On the advent of Buddhism, all animals (other than those that became envoys to the gods) lost their divinity. The tanuki was obviously one of these, and I can’t imagine it was very happy about it. You see, rumour has it that before Buddhism the cute little Japanese raccoon dog occupied a very powerful position - as governor of all things in nature. So if you had a problem with the way things were organised, then you’d go visit your local tanuki.
Following this fall from grace, the tanuki became a yokai known as the Bake-danuki (ghost or evil spirit) - but it’s far different from the terrifying spirits we have come to know from Japanese horror. Bake-danuki is a prankster, and particularly enjoys shapeshifting into objects, people and animals to fool us. If shapeshifting wasn’t enough, they’re also gifted with the ability to possess humans.
There is a saying in Japanese that the fox has seven disguises, the tanuki has eight, which puts the tanuki above the fox on the scale of animals-you-should-not-trust - that’s not to say that the tanuki is incapable of doing good for others, however. In one of the most famous folktales a rescued tanuki rewards the poverty-stricken rescuer by turning into teapot, which the rescuer then sells to a monk for a good price. The tanuki struggles against the heat of the flames and turns back into a tanuki, it returns to the poor man with a better idea; to set up a stall showing a teapot walking a tightrope. The show is a hit. The poor man becomes wealthy, and they both become close friends.
There are many, many tales like this about the tanuki, and over the years the little Japanese raccoon dog has appeared in a large number of artworks. The most hilarious being those produced in the Edo period, which emphasised the tanuki’s impressively large testicles. In the paintings, the tanuki uses its balls as boats, sails or boats, umbrellas, large sacks, cloaks… it’s quite impressive. Purses and wallets made of tanuki testicals are a good luck charm, that will stretch the value of the coins placed inside.