Ponder these two data points for a second:

  • On Dec. 29, 1989, the Nikkei 225, Japan's benchmark stock index, hit an intraday trading high of 38,957.
  • Earlier today, it closed at 9,977.67, some 74% off those 20-year-old highs.

It seems crazy if you don't know the history. After all, Japan's not some faded boomtown; it's the second-largest economy on Earth, a perennial hotbed of innovation, with huge companies like Sony (NYSE:SNE), Toyota (NYSE:TM), and Canon (NYSE:CAJ) that are market leaders and household names all over the world.

So what happened? Long story short, a huge real estate bubble popped and a protracted banking crisis followed.

Ponder that for a second. Sound familiar?

So here's the obvious question: Is that what we have to look forward to here in the U.S.?

It's exactly the same, only different
Back in 2000, the International Monetary Fund released a paper that reviewed the Japanese banking crisis and tried to draw  lessons from its experience. The paper pointed to four causes of the crisis, which it said were "typical of banking crises" generally:

  • Excessive asset expansion during an economic boom period.
  • Liberalization (meaning deregulation) without appropriate adjustment to remaining regulations.
  • Weak corporate governance.
  • Regulatory forbearance when the system came under stress.

So let's review. Excessive asset expansion? Yeah, I'd say our real estate boom qualifies. Liberalization? Yup -- we had the repeal of Glass-Steagall and other regulatory constraints on banking. Weak corporate governance? I don't remember the directors of any of the major banks calling for reductions in subprime exposure before it was too late. And regulatory forbearance? I think the phrase "too big to fail" says everything we need to know there.

Yep, we definitely had -- and arguably still have -- a banking crisis. We didn't need the IMF to tell us that. But that in and of itself doesn't mean that we'll be sitting around 20 years from now wondering if the S&P 500 will ever get back over 450. The Japanese government's response to the crisis was very different from that of the United States. In a nutshell, it was several years before its government did much of anything, and what it finally did do was arguably too little, too late.

But at the same time, it's hard to argue with this: In the past decade, the S&P 500 index is down more than 20%. It's a disturbing parallel to ponder, especially for those of us worried about our retirement portfolios.

Experts agree, it's different. Sort of.
The Fool's retirement guru, Robert Brokamp, recently asked a bunch of his favorite experts whether they thought the U.S. stock market could end up going the way of Japan's. And the consensus answer was … well, there wasn't one, really. As with any economic question, there are a lot of different ways to look at it.

The answers Robert received are presented in an article in the new issue of the Fool's Rule Your Retirement newsletter, available online at 4 p.m. EST today. I'll point you there for the full story -- it's worth reading carefully -- but meanwhile, here are some key points to ponder:

  • The U.S. government -- believe it or not -- has been harder on its banks: Several of Japan's banks were essentially bankrupt, but were allowed to zombie-shamble along for years without recognizing their losses, and even survivors like Nomura (NYSE:NMR) struggled under an enormous burden. U.S. banks like Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) may still have a long way to go, but they've already written off a significant portion of their losses -- as much as 60%, according to a recent IMF estimate -- which bodes well for an eventual recovery.
  • Japan's bubble was bigger: The Japanese market's P/E ratio in 1989 was close to 100, whereas the U.S.'s topped out around 40 at the height of the dot-com boom, according to one expert cited in Robert's article. Japan's real estate crash was also significantly worse, with some prime properties in Tokyo losing 99% of their boom-peak value.
  • The Fed has the advantage of learning from history. Many of the actions we've seen -- including the big bank bailouts and promises of continued low interest rates -- were informed by the Japanese experience. That doesn't mean we'll have a smooth ride, but it does mean that the drivers are at least aware of the biggest potholes.

Still, it's an ambiguous, worrisome parallel, worth taking some time to ponder, and I encourage you to check out Robert's article for the full scoop. If you're not a Rule Your Retirement member, just grab a free trial and full access is yours for 30 days, with no obligation.

Fool contributor John Rosevear has no position in the companies mentioned. You can try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.