What a difference a decade makes. The Japanese economy has been locked in recession for so long, and everyone is so gloomy about its prospects, that it is hard to imagine that at one time serious commentators spoke of a Pax Nipponica in the offing. Now unemployment is officially (and optimistically) estimated at 5 percent, corporate bankruptcies are soaring, the stock market is roughly 75 percent below its all-time high, and the financial system is on life support. Japan now leads the world in public debt as a percentage of GDP, while the Iron Triangle of government, business, and the conservative Liberal Democratic Party that oversaw the vaunted “miracle” era of growth in the 1950s and 1960s is discredited and unraveling. The Japanese employment system is also fading as firms trim their workforces, renege on implicit guarantees of lifetime employment, and shun seniority-based wages in favor of merit- and skill-related compensation. In short, Japan is in a period of wrenching transformation, in which its most popular politician, Prime Minister Koizumi Junichiro, routinely admonishes audiences with his decidedly unpandering slogan, “No pain, no gain.” This blunt message is a reminder that the verities of postwar Japan are rapidly fading. The new mantra of restructuring and deregulation heralds a new era of uncertainty and insecurity in which most people expect things to get much worse.