Jan. 17 (LPAC)--As the Japanese stock market plunges, prime minister Yasuo Fukuda said today that the ruling Liberal Democratic Party is facing its "biggest crisis" since its founding in 1955. "The party frankly admits it is facing the biggest crisis since its establishment," Fukuda told the national convention today. In the elections last year, the LDP lost control of the upper house of parliament for the first time, although it still controls the more powerful lower house. The opposition Democratic Party of Japan is calling for another general election, but Fukuda wants to block that. "We are in a difficult situation in managing parliamentary affairs," Fukuda said.

He said that the Japanese economy was now in such a "delicate" state that it would be unwise to call a general election. Fukuda said the government would "respond if necessary" to prevent a stock market rout, but in reality government deficits are so massive that there is little room to do anything.

The Nikkei index has fallen 11% in barely two weeks, recording the worst start to the year since 1945. It is down 24% from its peak and as a result of investors fleeing the stock market for government bonds, yields on five-year government bonds have dropped to 0.86%. The yen has risen sharply recently, including from 251 to 210 to the pound since the crisis broke out last summer. The yen surge is hitting the big exporters, led by Toyota, Honda, Sony and Toshiba.