For those not in the know, Paranoia Agent is a 13 episode Anime series following a series of brutal attacks in Tokyo, and the strange circumstances surrounding both the attacker and his victims. The show, created by Satoshi Kon (Tokyo Godfathers, Millenium Actress) was featured on adult swim and is currently available on DVD in the US. If you have not seen the entire 13 episode series (or at least do not know how it ends), STOP NOW. Otherwise, scroll down.
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Okay, so you've seen the show and know how it ends. So the question remains: what does it all mean?
According to an interview with Satoshi Kon (an extra feature on the DVD), the idea resulted from the concept of a person feigning injury or weakness to avoid responsibility - for example, a child claiming to be sick to get out of school. Though starting as a ruse, the child may feel actual symptoms, either because he is exaggerating minor problems, such as a headache or a bit of queasyness, or convinces himself he is ill to such an extent that symptoms appear.
The series deals with both supernatural and psychological themes, though its difficult to tell where the psychological ends and where the supernatural begins. In the case of Little Slugger, the attack on Tsukiko Sagi at the beginning was, as the old homeless woman testified, most certainly faked. Sagi hurt herself and placed the blame on a nonexistant being, just as she had as a child. However, the attack became public, and people began thinking of Little Slugger as a real person. Others, also dealing with serious issues, began using the character as an escape valve. As the "attacks" continued, the more the public believed in Little Slugger's existance, and the more real he eventually became.
The show is loaded with symbolism and metaphors, much of which would be almost impossible to decipher without a working knowledge of Japanese culture and history. The following link is to an article in a Japanse American news site and provides the best explanation for the series as a whole:http://www.nichibeitimes.com/articles/artsent.php?subaction=showfull&id=1155242640&archive=&start_from=&ucat=3&