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Japanese Economy, Leader Both Sinking
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Nagakawa denied being drunk, blaming "a larger-than-usual portion of cold medicine" for his demeanor, and Aso on Monday asked him to stay in his post.
But a day later, Nagakawa told reporters at a news conference that he intends to resign "as soon the budget and related legislation are passed by the lower house" for the fiscal year that starts April 1. That makes the time frame for his departure unclear, since each house is currently debating budget-related measures.
Aso has championed a stimulus plan built around a cash handout of $130 to $220 per person. But the public does not want the money and does not believe the handout will do much to revive the economy, polls show.
The plan has also been questioned by former prime minister Junichiro Koizumi, who stepped down in 2006 but remains perhaps the most influential voice in the ruling Liberal Democratic Party, which has controlled the government, with only one brief interruption, since World War II.
Koizumi's unusually harsh words -- he has called some of Aso's comments "laughable" and has questioned his competence to contest an election -- suggest that the prime minister may be forced to resign.
The ruling party must call a national election by September, and polls suggest that it could be defeated by the opposition Democratic Party of Japan.
The size of any stimulus package in Japan is limited by its obligation to service the world's most onerous public debt burden -- totaling more than 155 percent of gross domestic product -- while meeting the mushrooming pension and medical needs of the world's oldest population.
The Bank of Japan, meanwhile, has virtually no room for cutting interest rates. It has already cut a key rate to 0.1 percent, while pumping money into the financial system and buying corporate debt.
The head of research at the central bank, Kazuo Momma, said last week that surging bankruptcy numbers and sharply falling orders for machinery show that the Japanese economy is far from reaching bottom.
