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The True Story Of The 1980s, When Everyone Was Convinced Japan Would Buy Americahttps://www.businessinsider.in/the-true-story-of-the-1980s-when-everyone-was-convinced-japan-would-buy-america/it-started-out-innocently-enough-for-instance-some-japanese-automakers-coming-over-to-put-american-parts-in-their-cars-/slidelist/21438412.cms2021-07-26T12:45:17+05:30

The True Story Of The 1980s, When Everyone Was Convinced Japan Would Buy America

Jul 26, 2021, 12:45 IST

It started out innocently enough — for instance, some Japanese automakers coming over to put American parts in their cars.

Meanwhile, American firms like Motorola were still finding Japanese buyers for their products — including beepers.

But the country's influence was starting to be felt — not just in America's cosmopolitan corners, as this article noted, but even in Texas, Arkansas and Mississippi, whose museums now featured Japanese exhibitions.

Then the trend got real, with a conglomerate purchasing a steel company wholly owned by Ford.

But we hadn't seen anything yet.

At the time the value of the U.S. dollar had exploded...

...Resulting in a major U.S. trade gap.

So in September 1985, the G-5 countries signed the Plaza Accord. The non-American ones pledged more liberal trade policies to try to close the gap.

It worked — the value of the dollar fell dramatically against the yen.

But it may have worked too well, because Japanese commenced a "buying spree" that would last another the rest of the decade.

For the rest of the decade, Japanese conglomerates snapped up any U.S. asset they could get their hands on.

Even the most marquee ones.

Old-school columnists like Paul Harvey were outraged and warned of "an economic Pearl Harbor."

Suddenly, Hollywood started introducing Japanese bosses. Here's a scene from Steven Spielberg's "Back To The Future 2" showing how Japanese companies would dominate.

Much of "Die Hard" starring Bruce Willis took place in a Japanese building in Los Angeles.

Anyone growing up in the '80s will remember the cartoons from Japan...

...like Voltron...

...and Thundercats...

...American children got used to seeing Japanese names during the closing credits of their favorite cartoons.

Even the Japanese themselves started getting freaked out about their prosperity. "The amount of money spent for pet food now exceeds the defense budget," wrote Georgie Geyer.

Others were more sanguine. "By American super-power standards, Japan is still a minor-league player," wrote Ben Wattenberg.

But the Japanese purchasing machine couldn't be stopped: hotels..

Tire companies...

Movie studios...

The climax came in November 1989, when the Mitsubishi company bought Rockefeller Center for $846 million.

As Union College economics professor would observe, "Sony chairman Akio Morita might be excused for asking bluntly, 'What was it you said you wanted?"

But that was the eighties. If you don't know what happened next, read on...

With all that spending, inflation in Japan exploded.

In December 1989, Yasushi Mieno took over as Bank of Japan president and immediately raised rates.

The market caught a glimpse of itself in the mirror, and screamed.

But Mieno kept raising rates.

The decade-long correction had begun...

And Japan began its retreat from the U.S.

The bubble had burst.

In the long run, we came to welcome Japan as a prosperous trading partner...

...Though we still occasionally break out in hysterics when a rising East Asian power comes knocking.

For more economic history...

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