Today Japan released first-quarter economic figures, and pleasantly surprised itself by noting that its economy is cratering just a little bit less swiftly than everyone thought. GDP contracted at an annualized rate of 15 percent, more than twice as severely as the US, and faster than at any point since Japan started tracking GDP in 1955.

Any Japanese who looked surprised was putting on an act.  In three days in Tokyo, the business leaders and economists I've met have been a parade of Eeyores, all gloomy about their industries and doubtful about Japan's ability to unhitch its lead belt soon. The optimists say the bottom is here. But optimism hasn't been a winning bet in Tokyo since the 1980s, and there are reasons to despair. The Japanese economy runs on exports, and the world is not in a buying mood.  Demography all but guarantees that domestic demand, which peaked a few years ago, will never pick up the slack; the population is getting older, thriftier, and ever more immune to stimulation. Every time Barack Obama suggests that there might be virtue in "buying American," a Sony executive told me, Japan feels its spirits deflate a little more.

This spiritual deflation began in the early 1990s, when Japan suffered the economic equivalent of multiple organ failure. Japan's government was famously slow to acknowledge its rut, to cut interest rates, and to revive its economy. By the middle of the "Lost Decade," many observers (Japanese and foreign) urged the world to retire the notion that Japan could ever ascend to the top GDP spot it had coveted in the 1980s.  Now, its place as the world's number two economy is almost certain to fall to China within a couple years, and the sense of resignation has entered a new phase.  Yasuhiko Ota, an influential Nikkei writer, said that declining Japanese demand is fast making the Chinese market Japan's "only hope." And another Nikkei columnist, Hisayoshi Ina, speculates that Japan will have to give up the idea that it will ever be dominant, and instead reconceive itself as an economy that prospers only because of its productive junior partnership with a much bigger -- and, he hopes, democratized and peace-loving -- neighbor.  Japan has not thought of itself as the region's Canada before, but now it may have to start.