Posted on Friday, September 10, 2010
n the late 19802 Japan was at the top of its game. The leader in cars, electronics and other industries. With cash to spare. Then real estate and stock prices crashed. And the flow of money through its banking system froze for a logn time.
Sound familiar? One fear now is that here in the US we're in for a long-term freeze like that. In fact a lot of our recent policy has come from trying to avoid that situation. To wit; TARP and bank stress tests as well as the Fed's keeping rates low and bond purchases and stimuls plans, all designed to keep money flowing and demand high until we can all get out of this debt funk.
One distinction is just was Japan needed more demand its working age poputlation began to shrink. We do not have that problem.