It took the Japanese two decades to recover from their 80's-90's bubble. This Times article discusses the similarities and differences between their crisis and ours. (Our current crisis is also affecting them -- the Nikkei is down 11 percent as I type this.)
I first posted the graph above in 2005.
NYTimes: ...The similarities with Japan are striking. Like the United States today, Japan in the early 1990s faced a banking and real estate crisis that undermined the entire economy and required large government intervention. Some of Japan’s most venerated financial institutions collapsed as snowballing losses from failed business and property loans plunged the nation’s financial system into paralysis.
But the differences are also pointed and revealing. The United States reacted far more quickly than Japan, committing taxpayer funds just over a year after the subprime mortgage problems surfaced in summer of 2007. Japan took nearly eight years to pass a sweeping bailout, a delay that contributed to a long economic slump that Japanese call their “lost decade.”
“Japanese government and financial institutions realized there was a problem, but they tried to cover it up,” said Junichi Ujiie, chairman of Nomura Holdings, Japan’s largest investment bank. “The United States has done in months what Japan took years to do.”
...Most of the government officials, business leaders and economists interviewed praised America’s plan to spend $700 billion buying troubled mortgage-related assets from banks. But they also said they expected that Washington would soon have to put together another huge bailout package, this time to recapitalize American banks, especially with the International Monetary Fund now estimating total bank losses from the subprime mortgage crisis to reach $1.4 trillion.
On the other hand, another lesson from Japan is that the American bailout may end up costing taxpayers far less than $700 billion or whatever the final figure may be. Japanese regulators were eventually able to recover all but $100 billion of the $450 billion spent by selling off the troubled loans and bank stocks later, after the economy had rebounded.