 points). However, 49% of those surveyed still disapprove of the Fukuda Administration becuase a) "there is no leadership", b) "there are no policies", and c) "there is no stability".

The weekend media and talk show comments about the new cabinet were generally disparing, but it does appear to have the intended effect, i.e., improving the LDP's support ratings, as the LDP approval rating improved to 37% versus 33% for the opposition DSP.

Many observers however point out that there are now many consumer tax hike hawks in the Cabinet, including Kaoru Yosano, new Economy & Fiscal Policy State Minister, Sadakazu Tanigaki, new Land, Infrastructure, Transport & Tourism Minister and former finance minister, and ostensibly Bunmei Ibiki, new Finance Minister and ex-MOF OB. Minister Ibiki reportedly already instructed his troops to create consumption tax hike scenarios with an eye on the September 2009 Lower House elections, while Chief Cabinet Secretary Nobutaka Machimura went out of his way to deny the possibility that a consumption tax hike was in the works.

Since the Japanese economy has already dipped into recession and Economy & Fiscal Policy Minister Yosano has already stated that Japan's economy probably dipped into recession in the final months of 2007, any premature move to raise consumption taxes would be a repeat of the mistake that former Prime Minister Hashimoto made, i.e., raising consumption taxes just as the economy was going into recession--thereby exacerbating the downturn.

While much lip service is being paid to the commitment to achieve a fiscal primary balance by 2010/2011, the first knee-jerk reaction of the new Cabinet will probably be to introduce as much pork as possible to grease the election wheels before the September 2009 elections, as the LDP still faces the real possibility of losing control of the Lower House for the first time in Post War history.