The Bubble Economy

Publishers Weekly - Publisher's Weekly

Japan's recent stock market crash and economic troubles may not portend catastrophe, according to Wood ( Boom and Bust ) in this analysis of Japan's current crisis. The situation will bring needed banking and market reforms, will correct the 1980s ' wildly overvalued assets, will further open Japanese markets to the West and will force the country closer to Western - style capitalism. In the process, however, there are likely to be further devaluations, higher unemployment and possibly serious political unrest. Wood vividly details Japan's feudal structures in banking, insurance, real estate and investment , which upended the world's most impressive economy and brought about the recent scandals. He analyzes the country's international buying sprees, which he views as misconceived, and foresees additional implosions. He is nevertheless optimistic that Japan's effects on the West will be less horrendous than predicted. Wood criticizes current popular notions that Japan's unique culture permits it to play successfully by different rules. This is an important and accessible study. (Oct.)

David Rouse

To those accustomed to hearing about the financial prowess and economic superiority of Japan, Wood's contention will come as a surprise. Wood, a writer for "The Economist" now living in Tokyo, warns that the spectacular speculative boom that fueled Japan's economy throughout the 1980s has come to an end and that the Japanese economic bubble has already burst. What has not happened, however, is a subsequent collapse of Japan's economy. The reason, Wood asserts, is that many of the details of Japan's problems are not well known because of the impenetrable secrecy that surrounds Japanese business activity, and therefore, the total effects have not been felt. Wood documents these problems and cautions us on their dire consequences. Among the warning signals are widespread banking and brokerage scandals, problem loans, a plummeting of the Nikkei stock average, a falling of real estate values from absurd heights, and growing consumer debt. If Wood's alarming analysis is correct, the world economic outlook will only get worse.