Academics often say controversial things just to be noticed. This was no ordinary president of Harvard, either, but Larry Summers, who until the middle of January was treasury secretary of the United States and rated as one of the most brilliant economists of his generation. Mr Summers has thought a lot about Japan, regularly lecturing hapless Japanese officials at international gatherings about their failure to take the measures necessary to restore health to Asia's first and most successful tiger economy. Speculative bubbles On the face of it, this seems laughable. The US economy is still growing, albeit at a slower pace, after its longest period of expansion since records began in the 1850s.
Unemployment is historically low and American companies are world leaders in the new technologies.
The same could have been said of Japan at the end of the 1980s, when the country was enjoying full employment, had been growing strongly since the end of the second world war and boasted many of the world's biggest companies. For Sony, Toyota and Nissan then, read Microsoft, Intel and Cisco now. Both saw the emergence of speculative bubbles at a time when inflationary pressure was weak. This was unusual in the post-war period, when developed countries became accustomed to relatively high inflation, but a regular feature of economic life in the 19th century when there were clearly defined business cycles driven by the interplay of technical advance, profitability and speculation. Mr Summers has suggested that the US, like Japan, could be returning to an older type of economic cycle.