The days really are dwindling down to a very precious few. Tomorrow is Near Year’s Eve. And on Friday begins a new year…

What’s ahead?

We were right all along. Sort of. Kind of. It must have been two years ago that we looked into the future and thought we saw where we were headed.

“Japan…then Zimbabwe…”

The de-leveraging process began in 2007. It’s already been going on for more than two years. This is just what happened in Japan after the bubble burst in ’89. And as in Japan, US authorities acted with vigor, with rapidity and like morons. They propped up inefficient firms. They saved the bankers from their just desserts. They prodded and bribed consumers to return to their free spending ways.

And what result did they get? They managed to stretch out and delay the depression. Instead of a quick, sharp depression…they got a slow, retarded one.

Several years ago, we opined that the US would probably not have the sort of long, drawn-out slump Japan has had. Japan had high domestic savings, we pointed out; so the government could afford to waste trillions of dollars fighting the downturn. It simply borrowed its citizens’ money and used it to imitate prosperity. People were given jobs on public works projects. GDP held up. Unemployment stayed low.

But America depends on the kindness of strangers just to pay its ordinary operating expenses. It wouldn’t be able to stay on the Japanese road for very long, said we; it couldn’t afford it.

We may have been wrong about that. The US has been following the Japanese now for 2 years. The bond market hasn’t fallen apart. The dollar hasn’t lost its value. The crisis stage seems to have passed…leaving an on-again, off-again funk, just as in Japan.

But wait. The latest numbers we saw showed the need to rollover $2.5 trillion worth of US government debt over the next two years. Add as much as $2 trillion more to cover current deficits. How could so much debt be funded?

Well, in a slump the best thing you can do with your money is not lose it. And the savings rate goes up. What do people do with their savings? They put them in safe Treasury debt. Imagine that the US savings rate goes back up to 10% of GDP…which it very well could, as the depression makes people more and more worried about the future. That’s $1.3 trillion per year in available savings. And imagine that holders of US debt want to rollover their positions rather than cash them out. And imagine that foreigners, too, are looking for safe places to put their money….

…could the staggering debts of the US government over the next 5 years be funded? Yes…they could. Could the Japan phase last longer than we thought at first? Yes it could. It could last years…maybe even 10 years. Depression is a long, slow process under the best of circumstances.

As we keep saying, anyone can make a mistake. A colossal blunder, on the other hand, typically requires taxpayer support. It takes taxpayer support, for example, to turn an ordinary, run-of-the-mill depression into a Great Depression. Stall, subsidize, bail out, mislead…hoodwink – use enough tricks, and enough taxpayer money, and you can stretch it out for 20 years or more. In the US, stock prices didn’t return to ’29 levels until 1956. Interest rates didn’t return to ’20s levels until 1959 – 30 years later.

Japan’s been at it for 20 years already. It already borrowed so much money its government debt rose to nearly 200% of GDP. US government debt is still below 100%…though it is rising quickly.

Of course, we don’t have any doubt about where this leads – to bankruptcy. In Japan, the government attempted to save the private sector from bankruptcy by effectively transferring private sector debt to the public sector. The final result will be bankruptcy for both of them.

But that could be years in the future. In the meantime, our goal for 2010 is a modest one. We hope to avoid losing money…and enjoy the show.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.