Japan Cannot Avoid A Recession

Much like the United States, Japan is preparing a major stimulus package to shore up its rapidly deteriorating economy. The packages have similarly become political footballs in both countries, with opposition party leaders objecting to one line item or another as either too much or too little to bring real help or extra benefit to ailing companies and worried citizens. In Japan, however, the objections have evolved into a legislative stalemate, with a hugely unpopular Prime Minister hanging onto power by seemingly invisible strings.

Taro Aso is the third Prime Minister in as many years to lead the Liberal Democratic Party, or LPD; but he must declare national elections for the House of Representatives by the autumn of 2009. Fearful of earning blame for causing loss of governmental power for the LPD, renowned for holding such power almost without break since 1955, Aso has produced excuse after excuse to put off a snap election. But mostly he has said that dealing with the economy is a priority, that this is not time for politics as usual. The LPD currently shares power with a small coalition partner, the Buddhist-oriented New Komeito Party, or NKP, an increasingly restless partner which is positioning itself to profit from the coming elections. These elections, whenever they eventually occur, may well see the establishment of the Democratic Party of Japan, or DPJ, the long-running opposition party with few ideological differences from the LPD, as the new power in the country. Additionally, there are rumors that another party may form, aligning disaffected LPD members and other reformist politicians, with the idealistic objective to bring about a true two-party or three-party democratic system.

Many observers had expected Japan, a productive and wealthy nation with considerable economic clout, to weather the burgeoning global recession better than other developed nations, thanks due to lessons learned and reforms instituted following a major real estate meltdown in the 1990's. However, a heavy reliance on exports underpins this Asian nation's economy; and exports to all trading partners, including the U.S. and even China, are not just slowing but are practically stopping. The credit crunch, a phenomenon which has made getting bank loans and credit lines necessary to conduct normal business very difficult even for major companies, has also affected Japan. Purchasing shares in suppliers to global conglomerates and manufacturers, like Sony and Toyota, is part of the current government's economic package, the package held up by political infighting. This plan may stave off anticipated bankruptcies and resulting job losses for a time, maybe even enough time for the global situation to improve and bring back demand for Japanese goods.

Still the question remains: what happens to Taro Aso, the current Prime Minister and former foreign minister from a family with a long history of government service, and what happens to his party, the long-ruling Liberal Democratic Party? Will the voters unceremoniously throw the LPD out and welcome the DPJ? Stay tuned to find out what happens next in this island nation, one of the United States' most important allies.

"The revolving door of Japanese politics keeps on spinning", Foreign Policy Passport blog

"Japan: Can this place be governed?", The Economist

Christian Caryl, "Mr. More-Of-The-Same", Newsweek

Martin Fackler, "Japanese Leader Offers a Vast Stimulus Package", New York Times

Bettina Wassener, "Sony and Toshiba Shares Fall Sharply", New York Times