Last October Normura Research Institute Chief Economist Richard Koo spoke to the Centre for Strategic and International Studies about Japan's Great Recession as it related to the policy choices currently facing the US.
During this speech he samurai-ed into sushi cubes the notion of quatitative easing as a valid policy and turned on its head what has become conventional wisdom about the fiscal policies of Japan ("bridges to nowhere"). And, for an ex-central banker, was remakably supportive of those fiscal stimuli (memo to Trichet - check out the speech here). The largest peg he hangs his hat upon is that during crisis firms are no longer profit maximisers: rather, they become debt minimizers.
With the announcement of the Geithner Toxic Asset Plan his entire presentation is well worth considering afresh. The Secreatary to the Treasury certainly appears to have done so - and in much the same way John Sturges did with Akira Kurosawa.
A couple of key slides from his talk:
Slide 1: Diagnosing the problem
Slide 2: Policy options
His superb presentation is here and I tip my hat to Tim Price's discussion of Mr Koo in his March 13 article Japanese Lessons.