No, it was monetary policy and the busting of speculative bubbles in their stock market. With their demographic crisis in the last decade they've been going about 1 percent on average and just this year hit 3 percent.

As far as borrowers, there's really only a problem for home owners looking to sell. They will likely be under water for a little bit. There's no reason new loans shouldn't be available because our banks are healthy and loans already come with a cost.

The biggest difference is in how value is grown. Instead of huge mutual funds that follow the market, you have to invest in something that's actually creating value. Which is, of course, more difficult. And yes many people will decide to pull out of the stock market because of that, which might create a liquidity trap. The thing is, we know how to get out of a liquidity trap if one does develop. You just give people money. And since this is a digital economy, you can make sure it gets spent by giving them money with an expiration date.

As for the under water home owners? There's no reason we couldn't institute a government buy out program.

We have the ability and the tools available. We lack only the will and the imagination.