(Updates with Summers quote in second paragraph.)
Nov. 14 (Bloomberg) -- Former Treasury Secretary Lawrence Summers said the U.S. economy is too strong to enter a long period of high unemployment and slow growth like Japan’s “lost decade” that began in the 1990s.
“I would buy, not sell” the U.S. economy, Summers said during a debate presentation in Toronto tonight. “In Japan, house prices fell to a level not two-thirds of previous levels, but a level 15 percent of previous levels.”
Summers was debating Nobel Laureate Paul Krugman on whether North America faces Japan’s so-called lost decade, during which the Asian economy slipped in and out of recession after the collapse of a real-estate bubble. International Monetary Fund Managing Director Christine Lagarde warned on Nov. 9 of the risk of such a global slowdown unless nations act together to counter threats to growth.
“The stock market may get there, but to get where it got in Japan, you’d have to be talking about Dow 2,600. And I don’t think that is in prospect,” Summers said. The Dow Jones Industrial Average declined 0.6 percent today to 12,078.98.
Summers was Treasury secretary under President Bill Clinton and director of the National Economic Council under President Barack Obama until last year.
Krugman, a New York Times columnist, said “things in the United States have already gone much, much worse than they ever did in Japan.”
“Japan never had the kind of drastic slump in employment that has afflicted the United States,” Krugman said.
The discussions were part of the Munk Debates exploring global and Canadian issues.
--Editors: Ken McCallum, Gearoid Reidy
To contact the reporter on this story: Ian Katz in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ken McCallum at email@example.com