I recently stumbled across a research paper by Richard Koo titled "Japan's disposal of bad loans: failure or success?"
thesis of this analysis is that Japanese monetary/fiscal authorities
handled their post bubble banking crisis relatively well compared to how
the US has handled its banking crisis which began in 2008. The paper
contains a lot of good data so it is worth the time even if you disagree
with Koo's conclusions.
However, it looks like Koo is defining "success" as a fourteen year recessionary period.
problem I have with this Koo analysis is with its conclusion is that
Japanese monetary/fiscal authorities did mostly the right things. The
paper shows that the Japanese equivalent of the FDIC's Deposit
Insurance Fund was in a negative balance from 1996 to 2008. This implies
that it could still be in a negative balance now. If your deposit
insurance fund is negative, that's not "success".
In Japan much of the banks' bad loans were simply shifted into government debt.
posits the concept that the US is handling its banking crisis
differently when in fact the US is doing the same things that Japan has