This week, the effects of the collapsing asset bubble spread as the extent of the damage caused is revealed; Japan’s financial and political leaders scramble to respond, while refusing to admit the scale of the crisis. Plus, the legacies of the bubble era for Japan today.

Sources

This chapter by Dr. Ohno Kenichi of Japan’s National Graduate Institute for Policy Studies on the bubble and its effects

Nakaso Hiroshi’s paper on the financial crisis and its effects during his BOJ tenure

A New York Times article on nostalgia for the bubble era.

Tett, Gillian. Saving the Sun

Images

The old Long Term Credit Bank of Japan; nationalizing the LTCB was the moment the Japanese government finally found a systemic response to its crisis of confidence.

Japan’s unemployment rate has spiked since the bubble; it still remains low compared to other industrialized countries, but the effects on Japanese society have been substantially disruptive.

Prime Minister Abe is now Japan’s third longest serving prime minister ever. Yet his policies of Abenomics have failed to substantially revive the economy.

A graph from Nakaso Hiroshi’s paper showing the fall in Japan’s economic growth rate after the bubble.

Initiatives like “Premium Friday” are attempts to revive the Japanese economy, but they don’t address the lack of confidence consumers have in their economic futures — which is what holds them back from spending money.