ABSTRACT
The rapid rise in the yen had encouraged many of them to shift their focus from “exporter” to “investor.” Consequently numerous Japanese firms prospered despite the oil shocks, the stunning escalation in the yen, and the rise in overseas protectionism. Asset holders were particular beneficiaries. Between 1986 and 1990, land prices and Tokyo stock exchange values soared. Japanese tourists, toting wads of the ever more valuable yen, roamed the world filling Louis Vitton [sic] suitcases with foreign goods. Glitzy Ginza tea shops catered to the nouveaux riches by offering chocolates sprinkled with real gold. Japanese journalists delighted in noting that the book value of the five-kilometer circle of land that housed the Japanese Imperial Palace had a value greater than the entire state of California. A wave of worldwide trophy purchases came under Japanese ownership. Real growth rates averaged 4.5 percent per year from 1985 to 1989, a full percentage point or more ahead of any other industrialized democracy. Trade boomed, current accounts ballooned, foreign reserves expanded geometrically. Nine of the world’s ten largest banks were Japanese. Flush with capital, Japan became the world’s largest creditor nation. The economy seemed to defy comparative economic experiences and business cycles. Triumphalism swept the nation.
