INSOLVENT REPUBLIC OF JAPAN: And when I say that Indian pop culture basically has no effect on American cultural life, am, of course, contrasting it with Japan, a nation whose pop culture has a great deal of influence--or at least acceptance--here in the States. Witness Slate today:

So, is there anything good at all to say about Japan these days? It took the ultimate establishment gray-hair, Yotaro Kobayashi, head of the Japan association of corporate executives, to find it. And even then it was in the most unlikely place: youth culture. He stood up to praise an article published last year by Douglas McGray in Foreign Policy magazine, titled "Japan's Gross National Cool." Even as industrial Japan crumbles, McGray argues in the piece, its street culture, from fashion to art to music, has become ever more vibrant and is having an unprecedented influence on the rest of the world.

There is manga and anime (comics and cartoons), innovative product design, and the emergent "thumb culture" of the i-mode generation, who see the world through a cell phone screen. Pokémon, Digimon, and the other gotta-have-them-all menageries designed to colonize kids' brains; PlayStation, GameCube, and the lion's share of the titles driving the booming video-game business. And then the H-bomb of Japanese culture hacking, Hello Kitty, who sells in Japan because she is Western and sells in the West because she is Japanese. "A regular Davos cat," quips McGray.

As Japan's recession gets worse, the country's youth culture only gets more vibrant. Since this is the World Economic Forum, a mechanistic explanation must be found. For starters, the breakdown in Japan's lifetime employment system and rigid social hierarchy has put a lot of young people on the street (or, more often, in dead-end part-time jobs); their energy is now finding other outlets, from cultural obsessions to entrepreneurship. It's also easier to take risks when you're small; the last decade has seen a wave of creative little businesses, from one-man music labels to clubs and micro-niche magazines, that are rising in the rubble of the collapsing conglomerates. Big companies don't work that way, and increasingly in Japan they don't work at all.

Japan: cool but collapsing. As its cultural influence grows, its economic influence shrinks. Even as the country rises as a style superpower, its failing finances limits its ability to exploit that energy.

That Douglas McGray Foreign Policy article looks pretty choice too.