Yen again, yet again: Japan
At the end of 1989, Japan’s bubble economy burst and its economic miracle came to an abrupt end. The Nikkei exchange fell from nearly 40,000 to around 12,000 today. Over the course of 20 years, what appeared to be unstoppable economic growth proved to be anything but.
Today, China in some ways appears to be closer to following Japan than to sustaining its own economic miracle. China’s Shanghai Stock Index has fallen from a high of 7,000 in 2007 to a low of 2,000 for the past few years, and Chinese domestic investors have little confidence in their domestic stock market. The Japanese bubble, and its aftermath, was the result of a series of domestic financial and economic imbalances, many of which China faces today — to varying, if not greater, degrees:
• High growth rates fueled by credit-backed investment and artificially low interest rates
• Increasingly misallocated investment, which created u