BookTitleToyota Tsusho 70-Year History

Summary

Toyota Tsusho 70-Year History

IntroductionThe State of the TimesSection 1 The Rapidly Changing Economic SituationFall of the Berlin Wall (November 1989)Photo:Reuters/Aflo1 The Bursting of the Bubble Economy and the End of the East-West Cold WarThe strong yen triggered by the Plaza Accord in September 1985 caused theJapanese economy to bottom out in November of the following year. However,backed by expansion of domestic demand and active capital investment theeconomy recovered rapidly. There was also government-led fiscal spending andultralow interest rate policies, and the economy continued to expand, finallysurpassing the Iwato Boom (the economic boom of 1958?1961) in June 1990. Thislarge-scale boom lasted 51 months until February 1991. During this time, land andstock prices continued to rise abnormally, far surpassing the real economy, andthis came to be known as the bubble economy.In 1990, this bubble economy burst. The Nikkei stock average, which reacheda record high of 38,915 yen on December 29, 1989, fell below 20,000 yen onOctober 1, 1990. This led to a sudden drop in stock prices, land prices, and theeconomy as a whole. Because of the bubble economy, the impact was massive,and Japan suffered from a prolonged recession.The international situation also changed dramatically. Socialist economies thathad been in confrontation with liberal economies since the end of World War IIbegan to deregulate their economies, and the Berlin Wall, which was a symbol ofthe East-West Cold War, was brought down by the power of the people in 1989.The last decade leading up to the 21st century began with a turbulent economyand society.2 The Financial Crisis in JapanThe bubble economy burst, and the decline in stock prices and land pricesled to a decline in asset values for everyone, from individuals to corporations.Financial institutions with major bad debt were a particularly serious problem,and bankruptcies of financial institutions unable to overcome poor managementhappened one after the other from 1995. The successive bankruptcies of theHokkaido Takushoku Bank, Ltd., and Yamaichi Securities Co., Ltd., in November1997 and the Long-Term Credit Bank of Japan and the Nippon Credit Bank, Ltd.,in the following year, triggered a restructuring resulting in three mega banks.In 1998, an independent agency, the Financial Supervisory Agency (currentlythe Financial Services Agency) was established to oversee Japan’s financialinstitutions.The decline in stock and land prices inflicted heavy damage on the real estateindustry, major general contractors, and general trading companies undertaking84