In a remarkable and stark warning that has sent ripples through financial circles, one of Japan's most prominent political figures has declared the country's soaring stock market to be in a precarious bubble, drawing unsettling parallels with the infamous asset-price collapse of the early 1990s.
Shigeru Ishiba, a former defence minister and a seasoned voice within the ruling Liberal Democratic Party, issued the grave caution during a recent interview. His comments mark a significant and rare break from the prevailing government optimism surrounding the market's sustained bull run.
A Chilling Echo of the Past
Mr. Ishiba directly invoked the spectre of Japan's 'bubble economy' of the late 1980s, a period of rampant speculation that ended in a devastating crash and subsequent decades of economic stagnation, known as the 'Lost Decade'.
'Looking only at the stock prices, I believe the current situation is indeed a bubble,' he stated unequivocally. His analysis suggests that the market's current valuation is dangerously detached from the underlying health of the corporate sector and the wider economy.
Mounting Pressure on the Central Bank
The intervention places intense scrutiny on the Bank of Japan and its controversial ultra-loose monetary policy. For years, the central bank has been a colossal buyer of exchange-traded funds (ETFs), pouring trillions of yen into the market to prop up prices and foster inflation.
Critics, including Ishiba, argue that this prolonged artificial support is a primary driver of the overvaluation, creating a fragile market reliant on government intervention rather than organic growth.
A Call for Prudent Action
Far from simply criticising, Ishiba proposed a clear path forward. He urged the government and financial authorities to initiate a serious and public discussion on a definitive exit strategy from its massive easing programme.
The key goal, he emphasised, must be to engineer a 'soft landing' for the market—a gradual normalisation of policy that carefully deflates the bubble without triggering a panicked sell-off or a full-blown financial crisis. The alternative, an unmanaged pop, could have severe consequences for investors, pension funds, and the national economy.
As the Nikkei continues to flirt with record highs, this sobering warning from a respected insider serves as a critical reminder that what goes up must eventually come down. The question now is whether policymakers will heed the call for a controlled descent.
