Day 1 - Tokyo
Political and economic stagnation are nothing new in Japan but the last few days have only emphasised a deepening pessimism within the second largest economy in the world as Prime Minister Mori seemed to announce his intention to resign and as the economy lurches along the precipice of disaster.
More has been one of the most unpopular prime ministers in recent memory and has stumbled from one gaffe to another failing to tackle deeper problems. But even his resignation was typically Japanese - vague and coded he didn't really make clear whether he was actually going and he now seems to be saying that maybe he is not going after all. Most people agree that he will go sooner rather than later but he seems to want to hang on to meet President Bush and others.
But the kind of word games being played here will only increase public cynicism towards politicians. This political quagmire does relate closely to the economic situation. On one level the lack of leadership prevents the kind of reforms the country needs to get back on its feet. But it also adds to the lack of confidence that is the key economic problem. Japanese people simply are not spending enough money. Interest rates have gone down to nearly zero but still consumer spending is stalled and people are too worried to spend.
Latest economic figures from Monday show the Japanese economy did grow in the last quarter of 2000 - but only just, narrowly avoiding a recession. But the recession still looms on the horizon particularly as the US economy slows - America is a huge market for Japanese exports. The danger is that Japan may see devaluation as its only solution - lowering the value of the Yen to try and make its exports more competitive. But if it does this then it risks undermining the competitiveness of other Asian countries and the whole global economy.
The world has relied on the booming US economy to suck in other country's exports - now this is gone, many countries could run into trouble and trade tensions may grow. For the UK there is no sign at the moment of a sudden pull out of Japanese investment but equally don't expect any new investment to be coming in so long as the economic and political situation continues as it is.
Go to to Day 2 - Tokyo
