Academic journal article ABA Banking Journal

Forget Japan, What Are We Doing?

Academic journal article ABA Banking Journal

Forget Japan, What Are We Doing?

Article excerpt

Ever since the economic recovery lost steam a few months ago, there has been much discussion about whether the U.S. is repeating the Japanese experience. After that Asian country's stock and real estate bubbles burst, it has not been able to regain its economic mojo--struggling with deflation and slow growth for 20 years.

You can learn from others' experiences, but comparisons often do more harm than good.

Comparing two struggling economies is no different from comparing two struggling banks. The differences outweigh the similarities, which is why bankers don't like it when examiners compare their institution with another bank they've just visited.

Performance data are frequently compared, of course, but what produces the numbers differs with each bank--management skill, board involvement, employee experience, customer base, and so on.

When looking at a specific situation--how to move bad real estate loans off your books, for example-it can help to hear how others have handled it. But broad comparisons between companies or countries, just like comparisons between people, rarely produce anything positive. The comparisons with Japan actually run the risk of inducing a self-fulfilling mind-set.

This country's economic fate is in our own hands--leaders and citizens, alike. And, yes, we've got our hands full. Instead of looking over our shoulders at Japan, however, a better approach would be to take a sober look at what brought us to where we are, what needs to change, and how

we bring that about. …

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