Flash Comment Japan: DPJ suffers defeat and faces political deadlock

 The ruling DPJ-led coalition government suffered a severe defeat in connection withthe Upper House election and lost its majority. DPJ still has a majority in the moreimportant Lower House and hence the government will remain in power. However, itwill be significantly weaker and PM Kan’s leadership of DPJ could soon bechallenged.

 The most imminent concern is to what degree the new political situation will hamperJapan’s ability to consolidate public finances.