Krugman Versus Krugman

In his latest op-ed, Krugman writes:

It’s not at all clear that credit from the Fed, Fannie and Freddie can fully substitute for a healthy banking system. If it can’t, the muddle-through strategy will turn out to be a recipe for a prolonged, Japanese-style era of high unemployment and weak growth.

But Krugman has argued on several occasions that Japan’s recovery had little to nothing to do with banking reform! Not long ago, he wrote:

I have a problem. You see, it’s hard, looking at the data, to see much role for bank reform in Japan’s recovery, such as it was.

A first read would be that recovery came from an export boom, which in turn fed a modest increase in consumption — full stop. What did banks have to do with it?

He followed that up with this:

But it’s true that I’m a bit puzzled by the attribution of Japan’s recovery to bank reform. If the bank-reform story were central, you’d expect to see some “signature” in the data — in particular, I’d expect to see an investment-led boom as firms found themselves able to borrow again. That’s not at all what one actually sees.

Kobayashi’s argument, as I understand it, was that in the 90s Japanese firms weren’t able to take advantage of export opportunities because of lack of access to credit. That’s a fairly exotic argument, and I’d like to see some supporting evidence.

If America can’t find new growth opportunities to replace housing and finance, then it may well muddle through the next few years, just as Japan muddled until export growth took off. But to paraphrase Krugman, what do banks have to do with it? I wish he’d reconcile these conflicting views.