The New York Times has an article about lessons from the Japan for the US about managing the economic crisis. After a real estable bubble in Japan collapsed in 1990 Japan had its "lost decade" of economic stagnation. Much money was spent on stimulating the economy but the economy only started to recover after the Koizumi government in 2003 forced the banks to account for all their losses.
Yet despite its accurate analysis the article draws the wrong lessons. It concludes that "more money fast" is the lesson from Japan. I think the lesson should be: make the banks (and the economy) honest again. Banking is based on trust. And that trust has been totally destroyed in the US both by the Enrons and the Madoffs, but also by those bankers who sold mortgage packages to their collegues that they knew would never be repaid. If a bank now writes off a huge sum it means that until now it lied about that sum. Worse, it suggests that this or other banks might have more hidden losses. It is this blanket of lies that has to be lifted. That may very well cost a few trillion to the US. But money is not the core of the problem.