Japan may have great savings levels, but where it puts those savings to work, its investments are extremely ineffective. Thus you don't get investments that really grow the economy, that increase total factor productivity of its economy. The reason why those saving dollars are not chasing the most effective investments is due to the iron triangle that japan has LDP, the Keiretsu (incestuous businesses), and bloated Beaurcracy.

Pretty much since WW2. The LDP always won elections (till 2007) because of how Japan's districts are drawn (not buy population but buy land area), thus the rural but unpopulous districts have all the political power. Japan's LDP then has the Japan's postal banks to do infrastructure projects in the middle of nowhere, in Japan's version of pork barrel spending. Thus these investments have very little return on investment, they don't grow the economy, but they continue due to political manifestations.

At the same time the Keiretsu, Japanesse business are way too incestuous. Pretty much Kerietsu are there own little monopoly with their own little bank that only lends to the Kerietsu businesses. Unfortunately when parts of the Kerietsu were underperforming or dead businesses walking, instead of killing those parts the good performing parts of the Kerietsu reinvested money into these zombie industries, thus dragging down the Kerietsu growth.

I don't think I need to explain bureaucracy and how it can be a drag on growth .

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In sum, in my mind Japan's economy is up .
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Because of all this Japan's economy has barely grown since 1990. If the economy does grow than debt doesn't get paid off.

Luckily things are finally changing (why it took 18 to 20 years instead of 5 or 10 years is beyond me). The LDP lost the 2007 upper house, yet the current prime minister resigned but he was only replaced by a new LDP prime minister. Kerietsus are weaker and less incestous than before due to non Kerietsus Japanese business outpeforming them. The post office of japan will be completely privatized by 2017, there are new bankruptcy laws, etc.