The major difference between the Japan experience and ours is that they had a ocean of domestic savings for the state to borrow and spend. We have none which I would say makes for a different outcome.

We're going to have to print the money the state will spend to try and refloat the system and that will destroy confidence in the US Dollar. The markets already know this as anyone who has followed the collapse in Sterling over the last few months can see. There is no way you can take a democracy with an economy as indebted as the US or the UK thorough a deflation, it is just unthinkable for the politicians. They know they'll be handed their heads if they try it...