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In a landslide victory, the new Democrat Party of Japan defeated the ruling Liberal Democratic Party, ushering in a new era of Japanese politics. After being in control for virtually all of the past 45 years, the LDP was was brushed aside in what many feel was a venting of the Japanese people's frustration over the economic woes prevalent worldwide recently.
The Liberal Democratic Party has long been an ally of the US, favoring policies conducive to business, conservative interests, and the national bureaucracy. The focus of the spending by the LDS has been on public projects and infrastructure. Japan's stock market surged briefly after the election, but then fell back, amid concerns of what the new administration would bring. Japan climbed out of its recession in the second quarter of last year, but its economy remains weak. Unemployment and anxiety over falling wages threaten to undermine any recovery. The unemployment rate has risen to a record 5.7 percent. After a succession of three administrations in three years, Japan is facing its worst national confidence crisis in twenty years or more.
The new Democrat Party of Japan, founded by inexperienced activists, has been in in existence for eleven years. Only a few of its members have ever served in high ranking government positions. They intend to shift the focus of national spending to families and "education". They must also figure out how to deal with Japan's aging and shrinking population, with more people drawing pensions, and less people paying taxes. Population projections show Japan losing 20% of its population over the next forty years. Ichiro Ozawa, co-founder of the party, said, "We have no fear, and we will steadily achieve our campaign promises one by one."
The Democratic solution includes moving away from the centrist corporate model, to one that includes cash handouts to people, higher minimum wage, and tax cuts. The total bill for these programs will be in excess of $179 billion when implemented in fiscal year 2013, bringing their national debt to above 200% of Japan's GDP.
The party has said it plans to cut waste and rely on untapped financial reserves (sound familiar?) to fund their programs. But with Japan's public debt heading toward 200 percent of gross domestic product, the Democrats' plan has been criticized as a financial fantasy that would worsen Japan's precarious fiscal health.
The newly elected Prime Minister,Yukio Hatoyama, has been very vocal about distancing Japan's relationship with the United States, and will instead focus on strengthening ties with Japan's Asian neighbors. He will first end the refueling mission in the Indian Ocean for Americans forces heading to the Afghanistan conflict. He also wants to review the role of the more than 50,000 US troops stationed on the Japanese islands as part of a mutual security treaty.