Welcome to StockForums.info!   


What is Japanese Bubble economy?

Tokyo Stock Exchange

What is Japanese Bubble economy?

Postby bardulph » Sun Dec 30, 2012 8:07 pm

As far as I know, it is the recession. at first time, the economy was very good, very easy to get job, sells were good, many companies developed, however, the problem is the economy was very good because many consumers and companies did lots of loans and they spend money too much on buying homes and industries. After all they can not pay back those money. The economy decline.

Can you make this more clear? and tell me more about it?
Posts: 41
Joined: Thu Oct 04, 2012 12:39 am

What is Japanese Bubble economy?

Postby iye38 » Sun Dec 30, 2012 8:09 pm

For a brief moment in 1990, the Japanese stock market was bigger than the US market. The Nikkei-225 reached a peak of 38,916 in December of 1989 with a price-earnings ratio of around 80 times. At the bubble's height, the capitalized value of the Tokyo Stock Exchange stood at 42 percent of the entire world's stock-market value and Japanese real estate accounted for half the value of all land on earth, while only representing less than 3 percent of the total area. In 1989 all of Japan's real estate was valued at US$24 trillion which was four times the value of all real estate in the United States, despite Japan having just half the population and 60 percent of US GDP.

All of it was based on loose monetary policy, low interest rates, and irrational leveraging that results from such "stimulative" measures. It all came crashing down and the government responded by attempting to prop it up ever since the crash.

In the 1990s, the Japanese government socialized private losses through a massive transfer of private debt to the national balance sheet. This happened in the wake of the Japanese asset bubble — another boom fuelled by a tidal wave of easy money from the central bank — and led to a decade of slow growth and a lack of restructuring of the economy. Whether or not the US economy is "turning Japanese" is still an open question, but is becoming ever more likely as fake fixes are delaying painful economic adjustments. Christopher Wood made the following observation in the Wall Street Journal:

"With the U.S. government stepping in to keep markets from clearing, today's U.S. economy in many ways resembles the post-bubble Japanese economy of the 1990s. Ultra-loose monetary policy and low demand for credit, combined with high unemployment and consumer deleveraging, could lead to a prolonged slump."
Posts: 152
Joined: Tue Jun 26, 2012 3:19 am

What is Japanese Bubble economy?

Postby benjy » Sun Dec 30, 2012 8:26 pm

Economists say that a financial asset (stock, for example) exhibits a bubble when its price exceeds the present value of the future income (such as interest or dividends) that would be received by owning it to maturity.[4] If most market participants buy the asset primarily in hopes of selling it later at a higher price, instead of buying it for the income it will generate, this could be evidence that a bubble is present. If there is a bubble, there is also a risk of a crash in asset prices: market participants will go on buying only as long as they expect others to buy, and when many decide to sell the price will fall. However, it is difficult to tell in practice whether an asset's price actually equals its fundamental value, so it is hard to detect bubbles reliably. Some economists insist that bubbles never or almost never occur.[5]

Well-known examples of bubbles (or purported bubbles) and crashes in stock prices and other asset prices include the Dutch tulip mania, the Wall Street Crash of 1929, the Japanese property bubble of the 1980s, the crash of the dot-com bubble in 2000-2001, and the now-deflating United States housing bubble
Posts: 36
Joined: Thu Oct 04, 2012 12:27 am

What is Japanese Bubble economy?

Postby ashburn86 » Sun Dec 30, 2012 8:37 pm

I have not heard it as you described though it is possible that the question you are asking pertains to something that is happening today.

There was also a buble from 1986 to 1991 in Japan called the "Bubble Economy" or Japanese Asset Price Bubble.

An easy to access link is available, but don't list this as a source if you need to because wikipedia is not a credible source for academic papers (though I read the article, the information is very accurate).
Posts: 161
Joined: Mon Jun 25, 2012 7:27 am

Return to TSE


  • Related topics
    Last post