Japan is finally pulling out of its 15-year slump. We don't have any comment about it except to notice that these cycles are long. Japan - still the world's second largest economy - was on top of the heap in 1989. That was the year its stock market reached its peak of 38,915. In that year, too, the grounds of the Imperial Palace in Tokyo were said to be worth more than the entire state of California.

But madness is not permanent. It is cyclical. Japan gradually came to its senses...while on the other side of the broad Pacific people began to get a little giddy. Japanese stocks crashed, eventually going down to 7,831 in April 2003, a drop of 80% from its high ...real estate collapsed...and the economy entered a long, dark period of off-and-on recession and falling prices. Meanwhile, America's stock market boomed...with prices shooting up 11 times from the bottom in '82 to the top in 2000. Then came the Tech Bust...knocking the NASDAQ down.

Readers will recall that we have spent a lot of time discussing how the U.S. bust should follow the pattern of the Japanese. The NASDAQ did follow the Nikkei, as it turned out, but not the Dow. Nor has the U.S. economy followed the Japanese - yet - into slump and deflation. That is still ahead, we imagine.

America has been able to extend its boom into a kind of Indian summer - by greatly increasing the debt of its householders, its government, and its businesses. But, come the slump, Americans...unlike the Japanese...will have no reserves to fall back on. They will fall back - everyone must, sooner or later - but instead of hitting a nice, soft cushion of cash, the poor lumpenAmericanoes will hit the hard pavement.

The Japanese were able to sit through their 15-year slump in relative comfort. They had savings to spend...and with falling prices...could live fairly well. Their major industries - Toyota, for example - were still making things at a profit...and selling them throughout the world. The Japanese even had the biggest trade surplus in the world...and the biggest stock of U.S. Treasuries. Nor did they have foreign wars to fund.

What will happen when the United States hits its 15-year slump? There is no surplus - neither in the federal government accounts...nor the trade deficit...nor the current account...nor the private accounts of ordinary citizens. Will Americans not feel a bit overwhelmed...a bit forsaken...a bit betrayed? Will they take it in good grace...and get on with their lives? Or will they put on brown shirts...and turn to politics?

But we are getting ahead of ourselves...aren't we? For the moment, oil is barely over $60. Gold is trading at $576. Stocks are near an all-time high. The sun is out. You can still get a mortgage for less than 7%. What are we worried about?

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