[I]t seems that Japan's banking crisis isn't nearly as analogous to America's as you might expect. As John Hempton has explained, Japanese banks had tons of savings, few loans, and slim margins -- just the opposite of the big banks here. And they didn't impair recovery by failing to lend, but by continuing to provide credit, for political reasons, to large industrial firms that were in terrible shape. This was the zombie relationship. Japanese savers poured money into the banks, the banks rolled over old debt to busted property companies and industrial firms, and so necessary shifts in the economy never took place.

As James Surowiecki notes, political involvement in the banking system in America has not led to a similar outcome -- the banks aren't being told to keep sinking firms afloat. The results have been plain for all to see; old industrial enterprises have been hammered, as have firms tied up in the housing boom. The destruction in "creative destruction" is taking place, leaving plenty of room for creation later.