In Japan’s Stagnant Decade, Cautionary Tales for America - (train wreck ahead!)

[SOS]

February 13, 2009 - New York Times

By HIROKO TABUCHI
TOKYO — The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan’s banking crisis have three words for the Americans: more money, faster.

The Japanese have been here before. They endured a “lost decade” of economic stagnation in the 1990s as their banks labored under crippling debt, and successive governments wasted trillions of yen on half-measures.

Only in 2003 did the government finally take the actions that helped lead to a recovery: forcing major banks to submit to merciless audits and declare bad debts; spending two trillion yen to effectively nationalize a major bank, wiping out its shareholders; and allowing weaker banks to fail.

By then, Tokyo’s main Nikkei stock index had lost almost three-quarters of its value. The country’s public debt had grown to exceed its gross domestic product, and deflation stalked the land. In the end, real estate prices fell for 15 consecutive years.

More alarming? Some students of the Japanese debacle say they see a similar train wreck heading for the United States.

“I thought America had studied Japan’s failures,” said Hirofumi Gomi, a top official at Japan’s Financial Services Agency during the crisis. “Why is it making the same mistakes?”

http://www.nytimes.com/2009/02/13/business/economy/13yen.html

Half measures will fail. Nationalize now!

[FreakinDJ]

1. Like to see Freidmen and his Trickle Down buddys Theorise that

forcing major banks to submit to merciless audits and declare bad debts;

So deregulation works for them just like it did for us

[midnight]

2. This will be a bitter pill to swallow for those in the banking industry.

forcing major banks to submit to merciless audits and declare bad debts; spending two trillion yen to effectively nationalize a major bank, wiping out its shareholders; and allowing weaker banks to fail.

[elocs]

3. If economic measures are done half-assed and compromised to death

they will fail and Obama and the Democratic Party will pay the price for that failure.

[HughBeaumont]

4. “I thought America had studied Japan’s failures, why is it making the same mistakes?”

With 57 million people thinking President Sarah Palin is a good and sensible idea, I'm going to go with "Low I.Q. is still not exactly confined to a scant minority in the good Ol' Yew Ess Ay."

[leftstreet]

5. K&R

[Turbineguy]

6. Today, on CNBC

they were suggesting that we let wall street people solve our financial problems.

I can see retention bonuses coming!

[BR_Parkway]

7. Funny, if you read that paragraph about what they did in 2003 next

to the outline that the Treasury Secretary provided the other day - there's a lot of similarities there.

But hey, why would big business bother making that connection if they stand to be wiped out? Much better to report more and more stories about why this is such a bad idea, huh?