Untitled Essay Research Paper The Economy of — страница 5

period. (8) “In 1989 the GNP has increased by 481,000,000,000,000 yen and this was mainly due to the speculate market.” (People put their profit from land to stock market or vice versa) Many companies were mainly focus on the speculate market. (9) “The Tokyo Stock exchange soared to almost 40,000 points, the value of stock and land was far above the real value and value of property was not rise due to its demand but was due to speculation. Eventually when the bubble splash, the vacancy rate went rocket high due to lack of demand. Many companies had to go on a strict diet to survive, and they made deep cuts in expenditures for entertainment, advertising, communications and much else.” And the above statement is the general picture of what happen during the bubble economy.

During the golden period of land speculation, many investors know that the land market in Japan was limited (due to the potential and limited geographic area) so they began to purchase land over sea in Hawaii. (10) “The Non water front housing price in Hawaii during 1987 went up by 51 % and the water front housing price went up more than 100%.” This resale land market in Hawaii was primarily between the Japanese; in 1987 the land prices was estimate has rise over 60.2% and many tenants have suddenly realize that the rent has tremendously increase and cannot afford it, so many people have no place to stay (especially the elder). There are several reasons that Japanese wants to invest in Hawaii such as; the waterfront view is similar to Japan so it will be a good place for

vacation and retirement, the distance between Japan is relatively close ( 3 hours trip by plane) and massive left over of equity and advantages in the exchange rate that has tremendously increase the nominal value of their equity so it is an encouragement for investment. Therefore the wave of land speculation did not only distort the land market in Japan but also affected foreign country.(8) Iwami Toru, “Japan in International Financial System”, MacMillian Press, New York 1995, pg. 135 (9) Iwami Toru, “Japan in International Financial System”, MacMillian Press, New York 1995, pg. 135 (10) Kenneth V. Smith, “Inman News”, June 1996 Version, Section B4 email address: InmanNews@aol.com Looking back at the Japanese economy (11) “in 1987, 77 out of the top 100 most

heavily taxed people were involve in land speculation (either have resale their lands or have large land properties). This created a very unhealthy economy because most of the economy is depend on the land market and if any thing happen to the land market, it will distort the economy greatly. (12) “In 1989 the top 100 most heavily tax people 95 of them were involve in land speculation.” Therefore the situation was worst in the later period this is mainly because of the profitability in the land market. Since many enterprises only focus on speculate market therefore the real growth of GNP of the country was only 4 to 6 %. The growth of the economy was mainly on the nominal sector. The increase in nominal GNP has created massive appreciate of yen, which had tremendously affect

the export businesses and the manufacture industries. (the nominal price of the good has increase therefore foreigner has less interest on Japan goods but this mainly effect small and medium enterprise) While some export business was not doing too well, consequently the workers are not getting an appropriate rise in income. (13) “In 1986 (Nissan) several of the high executive had experience an income cut by 5 to 10% and many of them are very frustrated because most of these people were in their 40*s and have to pay for mortgages and children*s tuition. In later years Nissan had announced to cut 500 in order to balance out their lost.” Therefore large manufacture as Nissan was not doing so well during this period. This was worst in the case of the small and medium enterprise.

Many small and medium size export companies had contract or even close down during the mid 80*s and as the wave of income cuts continued, every level and class of the employees were involve. On the other hand the high exchange rate was really an advantage for importer (same value buy more) such as energy, petroleum and primary material. These companies were suddenly becoming so wealthy and the income of their employees were much higher compare to those working in the export enterprise. Therefore there was a large gap on the profit and income between the two distinct groups of company and it was very unhealthy for the white collar. (11) – Iwami Toru, “Japan in International Financial System”, MacMillian Press, New York 1995, pg. 178 (12) Iwami Toru, “Japan in International