Episode Details

In 1989, every number needed to identify Japan's asse bubble was publicly available. The Nikkei P/E was over sixty. Tokyo commercial real estate cap rates were below one percent. Japanese bank lending was growing at twice the rate of nominal GDP. The Bank of Japan's own economists had documented the disconnection between asset prices and fundamentals.

This episode dissects the three-layer analytical framework: asset valuation versus fundamental value, credit expansion rate versus GDP growth rate, and non-performing loan recognition versus provisioning. We also dissect the balance sheet recession diagnostic — why conventional monetary policy stops working when the private sector is paying down debt regardless of how low rates go — and why Japan's recovery timeline was determined not by the size of the bubble but by how long the institutions delayed saying the loss number out loud.

Japan 1990 | balance sheet recession | asset price collateral loop | non-performing loans | evergreening | Bank of Japan | GP/LP analysis | fixed income due diligence | credit contraction | monetary policy transmission | keiretsu | financial autopsy | sovereign credit | Richard Koo | lost decades

Every collapse has a pattern. We dissect it. Layer by layer.— Financial Forensics Labs