Japan's New Ruling Coalition Rushes To Fill Cabinet

Japan's newly empowered leader Yukio Hatoyama rushed on Monday to select Cabinet ministers and start making good on promises to revive the world's second-largest economy after his party's historic trouncing of the ruling conservatives.

Hatoyama, who also has signalled he wants to redefine Tokyo's diplomacy to make it less reliant on Washington, said in a victory speech late on Sunday he would focus on a quick and smooth transition and make a priority of choosing the nation's next finance minister.

Hatoyama spoke only briefly with reporters on Monday before huddling with his party leaders.

"We can now conduct politics for the people of Japan in the way we believe," Hatoyama said, speaking from his party's headquarters in Tokyo.

"I feel overwhelmed with emotions for that fact," he added.

Prime Minister Taro Aso, conceding defeat, said he would step down as president of the ruling Liberal Democratic Party.

"The results of this general election are extremely difficult for the Liberal Democratic Party," he said, apologising for the results.

"I regret to have lost many of our colleagues and as the representative of this party I am responsible for this. I hereby will resign."

Although the nation gave the Democrats a landslide win, most voters were seen as venting dissatisfaction with the Liberal Democratic Party and the status quo more than they were endorsing the policies of the opposition.

The Liberal Democrats have governed Japan for virtually all of the past 54 years.

The Democrats will also face next year an election for the less powerful upper house of parliament. They have controlled that chamber with two smaller allies since 2007, but if they fail to deliver quickly on their promises the Liberal Democrats could resurge.

Official results were still being counted, but exit polls by all major media said Hatoyama's Democratic Party of Japan had won more than 300 of the 480 seats in the lower house of parliament.

That would easily be enough to ensure that he is installed as prime minister in a special session of parliament that is expected to be held in mid-September.

The task ahead for the Democrats is daunting.

Japan managed to climb out of a yearlong recession in the second quarter, but its economy remains weak.

Unemployment and anxiety over falling wages threatens to undermine any recovery. The jobless rate has risen to a record 5.7 percent.

After a rapid succession of three administrations in three years, Japan is facing its worst crisis of confidence in decades.

In the long-term it faces a bleak outlook if it isn't able to figure out how to cope with a rapidly aging and shrinking population.

Government estimates predict the figure will drop to 115 million (m) in 2030 and fall below 100 million (m) by the middle of the century.

The Democrats' solution is to move Japan away from a corporate-centric economic model to one that focuses on helping people.

They have proposed an expensive array of initiatives: cash handouts to families and farmers, toll-free highways, a higher minimum wage and tax cuts. The estimated bill comes to 16.8 trillion (t) yen (179 billion (b) US dollars) when fully implemented starting in the 2013 fiscal year.

Japan's stock market surged early in the morning on the news of the election, but then fell back, indicating uncertainty among investors about what the Democratic government will bring.

The Democrats are also under scrutiny for their positions on national security and foreign policy.

Party leader Yukio Hatoyama, set to become Japan's next prime minister, has been vocal about distancing the country from Washington and forging closer ties with its Asian neighbours.

Washington's new ambassador to Japan said the US is looking forward to working with the administration in Tokyo.

The Democrats first task will be to convince a sceptical public that they can actually lead.

"I cannot deny that I feel some anxiety for the change of the new situation that we are heading to," one resident in Tokyo said, while another said it would take a while to see if the DPJ would be able to live up to voter expectations.

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