Like President Barack Obama, Japan’s new Prime Minister Yukio Hatoyama made lots of extravagant economic and foreign policy promises on the road to victory earlier this year. Mr. Obama has shown flexibility and the willingness to compromise. Will Mr. Hatoyama do the same? If not, Japan will be in for a rough ride in 2010.
In some ways, Mr. Hatoyama’s victory was even more historic than the American election. His Democratic Party of Japan (DPJ) ousted the Liberal Democratic Party (LDP) that had held power virtually without interruption for more than five decades. Like Mr. Obama, he’s had to come to grips with enormous immediate challenges, beginning with the need to kick start a stalled economy. Japan’s public debt is approaching 200% of gross domestic product—by far the largest debt-to-GDP ratio in the industrialized world.