Japanese politics since Junichiro Koizumi have been in a tailspin, with the mud wrestling between the ruling Liberal Democratic Party (LDP) and Democratic Party of Japan (DJP) creating political gridlock amidst one of the most serious recessions in postwar history. This gridlock is exacerbating the negative impact the global recession is already having on Japan's export-driven economy, which is being harder hit than North American and European economies. The unintended benefit is that it is undermining confidence in the Yen as a haven currency.
Between 2001 and 2005, Junichiro Koizumi changed the way that Japanese politics was played. Rather than being ruled by factional politics within the LDP, he spoke directly to the people, relying more on his image, ideas and popular support than on currying favor with party insiders. This gave him the independence that enabled him to pursue his structural-reform agenda even if it meant destroying his own LDP, which had long been wedded to the pork-barrel politics he was assailing. The Koizumi Administration was credited with cleaning up after Japan's financial crisis and "Lost Decade" through massive consolidation of Japan's banking system, some nationalization, and general write-offs/liquidation of NPLs (non-performing loans), and his taking his case to the public made him the third-longest serving prime minister in Japanese history.
Since he left office, however, Japanese politics have been in a tailspin. The massive Keynesian stimulus used (some JPY160 trillion/25% of GDP) to combat Japan's "Heisei Malaise" left the Japanese government heavily debt-riddled and Japan's economy enfeebled, and with a real and perceived growing gap between rich an poor.
Since Koizumi, there have been three ineffectual, unpopular prime ministers. Shinzo Abe was supposed to have been Koizumi's hand-picked successor, but abruptly resigned after less than a year in office amidst plunging approval ratings and a humiliating upper house election defeat by the DPJ. The second successor, Yasuo Fukuda, also abruptly announced he was stepping down after just under a year in office. He also struggled with dismal support rates despite a major Cabinet reshuffle. The current prime minister, Taro Aso took office in September 2008, has also proven to be extremely unpopular, with his support ratings plunging to record-low single-digits. Correspondingly, the LDP's support in the polls has also continued to deteriorate to new lows, with recent polls showing their popularity dropping below the opposition DPJ and DPJ Ichiro Ozawa's approval rating rising above that of prime minister Taro Aso.
The LDP has been in power for all but 10 months since it was created in 1955, but it has long since ceased to represent voters. It may have even lost its mandate as the party for big business.
