Is Europe the new Japan?

Remember Japan’s lost decade in the 1990s? Possibly not, but essentially what happened was that a combination of low interest rates, rapidly rising land/real estate values, borrowing and speculation ended when Japan’s Ministry of Finance suddenly raised interest rates. This created a debt crisis followed by a banking crisis, with a number of banks being bailed out by the Japanese government.

The result was a collapse assets prices and a ten year recession with almost no economic growth. Sound familiar?

A critical difference though is unemployment, which in Japan at the time was high, but was nowhere near the levels now being seen in Europe, especially among young people. For example, the jobless rate for youth in Spain is currently 46%, in Greece it’s 43%, in Ireland it’s 32% and in Italy 27%. Trouble on the streets of Europe anyone?

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