- 5 Dec 2007
Japan's bust started with a real-estate boom, lax lending and the propping up of financial firms -- and its recovery took a decade. The Fed's rate cuts keep the US on the same path....
...... And like the U.S. real-estate boom, the Japanese boom was fueled by cheap money. The Bank of Japan, that country's Federal Reserve, had lowered the discount rate -- the rate it charges other banks -- to a post-World War II low of 2.5% from 5% in 1984-87. In those same years, the money supply grew by better than 10% a year.
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This article is quite right. Although the American economists do not agree yet, the US situation is exactly the same as 1989-90 era of Japan. After all, USA lived on only bubble economy for the past years, and the economy is entering into lost decade or endless depression until house price recovery.
When Japan warned USA, they didn't hear us, saying US economy is strong and US-led Global Capitalism is Global Standard. But in fact, is was Global Casino Economy.
Japan needs to develop BRICS markets as an alternative of US market.