“Turning Japanese” was a classic one-hit wonder by The Vapors in 1980 and three decades later it is certainly not music to the ears of US policymakers and debt-strapped households as the world’s largest economy struggles for traction.
The bursting of Japan’s debt bubble in the early 1990s heralded years of deflation and subdued growth, in spite of endless fiscal and monetary stimulus efforts.
That has seen equities languish, with the Nikkei 225 Average some 80 per cent below its peak, and kept the 10-year Japanese bond yield below 2 per cent since early 1999.
Three years and counting since the bursting of the US credit and mortgage bubble, the yield on benchmark 10-year Treasury notes sits below 2 per cent, a level that suggests the US is in danger of emulating Japan’s experience of two lost decades.
