The BBC
notes the 20-year anniversary of the Nikkei stock market index reaching an all-time high of 38,957 back on Decebmer 29th, 1989.
The index now trades at about quarter of that value. In other words, it has lost about 73%, closing at 10,638 on Tuesday. Back in 1989, Japan's growth was seen as unstoppable, with some analysts expecting the Nikkei to reach 100,000.
But as the bubble in the property market burst dramatically, so the stock market fell and Japan's economy has never quite recovered, struggling with deflation and sluggish growth.
Here in the U.S. we should feel pretty good about having just one "lost decade" in stocks - in Japan they're now starting their third.
Okay, the Nikkei was over valued, and came back to more reasonable valuations. I don't get why economists are so upset over this reversion to the mean. Japan had low unemployment and a high standard of living the whole time.
ReplyDeleteKeynesians are looking at all the wrong things. The low productivity gain was a function of MITI subsidizing dinosaur industries, preventing innovative new industries from competing (i.e., central planning). Not a function of the Nikkei over valuation, or currency debasement rates.
I suppose Keynesians would have been happier if Japanese workers had been told to dig ditches, and fill them in again. Maybe they would have preferred Zimbabwe style currency debasement stealing Japanese retiree pensions. Keynesian love to steal pensions, and prescribe other harmful policies.
On the other hand, the March 2000 high for Nasdaq should stand for another 30 years.
ReplyDeletehas their infant mortality rate and crime rates been rising?
ReplyDeleteOtherwise not much of a lost decade.