yakuza essential? (was Sixty Seconds to Eternity)

Charles Jannuzi jannuzi at edu00.f-edu.fukui-u.ac.jp
Mon Feb 18 18:19:08 PST 2002


Hakki A:
>Do you think this is BS too? BTW how many fingers do you have >Charles ;-)?

Hakki is referring to the practice of lopping off parts of the pinkie finger to show contrition to the boss. This might have come from something samurai did, but the custom might not be continuous just a revived artifact (like sumo, like so many other 'traditional' things in Japan).

Next: Regarding this article:

The Yakuza Johan Björck Anomalies Project Stockholm School of Economics & EIJS 1997 Course 9995 Introduction to the Economies and Business of East Asia http://www.hhs.se/EIJS/anomaly/JYakuza.htm

Do these guys politic for the award of Nobels in economics?

(...) The Yakuza´s financial ties

Point by point:


>Today the Yakuza is accused of having played a major role in creating the
"bubble economy" of the late 1980´s. Taking advantage of the speculation fever of the era, especially in real estate business, gangs found much to do. "Those involved in jiegeya business, for example, visit small, old-style mom and pop shops concentrated in the shadows of high-rise buildings in a downtown area and persuade the owners to sell their premises."3 Land scalper (jiegeya) tactics practiced by Hiroshi Asaji ranged from "placing blaring stereo speakers next to the house of a stubborn resident to hiring a gang to crush six ribs of another owner."4 These people were connected to major real estate companies to whom they sold the properties to a premium price. As these companies got hold of land pieces at a bargain price they began to purchase land from anyone not caring about if they were Yakuza-related or not. <

Developers would hire yakuza to drive out residents and small shop keepers in buildings, since eviction is very hard to accomplish in Japan--even when the shop keepers can't pay the rent. Others, like residents and shop keepers, might hire yakuza to keep the land developers and their thugs away. I think this is called a 'protection racket' (like my Italian relatives might say, Mafia? Mafia? What is the Mafia? Huh? What is the Mafia?).


>Once the connections were built with financial institutions, the Yakuza
was no longer content with jiegeya business; it started to run real estate business, develop buildings and golf courses on their own. And financial institutions just kept lending them money. <

But these weren't, for the most part banks or credit cooperatives lending the money. Incidentally, the yakuza prefer properties on Hawaii and Guam.


>That way, a base was established
for direct and indirect transactions between Yakuza and securities firms and banks by the mid-1980´s.5<

Anyone with money can get someone to wait on them at Nomura securities. I think it works the same way at a bank, too.


>This was not the only way the Yakuza got a foothold in the Japanese
financial system. The Ministry of Finance, at the end of 1984, requested the leader of Yamaguchi-gumi to come to Tokyo and help kick out Kanto-based Yakuza from sogo banks, mutual financing banks who are small in term of assets and have a weak management capacity, since these had incurred massive losses in failed stock and land speculation. Taking advantage of this situation, Yamaguchi-gumi not only expanded its business territory but also started interacting openly with the bank´s top management with the consent of the Ministry.<

No one in Japan likes the Ministry of Finance, not the banks, not the credit cooperatives, and not the postal savings system (which is in a different ministry). They, not the yakuza, are to blame for the mismanagement of bad loans, since it was their oversight that was the major oversight (double entendre intended, forgive my redundancy).


>The Yakuza themselves say that they are not the reason for the acute
problems in the Japanese economy. In an interview with Takayama Tokutaro, a big Yakuza boss, he concluded that "it is true that some Yakuza and their affiliate companies had a hand in forceful land evictions during the bubble economy, but large corporations and banks forced the Yakuza to do so. Yakuza was just used as their tool."<

I agree, though the payments to them didn't force them to do anything. They are supposed to be good on their word and a promise is a promise. This is just scapegoating now that the real yakuza are here to buy up the place and tell Koizumi what to do.


>Once the bubble burst and the property prices crashed; the credit unions,
housing-loan corporations (jusen) and real estate companies had difficulties in getting their money back from the Yakuza. Terrified lenders are afraid of pushing the issue too far. <

They have trouble getting their money back from just about anyone apparently. Really, huge amounts of this junk has already been written off. The real question is just how bad are all the 'bad' loans that Bush and O'Neill want written off for totally mercenary reasons. Ask yourself, why do the banks insist they can best manage their own loan portfolios? Why are interests like Carlyle and Ripplewood keen to buy these loans? If if were just yakuza junk, they wouldn't want to touch it. My hunch is these loans go to the very heart of the so-called Japan, Inc. The small and medium sized companies that do all the work.


>The main difference between Japan and Sweden in
this case must be that crime organizations were not able to act so openly in Sweden as in Japan.<

Well, Sweden had a banking crisis but I don't know enough about it to say how they cleaned it up. Does this statement mean the crime in Sweden is more underground? I thought they were an open society.


> When the lenders in Sweden wanted to get their money
back from their reckless lending the only problem they got was that people could not pay, not that they did not want to. This has resulted in that Japan is suffering from bad loans amounting to $350 billion7 that probably are unrecoverable.<

It's like Stalin's dead. Hundreds of billions, trillions, the entire GNP of the world, maybe the problem is no one can put their self-interests aside to get a real count. I trust the microeconomics of banks more than I do O'Neill or an American investment banker. I don't trust Standard and Poor's or Moody's. Didn't before Enron, but...


>This has resulted in the conclusion that "the collusive structure among
politicians, bureaucrats and business is now in the way of the nation's development, but in the world of finance we have a structure of tie-ins among four, the above three plus Yakuza. Unless the structure is broken up the nation has no choice but to be doomed."<

Wow, what reductionism. Japan's financial problems explained so neatly. It all makes sense. Let's go with it. Chip, what do you think? You are the one always cautioning against such simplistic explanations. Just replace yakuza with jews and you've got it.

Yes, we are all doomed, doomed, doomed I tell you. Well I hope Carlyle and Ripplewood come in and put the yakuza out of business. Yes, that is our last best hope, no doubt.

Charles Jannuzi

PS: more coming on this



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