Japan's lost decades and those of economists'

Comments on Hugh Patrick “The Japanese economy’s recovery”, http://www.eastasiaforum.org/2010/11/20/the-japanese-economys-recovery/
With the recent serious in major industrialised economies and the difficulties in putting it behind in terms of constraints from macro economic policies, it is much clearer that Japan's lost decade of the 1990s should have been a serious area of economists to provide a good answer several years since it first occurred in the early 1990s.

But mainstream economists were not in Japan and Japan's problems and concerns were no their focuses.

Now many economists in the world should probably be awaken and attempt to find a good solution world wide but maybe first focused on the US and Europe with their own different economic issues.

For the US, one of the main questions is how to overcome monetary ineffectiveness and the difficulties in rationalising further increases of budget deficits politically.

For the EU, one of the main questions is how to resolve the common currency euro and more or less independent and sovereign fiscal policy and their implications for some weak economies within the euro zone.

In a sense, Japan's lost decades may be regarded as economists' lost decades in terms of missed opportunities.

The question the US is facing is akin to Koo's so called balance sheet recession.

It may be the case that the authorities need to manage the processes of both bubble formation and bursting, so irrespective what the bubbles are, they should not be let to burst in such a speed and process to affect the balance sheets so severely.

When a severe bursting did occur, the question is how to improve the balance sheets simultaneously without serious further distortion.