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The Japanese asset price bubble (バブル景気 baburu keiki?, lit. "bubble economy") was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated.The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion.More specifically, over-confidence and speculation regarding asset and stock prices had been closely associated with excessive monetary easing policy at the time. By August 1990, the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the Bank of Japan (BOJ). By late 1991, asset prices began to fall. Even though asset prices had visibly collapsed by early 1992, the economy's decline continued for more than a decade. This decline resulted in a huge accumulation of non-performing assets loans (NPL), causing difficulties for many financial institutions. The bursting of the Japanese asset price bubble contributed to what many call the Lost Decade. The asset price burst seemed to exert a strong impact on the overall Japanese economy. By 1992, urban land prices nationwide declined 1.7% from the peak.However, the impact was worse for land in the six major cities, as the average land prices (commercial, residential, and industrial) dropped 15.5% from its peak.Commercial, residential and industrial land prices dropped 15.2%, 17.9%, and 13.1%, respectively. The entire asset price crisis was far worse, especially in the large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak, but still managed to be listed as the most expensive in the world until being surpassed in the late 2000s by Moscow and other cities. However, since 2012, Tokyo is once again the world's most expensive city, followed by Osaka with Moscow as number 4.Tens of trillions of dollars of value was wiped out with the combined collapse of the Tokyo stock and real estate markets. Only in 2007 did property prices begin to rise; however, they began to fall in late 2008 due to the global financial crisis. Household impact The entire crisis also badly affected direct consumption and investment within Japan.As a result, from a prolonged decline in the asset prices, there was a sharp decline in consumption, which resulted in long term deflation in Japan.The asset price burst also badly affected consumer confidence since a sharp dip reduced household real income. Corporate impact At the same time, since the economy was driven by its high rate of reinvestment, the crash hit the stock market particularly hard. The Nikkei 225 at the Tokyo Stock Exchange plunged from a height of 38,915 at the end of December 1989 to 14,309 at the end of August 1992.By 11 March 2003, it plunged to the post-bubble low of 7,862 on March 11, 2003.As investments were increasingly directed out of the country, manufacturers were facing difficulties to uphold its competitive advantage since most manufacturing firms lost some degree of their technological edge. Consequently, Japanese products became less competitive overseas. During the asset bubble period, most Japanese corporate balance sheets were backed by assets. Hence, the asset prices influenced the corporate balance sheet.Owing to a lack of corporate governance in Japanese companies,most Japanese corporations had an inclination to convince investors with their healthy balance sheet, since most investors believe that such prices are likely bullish. An important effect of the bubble collapse was the deterioration of balance sheets. Since asset prices tumbled, increasing liabilities on a long term basis projected a bad balance sheet to investors.Many Japanese corporations were facing huge difficulties to reduce the debt ratio – resulting reluctance from the private sector to increase investments. The House Bubble of China Real Estate Market Lesson from Japan 経済日本の住宅価格 東京房價永不下落如何走向幻滅 ,for more information about china world news visit site at http://youtube.com/user/cosmeticmachines as well as business website at http://penglaichina.com