There are two major issues facing the Japanese economy. Nepotism of the old (there is a much more succinct word for this, but it escapes me) and the incredibly long life expectancy of the population. The nepotism of the old (someone please tell me the name for this) is causing issues in a few different ways.
The older government officials are notorious for taking private sector positions in the very industries they previously regulated. This happens so frequently there is actually a Japanese phrase to describe it (again I can't remember for the life of me what this phrase is). In America this happens, but isn't nearly as blatant or widespread. It Japan it is a near guarantee.
The older population in Japan has a stranglehold on influencing public policy. They are a huge block of voters who actually turn out for elections. They consistently vote for, or force politicians to push for, unsustainable short-term solutions to problems. Japan has a pension crisis similar to our social security problem. Everyone knows it is unsustainable, yet the older people vote for it and push the burden onto the young.
The young people entering the economy don't have the job availability they need. Old people aren't retiring as early as they once were and basically aren't getting out of the way for the young. People are living longer and need to work longer. As a result, young workers are forced to be underemployed and struggle to become part of the economy.
There is also the issue of failure being viewed as shameful. There is very little entrepreneurial activity going on in the country so they don't have this potential of creating jobs for the economy.
The long life expectancy is exacerbating all of the above issues. That said, Japan is a fascinating place, the projections towards the strain social security and medicare taking on our economy in the future are good proof that Japan may still offer insight towards our own future.