After the burst of the bubble economy, companies tried to survive the recession by restructuring, overseas production and overseas expansion, and real economic growth was on a recovery trend of 2.8% in 1995 and 3.2% in 1996, but it has recovered completely. Was a difficult situation to say.
Japanese economy after the burst of the bubble
1993 In addition, the government has stated that [ economic stimulus policy ], We made public investment, but did not reach the economic recovery. The long-term recession has resulted in lower tax revenues and increased public works projects causing deficit finances and issuing large amounts of deficit-financing bonds.
The slump in the Japanese economy stands out in terms of results, and the 1990s were [ lost decades . 】It is said that.
Impact of the bursting of the bubble
The bursting of the bubble caused a great deal of damage to companies and individuals who invested in land and stocks with loans from financial institutions. The bank is forced to repay the debt borrowed from the bank, but even if you sell the land or stocks that are collateralized, the price is falling, so even if you sell it, you can not make enough money to repay bad debt Has increased.
As a result, corporate bankruptcies continued and huge amounts of non-performing loans swelled.
The economic downturn is 1997 The consumption tax will be stopped, further discouraging people from buying, and resulting in a decline in personal consumption.
Due to the deterioration of the Japanese economy, the management of companies has also deteriorated, and many companies have restructuring and salary reductions . I had no choice but to do such things. As a result of these corporate restructuring measures, the number of middle-aged and elderly unemployed will increase, and the recession will be prolonged due to the difficulty in finding employment due to the decrease in job seekers for new graduates.
In this way, the Japanese economy will enter a long recession called the Heisei recession from 1997.
Cause of the Heisei recession
- Increase in non-performing loans and financial instability due to the collapse of the bubble economy
- 5% increase in consumption tax
After the burst of the bubble, financial institutions also went bankrupt and were forced to deal with bad debts ...
The credit crunch of financial institutions has created a vicious cycle in which corporate funding is squeezed and the bad economy worsens.
Disposal of non-performing loans
There are two ways to dispose of non-performing loans.
Abandon bad debts
If the lending company decides that it is still possible, it will give up the bad debt and give up part or all of the debt. However, the bank will cover the debt, so you will lose money.
Debt consolidation
Companies without a future are abandoned by banks, sell off all collateral, and collect as much, if not all, of the money they lend. In most cases, the full amount will not be reached and the deficit will be borne by the bank.
Regardless of which method is used, the deficit on the bank side is fixed, but even if it is left as it is, bad debts will only increase, so the current situation is that we cannot wait. Banks with an increased deficit, like other companies, are forced to restructure, close their businesses, or go bankrupt when their capital adequacy ratio falls below 8%, resulting in a reluctance to lend.
As a result of the credit crunch, funds will not be available to small and medium-sized enterprises in particular, salaries will not be paid, materials will not be procured, and more companies will go bankrupt. If you go bankrupt, you will lose your job, your income will decrease, and your life will be difficult.
Stabilization of financial system
November 24, 1997 Yamaichi Securities Has voluntarily closed down.
Subsequently, the bankruptcy of financial institutions such as the bankruptcy of Hokkaido Takushoku Bank occurred one after another, and the government considered the stability of financial institutions.
1998 A public fund introduction system will be established to stabilize the financial system.
This was decided to inject public funds into banks with a low capital adequacy ratio, as well as to dispose of non-performing loans and stabilize the financial system. While enacting the Financial Stabilization Act and the Financial Rehabilitation Act in 1998, the Financial Supervisory Agency was established and the Resolution and Collection Corporation for the disposal of non-performing loans was also created.
Financial Supervisory Agency
Established as an external agency of the Prime Minister's Office, it was reorganized into the Financial Services Agency in July 2000 with the aim of separating and separating the inspection and supervision functions of banks and insurance companies from the Ministry of Finance. Furthermore, in 2001, the Financial Reconstruction Commission was incorporated into the reorganization of ministries and agencies, and it became an external agency of the Cabinet Office.
1998 According to the Ministry of Finance's announcement, the total amount of non-performing loans amounted to 76 trillion yen, and in March the government bought bank stocks with taxes to support management.
Why were only financial institutions invested in public funds?
Banks are in charge of the flow of money in the economy. If the financial institutions that support the flow of money go crazy, the flow of money will not be smooth, the recession will become more serious, and the economic situation in Japan at that time will be the same.
When the Hokkaido Takushoku Bank went bankrupt, the Hokkaido economy had a serious impact and has been trailing to this day. A bank's bankruptcy not only affects a large number of business partners, but also makes the Japanese financial system unreliable and may further worsen the economy.
September 1998 The financial revitalization law was enacted in Japan, and the main contents are ...
- Bank before bankruptcy ⇒ Mandatory information disclosure, inject public funds, and aim for soundness.
- Bank after bankruptcy ⇒ After the bankruptcy, select from the following three, search for a company that will be the recipient, and merger etc. will be carried out. If this does not work, it will be cleared and disappear.
What are the three options ...
- Special public management (temporary nationalization).
- The Financial Supervisory Agency dispatches a financial consolidation trustee to Bridge Bank.
- The Japanese version of RTC (The Resolution and Collection Corporation) buys bad debts.
Heisei recession and escape from recession
The recession after the burst of the bubble was very serious in terms of the number of corporate bankruptcies and the high unemployment rate. In addition, a huge amount of bad debts were generated, many financial institutions went bankrupt, and financial instability occurred.
1990 The official discount rate, which was 6% in 2001, fell to a minimum of 0.1% in 2001.
At private companies, we promoted restructuring, reduced the hiring of new graduates, and reduced the number of employees.
In addition, the company-led price system collapsed due to the chilling demand, the influx of cheap imports due to the strong yen, and discount stores, and competition for price cuts intensified. I feel that the concept of fixed price has disappeared at this time.
1999 The government will take measures to recover the economy.
- Income tax / resident tax reduction
- Expansion of public works
- Distribution of regional promotion tickets
- Stabilization of financial system
Recession is not all bad
When you hear about a recession, you may think that you don't have bad money and that economic activity is not active, but if you change your mind, it's not all bad things.
Avoiding spending money as much as possible also leads to improving work efficiency and thinking not to spend money. Even if you make things, it will cost less than before, and we will try to make the same performance or better things.
In a recession, all companies are trying to survive, wasting it, and getting their work done efficiently. And when the economy recovers, that effort will live and grow more than ever.
Public works projects that were effective during the high-growth period used to have a shopping street and a stand that had an economic effect by building a new road, but if the road is being built in a place where there are no people as it is now. If so, no economic effect can be expected.
Rather, I think it would be better to take measures to create the occupations and facilities necessary for a super-aging society.