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

Die hard mr. takagiGoogle ImagesJoe Takagi enjoyed a successful career leading Nakatomi Trading, which had built its U.S. headquarters in Los Angeles, in the film ‘Die Hard.’

A year and a half into Japanese Prime Minister Shinzo Abe’s tenure, results about his bold attempt to revive Japan’s moribund economy remain inconclusive. Last week the FT literally asked whether Abenomics was failing? While Japan’s labour market has strengthened, firms have mostly been creating lower-wage jobs, and economic growth has begun to tail off.

It’s thus almost inconceivable that a wave of Japanese conglomerates would be able to snap up American corporate assets as investments.

But in the 1980s, it was a fact of life.

Starting with a relative trickle at the beginning of that decade, Japanese corporations went on an epic buying spree in America during the latter half of the decade after both countries agreed to revalue their currencies.

The trend became so widespread that the “Japanese takeover” theme began seeping into American culture.

Via Google News, we now take you on a tour of this singular moment in the life of both countries…

It started out innocently enough, with a handful of Japanese automakers looking to buyout American parts makers.

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

Before long, Japan's influence was being felt across the country -- not just in America's cosmopolitan corners, as this article noted, but in places Texas, Arkansas and Mississippi, whose museums were suddenly featuring Japanese exhibitions.

But we hadn't seen anything yet.

In the early eighties, the value of the U.S. dollar began soaring as Fed chair Paul Volcker's interest rate 'shock therapy' took effect.

This ended up producing 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 it.

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

But it may have worked too well, because Japan commenced a 'buying spree' that would last through the end of the decade.

Japanese conglomerates began snapping up any U.S. asset they could get their hands on.

Even the most marquee ones.

Old-school columnists were outraged. Paul Harvey warned of 'an economic Pearl Harbor.'

Suddenly, Hollywood started introducing Japanese bosses. Here's a scene from 'Back To The Future 2' showing how in the future American workers would be subservient to their Japanese masters.

Much of 'Die Hard' starring Bruce Willis took place in Nakatomi Tower, home of Nakatomi Trading, in Los Angeles.

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

...and Thundercats.

Even the Japanese themselves started getting freaked out about their prosperity. 'The amount of money spent for pet food now exceeds the defence 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 Japan acquisition machine kept going: Hotels...

...Tire companies...

... and movie studios were all snapped up.

The U.S. had aggressively sought liberalization of Japanese markets, and a lower value of the U.S. dollar. This was what it got in return. 'Sony chairman Akio Morita might be excused for asking bluntly, 'What was it you said you wanted?' one econ professor wrote.

The era reached its apex in November 1989, when the Mitsubishi company bought Rockefeller Center for $US846 million.

But almost immediately after the new decade began, things would change abruptly.

With all that spending, inflation in Japan had 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.

By October, Japan was in a full-blown market correction that would shatter its economy.

The bubble had burst.

The country began retreating from the U.S.

Mieno's legacy is decidedly mixed at best. '...The economy has gone into the deepest recession since the second world war,' The Guardian wrote in 1994. 'Yasuhi Mieno, governor of the Bank of Japan, in 1992 was looking for economic recovery somewhere between spring and summer; today he is still searching in vain for green shoots.'

Eventually, 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.

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