I bet the Japanese thought lowering rates to near zero would help avoid a stock and housing meltdown. Didn't quite work out like that

The Japan crash was child's play compared to this epic Ponzi Scheme. And for those out there calling "soft landing" (if there's any of those idiots still left), thinking Ben's panicked 1/2 point cut will help end the crisis, or thinking that we'll "bottom out" in just a few months, got some advice for ya.. Look to Japan. And pass the ramen noodles please.

I thought you'd all like to freshen up on other classic bubbles. Here's Japan

Japanese asset price bubble

Inflation-adjusted house prices in Japan (1980–2005) compared to house price appreciation the United States, Britain, and Australia (1995–2005).

The Japanese asset price bubble was a time of skyrocketing land and stock prices in the Japanese economy, lasting from 1986 to 1990. It is one of the most famous economic bubbles in the history of modern capitalism.

In the decades following World War II, Japan implemented stringent tariffs and policies to encourage the people to save their income. With more money in banks, loans and credit became more easy to obtain, and with Japan running large trade surpluses, the yen was able to appreciate against foreign currencies. This allowed Japanese companies to invest in capital resources much more easily than their competitors, which made goods cheaper, which widened the trade surplus further. And, with the yen appreciating, financial assets became very lucrative.

Unfortunately, with so much money readily available for investment, speculation was inevitable, particularly in the Tokyo Stock Exchange and the real estate market. The rates for housing, stocks, and bonds rose so much that at one point the government issued 100-year bonds. Additionally, banks granted increasingly risky loans.

By 2004, prime "A" property in Tokyo's financial districts were less than 1/100th of their peak, and Tokyo's residential homes were 1/10th of their peak, but still managed to be listed as the most expensive real estate in the world. Some US$20 trillion (1999 dollars) was wiped out with the combined collapse of the real estate market and the Tokyo stock market.

With Japan's economy driven by its high rates of reinvestment, this crash hit particularly hard. Investments were made increasingly out of the country, and Japanese manufacturing firms lost much of their technological edge. As Japanese products became less competitive overseas, the low consumption rate began to bear on the economy, causing a deflationary spiral.

The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid. Correcting the credit problem became even more difficult as the government began to subsidize failing banks and businesses, creating many "zombie businesses".

The time after the bubble's collapse, which occurred gradually rather than catastrophically, is known as the "lost decade" in Japan.