Fiscal austerity dominates policy objectives.
Even in Japan, however, there is a limit to how much the government and a compliant media can gloss over the dreary facts, and it is all starting to wear very thin with the Tokyo capital markets. The burdens of monetary deflation continue to linger, with a mountain of uncollectible debt and new lending still below the already depressed levels of a year ago. This is just one element of a multi-dimensional malaise settling over the land of the rising sun, however. Japanese markets also are being buffeted now by a frenzy of fiscal austerity. Indeed, last week's market plunge coincided with several developments which substantially increased the odds of a tax increase.