Sinking FeelingIs the once-unstoppable U.S. economy following Japan's into the depths?

The similarities are eerie. In 1990, the United States enviedJapan. After decades of rapid economic expansion, the Nikkeiaverage of Japanese stocks reached a new high of 38,915 on NewYear's Eve 1989. Japanese real estate had appreciated so muchduring the 1980s that, at one point, the city of Tokyo was said tobe worth more than the state of California. Japanese companies werethrashing U.S. rivals in semiconductors, automobiles, consumerelectronics and other industries, while cash-rich Japaneseinvestors purchased American icons like Rockefeller Center and thePebble Beach golf course. Japanese business was held up as a modelto the world, and readers snapped up tomes on Japanese managementpractices.

The year 1990 marked the end of Japan's ascendancy. Over thenext two years, the Nikkei plummeted 60 percent. Real estate valueswere cut in half by 1996. The long-booming economy entered equallypersistent recession and stagnation. A decade later, Japan'ssituation has changed little, with few prospects for the country orits style of business returning to dominance soon, if ever.