Saving the Sun tells the story of the world's largest private equity deal where American investors made billions of dollars rehabilitating Shinsei, a failed Japanese bank. Within that business saga is the dramatic tale of Japan's brightest financial minds, the men who made the Japanese economic miracle come to life, and their struggle against the economic failure in the 1990s. Into this climate of despair, where Japan seemed incapable of reviving prosperity, came a group of wily and determined Americans who would discover just how different the Japanese really are.
Financial journalist Tett asks why the economic engine that achieved phenomenal growth for Japan between 1953 and 1970 has been stalled since 1990, with 2003 marking the fifth consecutive year of deflation. Puzzled by the persistent stagnation and dissatisfied with prevailing macroeconomic explanations, Tett has taken an intriguing alternate route to investigate what has gone wrong: she focuses on the history of the Long Term Credit Bank (LTCB) as it evolved from financing industrial customers during the boom years to expanding its portfolio with real estate loans in the 1980s and recent attempts to reinvent itself as Shinsei Bank after being purchased by a U.S. consortium in 2000. The twists and turns of the fascinating LTCB saga are cultural and political eye-openers, but Tett also thinks that the problems she found in the bank are symptomatic of Japan's economy as a whole. She argues that one consequence of Japan's reliance on old ways of doing business was the proliferation of nonperforming loans, burdening the banking system to the tune of more than a trillion dollars in the 1990s; she sees the meltdown of the LTCB and the need to put it up for sale as an inevitable result of failure to get tough with rafts of deadbeat borrowers. When the determinedly entrepreneurial U.S. consortium took over the LTCB with a vision of transforming it into a viable commercial bank, it soon discovered a vast number of hidden bad loans along with unexpected resistance to the consortium's new business strategies. Her candid assessment in this lively volume is certain to stir debate since she points an accusatory finger at what she characterizes as paralyzing traditions of consensus thinking, harmony, hierarchy, insularity and resistance to change, especially if the proposed changes originate with non-Japanese. Illus. not seen by PW.
Copyright 2003 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
-- PUBLISHERS WEEKLY.
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September 07, 2004
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Excerpt from Saving the Sun by Gillian Tett
After the war we had a system that was really a type of socialism under the disguise of capitalism. The bureaucrats directed everything, in a wise way, and we all accepted that and worked together very hard. The system worked well for a few decades.
-- Yoshiyuki Fujisawa, former chairman of IBJ
In the evening of June 8, 1999, the Tokyo police telephoned Katsunobu Onogi at his house. "Tomorrow we are going to arrest you," the caller said politely, "please take care to be ready!" Staging the arrest so everything could be done in the proper fashion, the police asked Onogi to suggest a convenient location. Japan is clearly not a country that leaves room for surprises.
Nor was Onogi surprised. As he put down the telephone, part of him felt relieved. He was grateful that the police did not plan to drag him away in a disorderly fashion. At the age of sixty-three, Onogi had spent his entire life behaving with dignity and he had absolutely no intention of going to prison without being properly attired in the suit and tie that was the badge of a Japanese "salaryman." The possibility of such shame appalled him.
At the same time, Onogi was terrified, too. Even with the correct clothes -- and with all the perfect etiquette -- prison was a frightening place. Onogi had always been an intellectual and methodical man. He wore large, bookish glasses and an impassive expression on his square face, broken only by a tense half smile that turned down at the corners of his mouth. Whenever he faced a problem, he liked to scour history books for answers and in the weeks leading up to his arrest, Onogi had furtively peeked into bookstores to see if there was any guide to what a middle-aged man should do in prison.
Alas, there was no way to bone up on the ordeal ahead. Nor had Onogi's professional career given him any idea of what to expect in jail. Onogi could scarcely have imagined that he would share the fate of a common criminal. He had spent his whole life believing that he was a member of the elite, a respectable man who did things right, according to Japanese ideas of duty. He had slaved for forty years of his life in Long Term Credit Bank, one of Japan's most prestigious banks, where he had risen to become president. Normally, such service would have guaranteed Onogi a comfortable retirement. Holidays in Hawaii; rounds of golf; group trips with former colleagues to Japan's hot springs; the satisfaction of knowing that he had served his country well. That was how most sixty-three-year-old Japanese bankers lived.
But somehow it had gone horribly wrong for Onogi. LTCB had collapsed with almost $50 billion of bad loans, engulfing Onogi and his employees all in a shame that was too much for some of the most senior LTCB bankers to bear. A few weeks earlier, fifty-nine-year-old Takashi Uehara -- the man who was expected to succeed Onogi as LTCB president -- also received a telephone call from the police warning that his arrest was imminent: Uehara and the other LTCB managers were accused of hiding the bank's bad loans. Uehara decided to commit suicide. Once the Japanese believed that the correct way to kill oneself was to slash the stomach open with four precise strokes of a sword, letting the guts spill out, a method known as seppuku. Nowadays, that was deemed "selfish," since it created a bloody mess that needed to be cleaned up. Consequently, when executives committed suicide in the 1990s, they usually hung themselves in an anonymous hotel -- to spare their family "shock." Uehara had always been a stickler for etiquette: He checked himself into a little suburban hotel and hanged himself, leaving a note on the table for Onogi and the other LTCB bankers.