I swear that after I did the research for this article in the Register's Sunday Commentary section ( a piece whose general outlines we've been talking about doing for months) I felt even more pessimistic than when I started. Interesting that the piece got a fair number of comments, some of them even thoughtful. The circumstances and conditions are hardly identical, but the Japanese downturn started with the bursting of a real estate bubble, followed by efforts to get out of recession with heavy government spending.
In part because of the Japanese keiretsu system, in which large companies affiliated together and helped one another out during periods of trouble or lack of capital, the Japanese didn't take the underfunded bank with non-performing loans problem seriously for a long time, or thought they could handle it with judicious injections of government money. They had to start letting banks fail before a modicum of realism set in. Then they got hit with the global financial crisis which has reduced their export potential, and it's recession time again.
The U.S. started out promising to identify toxic assets and take them off financial insitutions' books, but more than a trillion(!) bucks later those toxic assets are still there, poisoning the chances for recovery.