Daily History Challenge · No. 33 · Friday 31 July 2026 · When?
Puzzle No. 33: When?
The event was Japan's Asset Bubble Peaks as the Nikkei Hits Record, in 1989.
The answer
Japan's speculative asset bubble reached its zenith on 29 December 1989, when the Nikkei 225 stock index closed at an all-time high of 38,916, capping a decade in which the world marvelled at the country's seemingly unstoppable economic ascent. Loose monetary policy, following the 1985 Plaza Accord that had strengthened the yen, had flooded the economy with cheap credit that inflated stock and real-estate prices to extraordinary levels; at the peak the grounds of Tokyo's Imperial Palace were said to be worth more than all the real estate in California. Japanese firms bought landmark foreign assets and the nation's manufacturing prowess drew both admiration and protectionist anxiety abroad. But the bubble was unsustainable, and as the central bank tightened, it burst in 1990, wiping out trillions in wealth and ushering in the "Lost Decade" of stagnation, banking crises, and deflation from which Japan struggled to recover for a generation. The December 1989 peak thus marks a pivotal turning point in modern economic history, the high-water mark of the postwar Japanese miracle just before its long reversal.