Justin Lahart comments for the Wall Street Journal:

When Japan was mired in economic crisis, the U.S. urged it to take decisive action to deal with its ailing banks. Japan didn’t follow the advice and the crisis dragged on for years. Now, it is the U.S. that is mired in crisis and facing the prospect of swallowing the bitter medicine it once proffered.

Japan’s stock-market bubble began rapidly deflating in 1990 and its property bubble followed suit shortly afterward. Many borrowers were unable to make payments on their debt and bad loans piled up on bank balance sheets. A long period of lackluster economic growth made a tough situation worse. With the financial system saddled with bad debts, Japan desperately needed its banks to acknowledge the severity of their problems and for some banks to shut their doors. But the banks, unwilling to take steps that might render them insolvent, refused to acknowledge their problems, extending the crisis.

“One of the lessons we took from Japan was the hesitation and refusal to own up to the problem was a disaster,” says University of Chicago Graduate School of Business economist Anil Kashyap.

U.S. financial firms, too, have struggled with owning up to the extent of their credit losses, partly because those losses are a moving target. A year ago, Bear Stearns Cos. was reluctant to sell mortgage-related credit at a loss. That decision came back to haunt the firm as declining home prices continued to pummel mortgages, and Bear ended up in a government-backed fire sale to J.P. Morgan Chase & Co. Meanwhile, Merrill Lynch & Co. Chief Executive John Thain said in a January interview that the firm’s troubles were “for the most part behind us” — but in July the firm agreed to sell more than $30 billion in mortgage-related assets at a large loss.

Still, U.S. financial firms have been much quicker to acknowledge losses than their Japanese counterparts were.

But not fast enough; if the U.S., Lahart argues, truly wants to deal with this problem it should own up to its problems ASAP.

Why link to it? Because I completely agree.