Snippets on Japan

The Nikkei stock index hit an all time high of 38,915.87 on 29 Dec. 1989.

Nikkei 225 reached a 26-year low of 6994.9 in October 2008.

In Ginza district, choice property fetched US$1.0 million per sq. metre in 1989. By 2004, it had slumped to 1 % of its peak. Similarly, residential prices in Tokyo shed 90 % of its value during the period.

In 1990, Japan accounted for 14 % of the world economy. Today, it account for just 8 % of the pie.

The population of Japan is 127 million today. It is expected to fall to 100 m by 2050.

Japan’s debt to GDP is 200 %. USA’s is about 100 %.

Liquidity trap – interest rate is set at zero and aggregate demand consistently falls short of aggregate supply potential. In simple language, the money supply is increased and the interest rate kept near to zero to encourage borrowing and spending. However, the corporations preferred to pay down their debts with their earnings and consumers deferred their spending in the hope of cheaper goods in the future. Japan was in such a situation during the lost decade.

The lost decade – from 1991 to 2000 when the Japanese economy went into a recession as a result of the asset bubble bursting.