Japan’s "Lost Decade," 1990-2000

The collapse of the Japanese asset bubble in 1991 led to a prolonged period of low growth, which has since been extended to incorporate the decade since the year 2000. The original lost decade was caused by an unsustainable level of speculation, large amounts of credit and low interest rates (sound familiar?). When the government stepped in to control this, credit became much harder to obtain, and capital investment dropped significantly. It led to a virtual halt in economic expansion during the 1990s, hence the lost decade. 

Japan was fortunate in avoiding a depression, but the effects of 1991 are still being felt, even today. It is a situation that some commentators feel could be repeated in Western economies in the near future if care is not taken.