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If you ask many people who know of the subject you’ll be surprised by many, sometimes wildly different answers. Some attribute it to the Plaza Accord, others say it’s completely innocent, some will mention the policies enacted by Japan that enabled pretty much anyone to take huge loans, and some will say it was all a conspiracy by the U.S. government- or all of it together at once. We won’t know. What we do know is that, during the Bubble Economy, people would have to fight over taxis by waving wads of bills at them, that coffee shops were serving 15 dollar cups of coffees and cakes with gold foils, that English teachers could earn 10000 yen an hour, high-end cars became the norm, that everywhere every time was a party. Corporations would spend lavishly on perks, such as extravagant buildings and stranger entertainment, while even single mothers, who nowadays work full time just to stay afloat, would leave the supermarket with carts filled to the brim not even minding what the wind could take from them as they rushed back home. There was money. There was hope. Their efforts to rebuild the country from the ground up, the endless hours spent feeling nervous at a small desk, were finally meaning something and they welcomed whatever that was with wide open arms
but light can be blinding.
Japan was basking in a never before seen inflation of asset prices, particularly in real estate companies still considering selling their stocks as admitting defeat .People were willing to pay exorbitant prices for lands and buildings, leading to a major construction boom in the whole country. They would continue to invest heavily in these assets, dead sure that their value would continue to rise, unwilling to give up this newfound, earned sense of freedom that they endured so much to attain.The prices were so inflated that the Imperial Palace in Tokyo was worth as much as the entire state of California, and everybody was sure it was going to be worth even more. Jaws dropped when Mitsubishi Estate Co. bought New York City’s Rockefeller Center in 1989; suspicions that Tokyo aimed to reassert itself as a military force in Asia also caused consternation.
People weren’t investing in real estate or stocks because they saw some inherent value or utility in them.
People were investing because other people were investing.
That was the only reason.
There was no other.
And by the time most of them realized, at the very moment when a specific single person decided not buy to single specific property to re-sell it in the near future,
the bubble burst.
