SNA (Tokyo) — Some of the shine has come off Abenomics in the last month or so, perhaps representing little more than a hiccup on the way to greater success, or perhaps representing the vast turning of the tide.

At the beginning of this year, the Yen stood at the 83 level versus the US Dollar and rose to the 103 level by the middle of May. In the last month it has slid back to about the 93 level. Likewise, the Tokyo Stock Exchange was hovering around the 10,000 level at the beginning of the year and rallied to 15,706 last month, but it has now dropped back to about 12,686 as of the Friday closing.

Most economic analysts point out that Japan’s stock market rally was fueled entirely by foreign investors, and it is those same foreign investors who became more skittish recently, not as sure as they were previously that Team Abe really has the pedal to the medal in terms of monetary policy and an unshakable desire for structural economic reform.

Prime Minister Shinzo Abe’s unsheathing of the Abenomics “third arrow” of structural reform on June 5 was not well received by the markets. There was a palpable sense of disappointment that the proposed reforms weren’t bolder and more sweeping. Many analysts pointed out that much of what Abe talked about had already been tried in the past and had failed.

Those analysts who are rooted in politics, as opposed to economics are, generally speaking, not very surprised. From the very beginning of the Abe government – actually long before it appeared – it was well understood that the Liberal Democratic Party is the main representative of Japan’s status quo authority.

Could any LDP leader, even with 70% public support filling his sails, change the DNA of his own political party? Junichiro Koizumi never succeeded, so why should we expect Shinzo Abe to do so?

Viewed through this lens, it is rather easy to understand what People’s Life Party leader Ichiro Ozawa is talking about when he confidently predicts that Abenomics will fail and that a stock market crash is a “natural” expectation for the near future. Ozawa says that Shinzo Abe’s regime will fall much faster than people are thinking right now, but he also says it is unrealistic to expect the LDP to call for fresh general elections any time before the summer of 2016.

Ozawa’s insight raises an interesting point: Shinzo Abe has derived massive political benefit so far from his Abenomics policies. It has been a brilliant success that has made him the political superstar of early 2013.

But, by the same token, since it is called “Abenomics” the prime minister will have nowhere to run, nowhere to hide if the economy meets a serious reverse. Abenomics has lifted him to a great height, but if this ship begins taking on water, you can bet your bottom yen that his LDP colleagues will make sure that Shinzo Abe is the first man thrown overboard in the crisis.

Indeed, how could Abe possibly distance himself from Abenomics if things go wrong?

We reckon that this kind of thought has already crossed through the mind of, say, LDP Secretary-General Shigeru Ishiba. He’s not exactly out in front cheerleading for Abenomics, is he?

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