Abe's Days Numbered? DB Warns Japan PM "May Be Forced Out" Leading To Spike In Yields

Almost exactly ten years ago, on September 12, 2007 Japan"s current prime minister Shinzo Abe resigned less than a year into a tenure dogged by scandals, the suicide of a minister, a raft of resignations and corruption allegations, and a humiliating election drubbing for his Liberal Democratic Party. Never one to shrink away from resposibility, Abe blamed it on crippling diarrhea:

Shinzo Abe resigned as Prime Minister, claiming that diarrhea was preventing him from carrying out his duties. The diarrhea was due to ulcerative colitis, a bowel illness caused by ulcers. Abe had suffered from this illness for decades, but after becoming Prime Minister, the stress of his job apparently made the symptoms worse.

Apparently it did not prevent him from taking on the job again some five years later, when he was reinserted in the prime ministerial position again, largely as a smokescreen meant to keep the government together as BOJ"s then-new governor Haruhiko Kuroda unleashed the greatest "wealth creation" and bond monetization experiment in the history of Japan, which has culminated with the Japanese central bank owning nearly 100% of Japan"s GDP in Japanese Government Bonds.

Unfortunately for Abe, it may be time to buy Imodium again.

As Deutsche Bank reports, following a fresh series of political scandals, the Abe cabinet"s approval ratings have kept falling and are now in the sub-40% "danger zone" and as DB"s Makoto Yamashita writes, it is now starting to look as though Prime Minister Shinzo Abe might be forced out of office until the Liberal  Democratic Party leadership race scheduled for September 2018, "in which case JGB yields might be at risk of climbing quite significantly."

Ironically, in many ways this mirrors Abe"s first fall from grace. This is what the Economist wrote some ten years ago:

"Mr Abe"s government was initially very popular. Yet the tide in Mr Abe"s affairs only ebbed. True, early on he made a notable opening towards China, with whom relations had been strained under Mr Koizumi. Other than that, Mr Abe proved unable to impose discipline upon a cabinet of the corrupt and incompetent. Worse, he had a tin ear for the political mood. Voters, it had turned out, had been beguiled more by Mr Koizumi the messenger than by his message of structural reform, which entailed pain and uncertainty, notably in Japan"s rural regions and among the old. Mr Abe failed to address these concerns."

This time around, the reason for the German bank"s dour outlook is because sub-40% approval ratings have almost invariably triggered changes of leadership around one year later over the past two decades and have always resulted in significant national election defeats.

"We will thus be watching quite closely to see whether Abe"s upcoming cabinet reshuffle proves successful in regaining the 40% level. Given that this political risk is a yen-specific factor, it should be sufficient to buy foreign bonds as a hedge against the possibility of a "risk off" decline in interest rates."

And since the financial world is far more interested in the implications of Abe"s departure on JGBs than his actual political fate, here is the background: while the BOJ has once again proved successful in curbing upward pressure on the 10y JGB yield by conducting a fixed-rate operation, it continues to buy more 5y–10y JGBs than are being issued each month and is thus likely to reduce its purchases when yields are declining. Moreover, the BOJ has this month left its offer amounts in the super-long sector unchanged (at least to this point) despite yields having climbed quite considerably. The central bank thus appears willing to tolerate steepening of the >10y curve, which may suggest that a "shock" political event like an Abe resignation may lead to an accelerated selloff off the longest-dated Japanese bonds.

As for Abe"s fate, here are the details:

Abe cabinet"s approval ratings already in dangerous territory:  the Yomiuri Shimbun reported on July 10 that the Abe cabinet"s approval rating had fallen 13%pt from its previous survey to 36%, while other polls have shown a 5%pt decline to 33% (Asahi) and a 13%pt decline to 35% (NHK). An approval rating of 40% or higher is generally considered necessary for a prime minister to remain in office. The Yomiuri Shimbun also reported a 10% decline in the Liberal Democratic Party"s approval rating to 31%, a 1%pt decline for the Democratic Party to just 6%, and a 7%pt increase for independents to 47%. Some have suggested that  Prime Minister Shinzo Abe might still be "safe" for want of opposition, but past experience indicates that might not necessarily be the case.

And, as Deutsche Bank warns, it is now beginning to look as though Abe might be forced out of office prior to the LDP leadership race scheduled for September 2018. Here"s why:

For starters, no administration since 1997 has survived for more than a year after recording sub-40% cabinet approval ratings in consecutive months, although Keizo Obuchi should probably be considered an exception given that his cabinet"s approval rating had improved from 25% initially to 40% by the time he was forced to stand down due to the abovementioned diarrhea. Only Junichiro Koizumi served out his full term, having consistently maintained approval ratings above 40%. It is possible that Abe will redeem himself with his upcoming cabinet reshuffle, but failure to regain the 40% level would almost certainly point to a change of prime minister before the end of 2018 if past experience is any guide.

Second, the next lower house election needs to be called by December 2018, and it is important to note that each upper or lower house election since 2003 contested with a sub-40% cabinet approval rating has resulted in defeat for the incumbent party (chart below), with changes of government occurring after Abe"s July 2007 upper house election defeat, Taro Aso"s August 2009 lower house defeat, and Yoshihiko Noda"s December 2012 lower house defeat. The next LDP leadership race is scheduled for September 2018, and it seems highly unlikely that party members would throw their support behind someone with a sub-40% cabinet approval ratings. The lack of unified opposition is indeed a significant difference from the past, but it is quite conceivable that independents will have combined forces to establish a new party by the end of this year or soon thereafter.

Third, Abe will struggle to proceed with his attempt to revise the Constitution if his approval rating remains so low. Even if the necessary two-thirds majority can be secured in the Diet, it is difficult to envisage 50% support in a national referendum. There does not currently appear to be any headroom to use fiscal or monetary policy to boost the government"s popularity, with the Abe administration having already compiled a roughly JPY28.1 trillion "Economic Stimulus Package for Realizing Investment for the Future" under the second FY2016 supplementary budget. Some market participants appear to believe that further pump-priming could be on the cards, but recent experience has in any case demonstrated that even that might not be enough to win back the support of voters.

Fourth, while markets may be finding it difficult to envisage a post-Abe government, Kyodo recently claimed that Foreign Minister Fumio Kishida intends to stand down around the time of the cabinet reshuffle (although we are as yet unsure as to the accuracy or veracity of this report). Kishida heads a faction thought to consist of around 46 LDP lawmakers (chart below)). This faction has its origins in the Kochi Kai launched by then Prime Minister Hayato Ikeda back in 1957, and is thought to be more dovish than Abe with regard to matters of diplomacy or the possibility of constitutional reform. Kishida is believed to have reiterated on June 28 that he remains reluctant to revise war-renouncing Article 9 of the Constitution, and Finance Minister Taro Aso might also emerge as a contender now that he is effectively heading the LDP"s  second largest faction. As a result, expect talk of a successor to Abe to heat up unless the upcoming cabinet reshuffle does prove successful in reversing recent declines in popularity.

Finally, here"s why the above matters for Japanese risk assets, from Deutsche Bank:

We have been stressing the potential for political risk to drive JPY rates higher for several weeks now, but have yet to see this possibility priced into the market. This is somewhat puzzling given that the demise of Abe would almost certain have ramifications for the BOJ (with Abe having been such a strong support of Governor Haruhiko Kuroda). The current climate of low bond market volatility thus looks likely to come to an end sooner rather than later. Weak inflation has of course helped to keep JPY rates anchored, but that might not be enough if political instability does develop into a major market theme. We will therefore be  keeping a close eye on poll results following Abe"s upcoming cabinet reshuffle. 

And for those who are seeking a pair-trade variant to a long position in govvies elsewhere, DB recommends shorting Japan dur to said rising Abe risk:

Given that this political risk is a yen-specific factor, it should be sufficient to buy foreign bonds as a hedge against the possibility of a (global) "risk off" decline in interest rates (including super-long JGB yields).

As for Abe"s life after resigning - for the second time, - we are confident he will be fine following a few unpleasant run-ins, pardon the pun, with the bathroom which will once again be scapegoated for his failures, and several Imodium prescriptions. Who knows, after Japan"s economy crashes for a few more years, we may just see the third coming of prime minister Abe to serve as the smokescreen to the BOJ one last time, which at that point will be forced to buy, well, everything to keep the market from imploding.

Japan's "Womenomics" Is Working Just As Well As Abenomics... Terribly

Via Japan Subculture Research Center,

Japan is getting serious about gender equality - and there were absolutely no bribes paid by Japan to win the right to host the 2020 Olympics - and the nuclear disaster at Fukushima is under control. Decide for yourself which of these three statements is the most untrue.

Womenomics was touted by Japan’s Prime Minister Shinzo Abe as his progressive policy to elevate the status of women in what is still a very sexist and unequal society, where women are far from being empowered. The Global Gender Gap report published last year noted that Mr. Abe and the LDP’s pledge to bridge the gender divide resulted in actually widening the gulf, with Nippon sliding down a few notches to 111th in terms of world gender equality. 

It’s hard to see women in Japan being “empowered” when they can be sexually assaulted with near impunity. The odds that their assailant will be arrested, or prosecuted are low–less than a coin toss. And if he is actually prosecuted–he can sometimes walk free, with no jail time and no criminal record,  by paying damages and saying, “I’m sorry.” It’s a situation that the Abe administration could have changed but neglected to do so, tabling newly revised criminal codes to instead focus on passing a conspiracy bill that the United Nations warns could erode civil liberties.

Of course, some would argue that “womenomics” have never been about elevating the status of women in Japan - it’s always been about keeping Japanese business thriving and hopefully encouraging woman to work - and breed. Of course, pregnancy in the workplace often is greeted with bullying from all sides. Abe’s vision of Womenomics has certainly never been about improving the lives of Japan’s single mothers, 50% of whom live in poverty. In fact, other than talking about “shining women–it’s not clear exactly what he wants for Japan’s future potential birthing machines.*

The current Minister of Gender Equality and Women’s Empowerment, is of course, also a man, and also in charge of improving Japan’s birthrate. Do we need to say more?

Yes, Japan’s Prime Minister Abe and the LDP are gungho about Gender Equality. Meet Katsunobu Kato, his home page will convince you.

Recently, Bloomberg published an interview with Democratic Party leader Renho, in which she pointed out the obvious, Womenomics is all talk and no walk.

“They should be ashamed to use the word ‘Womenomics’,” Democratic Party leader Renho, the 49-year-old mother of twins, said in an interview in Tokyo late Thursday when asked about the term Abe often uses to describe his efforts. “It’s an embarrassment.”

Abe had vowed to eliminate waiting lists for childcare in a bid to draw more women into the workforce to make up for Japan’s shrinking population. He also sought to have women take 30 percent of management positions in all fields by 2020.

On both goals he’s falling well short: Japan was 111th in the World Economic Forum’s Gender Gap ranking for 2016, down 10 places on the previous year.

“About 80 percent of those who take childcare leave are women, and if they’re forced to wait for daycare, that means unemployment,” Renho said.

“You either get demoted or you give up on work. What’s womenomics about if women are being forced to make such sad choices?”

For the rest of the article, go to

Abe’s Policies Failing Women, Japan Opposition Chief Says

*Reference to women as “birthing machines” is sarcasm. We know that the LDP also thinks of women as much more than that–as potential nurses for the elderly, expert green tea brewers for the office, and caretakers of the children that they should be giving birth to right now for the greater prosperity of Japan."

Japan Prepares For North Korea "Emergency"

Judging by the precautionary actions of North Korea"s neighbors, the next 48 hours on the Korean peninsula could see substantial volatility, because at the same time as China"s largest carrier was said to suspend flights to Pyongyang, the Japanese government has asked the U.S. to provide advance consultation if it is about to launch military action against North Korea, and "has ramped up preparations for emergency situations" according to Japan"s Yomiuri Shimbun, including the potential evacuation of some 57,000 Japanese citizens currently in South Korea.

According to the Japanese publication, PM Shinzo Abe stressed that the region is becoming increasingly tense. “[U.S. President Donald Trump] has stated that all options are on the table. It’s a fact tensions are rising,” he said at the Prime Minister’s Office after receiving a written proposal calling for tougher sanctions on North Korea from the Liberal Democratic Party’s Eriko Yamatani, chief of the headquarters for the abduction issue. 

He added that "if an unexpected situation occurs, we’ll ask the United States to cooperate in rescuing the abduction victims."

The Japanese government, like its South Korean peer, has asked for advance consultation regarding any U.S. military action against North Korea during a series of meetings between Japanese and U.S. officials. The U.S. side is said to have responded positively to the request. This is because Japan would need to take appropriate precautions given that, as an ally of Washington, it could be a target for retaliation should the U.S. military attack North Korea, although in order to preserve the "element of surprise" it would not be at all
surprising if Trump proceeded to launching a strike unannounced.

As the infographic below shows, the Japanese government is contemplating five potential emergency responses should a military clash break out between the US and North Korea:

• Logistical support by Japan"s Self-Defense Forces (SDF) in the event of a local conflict


• Use of force by the SDF in the event of a full scale war


• Protection of Japanese citizens in South Korea


• Preparation for armed attacks against Japan


• Civil protection and response to evacuees

There are three main threats Japan would face if Trump launches an attack: in addition to a potential ballistic missile retaliation; the mass evacuation of thousands of Japanese citizens, and what would likely be a massive refugee onslaught by North Koreans.

Furthermore, recall that under its post-war constitution, Japan is not allowed to have offensive military forces. Its Article 9 declares "the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes." That may copmlicate logistics should war indeed break out in North Korea.

As the Japan Times notes, a North Korean attack on Japan would involve ballistic missiles. The Japanese government has been bolstering defensive measures against ballistic missiles, including making permanent in August 2016 an order to the Self-Defense Forces to intercept and destroy incoming missiles.

There is also the concern of an imminent evacuation:

A difficult issue that would emerge in a contingency on the Korean Peninsula is the rescue and protection of an estimated 57,000 Japanese, including tourists, in South Korea. The government started compiling an evacuation plan in the 1990s and has updated and changed it several times. The government plans to convene a meeting of the four ministers who form the National Security Council to review the strategy for dealing with this issue at an early date.

Security legislation that came into force in March 2016 newly allows the Japanese Self-Defense Forces (SDF) to take steps to protect, rescue and transport Japanese overseas. The Japanese government plans to use government-chartered aircraft and SDF transport vessels for such evacuations, which would be conducted in cooperation with the U.S. military.

A potential complication here is that the governments of Japan and South Korea don"t really have the best diplomatic relations, a tension that goes as far back as treatment of Koreans by the Japanese during World War II.  “South Korea’s allergy toward the SDF is still strong, so there has not been much progress regarding concrete talks between the Japanese and South Korean governments,” a senior Defense Ministry official told The Yomiuri Shimbun.

The Japanese government must also figure out how to cope with the huge number of refugees expected to descend on Japan from the Korean Peninsula. They would need to be temporarily accommodated, but it also is possible that North Korean agents would slip into Japan with the intention of striking nuclear power plants, heavily populated areas and other targets. As the Shimbun adds, implementing immigration control procedures for those refugees would not be easy.

* * *

So in case airstrikes do begin, will Japan get involved on the offensive, in breach of its constitution, and a development that would in turn put both China and Russia on edge? 

While in theory, the SDF is supposed to jointly respond with U.S. forces according to how a contingency on the Korean Peninsula would develop, however in practice a Japanese response would likely be limited: senior Defense Ministry official emphasized the difference made by the security legislation, which permit the limited exercise of the right of collective self-defense: “There has been progress regarding Japan-U.S. coordination for role sharing.”

The most realistic SDF activity would be logistics support for the U.S. military. The SDF is permitted to supply ammunition to U.S. forces and refuel ready-to-fly fighter jets, among other measures, in situations that do not constitute an armed attack but are recognized as having an important influence on Japan’s security and safety.

Still, as Shimbun notes, "in a situation that could result in Japan sustaining damage equal in seriousness to a direct attack, the government would recognize that the nation’s survival is under threat and permit the use of force by the SDF. Using the right of collective self-defense, it would become possible for the SDF to defend U.S. ships by counterattacking enemies that attacked them, based on the SDF mobilization order. The SDF could also conduct other operations, including minesweeping in the open sea to remove mines laid by North Korea.

Under such a situation, the government would simultaneously recognize that Japan is at imminent risk of coming under attack while likely starting preparations based on the Civil Protection Law, such as evacuating residents.

Ideally all of the above contingency scenarios never have to be implemented, and the threat of a US attack on North Korea remains just that, eventaully resulting in de-escalation instead of potentially unleashing another regional conflict and what some would saw "world war" in addition to the similar development in the middle-east. Unfortunately, considering how long the neo-con warhawks had been "caged" and prevented from profiting from an all out war, we doubt this optimistic scenario deserves much merit.

Abe School Scandal Set For Major Escalation After Donation Receipt Emerges

The crisis that has rocked the previously unshakeable administration of Japanese Prime Minister Shinzo Abe is not the result of bungled economic policies, party in-fighting or any of the other calamities that have brought down Japanese leaders in the past, which includes Abe"s first administration as prime minister. Abe is struggling to shake off a scandal involving a kindergarten.

Japan"s Prime Minister Shinzo Abe and his wife Akie

 As the SCMP recently reported, just a few weeks ago, Abe was riding high in the polls and making plans to run for an unprecedented third term as head of the dominant Liberal Democratic Party. So when questions first began to be asked about Moritomo Gakuen, a kindergarten operator in Osaka with what was initially described as a conservative curriculum, the prime minister felt confident to declare that he shared many of the philosophies of the school’s president, Yasunori Kagoike.

It would emerge in swift succession last month that the premier’s wife, Akie Abe, had been named honorary principal of a new school being planned by Kagoike; that the school was being built on land purchased from the government by Moritomo Gakuen for a fraction of its estimated value; that Abe’s wife Akie allegedly donated 1 million yen ($8,800) to the foundation in September 2015 on behalf of her husband (they both deny it), and that the operator’s philosophies imposed upon his young pupils were not just conservative, but tended towards far-right pre-war nationalism. 

As the East Asia Forum adds, the scandal surrounding the sale of state-owned land to educational institution Moritomo Gakuen, and the exposure of the ultra-nationalist curricula at its privately run schools, has brought to the fore the uncomfortable questions that have always lurked in the background of Mr Abe’s political career and are now ensnaring his cabinet because of its links to far-right lobby groups. The scandal is significant not only because it has enveloped Prime Minister Shinzo Abe and his wife, Akie, but also because of what it says about Abe’s vision for Japan.

Some more details:

Last month it was revealed that Moritomo Gakuen had bought a parcel of land last year in Osaka for construction of its Mizuho-no-kuni Elementary School for 134 million yen (US$1.18 million), about a seventh of its appraised value of 956 million yen (US$8.39 million). The government has attempted to explain away the cost difference being due the need to clean up waste materials on the site. Yet a similar sized neighbouring plot of land was sold for 1.4 billion yen (US$12.3 million) in 2010.

For a country where political money scandals are a regular occurrence, this one is fairly small beer. A much bigger issue is what Moritomo Gakuen schools are teaching and how the prime minister and his wife have been tarred with their agenda.

As the details of the scandal emerged, the Osaka Prefecture Education Bureau enquired of the Ministry of Education as to whether Moritomo Gakuen had violated the Basic Education Law which stipulates that all schools, including kindergartens, ‘must not conduct political education or other political activities that support or oppose certain political parties’.

The Prime Minister and Mrs Abe, it transpires, have been deeply involved in promotion of the Moritomo Gakuen enterprise. Mrs Abe was set to be the honorary principal of the school until the land sale scandal came to light. She had publicly expressed support for the school in a message which, on prime ministerial request, has since been removed from its website, ‘stating that it is “wonderful”, “remarkable” and “fosters children to have pride as Japanese and a strong inner self”’.

The adverse impact on Abe"s popularity was swift: as Reuters reports support for Abe plunged after questions were raised in parliament about the murky elementary school land deal to which his wife had ties, according to an online poll published on Wednesday. An online survey by Japan"s Nikkei business daily found that Abe"s support fell to 36.1 percent in a survey conducted from March 4 to 7 from 63.7 percent in the previous week. Additionally, 78 per cent of those polled reckoned that Mrs Abe should not have accepted the appointment as honorary principal at Moritomo Gakuen and 76 per cent agreed that its chair should be summoned before the Diet to explain, a course that the prime minister has so far deflected. 

On one hand, Abe could simply admit his error and apologize: according to EA forum, "Abe might in the end succeed in brushing the scandal off as an error of judgment on his wife’s part. But the vast majority of Japanese are in no doubt about the inappropriateness of their role in the affair."

Many factors, apart from how successful he is in pragmatically scrambling away from his right-wing links to reclaim the centre ground, will determine whether the Osaka kindergarten scandal will knock Mr Abe off his political pedestal for very long. But the affair is a timely reminder of how important the constraints of institutions, the independent application of law and the role of a free press are in protecting against the inclinations of extremism to pervert the good sense of Japanese or any other society.

 Japanese markets have so far shrugged off the news,
mainly because the school scandal is still viewed as a transient factor,
said Hiroaki Hiwada, a strategist at Toyo Securities Co. "Up
to now, there haven"t been any scandals in which Abe was the main
actor, so that even though some foreign investors may be using this as a
reason to hold back there are still many expectations for his policies
based on the success of the recent Japan-U.S. leaders" summit," he
added.

* * *

Things got more complex last week when the head of the scandal-tainted school, Yasunori Kagoike, told a delegation of Diet members in Osaka Thursday that he received a donation from Prime Minister Shinzo Abe to help build an elementary school that promotes a nationalist education. Abe has denied the claim, according to Chief Cabinet Secretary Yoshihide Suga.

Kagoike made the comments to nearly a dozen visiting lawmakers at the site of a Moritomo-run elementary school , which is embroiled in a land scandal that has reached the highest levels of government. He said that while the plan to open the new school in April was called off, the structure was built and the scandal has affected all of the companies involved in its construction.

“We tried to build this school to everyone’s intentions. I’m announcing that Prime Minister Shinzo Abe’s donation was included,” Kagoike said in remarks picked up by news cameras from the grounds of the Mizuho no Kuni elementary school.

During his regular news conference in Tokyo late Thursday afternoon, Suga dismissed the claim. Suga told reporters that when he asked Abe about the matter, the prime minister denied making any donation himself, through his wife Akie or any other third party

The Diet delegation, led by Liberal Democratic Party lawmaker Ichita Yamamoto, departed for Tokyo without immediately commenting on the matter. Kagoike did not speak to reporters immediately after the visit.

Despite the denial, Kagoike’s comment is sure to refocus Diet inquiries into Moritomo back on the prime minister and possibly his wife Akie, who served as honorary principal of the new elementary school before resigning last month. Akie also spoke at the school in September 2015. Kagoike’s claim comes after a sudden visit to Tokyo on Wednesday, where he met with freelance journalist Tamotsu Sugano after canceling an appearance at the Foreign Correspondents’ Club of Japan.

On Wednesday night, Sugano told reporters that Kagoike had told him that another politician, a Cabinet member, was involved in the scandal in which Moritomo was able to purchase land from the government valued at ¥946 million for only ¥134 million. Abe has said neither he nor his wife was involved in the land deal.

Yet while ignoring the scandal may have been possible had Abe simply owned up to the revelations, a problem emerged once Abe decided to sternly deny any wrongdoing, and said neither he nor his wife, Akie, was involved in the deal or donating to the scandal-hit school. The PM couple dug themselves even deeper last Thursday, when Abe’s wife Akie also officially denied making any donations, the nation’s top spokesman said. According to Bloomberg, Chief Cabinet Secretary Yoshihide Suga made the announcement when speaking to reporters in Tokyo last Thursday.

The prime minister “said he had not made a donation through his wife Akie, through his office or through a third party,” Suga told reporters, adding that he had “absolutely no idea” on what basis Kagoike made his remarks.

Most problematically for Abe, on Satuday Japan"s Mainichi Shimbun reported that it has obtained a copy of a post office receipt for a deposit of 1 million yen that scandal-hit Moritomo Gakuen claims to have been donated by Prime Minister Shinzo Abe"s wife Akie Abe. In other words, should the receipt be authenticated, Mr and Mrs. Abe"s version of events collapses as an outright lie.

The post office receipt for a 1 million yen deposit that Moritomo Gakuen made
is seen. The school operator claims the transaction was to deposit a donation
made by Prime Minister Shinzo Abe"s wife Akie

As Mainichi adds, Moritomo Gakuen President Yasunori Kagoike claims that he received the 1 million yen donation from Akie for a new elementary school that the operator planned to open in Toyonaka, Osaka Prefecture. The receipt copy for the deposit shows Moritomo Gakuen as the depositor handwritten over whiteout tape. When the receipt is held up to the light, the name "Shinzo Abe" can be made out underneath the whiteout. The seal of the post office that handled the payment is stamped over the whited-out portion.

The receipt confirms a previous report that Abe’s wife Akie donated 1 million yen ($8,800) to the foundation in September 2015 on behalf of her husband, according to a Twitter post by Communist Party lawmaker Kotaro Tatsumi. Akie Abe had been scheduled to act as an honorary principal of the school but has since severed links with it.

During an interview with nonfiction author Tamotsu Sugano, Kagoike"s daughter said the school operator tried to make the deposit under Prime Minister Abe"s name, but was told by the post office that the name of the depositor on the receipt had to match the name on the transaction form kept by the post office. She said the school operator corrected the name using whiteout tape after consulting with its accountant.

While there has been little reporting on this scandal outside of Japan, the fact that it had such a swift adverse impact on Abe"s ratings before the couple officially lied could potentially result in an escalation in turmoil, should the scandal refuse to go away especially if the receipt is confirmed, and if the prime minister family is forced to explain to the Japanese public why they though they could get away with a simple lie over the growing scandal.

What happens next?

“Abe’s very unlikely to resign over this issue,” said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University’s Japan campus in Tokyo. “It’s not illegal to make donations to schools, but the issue really is about whether Abe was involved in the land deal.”

According to the new revelations, not only was Abe supposedly involved, but he lied about said involvement.

The coming days could be key: Yasunori Kagoike, the head of a scandal-hit school operator will testify in parliament on March 23 after the lower house budget committee agreed to summon Kagoike; as a note, private citizens are rarely asked to give testimony in parliament, especially if what they are about to disclose may provide further evidence the prime minister was deliberately lying to avoid a further escalation of the scandal.