Second, both Japan and the US took time to recognize the collapse of the economic bubbles and to appreciate its substantive implications for the broader economy. In fact, Japan’s equity prices peaked at the end of 1989 and the nation-wide land price index in September 1991.
It was in July 1991 that the Bank of Japan started the easing cycle in its interest rate policy. Even at that time, though, many people cautioned that lower interest rates could lead to a resurgence of asset bubbles. In the US, residential investment growth turned negative in the first quarter of 2006 and the house prices peaked in May 2006.