Chapter 528 The Last Straw
What was the economic situation in Japan in September and October 1990?
The fire is boiling and everyone is covering their mouths.
The first industry to have problems was the securities industry, as their profits are closely tied to the stock market.
Then there was the first stock market crash in January at the beginning of the year, and then another big drop in September.
With real damage of tens of thousands of points in a row twice, no matter how big the securities company is, it is impossible for it to remain unscathed.
The Ministry of Finance even played a certain role in fueling the situation.
That’s right, the Ministry of Finance also has to take the blame.
Because it was they who guided the securities industry to invent the highly illegal financial product "Special Business Fund".
Enterprises entrust their funds to securities companies to carry out various stock market and financial operations.
And the securities company claims that there will be absolute profits and no losses.
This part of funds is the "special operating funds" . However, as long as it is a product circulating in the financial market, there is no such thing as a guaranteed profit.
After two stock market crashes, tens of trillions of funds raised by industrial companies were completely lost!
The amount of these losses, if spread across all major securities companies, would be at least 200 billion yen!
So have these issues come to light?
No! Because the Ministry of Finance hinted to securities companies that "the annual settlement of special funds can be handled flexibly."
In short, it is to tell everyone that it is time for the final accounts in March.
You can use "financial management skills" to deal with operating special fund losses and not record them in the account books and make them public.
What is this operation???
Fake!!!
Yes, you read that right. The Ministry of Finance is hinting at major securities companies to commit financial fraud, and it is officially approved financial fraud!
Therefore, the tradition of various frauds in daily life does not come from the people, but is inherited from the official line.
So why is it that even though the Nikkei index has fallen below 20,000 points, no securities company has gone bankrupt?
It is precisely because these losses have not been announced to the public that many industrial companies, as the client, do not even know that they have lost most of their funds.
This can be said to be the result of the Ministry of Finance allowing losses to arise due to the negligence of industrial companies, securities companies, and banks, leaving the conflicts to the future.
Why did the Ministry of Finance do this? Fear of being held responsible is one reason.
In addition, there was a common belief within the Ministry of Finance at that time: "Japan must not become the one that triggers the world economic depression!"
And in order to balance its accounts, it also dominated banks' lending to securities companies.
This is equivalent to saying: Even if they have to borrow money, companies and enterprises must use "financial management skills" to eliminate account losses!
This is the situation in the securities industry, but what about banks?
The bank’s largest assets are various land mortgages based on the “land standard”.
In other words, land is the bank's wealth because it has lent hundreds of trillions of yen using land as collateral.
At the same time, in order to cooperate with the Ministry of Finance's "financial management skills", it also provided a bottom line for the "business special funds" of the securities industry's losses.
The basic foundation of the stock market and the real estate market now depends on the bank alone.
Therefore, it can be imagined that the Ministry of Finance will strictly guard against the various financial scandals discovered by Yeshan regarding major banks.
However, the reality went against one's wishes. The reporters ran too fast and had already spread this information to major media groups in Japan.
Does the Japanese government have any control over domestic media groups? Some do, some don't.
Although neon capitalism is a bit strange, people in the media industry are very committed to their principles.
Even government scandals are published, let alone bank financial scandals.
The Yomiuri Shimbun, Asahi Shimbun, Mainichi Shimbun, and Nikkei Shimbun all reported on this in great detail.
The anxious Ministry of Finance wanted to divert people's attention, so it asked the Tokyo Shimbun to shift the focus of its reporting to the yakuza fight.
In order to increase attention, the Ministry of Finance even strived to launch a special investigation by the Tokyo District Public Prosecutors Office.
…
There was a hurried knock on the door of Hiroyuki Ueda's office on the eighth floor of the Chuo Ward Contract Office Building.
"Minister, Mr. Hashimoto from the Ministry of Finance wants you to issue a public announcement announcing the launch of a public investigation into the Hayama Yakudo Gunfight."
Hiroyuki Ueda, who was sitting behind his desk, put down the pen in his hand and smiled.
"Yakuza gunfights are something the Metropolitan Police Department is responsible for, and the Special Investigation Department is not responsible for that.
However, in view of the huge impact of the incident and under pressure from public opinion, the Special Investigation Department decided to lend a helping hand to the Metropolitan Police Department. "
"Huh?" The assistant looked at Hiroyuki Ueda putting on his uniform, somewhat confused.
“The Yakuza matters are handled by the Metropolitan Police Department, but the Special Investigation Department has taken over the economic crimes in the financial industry!
Notify everyone and hold a press conference today to announce the launch of a special investigation into the Ye Shan incident!"
My goodness, this... the Ministry of Finance can’t even cover it up in time.
You are just preparing to add fuel to the fire.
"What are you standing there for? Why don't you go?"
"Hai!" The assistant ran out in a hurry again.
As for financial crime, isn't this the special investigation department's forte?
Hiroyuki Ueda said that in order to maintain a fair and just environment in Japan's financial industry, the Special Investigation Department has an obligation to do so!
…
The major banking and financial events that were reported repeatedly by the Japanese media were like a depth charge, making everyone dizzy.
However, this was not enough. At 7 a.m., the news media reported that at 10 p.m., the Tokyo District Public Prosecutors Office's Special Investigation Department announced that it would launch an investigation into this series of financial events.
As for the gang fights? That's the Metropolitan Police Department's business. The Tokyo District Public Prosecutors Office's Special Investigation Division only deals with financial crimes.
Moreover, the loan fraud incident of Fuji Bank some time ago has not been resolved yet, and this time, Hayama has implicated major banks such as Dai-ichi Kangyo Bank, Industrial Bank, Yamaichi Securities, and Long-term Credit Bank.
Therefore, the Tokyo District Public Prosecutors Office's Special Investigation Department announced that it would combine all these financial events into one case for investigation.
The report named the incident as "Yeshan Incident!"
The Special Investigation Department's press conference had just ended, and Nomura Securities' Setsu Tabuchi called Shirakawa Kaede.
All he said was, "The color of the water has changed."
Why did the color of the sea change? Because a tsunami is coming.
For the people of the island, this is a well-known folk saying.
The public was already shocked by today's newspaper headlines, and now the Tokyo District Public Prosecutors Office's Special Investigation Division has publicly announced that it will investigate the incident.
Doesn't that prove that the bank scandals reported in the newspapers are true?
Ordinary people have long had a very bad impression of banks because they believe that it is the banks that raise land prices.
Now this series of financial scandals is caused by banks, so people are angry.
Many people held banners and gathered in front of the Ministry of Finance, demanding an explanation from the Ministry of Finance.
The Deputy Minister of Finance of the Ministry of Finance came out sweating profusely to explain that the government was conducting an investigation and would definitely give the public an explanation.
As for the high housing prices that everyone is questioning, the Ministry of Finance also stated that the various measures restricting real estate previously issued will take effect next month.
In January next year, land tax will officially come into effect. Everything is aimed at bringing down land prices.
The Ministry of Finance just made its statement, and then Japan’s real estate market fell!
Since 1985, the land price in Neon, which had been rising for five years, has experienced a market decline for the first time!
First there was the stock market crash, then there were the various policies of the Ministry of Finance restricting land, and now there is the huge collapse of the banking industry.
Finally, the land prices in Neon, which had been rising like a mad bull, began to fall.
In just one morning, all major real estate agencies and real estate companies continued to list land for sale without making a fuss.
If not now, when? Didn't you read what the newspapers said? Some banks are already in debt of over a trillion.
And next month, new rules on land transactions will come into effect.
New houses cannot be traded within two years of purchase, otherwise an extremely high transaction tax of 96% will be waiting for them.
If the land in the hands of a real estate company cannot be traded, then what’s the point of trading it?
What does a 2% to 3% annual land tax mean?
According to market prices, the land held by most real estate companies is worth trillions or even tens of trillions of dollars.
This means that the taxes they will have to pay every year will likely be in the hundreds of billions of yen.
The key point is that many of these lands cannot be traded because they are subject to a 96% tax.
It can only be kept in hand for two years before being allowed to enter the market.
Who can tell what will happen in two years? Who will pay for the hundreds of billions of yen in taxes in the past two years?
Real estate companies? You might as well expect a sow to climb a tree as you would expect a real estate company to be reliable!
So the "Yeshan Incident" that overwhelmed the property market today has just been reported, and real estate companies have already taken action.
Why not run away while the law is still not in effect?
The market is impossible to control, the market is irrational, and the market is also blindly obedient.
Once one company starts selling, there will be a second, a third...
As the snowball rolls, the land price in Neon is not only falling, but also happening faster and faster!
Before September, land prices in Neon had risen 56% this year compared to last year.
However, in just one day, the growth gap narrowed to 42%.
Is this the end? No, the avalanche has just begun!
As mentioned before, banks provide loans based on the "land standard".
A large part of its assets are in the land mortgaged by real estate companies.
Not only that, many of the assets of private households are also linked to land.
From 1986 to 1989, Neon relied on the booming stock and property markets to generate more than 140 trillion yen in revenue.
In 1989 alone, Japanese households earned 260 trillion yen from land.
It is precisely because of these terrifying profits that the entire nation has plunged into this frenzy of the times.
However, these profits are all in the land, in other words, they have not yet been realized.
The current drop in land prices means that the assets of businesses, real estate companies and ordinary individuals are shrinking.
The value of the land mortgaged to the bank is shrinking, but the loan still exists.
At the beginning, the bank actually took out its own hard-earned money to lend to real estate and individuals based on the market price of the land.
The financing amount is generally 70% of the secured land price, but bold banks such as China Everbright Bank dare to lend at 120% of the land price!
Land is not as valuable as before, but real estate and bank loans owed by individuals are still there.
In other words, no matter how the land price will fall in the future, this loan cannot be reduced by a single cent.
And when the land price falls to a certain level, there may be a supply shortage!
Because everyone feels that their land is no longer worth the price, but they still need to pay for high loans.
Of course not! Besides, the reason why the land price was so high in the first place might be because of your bank.
Sumitomo in front and Fuji behind, this is the best proof!
Once the supply is defaulted, those worthless lands will become non-performing assets of the bank.
Because the loans it issued were real money, but the land it recovered was worthless.
If non-performing assets exceed a certain level, the bank will become insolvent.
What is the end point of insolvency? Bankruptcy!
Bank bankruptcy?!
Think about the responsibilities that banks bear now? !
It is providing support for securities companies, stock markets, and property markets!
Chain effect! A single move can affect the entire body, and this is how avalanches occur.
However, the current situation is not that bad yet, and both securities companies and the Ministry of Finance are considering countermeasures.
Besides, although land prices are falling, they are still slightly higher than last year.
Many real estate companies and even the Ministry of Finance are still hoping that prices will go back up.
After all, no one can predict the market, and the market is unpredictable.
