Bursting the Bubble and Its Consequences

Abstract

This chapter deals with bursting the bubble and its consequences. First, we follow the “bursting-the-bubble” process. Second, we explain serious consequences brought by the collapse of bubbles; that is (1) the relocation of the factories abroad (industrial hollowing-out), (2) huge nonperforming loans (NPLs) in Japanese banks, and (3) financial crisis (outstanding government bonds). Third, we deal with the causes of prolonged stagnation and its results, including “stock adjustments” and “adjustment to worldwide globalization.”