Your reference to a lost decade is an apt one. Because that is exactly what will happen. It could turn out to be lost DECADES...much like Japan thanks to the bumbling Keynesian's running our government.
We would be hard pressed to follow the Japanese model MORE closely. What we are doing is almost exactly the same. From wiki:
"
The strong economic growth of the 1980s ended abruptly at the start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a massive wave of speculation by Japanese companies, banks and securities companies. The combination of exceptionally high land values and low interest rates briefly resulted in heightened liquidity in the market. It led to massive borrowing and heavy investment mostly in domestic and foreign stocks and securities.
Recognizing that this bubble was unsustainable, the
Finance Ministry sharply raised interest rates in late 1989. This policy caused the bursting of the bubble, and the stock market crashed. The debt crisis also followed, and the government had to bail out banks, which were now loaded with bad debts.
Michael Schuman of
Time magazine noted that banks kept injecting new funds into unprofitable "
zombie firms" to keep them afloat, arguing that they were
too big to fail. However, most of these companies were too debt-ridden to do much more than survive on bail-out funds, and an economist described Japan as a "loser's paradise." Schuman stated that Japan's economy did not begin to recover until this practice had ended.
[3]
Eventually, many became unsustainable, and a wave of consolidation took place, resulting in only four national banks in Japan. Many Japanese firms were burdened with heavy debts, and it became very difficult to obtain credits. Even in 2012, the official interest rate is at 0.1%
[4] and had been very low for several years. Many borrowers turned to
sarakin (loan sharks) for loans.
The 1990s therefore was the "lost decade" when the economy contracted or grew at a paltry rate. The impact on everyday life was muted, however. Unemployment rates were high, but not at a crisis level. With the traditional Japanese emphasis on frugality and saving, an impact on an average Japanese family was quite limited, whose standard of living did not deteriorate significantly from what it was in the 1980s.[
citation needed]
Despite the economic recovery in the 2000s,
conspicuous consumption of the 1980s such as lavish spending on whiskey and cars did not return for the most part.
[5] Difficult times in the 1990s made people frown on ostentatious display of wealth, while Japanese firms such as
Toyota and
Sony which had dominated the industry in the 1980s had to fend off strong competition from rival firms based in
South Korea,
Taiwan, and other countries. Many Japanese companies replaced a large part of their workforce with temporary workers, who had little job security and fewer benefits. As of 2009, these non-traditional employees made up more than a third of the labor force.
[6] As of August 2012, the nation's economy has still not been able to recover from the early 1990s crash.
[2]"
http://en.wikipedia.org/wiki/Lost_Decade_(Japan)
In trading short term pain for long term stagnation they have harmed their economy in ways that it has still not recovered from. What economies need is for the natural pain to run its course - something all recessions in the US have done in the past in about two years. We could have been done with this years ago.