The world has fallen out of love with Japan and Japan with the rest of the world. Aside from discussions with Japanophiles – who wax with justifiable lyricism about the country's efficiency, marvellous cuisine and exquisite sense of beauty – mention of the country these days is likely to provoke a raised eyebrow or a gently suppressed yawn. Investors regard Japan as resistant to their attempts to spread the gospel of shareholder value and a place where a bull run is when equities rally to one-quarter their 1990 level. Such is the lack of interest that one Tokyo-based broker toyed with the idea of removing the word “Japan” from the title of his investment notes in order to lure more clients into reading them.

Meanwhile, Japan looks at the outside world with a certain gloomy detachment. It feels vindicated that it did not swallow the wilder notions of unfettered market capitalism, and yet let down that its export-dependent economy nevertheless suffered an even sharper contraction than its reckless rivals. It regards with nervous resignation a rising China that will shortly displace it as the world's second-biggest economy, and long ago trumped it as a diplomatic and geopolitical power. It even looks on with a degree of envy at South Korea, a former colony whose industry is fast catching up with its own and whose society has largely proved more adaptable to changes wrought by globalisation.

At home, only eight months after an opposition party finally wrestled power from the crusty Liberal Democrats, disillusion has set in. What some dared hope was a modern Meiji Restoration has turned out to be rather less inspiring. There is already chatter about when Yukio Hatoyama, the “revolution's” leader, might resign. Economically, and in spite of this week's formation of a ruling-party faction that favours inflation-targeting, the country's leaders nourish a fatalistic acceptance of deflation. True, 15 years of more or less continuously falling prices have not triggered the crisis some predicted. But falling nominal output has accelerated Japan's relative economic decline.