As the U.S. economy has retreated from the edge of a financial cliff, America's recovery repeatedly has been compared to Japan's. Both countries suffered a collapse in asset prices, followed by a government scramble for some kind of stimulus response.
Many market watchers say America is going down the same path as Japan, a frightening prospect considering Japan's economy is well into its second "lost decade".
However, "I actually don't think it's a terribly fair comparison," says our guest Emily Parker, senior fellow at the Asia Society.
Case in point, initial policy reaction in Japan. While there are plenty of critics of America's recovery and stimulus packages, Parker said Japan's response (including recapitalization of failing institutions and monetary policy) only emerged after years of "severe" inaction. The zombie "no bank will fail" concept originated in Japan, she notes.
Also crippling Japan's recovery was a false sense of recovery, as reported by some media groups at the time, says Parker, who has written extensively about Japan and China for The WSJ and other publications. Despite reports of recovery, Japanese citizens remained pessimistic about their future, she says.
Click "more" to learn about Japan's generation-old business model and what needs to change if the world's second-largest economy is finally going to get back on track.
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