Inside Investment: Japanese lessons

The drop-out rate from Japanese courses at UK universities is extremely high. Most students take it up from scratch and it proves a challenge too far for all but the most linguistically gifted. Japanese economic history can at least be studied in translation, although it still makes for difficult reading. Vacillation, combined with policy missteps following the pricking of the housing and stock market bubbles in the early 1990s, condemned Japan to a debt deflation cycle not seen in a developed economy since the Great Depression. The country is only now beginning to recover.

Central bankers looking for a guide of what not to do in the present credit crunch and economic slowdown could do worse than turn their attention to what unfolded in Japan. Fortunately for the US and the rest of the world, Federal Reserve chairman Ben Bernanke appears to be a keen student. The lessons are many...