The bursting of that bubble induced a financial crisis and an economic plunge following the failure of Lehman Brothers. Households have had to continue reducing borrowing to repair their balance sheets, which weakened due to a decline in home prices. Financial institutions have also been pressed to dispose of a large amount of impaired assets and become cautious about new lending.
As Japan had experienced since the 1990s, once the economy is burdened by balance sheet adjustments, it is likely that economic activity will continue to be in a situation in which it is unlikely to turn upward and remains vulnerable to downward pressure.