Since US is consumer driven economy, how will we recover if consumers just don’t spend. Other countries seem to have very conservative consumer base so who will take in the exports even if we start producing?

US and Europe were the biggest consumers for Japan’s eventual recovery through exports.

It’s obvious there are still people with money and they are waiting for the assets to be correctly priced. The U.S., like Japan is fighting that fact.

The major advantage the U.S. has relative to Japan is the significantly open and free markets. If that changes to protectionism and over regulation (aka National Industrial Policy), as indicated by the Detroit bailout, watch out below.

Japan doesn’t care what happens to the rest of the world as long as it doesn’t interfere with their planned economy. They have given up on being a major force on the world stage and are trying to exploit certain advantages they have engineered in their social structure. They are an island nation that does not have much interest in trade. The Japanese are quitessential isolationists, with no long term hopes for the prosperity enjoyed by the U.S. and pursued by China and India. Demographics are working against them and their export only policy cannot make up for it.