Japanese asset price bubble

Under a bubble economy (English " bubble economy" ) means an economy that initially benefited from a speculative bubble and growing, after the bubble burst, however, under the impact of economic setbacks suffers: the overvaluation of investments (particularly equities and real estate ) leads to increased consumption, while increased investment. Reason for the increase in consumption is that the value increases to lead to an increase of the citizens of which flows a part in consumption. Reason for the increase in investment is that the share capital companies to get low interest rates. Due to these positive effects there will be additional economic growth and thus a positive feedback.

Hallmarks of a typical bubble is the increase in the speculation on credit. This lending rates are not necessarily subject to the rules of supply and demand ( interest rate policy ) and too long is too favorable credit conditions during the upswing of the risk (even speculative ) Overheating (see also Wicksell shearing process).

The bubble bursts at a higher price level when the access to additional credit money is more expensive, which can not find enough Nachschuldner and thus stops further inquiry. Due to the increased lending rates stagnate investments and debtors, as well as economic, less free capital expenditure / revenue available. This can, if there is no or a too low supply of liquidity, leading to an economic crisis or paragraph.

Stock and property market in Japan

The best-known example of a bubble economy is the Bubble Keiki (Japaneseバブル 景気, baburu keiki, dt "bubble economy ") of the Japanese stock and real estate market of the second half of the 1980s.

In the Plaza Accord in 1985, the G5 ( U.S., Japan, Germany, Britain, France) agreed to a devaluation of the U.S. dollar against the currencies of the other four countries. In particular, the yen against the dollar made ​​within two years of a controlled increase in value by 100 percent, which was fueled by speculation on. International investors and the Japanese themselves bought everything had its value in Yen, on the one yen itself, but also Japanese stocks and real estate to benefit from the appreciation of the yen. Due to the demand stock market and real estate market have been further fueled, and an upward spiral began.

The Louvre Accord was now unchecked and the dollar be revalued again, but the spiral in Japan continued to turn. At the height of the bubble in the park of the Imperial Palace in central Tokyo was estimated to worth as much as all the land in California together, and nearly two- thirds of the total world value of the property was concentrated in the Tokyo City.

Strict Japanese editions, mutual support in the economy and the sheer price of the company prevented with this is that a Japanese company was taken over. The Japanese company itself benefited from the (compared to the U.S.) increased value of their shares and land and went to the U.S. to purchase and take-over tour. That the rise in the value of the yen also increased the labor costs in Japan relative to the rest of the world, the Japanese company made ​​up for the fact that they continue relocated production abroad, particularly to Southeast Asia.

The situation was risky, began as Japanese banks to issue loans that should be protected by the overvalued real estate ( loans were issued that served the real estate purchase). In 1990, the bubble burst. The value of the property fell within a short time back on a quarter and the stock market imploded. The banks were sitting on their loans. Several major Japanese banks and life insurance companies went bankrupt, others were rescued by the government. Since many of those responsible have committed suicide in the companies concerned, the insolvency proceedings were further complicated.

For several years, the Japanese economy could not recover from it, this time in Japan as a Lost Decade (失わ れ た10年, Ushinawareta juu -tion ) refers. This period was characterized by deflation and stagnation (see also Kakaku Hakai ). Only slowly could be rehabilitated, the banking sector, and the national debt increased by repeatedly deflagrating stimulus programs to over 150 percent of GDP. The long and successful Japanese principle to replace many areas of social life through the corporate affiliation, was shaken by the numerous bankruptcies and crises in its foundations. On the other hand prevailed during the "Lost Decade " for an average economic growth of more than one percent, which is why the term is misleading under certain circumstances.

Richard Koo sees the 1997 recommended by the IMF and implemented by the Japanese government deflationary policy a causal relationship to subsequent periods of economic stagnation and has later point to parallels with the economic situation in America and Europe. His thesis, however, were declared by the Bank for International Settlements in the "Board of Governors of the Federal Reserve System 2012 conference" as a solution not adequate.

On the economic crisis and the political crisis ensued. In the hot phase of the bubble economy, many politicians were sympathetic to the money flow of the economy involved, corruption was rampant. In 1993, the entire LDP leadership was involved in scandals. She lost the general election, and exhibited for the first time since the 1950s, not the majority in the Cabinet.

Property market in Ireland

In the 2000s more and more loans for construction projects were awarded by Irish banks, so in the end accounted for almost a quarter of the gross domestic product in the construction industry. In the context of the financial crisis from 2007 collapsed the bubble. Meanwhile, several 100,000 buildings empty.