In Japan in the last century, an unprecedented economic storm swept through this narrow island nation.
The boom in the real estate market is like a carnival bubble, and as the bubble bursts, the people's jubilation stops abruptly.
The collapse of housing prices is like a sharp sword, cutting the happiness and hope of countless families.
Families are shattered, dreams are shattered, economies are stagnating, and those who once longed to roll over in a bubble have fallen into the abyss of irreparable disaster.
This tragedy has brought profound reflection and lessons to Japanese society.
However, in this darkness, the Japanese people have realized a truth, which is like a dawn that guides them out of the predicament and is still used today.
Reconstruction after World War II
On September 2, 1945, Japan signed the "Unconditional Surrender" aboard the battleship USS Missouri, announcing surrender to all anti-fascist allies.
Since then, Japan has embarked on a journey of reconstruction after World War II.
However, the United States, as the enemy that completely crushed Japan, played an important role in the process of Japan's economic revival, in part because Japan became the front line of the United States against the Soviet Union, and thus received strong economic assistance from the United States.
In addition, the Japanese government itself has implemented a series of measures to stimulate economic recovery.
In 1952, Japan passed a law called the Business Rationalization Promotion Law.
The bill aims to encourage the installation and operation of new equipment by providing government subsidies and tax incentives, while requiring central and local governments to invest in ports, roads, power grids, gas pipelines and industrial parks for use in designated industrial sectors.
Thanks to this policy, Japan's factories and ports are closely linked, and manufacturing and processing plants are close to each other, forming a huge industrial belt along the Pacific coastline.
Since then, the Chiba area near Tokyo Bay has gathered a large number of petrochemical industries, and the three coastal cities of Tokyo, Nagoya and Osaka have combined to form a prosperous metropolitan area.
This has not only greatly expanded Japan's import and export industry, but also laid a solid foundation for the rapid development of Japan's economy in the future.
However, the industry is developing rapidly, but the national economy has not been able to keep up.
For example, after 1955, personal income in Japan grew by only 32%, while corporate income surged by 89%.
This income gap has led to increased social tensions.
How to translate economic growth into growth in national income has become a key issue for the Japanese government to solve urgently.
In September 1960, Isamu Ikeda, who was running for president of the Liberal Democratic Party, proposed an ambitious plan, the "National Income Doubling Plan."
The core idea of this plan is to make economic development truly beneficial to the people, and use economic growth to shape Japan's new middle class.
This plan was so popular that Ikeda stood out in the general election and was elected.
After consolidating power, Ikeda set out to deliver on his promises.
He realized that in the early postwar period, the Japanese government promoted economic revival by fostering basic industries such as coal, steel, and shipping.
Now, however, these basic industries are close to saturation.
Therefore, it is imperative to find new economic growth points and shift the government's support from basic industries to emerging industries, thereby creating new jobs.
The key to achieving industrial structure transformation is to "investment driven by investment", for example, the development of the oil industry will inevitably require construction and equipment, which will drive the construction and machinery industry; Transporting products requires pipelines and heavy-duty vehicles, spurring the development of these industries.
Eventually, this knock-on effect will extend to many industries such as power, rubber, and coal, giving them new vitality.
It was this chain development model led by emerging industries that led the Japanese economy to achieve rapid growth in the 60s of the 20th century.
Prelude to the formation of bubbles
In the late 60s and early 70s of the 20th century, the United States was mired in the Vietnam War, and military spending soared.
At the same time, Europe and Japan are at the peak of their recovery, with a flood of cheap European and Japanese goods pouring into the U.S. market, causing the U.S. trade surplus to plummet and dollars to flow out.
Faced with this situation, then US President Richard Nixon decisively announced that he would stop the exchange of dollars with gold and impose import taxes.
This policy has had a serious impact on a country as highly dependent on imports and exports as Japan.
In desperation, the Japanese government had to take countermeasures: increasing currency issuance, expanding fiscal policy, and trying to stabilize the domestic economy.
In 1972, then Japanese Prime Minister Kakuei Tanaka put forward a grand plan - "On the Transformation of the Japanese Islands".
The plan aims to eliminate the urban-rural gap in Japan by replanning industrial and agricultural areas and developing modern infrastructure such as expressways and shinkansen (high-speed railways).
However, before the policy was implemented, land prices took the lead in soaring.
Due to the impact of trade restrictions in the United States, the exports of large Japanese companies have been blocked, resulting in a large amount of idle capital.
At the same time, the government has expanded fiscal investment and implemented an inflationary policy.
As a result, businesses are starting to put money into the real estate market.
The introduction of the archipelago transformation policy has allowed many enterprises to see the possibility of future profits, and have purchased land in "induced areas", expecting to appreciate.
The shortage of land in these areas themselves has led to a rapid rise in housing prices and land prices, with an annual growth rate of 30.9%.
The skyrocketing land price became the most concerned issue in society at that time.
However, worse things are yet to come.
In 1973, the first oil crisis swept the world.
The Organization of the Petroleum Exporting Countries (OPEC) announced that it would jump the price of crude oil to $11 from $2 a barrel.
This is undoubtedly a disaster for Japan, which does not produce oil.
In just three months, Japan's domestic oil prices have soared threefold.
The costs of companies that rely on crude oil as their main fuel have soared, and the price of products has also climbed.
This has further pushed up costs and product prices for other businesses.
At the same time, previous inflation policies and the perverse behavior of some speculators have further contributed to the rise in prices.
In 1974, wholesale prices and consumer prices in Japan soared by 30% and 23%, respectively, causing people to cry out "crazy prices" and causing social panic.
Under these circumstances, it was no longer practical for the government to invest heavily in the renovation of the archipelago, and a contractionary fiscal policy had to be implemented in order to curb soaring prices.
As a result, from 1974 onwards, Japan's era of rapid economic growth finally came to an end, and the growth rate gradually stabilized, but it was still able to maintain a level of 4% to 5%.
Super bubble era
In 1985, the United States faced a huge trade deficit, while Japan's economy continued to prosper.
To save competitiveness, the United States reached the Plaza Accord with Japan, Germany, France, and the United Kingdom aimed at easing the U.S. trade deficit.
The deal led to a sharp appreciation of the yen against the dollar, leading to a flood of overseas hot money into Japan while freeing up more Japanese manufacturing capital.
In order to maintain the economic boom, the Bank of Japan had to keep interest rates low, which also buried hidden dangers for the next period, and Japan's housing prices and stock market, overseas acquisitions and financing loans were all in a state of near madness.
On the first business day after the Plaza Accord, the Tokyo Stock Exchange became the world's largest stock exchange, attracting a lot of hot money like a magnet.
In just five years, Japan's stock prices have soared threefold, like a rocket into the air, far outpacing GDP growth over the same period.
At the same time, land prices have risen sharply.
Initially, land prices in the Tokyo area were booming, but the rally spread to Osaka, Nagoya and other big cities, and spread throughout Japan.
In 1987, Tokyo's land price market entered a crazy dance.
Commercial land prices have soared by a staggering 48.2% in one year, and residential land prices have risen by 21.5%, exceeding the level of the "Japanese archipelago" period.
In 1988, the situation became even more frantic, with commercial land prices in Tokyo soaring by 61% and residential land prices soaring by 68%.
Since the rise began in 1985, the price of commercial land in Tokyo has increased by 2.9 times, and the price of residential land has also increased by 2.1 times.
With the boom in the real estate market, more and more companies have begun to turn to stock and property speculation, chasing crazy profits.
In 1990, Japan's 12 largest banks on the Tokyo Stock Exchange recognized real estate as the best lending program, granting loans totaling 50 trillion yen.
Some Japanese banks even lent unrealized profits as capital in defiance of Basel regulations for international banks, leading to a rapid expansion of the money supply.
During this period, the Japanese economy lost its balance, and the manufacturing industry, which is the backbone of the national economy, was severely affected.
However, governments that have always manipulated the overall economic situation have failed to take effective measures to channel the flow of money.
Supervision and regulation are like castles in the air, and the capital chain continues to extend and cannot find an end.
It is rumored that before the bursting of Japan's real estate bubble, half of the country's people, from college students to ordinary people, were speculating in stocks and buildings.
At that time, almost everyone in Tokyo had a publication called "Alchemy", similar to China's "Money Weekly" and "Money Book", as well as various financial programs on TV.
These publications and programs instilled speculation in the masses and taught them how to make money with money.
As a result, farmers no longer farm, workers no longer produce, and society as a whole generally pursues speculative enrichment, but few people are committed to creating real wealth for society.
Disillusionment
In late 1989, cracks in Japan's real estate market began to show, and in December of the same year, the new governor of the Bank of Japan, Yasushi Mie No, took power, and just eight days later, he launched an operation called "electroshock therapy" against the Japanese economy.
In just a few months, the government's discount rate has been repeatedly raised, and commercial banks have come under intense pressure to stop lending to real estate companies and stock speculators.
This series of measures pierced the bubble like a sharp blade, and in the early 1990s, the stock market of the Tokyo Stock Exchange collapsed, and then Japan's land prices plummeted.
However, the Japanese government did not stop there.
In 1991, in order to further stabilize house prices, the government introduced a comprehensive policy and introduced a land price tax.
However, due to a long-standing imbalance in the land tax issue in Japan, it was not until April 1992 that the land value tax was officially introduced.
At this time, the bubble had burst, and the implementation of the land price tax undoubtedly made the real estate market worse, accelerated the decline in housing prices, and caused deeper damage to the Japanese economy.
It seems that overnight, a huge amount of capital has come to naught, and the vast number of people are saddled with heavy debts.
The once-bustling housing market has become overwhelming, and even worse, the collapse in housing prices has set off a vicious cycle — starting with bank failures.
The depreciation of a large number of assets made it difficult for enterprises to repay bank loans, and banks fell into a huge distressed debt.
Under the pressure of heavy non-performing loans, some weak Japanese financial institutions began to go bankrupt in 1992.
From 1994 to 1995, waves of financial bankruptcies and runs, including Tokyo Kyowa Credit Union, Kizu Credit Union, and Hyogo Bank, swept through financial institutions.
Astonishingly, in early August 1995, Japan's largest credit union, the Cosmos Credit Union, collapsed.
This financial storm not only caused a huge impact in Japan, but also affected the global financial market, making the world tremble.
Then came the wave of corporate bankruptcies.
Under the double whammy of weak markets and tight bank credit, corporate funds are in trouble and profits are gradually disappearing.
According to statistics, by 1997, the number of bankrupt companies in Japan had surged to 16,464.
Surprisingly, most of the bankruptcies turned out to be public companies.
The collapse of these giants not only put many subsidiaries under great pressure, but also dragged down closely related trading partners, forming a spreading "chain bankruptcy" tragedy.
Eventually, a wave of unemployment came in.
A large number of companies lost their jobs due to production cuts, layoffs and bankruptcies, and a wave of unemployment swept the country.
At this time, many ordinary people who had taken out loans to buy houses during the real estate boom also found themselves under heavy economic pressure.
As house prices plummeted, the assets of these buyers shrank sharply, and the storm of unemployment made it more difficult for them to make ends meet.
Faced with such enormous economic pressure and living difficulties, some Japanese people felt unbearable and chose suicide in despair.
As a result, suicide rates in Japan rose sharply during that time, and society as a whole was shrouded in grief.
This period of history is undoubtedly the darkest moment for the Japanese economy, bringing deep suffering to the country and its people.
Today, looking back at the history of 1985-1995, known as Japan's lost decade, we see a former economic giant struggling after the bursting of the housing bubble.
Behind the painful suicides of tens of thousands of people, Japan deeply understands the importance of rejuvenating the country through industry.
This bitter lesson has made Japan re-examine its development path and realize that speculation and short-term profit cannot bring long-term prosperity to the country.
Since then, Japan has begun to actively adjust its policies, shifting its focus to the development of industry, strengthening industrial competitiveness, and attaching importance to scientific and technological innovation and talent training.
This principle has been applied to this day, laying a foundation for Japan's sustainable development.
The lessons of history always remind us that rejuvenating the country through industry is the foundation of building a country and the foundation for national prosperity.
Let us cherish this sad history, remember this truth, pass it on to future generations, and continue to work for the strength of the country and the future prosperity.
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