If HG has read anything about the Japanese bust (or understands anything about Japanese mindset), he would understand that it's unlikely we'll have the same sort of bust. Just quoting one-liners about how Japan has been in recession for 15 years (true) doesn't mean it'll happen in Australia or the US. Japan's bust is evidence of what can happen if you use a certain type of economic policy in response to an asset bubble. It does NOT mean Australia or the US will use the same economic policy. In fact history has shown that they use different policies.
Not just because Japan was a much bigger boom both relative to everyone else and in absolute terms (in the late 80s, when in fact Japan was already peaking, you had those wild ideas like the Nomura president saying the US should cede California to Japan and a bit of land under the palace in Tokyo was as valuable as New York or something), but because of the Japanese govt's response.
The Japanese govt simply didn't let businesses and banks fail even though they were insolvent. They just kept ramping up govt debt and lent it to banks to prop up failing businesses (Japan's govt debt is one of the highest in the developed world relative to their GDP). They also stimulated the economy with useless (but politically valuable, given Japan's concentration of political power in the countryside, the traditional support base of the ruling Liberal Democratic Party) pork barrel projects in the form of infrastructure that didn't do anything (beautiful bridges and roads in the countryside, hardly used).
The Western approach is different. Low interest rates is just the start. America and Australia are willing to let businesses fail, take some short term pain in terms of high unemployment and bankruptcies and social turmoil, weed out the excesses from the boom and reallocate resources to productive (new) businesses.
Japan didn't do that, so ended up with a decade of recessions with probably the lowest unemployment ever seen. Companies didn't lay people off: they just gave them less and less work. Many become 'window' positions (literally, they sat by the window and looked out all day).
But because everyone knew businesses were insolvent and were only alive from govt support, consumers cut their spending drastically waiting for the other shoe to drop. There was practically no creation of new businesses: all the old plodding companies (called zombie companies) just sat there with lots of useless staff. Japan does not have the entrepreneur culture that the US has.
What they should have done was allow businesses to go bust, lay off staff, write off bank loans with govt bailouts, and then the banks would be free to lend to new businesses and there would be plenty of cheap (unemployed) labour to go into those new businesses. There were political and cultural reasons why the Japanese did what they did (just as why they restrict, for example, practically all rice imports into the country even though doing so would lower prices to consumers), but it didn't work. The economy just sat in a holding pattern for 10 years while other countries took advantage of the low rates to do carry trades.
On the other hand, looking at the S&L crisis in the US or Australia in the early 90s, the govts LET businesses fail, used govt money to bail out some banks, but then let the 'creative destruction' process that is central to modern capitalism proceed. Doing that means a deeper recession in the short term, but the economy then emerges with a hungry and unemployed labour pool and banks with the capacity to lend. Combine that with an entrepreneurial culture, and you have the makings of a new boom (ask why the internet boom happened in Silicon Valley as opposed to Japan or Korea, or why many of the financial innovations such as mortgage backed bonds were made in the US even though in the late 80s the Japanese were supposed to be the masters of zaitech, or money manipulation).
The interesting question is whether China will allow creative destruction in light of it's political situation. But really, China is still just the world's factory. Rising costs is already driving low cost production to Vietnam, etc. If China tanks, it's not as bad as the US tanking. Our resource prices are going to take a hit, though.
Given the success of the response to the S&L crisis and (arguably) the 2001 recession, why the heck would Bernanke suddenly change course and say 'heck, let's try what the Japanese did in 1990'? Because it worked so well? Bernanke is a smart man. At the very least he's not going to try something that obviously failed.
Alex