What really caused Japan's Lost Decade? | 54 comments (54 topical, editorial, 0 hidden)

Re: Japan's Lost DecadeS (4.00 / 2)

Thank you for the story. Those were tough years for everyone. I don't have much to offer but a collection of observations:

American emphasis on the Wall Street did begin in 1983 when Reagan (or Treasury Secretary Regan) pushed for a "Yen/$" commission to address the currency. In fact, the commission exclusively worked for opening up financial services markets to the Wall Street.
After the bubble, Japanese banks began liquidating not just property-related loans, but business loans as well. Small businesses suffered, and their owners had their homes seized, because they had been forced by the banks to submit a personal guarantee of all business loans. Amazingly, the Japanese media praised the banks' debt collection as a necessary step and achievement of social good of some kind.
That experience raised, semi-consciously, a serious fairness issue, which neither the media or pundits dared to address. Rescue big banks with the government money so that they shut down small businesses? That's good for the entire economy? Am I part of the "entire economy"?... In my view, this unspoken resentment still permeates through the Japanese society.
The BOJ did undertake implicit inflation targeting under the zero interest rate policy. It did work, but not the way Paul Krugman anticipated. The policy helped to rekindle the commercial property bubble during the 2000s. The irony is, of course, the bubble burst again.

I will become a patissier, God willing.