Coincidentally, this week's Ecomist echoes my line:

http://www.economist.com/businessfin...=hptextfeature

I'm not entirely convinced of the validity of comparisons of Japan to other countries grappling with the financial crisis. Sure, public finances have taken a dip everywhere and many other governments are arguably doing variants of this, but the huge difference between Japan and the rest of the world is that Japan's not just fighting the current crisis, they're still dealing with 1989. There are a million things Japan could do that would make them more competitive in the long run -- let some big banks and keiretsu go bust; terminate the vast majority of Japan's increasingly useless public works projects; slash protectionist red tape; cut agricultural subsidies; allow larger, more efficient, mechanized farms; allow real immigration instead of just temporary 3K workers; put some money into restoring countryside instead of covering it with concrete; etc etc -- but they would cause too much short-term pain and shred too many cushy pits of corruption, and that's why in 20 years the only thing that's happened is that Japan is now in a much worse position to start dealing with this.

The other major difference is that, in most of the rest of the world, populations are young and increasing, creating new demand for goods and new taxpayers to pay for it all. In Japan, on the other hand, the population is already actively shrinking and the age pyramid becomes more and more insupportable with every passing year.

mosburger mentioned the trend of young Japanese moving overseas to escape Japan's stagnation, but -- at least in the short term -- this will only exacerbate the problem. They're often employed by Japanese companies at a fraction of the cost they'd need to pay in Japan, which is good for the company's competitiveness, but doesn't help Japan's tax base. Old-school lavishly funded expats are an increasingly rare breed, and here in Singapore the local Japanese community has been slashed from a peak of around 50k to under half that, the vast majority of those remaining being on salaries of S$3k (~200k yen) or less, and even they are constantly at threat from Japanese-speaking non-natives.