In Japan in the 1980s, there were many undercurrents behind Japan's economic boom. The frenzy of the stock and housing markets, as well as the fear of a fiscal crisis, set the stage for impending disaster.
On the Tokyo Stock Exchange in the 1980s, a crazy spectacle played out every day. As soon as the opening bell rang, investors flocked to buy shares. Many people even bought their shares and immediately sold them on the trading floor, drawing cheers. At that time, stock prices in Japan reached an all-time high, and it was widely believed that buying stocks was a risk-free way to make money.
What they don't realize, however, is that this seemingly enticing investment opportunity is the prelude to a nightmare in Japan's economic history. In just a few months, the era of bursting Japan's economic bubble will come. From then on, Japan's economy will be in a long-term downturn.
Looking back on this history, one can be shocked by Japan's full-blown recession in the shadow of fiscal crisis, house price collapse, and stock market crash. It seems difficult to find a specific reason for this. So, how terrible was Japan's economic crisis in 1990? What are the unknown reasons behind the bursting of Japan's economic bubble?
After the end of World War II, the United States provided a large amount of economic assistance to Japan for political purposes. This allowed Japan's economy to recover quickly from the devastation of the war in a short period of time. In the 60s and 80s, Japan's manufacturing and financial industries developed rapidly, further promoting economic prosperity. However, this false prosperity has made Japanese society run wild on the road of drunkenness.
At the same time, Japanese women in the 80s were generally affected by the boom in the commodity economy, and a large number of Japanese women began to borrow money and purchase real estate. The rise of this consumer culture, while boosting economic growth in the short term, sets the stage for future fiscal crises.
When we look at the Japanese real estate market, a similar story repeats itself. In those days, many people considered buying a property to be a sure-fire investment. They are scrambling to buy property, hoping to achieve financial freedom through rental proceeds. However, they did not realize that this behavior led to the oversaturation of the real estate market, laying the seeds for a collapse in housing prices in the future.
The combination of all these factors has led Japan's economic development astray. By the early 1990s, Japan's real estate bubble burst, the stock market plummeted, and the economy was paralyzed. The wealth of countless people was wiped out overnight, and the entire society was plunged into chaos and turmoil.
It's a sad history. However, it is worth noting that the crisis in Japan is not accidental, but the inevitable result of the superposition of various factors. It warns us that behind the economic boom, we must keep a clear head and be alert to potential risks; At the same time, we need to rationally plan the economic life of individuals and countries to avoid the consequences of excessive speculation. Only under the guidance of rational and sound strategies can we truly achieve sustainable economic development. At that time, Japanese merchants came up with the business slogan "Every woman should have five boyfriends" in order to cater to the shopping boom of female consumers. In addition, many Japanese use domestic funds to buy overseas real estate, and at one point even bought 10% of U.S. real estate. On the streets of Tokyo, some middle-aged Japanese men even light large amounts of dollar bills at once in order to light cigarettes. They believe that no matter how much they spend today, they will earn back in the future with interest. Therefore, throughout the 80s, the Japanese were very confident about the future economy, which also explains why the Japanese stock market was so prosperous in 1989.
However, most people overlook a key issue in enjoying the fruits of economic development: Japan's rapid growth after World War II was due to concessions from the United States. If the United States stops helping the Japanese economy, how will the Japanese weather the storm? Sure enough, with the increase of the purchasing power of the Japanese, there were calls in the United States to suppress Japan's economic development, which eventually turned into political pressure, leading to the signing of the Plaza Accord.
In September 1985, U.S. Treasury Secretary James Baker, Japanese Finance Minister Noboru Takeshita, German Treasury Minister Gerhart Stodenber and others signed an agreement at the Plaza Hotel in New York. On the surface, this is the official cooperation document of five countries including the United States, Japan, and Germany to intervene in the foreign exchange market. But in fact, the purpose of the agreement is to reduce the fiscal deficit. To that end, it is necessary to rapidly depreciate the dollar and the yen to appreciate rapidly. This makes U.S. products more competitive in the international market than Japanese products.
When the news of the yen's appreciation came back home, ordinary Japanese people and the business community were jubilant. They see the yen's appreciation against the dollar as a reflection of Japan's rising international standing. But they did not realize that this policy would have a serious negative impact on the Japanese economy. Here is my rephrase of the original text:
These Japanese people may never have imagined that this seemingly ordinary information would open the "Pandora's box" of the Japanese economy. After the stock market frenzy of 1989, Japan's stock market experienced an astonishing slash in 1990, with many investors losing heavy money overnight. Due to the rapid appreciation of the yen due to the Plaza Accord, Japanese products lost competitiveness in the international market, and companies had to deal with the financial crisis by means of financial fraud and stock sales. However, these measures ultimately cannot obscure the essence of the problem. When the capital chain of enterprises became more and more tense, the collapse of the Japanese stock market began.
Soon after, Japan's real estate market also experienced a massive collapse, and the properties that many people had painstakingly purchased were reduced to ruins in the blink of an eye. Under these circumstances, the number of suicide cases received by the Tokyo Metropolitan Police Department has increased dramatically. With a large number of companies going bankrupt and unemployment soaring, the Japanese government is also facing an unprecedented fiscal crisis. In order to keep government agencies running, the Japanese government encourages the unemployed to fend for themselves, resulting in a sharp decline in investment in social welfare programs, and in some places the financial bureaus are unable to pay pensions for local elderly.
However, in its Economic White Paper released in 1992, the Japanese government still lied to the people that economic growth was only temporarily slowing down, and that it was still growing overall.