Japan’s Nikkei stock index hits 26-year low

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Investors in U.S. stocks now have endured a Lost Decade, plus a couple of years, with the Dow Jones industrial average falling today to its lowest since 1997.

But we’re pikers compared with the Japanese: In early trading Tuesday, the Nikkei 225-share index slid to its lowest since October 1982.

The Nikkei dropped 2.6% to 7,088 in the first hour of trading, tumbling through 7,162, which was the 2008 closing low set Oct. 27.

Imagine going 26 1/2 years without a net gain in stock prices. America is facing up to a Lost Decade on Wall Street, but the Japanese now have suffered through a Lost Quarter-Century.

The Nikkei rocketed in the 1980s with Japan’s economic ascendancy. It peaked at 38,915 on Dec. 29, 1989. Then came the crash in Japan’s commercial real estate market, the virtual death of the country’s banking system and a massive government borrowing wave aimed at breathing life back into the economy. (Hey, sound familiar?)

Despite the government’s efforts, Japan’s economy has stagnated for the greater part of the last 20 years.

The Nikkei hasn’t been all downhill since 1989 -- just mostly downhill. The index has fallen in 11 of the last 19 years. Of the eight positive years, only four recorded gains in double digits.

At 7,088, the Nikkei is down 81.8% from its 1989 all-time high.

The Dow industrial average, at 6,763 on Monday, was down 52.2% from its record closing high of 14,164 reached in October 2007.

To match the Nikkei’s loss from its peak, the Dow would have to fall to 2,577.

That seems inconceivable. Then again, so much of what has happened in markets over the last year had been inconceivable, until after the fact.

-- Tom Petruno