BIS central bankers’ speeches  1  declines in home prices. ... Many have learned the wrong lesson from the Japanese experience.
The problem in Japan was not so much the bursting of the bubble but rather the policies that followed.” What I see behind this comment is a gross underestimation of the extent of the balance sheet repair – or deleveraging – required after a bubble bursts, as well as an overconfidence in the effectiveness of aggressive policy measures.2 However, comparing Japan’s experiences in the early 1990s after the bubble burst to what happened in the United States, the euro area, and the United Kingdom in the past few years, it is my impression that the similarities far outweigh the differences.