As 2002 drew to a close, a real sense of déja vu hung over the Japanese economy and financial markets. Prime Minister Koizumi came to power in April 2001, promising to fix Japan’s banks, tame the budget deficit and trim Japan’s unwieldy public corporations, thereby putting Japan’s economy back on a stable footing. From the outset, Japan watchers worried that Koizumi was more a populist than a reformer and did not have the political clout to defeat the tendencies of Liberal Democratic Party (LDP) old guard politicians to protect Japan’s special interests and maintain the status quo.
