When a British financial expert in Tokyo confided recently
Japan and the Economic Crisis: Been There, Done That
Japan is an abject lesson in how not to handle a major banking crisis. During the 1990s, its banks were technically insolvent following the bursting of the late 1980s bubble and the implosion of land and stock prices. Since land was the collateral for many loans, banks were saddled with massive bad debts. This festered as banks and the government dithered and temporised for nearly a decade when the country was in collective denial about the severity of the bad loan debacle. Myopia was facilitated by fuzzy accounting practices and the government’s failure to exercise proper oversight. Sound familiar?