But how much pain that effort will entail is a scary question to many. And no one can be sure if the nation, more used to harmonious conformity and jobs-for-a-lifetime, has enough strength left in it to take all the pain.
The dubious loans at the nation's banks are estimated by the government to total about ?40 trillion (US$324 billion). Private analysts say the figure could be double that or more.
Koizumi has balked at doling out public works projects -- the way his predecessors have tried to boost the economy. Japan's public debt has ballooned to about ?670 trillion (US$5 billion), or 135 percent of its gross domestic product, higher than any industrialized country.
"The market has read in the worst possible scenario," said Shoji Yoshigoe, a manager at UFJ Tsubasa Securities Co in Tokyo. "Usually government officials are very quick in comments to stop the stock fall, but this time they don't seem to have a sense of crisis."
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