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Caught between shame and nostalgia, Tokyo recalls the 1980s 'bubble'


Video by By France 24

Text by News Wires

Latest update : 2009-12-29

On December 29, 1989, Tokyo's stock market reached its historical peak. What followed was the end of an era of unequalled wealth and a slow economic slide. Japanese remember the excesses of the 1980s with a mixture of shame and nostalgia.

AFP - It was an era of opulence in Japan, when the champagne flowed, firms were buying a slice of America and the grounds of the imperial palace were said to be worth more than the entire state of California.

In the late 1980s, high-rolling bankers thought the only way was up for the Nikkei stock index, harbouring dreams of riding the bull market to an early retirement.

"Everyone believed that the Nikkei-225 would reach the level of 100,000 sooner or later," said Ryuta Otsuka, a 46-year-old equity strategist at Toyo Securities.

"Monthly pay and bonuses kept soaring every year. Even I, as a newcomer to a brokerage house, bore an ambition of earning a fortune by the age of 30, quitting my job and enjoying retirement," Otsuka said, with a cynical smile.

"It was a crazy period, but everyone believed that prices would keep rising forever," he said.

Between 1985 and 1989, the Nikkei almost quadrupled in value, approaching 39,000 points. Supported by low interest rates, property prices also soared.

Post-war austerity gave way to a new time of decadence with Tokyo businessmen spending thousands of dollars in swanky bars and restaurants, even sprinkling gold dust into their drinks.

Flush with cash and aided by the strength of the yen, Japanese companies went on an overseas shopping spree.

Mitsubishi Estate Co.'s purchase of the landmark Rockefeller Center in New York in 1989 symbolised Japan's growing economic might and came hot on the heels of Sony Corp.'s takeover of Columbia Pictures.

But the party came to an end after the Nikkei peaked at 38,915.87 points on December 29, 1989 before beginning a long slide seen as a cautionary tale to the rest of the world, now struggling to recover from a brutal recession.

As the world's number two economy marks the 20th anniversary of the height of the economic bubble, the index is worth only about a quarter of its all-time peak and the property market is still in the doldrums.

The Nikkei, which in March 2009 hit a 26-year closing low of 7,054.98, stood at about 10,600 points on Monday.

Japan is grappling with renewed deflation and is widely expected to lose its place as the world's number two economy to China, possibly next year.

The bursting of Japan's asset bubble in 1990 resulted in the bankruptcy of several well-known Japanese companies including Yamaichi Securities and supermarket chain Yaohan Group.

It took a decade for corporate Japan to recuperate from a mountain of bad debts and restructure.

During Japan's 1990s "lost decade," companies sought to repay their debts and stepped back from the traditional job-for-life culture.

"Meanwhile, the external environment changed drastically after the end of the Cold War," said Hitoshi Suzuki, economist at Daiwa Institute of Research.

The key challenge for Japan now is to boost its workers' productivity in new industries to survive mounting global competition, said Suzuki.

Japan's economy at last began to pick up in 2002 after overcoming its bubble-related problems.

Then the global financial crisis struck in 2008, unleashed by the US subprime debt troubles.

Nowadays young Japanese who were still children when Japan's bubble burst have a totally different attitude to life compared with during the late 1980s.

"My colleagues in their 20s don't spend at all. They save up money. They are not interested in buying a car. They don't travel abroad," said Otsuka.

"They have lots of worries over their future -- few long-term employment contracts, bleak prospects of salary increases and even fear of being sacked," he said.

But memories fade and bubble trouble -- the boom and the bust -- could one day return, experts warn.

"It could happen again when everyone has forgotten the last time," said Otsuka.


Date created : 2009-12-29