Posted by LeGianT on August 29, 2008
Lessons from a “lost decade”
Aug 21st 2008
From The Economist
Will America follow Japan into a decade of stagnation?
AS FALLING house prices and tightening credit squeeze America’s economy, some worry that the country may suffer a decade of stagnation, as Japan did after its bubble burst in the early 1990s. Japan’s property bubble was also fuelled by cheap money and financial liberalisation and—just as in America—most people assumed that property prices could not fall nationally. When they did, borrowers defaulted and banks cut their lending. The result was a decade with average growth of less than 1%.