The Japanese response to the asset bubble of the 1990s is an oft-cited comparison in trying to understand how the United States should react to its current financial crisis. Although the Japanese policy response is frequently referenced, many people fail to grasp the intricacies of its successes and failures. At "Lessons from the Japanese Bubble for the U.S.," sponsored by the Program on Alternative Investments of the Center on Japanese Economy and Business, Columbia Business School, three leading experts on the Japanese crisis brought their different perspectives to the audience at Columbia Business School on November 19, 2008. With a local, an outsider and a market view, the panelists helped the attendees grasp the core concepts of the policy response and what can be done by the United States to learn from both the successes and the failures in dealing with what may be the financial-market downturn most similar to our current state.

Takeo Hoshi, Pacific Economic Cooperation Professor in international economic relations at the School of International Relations and Pacific Studies at University of California, San Diego, and coeditor* of the book Crisis and Change in the Japanese Banking System (Springer, 2000), discussed the similarities between the crises and his thoughts on the lessons we can learn from Japan. To start his presentation, Professor Hoshi showed a series of captivating graphs that implied that the United States may be only about one-third of the way through its real estate devaluation. Next, attention was turned to dispelling the myth that Japan did nothing to respond to the bubble and ensuing market crisis. Actually, the Japanese policy response was similar to the initial U.S. reaction in so far as the government both bought assets and injected capital into the ailing system. However, the key difference is that while it took Japanese policymakers five years to react, the United States assembled the same response in just five days.