About not turning Japanese
RGE Monitor has a summary of what the money people think:
Key lessons: 1) government should not save all banks; encourage exit of weakest players; 2) Swift resolution of bad debt overhang a la Brady Bond initiative or Resolution Trust Corporation (RTC) is key.
PIMCO on differences: 1) Unlike the U.S., Japan is a creditor nation and does not rely on overseas financing, so its bad debt situation was an internal problem with little potential spillover; 2) Japan’s bad debt problem on a cumulative basis amounted to a whopping 25–30% of the nation’s GDP, whereas the subprime problem is an estimated 5–10% of U.S. GDP. 3) Japan's bad debt problem stemmed from commercial real estate and excessive corporate debt--> in U.S. the debt structure is more complex and structured. Scholtes/Mackenzie, Sep 11: After BearStearns and GSEs, LEH and WaMu show that a systemic solution is required along the lines of a government-sponsored Resolution Trust Corporation (RTC) in order to ring-fence troubled assets, restructure them with a haircut, and sell them on over time while retaining any upside. Luigi Spaventa: Central banks intervening directly in the RMBS market is not necessary. Instead issue government-backed Brady bond-like securities at a discount in exchange for toxic waste on banks' balance sheets. Bernanke: Reasosns for Japan's deflation after bank crisis are twofold: 1) structurally less flexible economy than the U.S.; 2) bickering authorities prevented decisive and early action towards resolving the bank crisis. Unicredit: Lessons from past crises: "Ultimately, tax funded bailouts may be unavoidable: Governments often must set up companies, which –equipped with wideranging powers and an experienced management– assume, manage and if necessary completely liquidate non-performing assets." --> e.g. Resolution Trust Co. (RTC) in U.S. (1989), loss recognition and government bail-out package in Japan under Prompt Corrective Action Plan (1998); Sweden's very successful government-owned Asset Management Companies (AMC) created to mange the disposal of bad loans and real estate assets (1993/4) Carlson (Fed Board): Many of the banks that failed during the 1930s panics appear to have been at least as financially sound as banks that were able to use alternative resolution strategies. This result supports the idea that the disruptions caused by the banking panics may have exacerbated the economic downturn.
I like the point on swift resolution.
Seems like this thing's been going on... Well, as long as the election. And yet this thing's never even become a political issue -- or, should I say, an issue in electoral politics. Odd, that. Or not.
NOTE I say "this thing" because there doens't really seem to be a name for, well, it. That's odd, too. Or not.