ANALYSIS - Low expectations could help Japan Democrats govern

By Linda Sieg

TOKYO (Reuters) - Fed-up Japanese voters look set to hand the opposition Democratic Party a historic victory in an election next month, but decades of disillusionment with politics means many have little hope of real change.

Ironically, those low expectations that the Democrats can easily solve a raft of problems from a recession-hit economy to creaking pension and health care systems could well help the party overcome early obstacles to governing and stay in power.

"Of course they are inexperienced, so there will be problems even in the first 100 days," said Yasunori Sone, a political science professor at Keio University.

"It's better if expectations are not too high. Then the Democrats will be fine as long as they implement their policies incrementally."

If so, a change of government would not only boost chances of ending a political stalemate created when the opposition won control of parliament's upper house in 2007, but provide welcome policy stability for investors in Japan's financial markets.

The business-friendly Liberal Democratic Party (LDP) has ruled for all but 10 months since its founding in 1955, but many administrations have been short-lived and Japan has had three premiers since maverick reformist Junichiro Koizumi's rare five-year term ended in 2006.

"What you care about as an investor is consistency," said Jesper Koll, CEO of investment adviser Tantallon Research Japan. "You want stability ... You want clear decisions."

Contemplating the possibility of a stable Democratic Party government might seem a bit premature when an election has yet to be formally called and the expected date of Aug. 30 is seven weeks away.