A window into the stalled economy of Japan through the extraordinary story of Shinsei, a Japanese bank that collapsed in the country’s economic bubble of the 1980s, this is a character-driven tale of two economic systems - Japan’s and America’s - at war with each other.
Why does anyone care about the fate of a Japanese bank? Because Japan is one of the main engines of the world economy and, without a revived Japan, Americans will suffer. That’s why the Clinton administration made Japan’s economic recovery a priority. But Japan will not escape its decade of economic doldrums until it reforms its antiquated banking system. That’s why a group of American investors bought one of Japan’s largest banks after it collapsed under the weight of its bad real estate loans. By some estimates, the amount of bad loans is as high as $1 trillion.
A trillion dollars. It’s an unimaginable sum. But it could be the amount of bad loans held by Japanese banks after a decade of Japan’s real estate bubble. Officially the figure is closer to $500 billion but many experts fear it could be as much as $2 trillion; and all of it has to be written off, evaporated from the balance sheets of Japan’s banks, if the country’s economy is ever to revive. To put the figure in perspective, it’s the entire economy of Germany or half the economy of Great Britain. (Poof. It’s gone.) Some estimates put the figure as high as $2 trillion: imagine the US Federal government taking a year off and leaving Americans to fend for themselves. That’s what it would take to deal with this loss.
In America, the loans would have been written off and the companies who received them would have been forced into bankruptcy. In Japan, however, capitalism comes with some very powerful cultural restraints. Saving the Sun tells the story of the country’s interlocking system of cronyism and its antiquated capital structure that feared Western-style investment banking. Following the careers of several Japanese bankers as they struggled to reform the system, Gillian Tett shows how a group of Americans like John Reed, Paul Volcker, Vernon Jordan and Deryck Maugham hoped to change the Japanese system. And though the foreigners would become very rich in the process, Tett shows how the Japanese discovered they didn’t like Western capitalism at all.