Could Japan's economic malaise strike here in U.S.?

— -- If you wonder what haunts Federal Reserve Chairman Ben Bernanke's dreams, it's Japan.

Japan has suffered more than two decades of subpar economic growth, made all the more miserable by falling consumer prices, a stagnant real estate market and a moribund stock market. The worry: that the U.S. economy devolves into something like Japan's.

Some of the similarities between Japan's economic woes and the U.S.' are striking. Both countries have aging populations. Both have ultra-low interest rates, which don't seem to be having much effect in stimulating the economy. And both countries are struggling with high debt loads.

Could the U.S. be entering a multi-decade recession like Japan's? Probably not, experts say: Japan's main problem was reacting too slowly to its problems, and the U.S. has reacted fairly swiftly to the economic crisis. Nevertheless, some of the problems the U.S. faces now could take another two to five years to fix — and investors could learn a thing or two from the Japanese experience if hard times drag on.

The U.S. recession officially began in December 2007 and ended in June 2009, according to the National Bureau of Economic Research. To most people, though, it still feels like a recession. Unemployment stands at 9.1%, according to the Bureau of Labor Statistics, and gross domestic product grew at a tepid 1.3% in the second quarter and is estimated to have grown at an annual rate of 2.5% from the second quarter to the third.

Miserable as current conditions are, they pale in comparison with Japan's problems. "It's not the lost decade — it's the lost two decades," says Bill Kennedy, portfolio manager for Fidelity International Discovery fund. Japan's period of malaise began in 1990, and the country is still struggling today.

How bad is it? The Nikkei stock index is down 80% from its 1989 peak. Property prices fell more than 80%.

Could the U.S. see a period like Japan's? "It's an increasing possibility," says Ryan Brecht, senior economist at Action Economics. Some of the similarities are striking.

For example, Japan's woes started with an overheated real estate market and frenzied borrowing — two problems that will sound familiar to anyone in the U.S. Home prices in the U.S. have fallen more than 30% since 2006, according to Standard and Poor's. The Japanese real estate market has yet to fully recover from its 1980s excesses.

Both the U.S. and Japan have seen heavy losses in their stock markets. The Wilshire 5000, a broad measure of the U.S. stock market, is down 18% from its 2007 high. Both countries suffer from high debt: Consumer debt in the U.S., and corporate debt in Japan. And the aging populations in both countries mean fewer younger workers will have to support more retirees.

The Japanese made matters worse in three ways:

•Japanese banks were slow to write down bad debt. "They took 10 years to recognize the non-performing loans," Kennedy says. "They kicked the can down the road."

Japan's corporations gradually paid down their debt, but during that time, they weren't making investments, says Kenichi Amaki, portfolio manager for the Matthews funds. Because the companies weren't investing in factories and employment, economic growth remained anemic.