"It was the best of times, it was the worst of times," wrote Charles Dickens in the opening passage of his famous novel "A Tale of Two Cities." Although written 150 years ago, the sentiment aptly describes Japan's current predicament, barely two decades after seeming on the cusp of global economic supremacy.
By the end of 2009, Japan may have surrendered its long-held position as the No. 2 global economy to regional rival China. Government stimulus packages aimed at ending the worst recession since World War II are set to increase public debt to more than 170 percent of gross domestic product, the highest in the industrialized world. Meanwhile, politicians squabble over pension reform and how to raise the birthrate before the demographic time bomb detonates.
On the plus side, Japan is set to post an economic recovery in 2010 and remains a manufacturing and creditor superpower, with a healthy trade surplus and over $1 trillion in foreign currency reserves. Household financial assets exceed ¥1,400 trillion, bolstering the spending power of the longest living and healthiest people on the planet.