Japan in Crisis

Once the economic envy of the world, Japan now is entering the second decade of a nearly continuous recession, with no end in sight. Unemployment, homelessness and crime are on the rise, and the banking system is lurching toward collapse under the weight of a trillion dollars in bad loans. Even the election last year of Prime Minister Junichiro Koizumi on a radical reform platform has produced little change, owing in part to the power of special-interest politics. Japan also must deal with the economic costs of an increasingly aging population, and growing competition from neighboring countries. Meanwhile, since the Sept. 11 attacks on New York City and the Pentagon, the U.S. has pressured Japan to help in the war against terrorism, triggering a debate within the country over its longstanding prohibition against sending troops into overseas combat.