Bubble economy
Under a bubble economy ( engl. "Bubble Economy") is understood an economy, the first by a speculative bubble profits and growing, but suffers after the bubble burst under the impact of economic setbacks: the overvaluation of investments (particularly equities and real estate ) leads to increased consumption and, at the same time, increased investment. The reason for the increase in consumption is that the increases in value lead to an increase in the wealth of citizens, a portion of which flows into consumption. The reason for the increase in investments is that the stock corporations receive capital at a low rate of return. Due to these positive effects, there is additional economic growth and thus a positive feedback .
A typical bubble is characterized by an increase in speculation on credit. Here are lending rates is not necessarily the rules of supply and demand ( interest rate policy ) and too long to favorable credit conditions during the upturn is a risk of (and speculative) overheating (see also wick sell shear process ).
The bubble bursts at an increased price level if access to further credit money becomes more expensive, which means that there are not enough additional debtors and thus further demand breaks off. Due to the increased interest rates, investments and debtors stagnate as well as the economy, there is less free capital available for expenditure / income. If there is no or insufficient liquidity supply, this can lead to an economic or sales crisis .
Stock and real estate market in Japan
The best-known example of a bubble economy is the Bubble Keiki ( Japanese バ ブ ル 景 気 , baburu keiki , eng . "Bubble boom ") of the Japanese stock and real estate market in the second half of the 1980s .
In the 1985 Plaza Agreement , the G5 ( USA , Japan , Germany , Great Britain , France ) agreed to devalue the US dollar against the currencies of the other four countries. The yen in particular made a controlled 100 percent increase in value against the dollar within two years, fueled by speculation. International investors and the Japanese themselves bought everything that had its value in yen, on the one hand the yen itself, but also Japanese stocks and real estate, in order to benefit from the appreciation of the yen. Demand further fueled the stock market and real estate market , and an upward spiral began.
The Louvre Agreement was supposed to counteract this and revalue the dollar again, but the spiral in Japan continued to turn. At the height of the bubble, the Imperial Palace Park in central Tokyo was estimated to be worth as much as all of the land in California combined, and nearly two-thirds of total world real estate value was concentrated in Tokyo City.
Strict Japanese regulations, mutual support in business and the sheer price of the companies prevented a Japanese company from being acquired. Japanese companies themselves benefited from the increased value of their stocks and land (compared to the US) and used the capital to invest in the US. The fact that the increased value of the yen also increased labor costs in Japan relative to the rest of the world was offset by Japanese companies by further relocating production abroad, particularly to Southeast Asia .
The situation became risky when Japanese banks began to issue loans that were supposed to be secured by the overvalued real estate (loans were issued to buy real estate). In 1990 the bubble burst. The value of the properties fell by a quarter within a short period of time and the stock market imploded. The banks stayed on their loans. Several large Japanese banks and life insurers have been declared bankrupt, and the government has saved others.
The Japanese economy was unable to recover from this for several years ; this period is also known in Japan as the Lost Decade ( ushinawareta jūnen ). This time was marked by deflation and stagnation (see also Kakaku Hakai ). The banking sector was only able to be rehabilitated slowly, and the national debt rose to over 150 percent of GDP due to repeated economic stimulus packages . The long successful Japanese principle of replacing many areas of social security with lifelong company affiliation was shaken to its foundations by the numerous bankruptcies and crises. On the other hand, the “Lost Decade” saw average economic growth of more than one percent, which is why the term may be misleading.
Richard Koo sees the deflation policy recommended by the IMF from 1997 and implemented by the Japanese government as a causal connection to subsequent periods of economic stagnation and later points out parallels to the economic situation in America and Europe. His thesis was declared by the Bank for International Settlements at the "Board of Governors of the Federal Reserve System 2012 conference" to be inadequate.
The political crisis followed the economic crisis. In the hot phase of the bubble economy, many politicians allowed themselves to participate benevolently in the economic surplus of money; corruption was rampant. In 1993 the entire LDP leadership was embroiled in scandals. They lost the Shūgiin election in 1993 and for the first time since the 1950s they did not have a majority in the lower house.
Real estate market in Ireland
In the 2000s , Irish banks gave more and more loans for construction projects, so that in the end almost a quarter of the gross domestic product went to the construction industry. The bubble collapsed as part of the 2007 financial crisis . Several 100,000 buildings are now empty.
Individual evidence
- ↑ Austrian National Bank: How does monetary policy affect the economy? ( Memento of the original from July 27, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Effects of monetary policy impulses on the economy - wealth channel - 3. Balance sheet effects: “A rise in share prices and property prices improves both the balance sheets of companies and households. A higher net worth means that there is effectively more collateral for the loans given to a company or household. This in turn leads to increased lending, higher capital expenditure and thus higher overall economic expenditure. "
- ↑ Gunther Teubner: Constitutions without a state? In: Law without a state? On the normativity of non-governmental legislation. (Eds. Stefan Kadelbach, Klaus Günther) Frankfurt 2011. ( online ) p. 54.
- ↑ FAZ, April 18, 2012: America and Europe are approaching Japan.Retrieved January 18, 2013.
- ↑ Bank for International Settlements : Board of Governors of the Federal Reserve System 2012 conference: Central banking in a balance sheet recession and as PDF, Conclusio, p. 4 . Both accessed on January 18, 2013.
- ↑ Michael Lewis: When Irish Eyes are Crying ( Memento of the original from February 9, 2011 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. . In: Vanity Fair . March 2011
