Japan government mauled in election, policy at risk - And that is with an unemployment rate of 5.1%

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http://www.livemint.com/2010/07/11165917/Japan-government-mauled-in-ele.html?h=B

Posted: Sun, Jul 11 2010. 4:59 PM ISTInternational News

Japan government mauled in election, policy at risk

The polls show the Democrats far short of Kan’s goal of winning 54 seats, a result that leaves him vulnerable to a challenge from inside his own party

Reuters

Tokyo: Japanese Prime Minister Naoto Kan’s coalition government suffered a major blow in Sunday’s upper house election, exit polls showed, threatening efforts to curb massive public debt and putting his own job at risk.

Kan’s Democratic Party of Japan (DPJ) were set to win just 47 seats and its tiny partner, the People’s New Party (PNP), were set to win none, losing their combined majority in parliament’s upper house, exit polls showed.

The polls show the Democrats far short of Kan’s goal of winning 54 seats, a result that leaves him vulnerable to a challenge from inside his own party.

“The Democrats disappointed me. The situation has clearly worsened in many ways. The mood of the country has become dark after the party took power,” said Sachiko Takeda, a 64-year-old housewife, who said she voted for the main opposition Liberal Democratic Party in Tokyo.

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http://www.businessweek.com/news/2010-06-29/japan-s-production-declines-jobless-rate-increases.html

Bloomberg

Japan’s Production Declines, Jobless Rate Increases

June 29, 2010, 12:35 AM EDT

June 29 (Bloomberg) -- Japan’s industrial production and household spending slipped in May and the unemployment rate unexpectedly increased, in signs that the recovery of the world’s second-largest economy may slow.

The figures underscore Japan’s reliance on exports to propel its rebound, and follow calls by the U.S. for Japanese policy makers to stimulate domestic demand. For Prime Minister Naoto Kan, facing a mid-term election in less than two weeks, the figures may pose a warning that it’s too soon to tighten fiscal policy to shrink the nation’s debt. snip

Export Driver

Exports have been driving the nation’s recovery from its worst postwar recession, led by demand from Asia. Spending by Japanese households has relied on government incentives to purchase cars and electronic appliances, and been insufficient to rid the economy of deflation.

“Japan’s growth has yet to be sustained by domestic demand alone,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. “The recovery will continue as long as exports keep growing.” snip

Economists had expected the jobless rate to fall to 5 percent from 5.1 percent, according to the median estimate of analysts surveyed. The gain was driven by young people who couldn’t find work, with the unemployment rate for 15-24 year- olds soaring to 10.5 percent, the highest level since June 2003.