The Conglomerate Family Became A Villain [EN]: Chapter 285

285. The End (3)

The atmosphere within the Japanese cabinet was grim.

“All remedies have failed.”

“If we continue like this, Japan will collapse.”

The surge in stock prices and real estate, far from encouraging productivity, was fostering a culture of speculation.

People were taking on debt without a second thought and declaring that saving was pointless.

“The account balances of all the banks are decreasing.”

“Banks are the biggest problem. Regardless of deposit levels, they’re focused solely on pushing loan products.”

The Bank of Japan, under pressure from the government, raised interest rates twice, but the Japanese stock market stubbornly broke through the 38,000 mark.

Then, the voices of ministers from the defense and foreign affairs sectors grew louder.

“Well! What are we going to do now?”

“See? Can we even manage domestic affairs properly like this?”

“Everyone, cut off your ties with corporations. Only then can the country stand upright.”

They were giving cold looks to the economic ministers.

It was clear they believed the current situation was a direct result of the economic ministers’ lax response and prioritization of corporate convenience.

The Prime Minister tried to ease the tense atmosphere.

“Now, now. What good does it do to fight amongst ourselves? We must join forces to solve this crisis.”

The faces of the economic ministers were darker than ever.

At that moment, a man sitting on the left cautiously spoke.

“Your Excellency, I don’t believe there’s anything more we can do.”

The Prime Minister’s brow furrowed deeply.

“There’s nothing we can do? What do you mean?”

The minister who had spoken earlier elaborated.

“Your Excellency, I believe the current economic situation has deteriorated too far for us to rectify.”

The Prime Minister couldn’t help but narrow his eyes.

“If we can’t solve it, who can?”

The ministers gathered were the leaders of the Japanese government, the individuals who steered the nation.

“Isn’t there the possibility of a new cabinet?”

The next cabinet.

At that single phrase, the Prime Minister fell silent.

‘Does that mean our role is over?’

A general resignation of the cabinet would have to occur, and a new cabinet would be formed through elections.

The minister was suggesting this course of action.

The Prime Minister frowned deeply and asked.

“Is that truly the only way?”

No one could answer the Prime Minister’s question. Even the minister who had spoken a moment ago simply bowed his head.

The bubble in the Japanese economy was undeniably a serious situation.

The media criticized the cabinet’s incompetence daily, and the resentment of those who didn’t own homes was even greater than the real estate bubble itself.

“Your Excellency, it would be best to resolve this through elections.”

Dissolve the cabinet and form a new one through elections.

The Prime Minister clenched both fists tightly.

“I had hoped to lighten the burden on the next cabinet, but instead, I’ve made it heavier.”

The ministers’ voices were subdued at his words.

“Your Excellency, we are sorry.”

“Our abilities were insufficient.”

“We deeply feel the responsibility for this situation.”

The Prime Minister let out a long sigh.

“Hoo… I won’t say it’s okay. But I want to acknowledge that everyone has worked hard.”

He and the cabinet had attempted to deflate the real estate and stock market bubble by raising interest rates twice.

However, a total interest rate hike of 1.5% was like “pissing on a burn” [an idiom meaning a futile effort].

The market did not respond to their interest rate hikes, and public opinion and the economic situation spiraled downwards.

“Your Excellency, you have also worked hard.”

The Prime Minister said with a bitter expression.

“Unfortunately, our last meeting concludes like this.”

The next day.

The Japanese cabinet decided to resign en masse and announced that a new cabinet would be formed following the August elections.

* * *

“Charlie, what are you looking at so intently?”

At Sarah’s question, Jung Hyun-woo put down the newspaper.

“The Japanese cabinet has resigned en masse.”

“Japan has a prime minister, not a president, right?”

“It’s the same as in England.”

“The cabinet resigned despite the economic boom; did a scandal break out?”

Jung Hyun-woo shook his head and replied.

“It’s not an economic boom; it’s a bubble. The Japanese media is hammering the government every day.”

“To try and catch the bubble?”

As Sarah sat next to him and asked, Jung Hyun-woo reached out and hugged her.

“A place called Hatoido in Ginza 5-chome [a prestigious shopping district in Tokyo] was traded at 150 million yen per *tsubo* [approximately 3.3 square meters].”

150 million yen.

Even by 2020s standards, it was a huge sum, approaching 1.5 billion won [South Korean currency].

‘I’ve seen records of it reaching 100 million yen per *tsubo*, but I didn’t know it would rise to 150 million yen.’

Converted to Korean prices in the 2020s, it’s almost 20 billion won per *tsubo*.

It was a price that defied description, bordering on insane.

“Was it really traded at 150 million yen per *tsubo*?”

Sarah wondered if there was a typo, an extra zero added.

‘No matter how expensive it is, the price of one *tsubo* of land shouldn’t be the price of a house.’

Jung Hyun-woo shrugged his shoulders and said.

“It’s not a mistake. Membership in the Yamato Group’s golf course was also sold at a similar price.”

Sarah asked with an incredulous face.

“Really?”

“Really. Prominent Japanese investors are also starting to say that something is seriously wrong.”

“What does John say?”

John Pierre was still overseeing the withdrawal from the Tokyo branch.

“He says it would be best to leave now.”

He had hesitated to withdraw from Japan only at the beginning of the year. However, as the real estate and stock markets spiraled out of control, he had no choice but to concede.

“Charlie won again.”

Jung Hyun-woo said in a soft voice.

“Where is there winning and losing? I’m just following the flow.”

“The person who knows the waterway is called the captain.”

“Is it a waterway?”

Sarah smiled brightly.

“I’m relieved to have one less worry.”

She had thought the Victoria Fund’s crisis was over. But the reality was different from what she had imagined.

A few days later.

The Nikkei index rose again to 38,231, shaking all of Japan.

And following the Nikkei index, the real estate appreciation rate was announced.

“A 25% increase compared to last year?”

“What is the cabinet doing!”

“Didn’t they say they would address real estate in the election?”

Not only reporters but also the opposition party’s criticism targeted the ruling party.

The new Prime Minister, Kaifu Toshiki, had a parched mouth. He mentioned real estate as the first issue at the first meeting of the newly formed cabinet.

“I believe we must address the real estate overheating.”

The reason he emphasized the need to control real estate was its connection to the overheating of the Japanese stock market.

In normal circumstances, funds flowing into the stock market would be used for corporate management.

However, Japan in the late 1980s was different. Companies weren’t using the funds obtained from the stock market for operations but for real estate investment.

Many Japanese companies owned a variety of real estate, and every time the stock market rose, more money flowed into real estate.

“I believe we should raise interest rates significantly.”

In August 1989, Japan’s base interest rate was 4%, and the loan interest rate was 5.5%, about 1.5% higher.

This was not an exceptionally low interest rate. Nevertheless, real estate prices continued to rise.

“How much should we raise it?”

“I think it would be good to raise it by about 50% more.”

“50% would be…”

“If we set the base interest rate at 6%, I believe real estate will be brought under control to some extent.”

If the base interest rate was 6%, the loan interest rate was likely to be close to 8%.

One of the surprised ministers raised his voice.

“Are you suggesting we return to the oil shock era?”

The minister who had initially proposed the idea responded.

“The current situation is worse than the oil shock.”

Prime Minister Kaifu narrowed his brow.

“If we raise the base interest rate to 6%, companies will be severely impacted.”

He desired a clever solution that would cool down the real estate market without harming Japanese companies.

But such a solution didn’t exist.

“Your Excellency, we cannot repeat the mistakes of the previous cabinet.”

The mistakes of the previous cabinet.

People criticized the previous cabinet for not actively regulating real estate investment.

“Hmm…”

Prime Minister Kaifu couldn’t easily accept the 6% base interest rate.

‘I wonder if I’m strangling Japanese companies with my own hands.’

Japanese export companies often operated with substantial loans.

“Interest rate hikes alone may not solve the problem.”

The speaker was the Chief Cabinet Secretary.

Prime Minister Kaifu asked him.

“Do you believe there is something else we need to do besides raising interest rates?”

“First of all, we must stop the banks’ indiscriminate lending.”

Raising interest rates was a signal to companies and stores taking out loans, and he was suggesting that a separate signal should be sent to the banks.

Prime Minister Kaifu slightly narrowed his brow after hearing his opinion.

“The bank president opposes that opinion.”

The bank president that Prime Minister Kaifu mentioned was Tsuchida, the president of the Bank of Japan.

President Tsuchida argued that he would accept interest rate hikes, but artificially prohibiting loans was not in line with capitalism.

Minister of Posts and Telecommunications Senpachi raised his voice.

“Your Excellency, does it make sense for the country’s economy to collapse because of one bank president?”

Following the Minister of Posts and Telecommunications, Minister of Education Kazuya raised his voice.

“That’s right! We must no longer be swayed by the Bank of Japan.”

The new ministers argued that the cabinet should take a strong stance.

Prime Minister Kaifu nodded at their words.

“Hmm, I understand your intentions. But since we cannot regulate loans right now, let’s set the direction to raise interest rates once again.”

He wanted to raise the base interest rate to 5% to warn the market.

* * *

Victoria Corporation announced good results in the third quarter as well, but its market capitalization was on the verge of falling out of the top 5 in the world. Of course, Jung Hyun-woo was not concerned about the ranking.

Immediately after the Victoria Corporation executive meeting, Jung Hyun-woo, Sarah, and Robert gathered.

This time, it wasn’t a meeting to ask Jung Hyun-woo something.

“The world has become strange.”

At Robert’s words, Jung Hyun-woo raised his voice.

“What do you mean by strange?”

“Charlie, no matter how hard we try, our ranking is falling, isn’t it?”

Victoria Corporation was achieving results in all fields.

From financial services, network system construction, data centers, game development, game distribution, to fund investment, there was no field in which they weren’t making profits.

Jung Hyun-woo replied calmly.

“Because there are those who are riding the elevator up.”

“Aren’t they riding a rocket, not an elevator?”

Robert looked as if he had tasted something bitter.

“Robert, still, our stock price is maintaining above $60, isn’t it?”

Entering 1989, Victoria Corporation’s stock price was stably maintaining above $60.

Jung Hyun-woo seemed satisfied with that.

“As the companies above us are getting farther and farther away, I even feel like we’re standing still.”

Sarah said, comforting Robert.

“We’re not standing still; companies like IBM are going backwards.”

IBM was losing its PC market share to challengers like Dell and Compaq, and its market capitalization was decreasing.

“Come to think of it, Charlie didn’t invest in IBM, did he?”

Jung Hyun-woo was investing in American IT companies, but IBM was an exception.

“Because it’s Dell’s competitor.”

Sarah asked again.

“Is that the only reason?”

She suspected there was another reason.

“Actually, it’s also because IBM’s prospects didn’t look very bright.”

Robert also agreed with his opinion.

“Recently, IBM has been showing a slightly less flexible approach.”

Originally, IBM was a computer manufacturer famous for its high compatibility. However, the situation changed in the late 1980s. Compaq and Dell shook the market by introducing customized PCs that were completely different from the existing Apple or IBM.

“In the future, companies that make core components that go into PCs will be more 주목받게 [receiving attention], rather than PC manufacturers.”

Sarah tilted her head after hearing his words.

“Not software companies, but component companies will be 주목받게?”

“Because the difference in technology will start to become apparent.”

Companies with technology will survive, and companies without technology will be eliminated.

“Hmm, I don’t know.”

Their conversation started with the Japanese bubble, touched on the IT business, and then circled back to China.

“Charlie, is the investment in China okay?”

At Robert’s question, Jung Hyun-woo replied calmly.

“It’ll be okay because I bought it cheap.”

This time, Sarah asked him.

“We didn’t lose money this quarter, did we?”

Jung Hyun-woo stuck out his tongue slightly.

“We lost a little.”

“You already lost money?”

It hadn’t even been two months since Victoria Fund acquired the Chinese investment from JP Morgan.

“Actually, we’re losing money every day.”

After the Tiananmen Square incident, Chinese stock prices were declining. It was only natural that losses were increasing.

‘Tsk, did I buy it too early?’

He knew that the Chinese economy would recover in the future, but he couldn’t completely relax.

Sarah raised her voice again.

“What about Japan?”

Jung Hyun-woo tapped the table with a pen at her question.

Tuk. Tuk.

It meant that it was difficult to answer.

Sarah said in a soft voice.

“The loss is big.”

Jung Hyun-woo stopped the pen with a long sigh.

“Hoo… According to John, the loss this month alone is over $2 billion.”

Robert whistled briefly after hearing his words.

“Wow! Charlie blew another Yankee [a billion dollars].”

Victoria Fund was losing more than it was earning.

“Charlie, isn’t it dangerous?”

The shadow fell on Sarah’s bright face. Of course, what she was worried about was not the money she was losing but Jung Hyun-woo’s well-being.

“It’s okay.”

Since the new cabinet was formed, the Nikkei index had been fluctuating around the 38,000 range.

‘Hmm, it’s about time for Japanese real estate and stocks to be caught.’

He thought it was time now that the Japanese base interest rate had risen to 5%.

But the Japanese stock market and real estate prices weren’t easily falling.

‘Is something missing? Some kind of event?’

The collapse of the Japanese bubble that he knew started with interest rates rising more than twice.

However, even in the second half of 1989, when interest rates had doubled, Japanese real estate wasn’t easily 꺾이지 [being꺾이지 is difficult to translate directly, but in this context, it means “subdued” or “brought under control”].

‘It’s going to be difficult if it keeps going like this.’

Just when he thought some kind of event was needed.

A major event broke out in Europe, not Japan.

It was the fall of the Berlin Wall.

* * *

“Spring has come to Europe!”

As the Berlin Wall fell, various parts of Eastern Europe began to move.

The German Democratic Republic (East Germany) couldn’t last a month after the fall of the Berlin Wall, and in Romania, a revolution broke out and the dictator was overthrown from power.

“I heard that Ceausescu was shot.”

“It’s his own fault.”

The man who was meeting with Jung Hyun-woo was Jeremy Spin, the COO of Victoria Fund.

“Shall we talk about our side of the story?”

The reason Jung Hyun-woo raised his voice was that the Japanese stock market and real estate hadn’t 꺾이지 even though it was December.

“Charlie, the loss is too serious.”

The data that Jeremy Spin presented to him was the loss that Victoria Fund had suffered from short selling this year.

Jung Hyun-woo narrowed his brow as he examined the data.

“The loss from short selling is over $30 billion.”

$30 billion was a huge sum that could acquire large companies such as Boeing or GM.

“It’s a good thing we made profits from real estate and the stock market, or it would have been a big problem.”

This year, profits covered the losses, but the problem was next year.

“Charlie, we’ve disposed of 98% of Japanese real estate and 87% of stocks.”

Victoria Fund’s withdrawal from Japan was as good as complete.

“How is John?”

Jeremy Spin asked back.

“Doesn’t Charlie talk to John directly?”

“This is between the owner and the manager.”

It meant that he wanted to hear the story between friends.

“He seems frustrated.”

Even though interest rates had risen, the real estate and stock markets were 요지부동 [immovable], so he had no choice but to be frustrated.

“Please tell him to be patient a little longer.”

“Can’t Charlie say it?”

“Wouldn’t what I say and what Jeremy says be different?”

It meant that a friend’s comfort would be more helpful.

“Okay. I’ll talk to him about that.”

It was around the time when the two people’s conversation was coming to an end.

Ttiririk. Ttiririk.

Jeremy Spin reached out and answered the phone.

“This is Jeremy.”

After a while, his eyes widened.

“What?”

Ttak!

As soon as he hung up the phone, he raised his voice.

“Charlie, it’s done!”

“What’s done?”

“I heard that the Basic Land Act has been passed in Japan.”

The Basic Land Act was a new bill that could suppress land transactions with strong speculative nature.

In other words, it was announced that real estate speculation would be suppressed by law.

‘Was this the trigger for the Japanese bubble?’

Many experts talked about high interest rates as the trigger for the collapse of the Japanese real estate bubble, but in actual history, the trigger was the Basic Land Act, not high interest rates.