NPR’s Plan­et Mon­ey pod­cast has done an excel­lent job of track­ing the ongo­ing glob­al finan­cial cri­sis. In its lat­est install­ment (Stream — iTunes — Rss Feed), they get down to an impor­tant ques­tion: Does his­to­ry offer solu­tions to the cur­rent cri­sis? And if so, does it make sense to look back at the Depres­sion of the 1930s? Or does 1990s Japan offer a bet­ter exam­ple?

One of Plan­et Mon­ey’s guests, econ­o­mist Adam Posen, argues that we should keep our eyes on Japan. Dur­ing the 1980s, Japan­ese banks and investors exploit­ed loose mort­gage lend­ing and gen­er­at­ed a sub­stan­tial real estate bub­ble, which popped in the ear­ly 90s once Japan’s gov­ern­ment start­ed tight­en­ing cred­it. From there, all oth­er assets and mar­kets fell apart, and a long reces­sion began. Sound famil­iar?

For Posen, the actions of the Japan­ese gov­ern­ment help illus­trate which anti-reces­sion poli­cies worked, and which did­n’t. The upshot is that Japan’s cri­sis could have been lim­it­ed to three years. But it went on for a decade instead. And that’s because Japan nev­er passed a major stim­u­lus pack­age until the very end, and because the gov­ern­ment nev­er forced the banks to change their prac­tices. This all sug­gests that Amer­i­can pol­i­cy can make a dif­fer­ence. The Oba­ma admin­is­tra­tion has a big stim­u­lus pack­age com­ing. But will it get the banks under con­trol? I’m less than san­guine about that, and it could make the dif­fer­ence between a short, sharp reces­sion and anoth­er lost decade.

PS The con­ver­sa­tion men­tioned above starts about 3 and 1/2 min­utes into the pod­cast.