Alamut


Banksters and Gangsters: Japan’s Yakuza recession
January 3, 2010, 5:58 pm
Filed under: Drugs, Economic Crisis, Organised Crime, Social Engineering

A while ago, I was reading Government of the Shadows: Parapolitics and Criminal Sovereignty, when I came across this curious passage within it:

The role that the yakuza played in the speculative bubble of the 1980s is now known. Through their control of drug trafficking, prostitution and employment in the building sector and public works, as well as their interests in the very lucrative business of pachinko – electric billiard games which generate one and a half times the turnover of the Japanese automobile sector, some 6 per cent of the GDP – organised crime has invaded the real estate co-operatives (jusen), the leading brokerages and the shareholders’ meetings of certain large companies.

Their access to credit enables them to launder their illicit profits in speculative businesses, where they tend to prefer high-risk operations. When the speculative bubble burst at the beginning of the 1990s, stock and real estate prices dropped, and bad debts swamped the banks and other financial institutions. The former director of Japan’s National Police Agency, Raisuke Miyawaki, estimates that 10 per cent of these debts are yakuza-related and an additional 30 per cent have probable links with other organised crime, which would put non-recoverable debt attributable to gangsters at somewhere between $75 billion and $300 billion, that is, 6.5 per cent of GDP.

After having speculated on the upside, the yakuza then speculated on the downside, trying to buy up real estate assets at fire sale prices and by blocking, through targeted operations, the liquidation of the liabilities of certain firms that resort to their illegal services in order to escape their obligations.

However, this doesn’t explain exactly how central the Yakuza role in fuelling the speculation was, and I was unaware of this myself until I got a copy of Misha Glenny’s fantastic McMafia this Christmas:

“The corporations wanted to buy land in clusters, big plots,” continued Miyawaki [the Anti-Organised Crime Tsar], “but things didin’t always go that smoothly.  A lot of people didn’t want to sell, and so the companies and banks turned to muscle – the yakuza.

First, the yakuza would offer financial incentives for tenants to leave their apartments, while negotiating with the owner to buy the land.  And if either the tenant or the owner refused to budge, then the yakuza would issue verbal threats or a physical warning.  (One of the most common and tasteless entailed spreading human faeces in and around the desired property).  Those who remained stubborn then ran the gauntlet of yakuza intimidation.  In its mild form, this might involve the notorious sound trucks (audible to this day in Tokyo), which would park outside a property and blast frentic political rhetoric from the huge loudspeakers, rendering life impossible for the targets.  The final stage of intimidation was of course physical assault and murder.

[…]

The banks, the corporations, the politicians (who were soon in the thick of it) were making tens of billions in speculative deals.  At first, the jamboree seemed to confirm that a superior form of capitalism had evolved from Japan’s perculiar culture.  With the price of land doubling each month, nobody seemed to notice the wholesale removal of thousands of unwilling, disenfranchised residents from their apartments and houses.  This could only happen because the core institutions of the Japanese state and economy were content to work hand-in-glove with organised crime at the expense of ordinary citizens.

And yet, in spite of this, people were still surprised when organised crime, in the form of drug cartels, helped keep financial institutions afloat during the worst of the current economic crisis.

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