Review: Saving the Sun

We have to read this book for External Enviroment; I finished it this past weekend.

It's pretty interesting. It charts the rise and fall of Japan's Long Term Credit Bank (長期信用銀行), its nationalization in the late 1990s, and its rebirth as Shinsei Bank (新生銀行). There's a pun in there -- Shinsei means new birth.

Basically, LTCB outlasted its role as a provider of credit to non-keiretsu (系列）companies. In the late 1980s, when a strong yen -- combined with a real-estate craze -- caused companies to start throwing money around like monkey poo, every bank in Japan jumped on the bandwagon and issued loans up the wazoo.

The good economy didn't last though, and when bad times hit, the Japanese system didn't allow companies to go bankrupt. Rather than let these (typically big) companies fail and then let the economy renew itself, the government forced banks to renew loans to those companies at super low interest rates. This crippling situation, akin to keeping companies on life support, lasted all through the 1990s, staving off economic collapse but preventing economic recovery. This period is called the Ushinawareta Juunen (失われた十年), or Lost Decade.

Surprisingly, the problem persists even today, though it's masked by the boom in Japan resulting from the rise of China. Shinsei is doing well, with bad loans only 5% of its portfolio, but the rest of Japan doesn't seem to be doing so well.

The only thing I didn't like was the tagline: "How Wall Street mavericks shook up Japan's financial world and made billions." It makes the book sound imperialistic, which is both inappropriate and misleading -- they weren't really mavericks. Yes, they made billions and yes, that irritated a few people, but that was because they bought out a company with serious problems, turned it around, and got it healthy enough to issue an IPO. Unless you consider capitalism a "maverick" way of life, this isn't all that strange.