I ended up reading this article today while studying Japan’s asset bubble in the 90’s. It’s an interesting read, and in some ways sheds a grim light on the present situation.
**I am not saying there is a bubble. I am not saying one is going to pop. I AM saying the Japan asset bubble is worth understanding and this article references topics that are relevant to the current state of both the financial and real estate markets.
… there are several major differences between Japan in the 1980’s and the United States today. One is the fact that property prices rose much faster and more steeply in Japan, partly because speculators used paper profits from a booming stock market to invest in property*, insupportably leveraging the prices of both higher and higher.*
Another difference is that the biggest speculators in Japan’s frenzy were deep-pocketed corporations*, and they pumped up the commercial property market at the same time that home prices were inflating.*
So… what can we learn?