when ichiro ozawa speaks, people in japan listen. he's one of the country's most influential politicians. now he's using that influence to shake up the ruling democratic party and threaten prime minister yoshihiko noda's political future. ozawa is bolting from the dpj, and he's taking 49 lawmakers with him. noda's plan to raise the consumption tax to offset japan's debt was the last straw. >> translator: we voted against raising the consumption tax based on our belief that there's much to be done before any tax hike. the democratic party, led by prime minister noda, is no longer the dpj that achieved an historic change of power. we're going back to the basics of what got us elected and have decided to leave the party to create a new type of politics in which the people can choose freely. >> ozawa has been critical of noda on a number of issues. the key point of contention is the prime minister's plan to hike the consumption tax from 5% to 10%. a majority of lower house lawmakers voted last week in favor of bills that would raise the

ozawa and most of his followers voted against the reforms. ozawa has a history of creating and breaking up political parties. he helped found the dpj and bring it to power in 2009. but he, 37 other members of the lower house, and 12 from the upper house, will now form a new party. ozawa plans to encourage smaller opposition groups to join him. the exodus is expected to raise doubts about prime minister noda within the dpj when he faces a leadership review in september. noda knew he was putting his job on the line when he asked lawmakers to vote on his fiscal reform plan, and he knew ozawa would likely quit the ruling party. but he's standing by his decision. he says japan must get its finances in order. >> translator: this reform is not just for increasing taxes. it's also for stabilizing social security. the legislation is aimed at protecting the lives of citizens now and in the future. we must pass the bill. i want to fulfill my responsibility to do that. >> some voters support ozawa. others want to hear more from him. >> translator: ozawa

ozawa has launched a new party under the banner people's lives first. he criticized the democrats for the changes they made for changes they made. he said the agreement with the opposition on a bill to raise the consumption tax deprives the public the right to choose between alternative policies. liberal democratic secretary general says he is looking out for himself, not citizens. >> translator: ozawa is making promises that are impossible to keep. even though he says the priority is the lives of the japanese people i believe that he is playing a power game by establishing a new policy because he lost against prime minister noda. >> he and their supporters tendered their ressing nakzs to the democratic party. the prime minister's bill to double the consumption tax passed and is waiting approval by the upper house. >>> south east asia nations are trying to draw up a framework to avoid further conflict. they apparently agreed to keep talking. beyond that there is little sign of any major progress. the meeting focused on one of the most delicate issues, w

ozawa is continuing his preparations to farm a new party. he met with members after small opposition group. members of the main opposition liberal democratic party have been watching all of this unfold. secretary-general says it's time for voters to have their say. >> translator: the situation is normal and the democrats are to blame. the prime minister has no choice but to call a snap election. >> the bill is based on a three-party agreement with the democratic party and nunomako party. they say their cooperation with ruling democrats will only extend to bills for the tax hike and social security reform. >> a pleet of u.s. military aircraft with spotty safety record is on its way it japan. american forces want to deploy the part plane part helicopters transporter known as osprey at one of their bases in okinawa. but the groups are doing what they can do round the aircraft. marine corps spokesperson say a ship carrying osprey left a california port sunday. they plan to arrive the the air station late this month for maintenance and inspection

ozawa will lead the new party starting on of with 50 members.egardless of the rebellion, the tax bill hike is expected to be passed by parliament in august with support from major opposition parties. the move will make noda's government more vulnerable to an earlier election and make it difficult for one party to form a majority alone. back over to you. >> thank you very much for that. >>> still to come on the program, we'll find out why markets are expecting robust earnings, results from india as top banks. not just the u.s. that has earning season. much more next. >>> let's give you a look at agenda in asia. central bank watch. india as tech giants emphasis in tcs results. we'll be joined on "worldwide exchange" for first on cnbc interviews. something to look forward to. earning season in india and top banks expected to post strong profits. we're joined with a preview live from mumbai. >> thanks. indian banks are expected to show good numbers. the low base effect of last quarter will have very strong number. on an individual basis, particularl

the yen pretty much unmoved by the fact a key member of the ruling party ichiro ozawa resigned in protestf the consumption tax. the aussie dollar friday up 7%, up its best move in seven months on friday, not weighed down too much by the chinese pmi data, sterling/dollar 1.5685. it's just enough to take oil off from the jump we had on friday, brent was up some six bucks and we're just down a little bit on the chinese pmi data to 96, nymex up seven bucks friday down slightly to 83.63. more market reaction to all the data we've had ahead of the manufacturing ism, tracy has more out of singapore. >> hi there, ross. asian markets had a mixed trading day post the chinese data. the final pmi for june showed factory activities shrank for the eighth consecutive month, new export records dropped to lows unseen since march of 2009 as demand at home and overseas weakened. the data corresponds with official china pmi figures out over the weekend. the pmi hit 50.2 last month compared to 50.4. the data was stronger than expected and it did signal that china's factory growth was close to stalling. the tw

actually we agree and we see potential further developments there with the -- the ozawa group leading the ruling party there. adding to the uncertainty in the near term outlook for yen. i suspect veneer term, focus will be on the next meeting. we think the latest data out of japan are ruling out further accommodation from the doj for now. this coupled with potentially more accommodations to come from the ecb, from the fed on august 1st. all that hikely to keep yen maybe supported really, more supported against its peers at. g-10, the euro and the dollar. political uncertainty will likely play a role over longer period of time. in addition to further potential further deterioration in the fiscal outlook for japan. >> valentine, lovely seeing you this morning. head of european g-10 for ex strategy. brightening up our screens on this, what is it, tuesday already. goodness. time passes. >> time passes. >>> france's prime minister will be outlining the government's economic agenda in parliament later on today. the prime minister has pledged to keep spending flat between 2013 and 2015 and g

ozawa was absent from the concert because he has suspended musical activities for health reasons. a large photo of ozawa was placed on the stage. >> there's no more deserving recipient of the first tanglewood middle than our beloved say gi. >> it makes me happy to imagine returning in the future years, to work again with my beloved colleagues. i thank you all from the bottom of my heart. [ applause ] >>> the olympics are less than two weeks away. about 1,000 people have danced in central london to celebrate the upcoming games. the performance gathered in tra fal gur swear where the olympic countdown clock is located. professional dancers providing training for the event. it featured a variety of styles from ballet to hip-hop, inspired by the movements of runners and swimmers. the olympic games begin on july 27th. >>> now we take a look at the extended weather forecast for selected cities around the world. >>> and that concludes this holiday edition of "newsline." i'm catherine kobayashi in tokyo. thank you very much for joining us.