Is the Bubble Coming to Japan Again?

Is the Bubble Coming to Japan Again?

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Japan's economy
Picture: ぺかまろ / PIXTA(ピクスタ)
Japan might be seeing another economic bubble - but compared to the last one, this one is, as one user put it, "all fever and no disco."

On Feb 15th, the Nikkei Index hit an important milestone. For the first time in 30 years and 6 months, the stock average finally hit 30,000 yen; the highest it’s been since 1990. While stock prices are seemingly soaring, many are skeptical of another bubble and didn’t hesitate to criticize the government’s policies.

The sudden upsurge was explained as a response to stimulus talks in the US, as well as a general optimism towards the coronavirus pandemic recovery. Experts say that this has revitalized foreign investors’ interest in Japanese equities, as an export-focused Japan continues to recover.

No Disco, No Fever

Compared to the flamboyance and excess of the Bubble period, this “bubble” is frankly a bit dull. With the ongoing pandemic, there are no lively discotheques packed with young people with disposable income. No flashy cars, and no crowds of people waving money around to pick up taxis. And no insanely high interest rates for deposits.

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Joking aside, there is a stark disconnect between the perceived “success” of the Nikkei Stock Index, and how regular Japanese citizens are feeling. As we covered previously, the COVID-19 pandemic has resulted in higher suicide rates, primarily for women and children. Unemployment rates for temp workers have also been consistently higher than the year before. And with the government refusing to consider a second stimulus, many more are still struggling under financial strain.

How To Tell a Bubble is Forming

A former bank worker also commented on the situation, adding in it their own personal experiences during the bubble era.

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私が新卒銀行員だった時の株価に戻った。3万円台回復に30年も掛かるとは誰も思っていなかった。日本人の平均給与も30年前とほぼ同じ。あの頃のバブルと今の金融緩和相場。政治が再分配を真剣に考えないと手痛いバーストは繰り返される。東証、一時3万円突破 30年半ぶり

Stock prices are back to when I was a newly-graduated bank worker. No one thought it would take 30 years to get back to ¥30,000. Average salaries for Japanese people are almost exactly the same as 30 years ago. Comparing the bubble back then and the quantitative easing happening now, if the government doesn’t seriously consider redistribution of wealth, we’re going to see another painful burst.

Other prominent voices echoed this frustration. A professor at Rikkyo University pointed out massive inequality and the mishandling of poorly performing businesses as an ongoing issue.

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“There is a bubble forming during the pandemic due to the BoJ’s deficit finance and massive capital injections,” writes @masaru_kaneko. “Because of this, there is a widening gap of severe inequality between the wealthy and poor. With the empty-headed policy menu that we have now, the decline of the Japanese economy will not stop.”


All of this is evidence that there has been no financial improvement for the lower and middle class, nor a massive improvement in GDP. The fact that stock prices have been rising whilst the unemployment rate increases and consumption decreases is, at the very least, concerning. Even if a bubble isn’t forming and everything is a-okay in the financial sector, the true test will be whether or not this ¥30,000 milestone will actually improve quality of life.

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Andrew Kiya

Andrew Kiya is a Mixed Japanese Writer, Streamer, and Activist. Born and raised in both Japan and the United States, he focuses primarily on the intersection of mixed race experiences, video games, and progressive politics.

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