The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan\u2019s banking crisis have three words for the Americans: more money, faster.<\/p>\n
The Japanese have been here before. They endured a \u201clost decade\u201d\u009d of economic stagnation in the 1990s as their banks labored under crippling debt, and successive governments wasted trillions of yen on half-measures.<\/p>\n
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.<\/p>\n
By then, Tokyo\u2019s main Nikkei stock index had lost almost three-quarters of its value. The country\u2019s 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.<\/p>\n
More alarming? Some students of the Japanese debacle say they see a similar train wreck heading for the United States.<\/p>\n
\u201cI thought America had studied Japan\u2019s failures,\u201d\u009d said Hirofumi Gomi, a top official at Japan\u2019s Financial Services Agency during the crisis. \u201cWhy is it making the same mistakes?\u201d\u009d<\/p>\n