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

die hard mr. takagi
Joe Takagi enjoyed a successful career leading Nakatomi Trading, which had built its U.S. headquarters in Los Angeles, in the film "Die Hard." Google Images

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 labor 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.  

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

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

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Michigan Daily

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

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The Sydney Morning Herald
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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 like Texas, Arkansas, and Mississippi, whose museums were suddenly featuring Japanese exhibitions.

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The Durant Daily Democrat

But we hadn't seen anything yet.

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Google Images
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In the early '80s, the value of the U.S. dollar began soaring as Fed Chair Paul Volcker's interest rate "shock therapy" took effect.

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FRED

This ended up producing a major U.S. trade gap.

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FRED
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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.

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Wikimedia

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

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

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The Albany Herald

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

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Milwaukee Journal
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Even the most marquee ones.

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Eugene Register-Guard

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

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Kentucky New Era
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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.

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Youtube

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

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

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Youtube

... like Voltron ...

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Google Images
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... and Thundercats.

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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.

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

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Daily News

But the Japan acquisition machine kept going: hotels ...

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Eugene Register-Guard
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... tire companies ...

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Reading Eagle

... and movie studios were all snapped up.

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The Age
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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.

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Schenectady Gazette

The era reached its apex in November 1989, when the Mitsubishi company bought Rockefeller Center for $846 million.

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

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With all that spending, inflation in Japan had exploded.

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

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Bank of Japan

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

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Eugene Register-Guard
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But Mieno kept raising rates.

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Deseret News

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

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The Press-Courier
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The bubble had burst.

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Eugene Register-Guard

The country began retreating from the U.S.

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The Prescott Courier
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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."

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REUTERS

Eventually, we came to welcome Japan as a prosperous trading partner.

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

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Milwaukee Journal Sentinel
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