But as with America, what was a national economy, after all, but a collective belief? Or so everyone had thought for a generation. The frugal Japanese citizens saved a high proportion of their earnings. Those savings went into banks, in such vast quantities that the supply of capital for lending was similarly huge, as a result of which the interest rates for those loans were correspondingly low, which allowed businesses to purchase land and build on it despite prices that anywhere else in the world would have been somewhere between ruinous and impossible. As with any artificial boom, the process had dangerous corollaries. The inflated book value of owned real estate was used as collateral for other loans, and as security for stock portfolios bought on margin, and in the process supposedly intelligent and far-seeing businessmen had in fact constructed an elaborate house of cards whose foundation was the belief that metropolitan Tokyo had more intrinsic value than all of America between Bangor and San Diego. (An additional consequence of this was a view of real-estate value that more than any other factor had persuaded Japanese businessmen that American real-estate, which, after all, looked pretty much the same as that in their own country, had to be worth more than what the foolish Americans charged for it.) By the early 1990's had come disquieting thoughts. The precipitous decline of the Japanese stock market had threatened to put calls on the large margin accounts, and made some businessmen think about selling their land holdings to cover their exposures. With that had come the stunning but unsurprising realization that nobody wanted to pay book value for a parcel of land; that although everyone accepted book value in the abstract, actually paying the assumed price was, well, not terribly realistic. The result was that the single card supporting the rest of the house had been quietly removed from the bottom of the structure and awaited only a puff of breeze to cause the entire edifice to collapse—a possibility studiously ignored in the discourse between senior executives.

Until now.