And so Japan loses another prime minister (an annual event in recent years). The economic consequences are hard to read but here are some questions:

A stronger or a weaker government?

Relocation of the Futenma airbase in Okinawa is the issue that turned Mr Hatoyama’s administration into a lame duck with such startling speed. But even right after last year’s election Mr Hatoyama never seemed to have much to say about the economy. His leadership was one reason why, for example, any real confrontation between the government and the Bank of Japan seemed unlikely.

The departure of Ichiro Ozawa as the Democratic Party of Japan’s secretary-general is probably even more important (assuming he doesn’t continue to run things from even deeper in the shadows). His old-style Japanese interest-group politics never sat well with economic reform and cuts to the fiscal deficit. Tobias Harris is worth reading on this.

Unless a new leader can save the DPJ’s upper house majority in July elections, however – and that still looks unlikely – then the government will be weakened. A change in the BOJ law, for example, would go from unlikely to very unlikely. Another question is whether new leaders can contain conflict within the DPJ as successfully as the inoffensive Mr Hatoyama and the menacing Mr Ozawa.

Will it be Naoto Kan? Read more