Pass notes No 3,049: The lost decade

A decade of economic stagnation blighted Japan in the 90s. Could it now be about to hit the western economies?
Trader makes a phone call as share prices take a plunge in Tokyo
A trader makes a phone call as share prices take a plunge in Tokyo. Photograph: Yoshikazu Tsuno/AFP

Age: 10. Because it's a decade.

Appearance: Growth-free. In a bad way.

A growth-free decade? That's it in a nutshell.

When was this? In Japan, from 1991 to 2000, after a debt crisis became a banking crisis became 10 years of economic stagnation. Which should ring a bell, since for the rest of us it could be just around the corner.

Says who? The IMF, for one.

The what? That's the International Monetary Fund. It's their job to keep global exchange rates stable, lend money to poor countries and generally bother and berate world leaders about the state of their economies. Which, at present, they're doing by warning us that we could be about to lose a decade.

How exactly? In the US, by not dealing with the $14.3tn public debt and in the eurozone by not putting together a large enough bailout package.

And here? If the other two mess up their jobs there's really not much we can do to avoid it. But the IMF did warn the chancellor that he should delay his spending cuts if we don't meet current growth forecasts.

Is it just the IMF who are saying this? Not at all, they're just the latest to jump on the bandwagon. Obama himself warned that America risked a lost decade back in February 2009.

So what happens if we do lose a decade? Is it like when the clocks go forward? Yes, it's exactly like that. Very astute.

Really? No.

So we won't just magically lose the time? No, we'll have to live through 10 years of high unemployment and financial hardship.

Is it the end of the world? Not quite, it's just the decade the world stood still. Provided people downgrade their expectations a bit it needn't be too bad at all. We'll just have to rediscover the simple pleasures, like playing charades and kiss-chase, and chewing bits of stick.

Do say: "It's only 10 years."

Don't say: "Think – where was the last place you saw it?"

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