Economic collapse--how bad was Japan in 1990's?

there is a thread in GD how bad do you think the economy is going to get? that offers 4 scenarios, in order of increasing scariness:

  1. mild recession (like America , 1987)
  2. Serious recession (like Japan 1990-2005)
  3. Great Depression (1929)
  4. Total collapse (Spanish empire, 1700’s)

Options 1,3, and 4 I know about . But not option 2.
So now I need to fight my ignorance: what happened in Japan for 15 years? How bad was their recession?And how did they end it?

I remember the 1980’s when the average American in the street suffered a real inferiority complex. “Japan, Inc” made better cars, better electronics, better everthing, and threatened to own Mickey Mouse and all of American society. Popular culture depicted Japanese factory workers as dedicated workaholics who proudly slaved away on the assembly lines, singing the corporation’s anthem in unision, doing everything better than us, and we could never catch up to them because of the cultural differences.Then in the 1990’s something happened with the Japanese banks, and somehow the Godzilla monster got defeated. Americans were happy again.

So can someone explain to me how much the average citizen suffered in Japan during the 1990’s?
Japan may be less of a powerhouse today, but I don’t see hoards of homeless Okies re-living a japanese version of the Grapes of Wrath.

If something similar happens now to America, how will the average wage earner feel it?

I am certainly no expert on this. However, what I remember reading about, and the writers were not Japanese and were kind of clinical in their analysis, was the unusual aspect of the Japanese recession was that it was accompanied by persistent deflation. Once they got locked into a deflationary spiral, none of the economic tools available (interest rate cuts and public spending to name two) worked-in fact they made the problem worse. Once Japan got stuck in this spiral they couldn’t get out. From the actions of the US Fed, it appears that is a fate the US is determined to avoid… :slight_smile:

As for what it will be like if it happens here, I don’t know. No one does. In Japan, prices on many but not all items fell so people could better afford necessities. The economy kept moving, but growth was very difficult. No one would invest since deflation meant that next year’s products would bring in less money than today, no one would buy because tomorrow the price will be lower, wages were effected since the “cost of living” kept going down, even though individual cases were all unique. It is a difficult situation for an economy to be in. Mostly because people and governments don’t know how to behave. And as we have seen, trust in the future is what drives any economy. Lose that and you have nothing.

Though if oil and basic commodities keep falling, not even trillion dollar deficits will keep us safe.

I work in big pharma, which had it’s own brand of economic collapse starting a few years ago. So from that admittedly limited perspective:

Outsourcing will go higher up the ladder. Jobs that required Masters degrees went overseas. A function will be outsourced and everybody can keep their jobs but the benefits aren’t as nice. By a long shot. It’s not just the hourly employees that have to worry.

Contracts will be shorter for contract workers. When I first started, contracts were typically a year and renewed for years on end. Now they’re typically 6 months and I’ve seen 3 and 4 month contracts. Contract positions which renewed indefinitely are now restricted to a couple of years. Which leads to…

Zero job security. End of contract, you did a great job, we’ll give you a reference, but you can’t stay here. No severance, no nothin’.

Monthly COBRA payment for a family of 4: $1200. No problem, right? At least there’s that, I suppose.

The good news in my part of the world is that the work hasn’t disappeared from the continent entirely but permanent positions are more hard to come by and even then a bad forecast can spell doom.

A couple of layoffs over a few years, a few months here and there unemployed and you’re running on fumes if you’re lucky.

So…

If you have nice secure job with swell benefits, hang on to it like grim death and watch your back!

I lived in Osaka in the mid-90s, teaching English. Quite a few of my stdents had been laid off work with pay-outs. Because they’d paid for a year’s worth of lessons upfront, studying English was pretty much all they did.

But it wasn’t total doom and gloom. There were still lots of people working. Its just that the number of people who weren’t was noticeable.

I seem to recall in 1996 the Japanese government refunded everyone’s personal income tax in a bid to stimulte the economy. No idea what sort of effect it had but I remember everyone being happy about it.