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The Best Hope Is Stagnation.(International Edition; WORLD AFFAIRS)

Newsweek International

| November 03, 2008 | Sharma, Ruchir | COPYRIGHT 2008 Newsweek, Inc. All rights reserved. Any reuse, distribution or alteration without express written permission of Newsweek is prohibited. For permission: www.newsweek.com. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Byline: Ruchir Sharma; Sharma is head of emerging markets at Morgan Stanley Investment Management.

Only weeks ago, Japan's prolonged slump was the worst-case scenario for America; now, it's the best.

The most commonly cited parallels for today's financial crisis are the debt crunches that hit America in the 1930s and Japan in the 1990s. Both comparisons are apt, but one is more so. Policymakers are under strong pressure to avoid either of these dire outcomes. But as psychologist Carl Jung put it: "You meet your destiny on the road you take to avoid it." Neither scenario exaggerates the scale of the challenge. There have been only two other instances in ...

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