The term "gaijin" is only used for non-Japanese people. It is not used among Japanese to identify people outside circles, towns, prefectures. Maybe "bakugai" use the term incorrectly but not Japanese.
White southerners aint got nuthin on Koreans when it comes to racism.
Japanese do not really have "racist" attitudes towards foreigners at all. They just wish we were not here. Toyota may want world #1 sales ranking but Japanese I have talked to are glad to accept lower economic rankings if it meant all the foreigners would go. Is it wrong for a society wanting to exclude itself voluntarily from the outside world?
The Halloween train party incident highlights how much a pain in a dick ignorant bakugai can be.
"Bakugai" is the term Japanese use for particularly idiotic foreigners.