Slow burn - Page 3
From Griffith REVIEW Edition 25: After the Crisis
© Copyright Griffith University & the author.
Written by Colin Mills
TWO YEARS LATER, I was rapidly approaching burnout. I had now moved firms twice since 1988, a mercenary with an Excel spreadsheet, and was head of a department of about forty analysts and support staff at yet another European investment bank. I was a resource allocator, dispute mediator, recruiting agent, kindergarten cop, bum-wiper and whip-cracker. I hated it, weary of the politics, appalled at how much certain individuals thought of themselves and how much the bank felt it needed to pay to retain them.
‘And so,' I said as the door of my little office clicked softly shut, ‘this year the bank has decided to award you a bonus of two hundred and fifty thousand US dollars.' Kohno sat motionless but I could tell his mind was working. His dark eyes were unmoved behind thick-rimmed glasses. He was doing the maths. Was it more or less than he was expecting, more or less than he could get from a rival bank, more or less than he was entitled to? Should he appear aloof and unimpressed in the hope that he would get more? Perhaps the bank would cough up a bit extra if it thought he might defect to a competitor, but was it worth alienating the firm? How much was he prepared to piss me off?
After a moment, he mumbled, ‘Uh, okay,' and permitted me a small smile before leaving. I realised he had not thanked me, and felt unutterably depressed. Money emboldens, strokes your sense of self-worth, especially if you have little of either to begin with.
I felt my sense of reality dissolving when I was required to mediate a dispute between a Japanese analyst and her assistant. Seated beside each other, the women despised each other so much they communicated only by email. Neither party wanted peace, only victory.
‘Stop whining,' James would tell me over beers after he left the finance industry to run his own internet and media company, in 1996. ‘Get your nose back in the trough.'
LIFE IN TOKYO IN THE LATE 1990s hadn't changed all that much, but the smaller regional cities that I would occasionally visit for company interviews were withering on the vine. Bridges had been built to nowhere, international airports erected in tiny regional towns linked by four-lane highways, but now the expenditure was petering out. With property prices in freefall, land-owners no longer needed to hang signs on their houses to ward off greedy yakuza. Golf clubs across the country were going bust. The Iranians had vanished almost overnight from Yoyogi Park, deported en masse after demand for their labour evaporated.
My partners and I quit our investment-bank jobs and established our own money-management firm in 1998. We were tired of bank bureaucracy and, despite the risk, preferred the eat-what-you-kill simplicity of working for ourselves. I loved the solitude, and company interviews were more fun now that I wasn't writing reports for publication.
The internet boom came and went; another head fake, another rally, another decline to a new low in 2003 before Prime Minister Koizumi pumped two trillion yen into Resona, putting a floor under the banking system.
In my little office in Kamiyacho, I was forced to hang up the phone when the ultranationalists charged south along Sakurada-dori, headed for the Russian Embassy, unintelligible propaganda blaring from the loudspeakers atop their huge black trucks. The middle-aged barber in the basement made me uncomfortable with tales of his sex-tourist jaunts to coastal Chinese cities, his sense of entitlement unsettling me. Each month, the fawning representative of the landlord would stop by, ostensibly to hand-deliver the rent invoice but really to keep an eye on me, his enquiries about the likely length of my stay masking a desire to replace me with a tenant in a more familiar or respectable line of work.
By the time Koizumi sang ‘Love Me Tender', in 2006, Japan looked as if it had finally shaken off its post-bubble blues. Many Japanese companies had at last begun to realise they were better off engaging their shareholders. I began to feel empowered.
Over the four years to early 2007, corporate earnings rose to a high, and the stock market more than doubled from its 2003 low as exports boomed on demand from China and the US. Corporate governance improved; dividend payouts and share buy-backs achieved record levels. Company balance sheets piled up with cash after years of restructuring, and foreign ownership of Japanese shares hit a historical peak of 28 per cent.
By then I had my hopes up again. It was the last time.
IN OCTOBER 2008, the benchmark TOPIX stock-price index skidded to a twenty-six-year low, down three-quarters from its peak of nineteen years earlier. Then, I had believed stock markets in developed economies experience peaks and troughs but generally trend upwards over time. Japan turned out to be an exception, with the nadirs of 1992, 1998, 2003 and 2008 all lower than the one before, the market smouldering endlessly but unable to ignite. And no economist or stockbroker can quantify the spiritual rot that set in somewhere along the way.
Our little company – small but perfectly formed, my business partner and I used to joke – had seven employees at its peak but by last year was reduced to the two of us. In October, the decision to liquidate our sole fund was made for us: after ten years' slog, we had to salvage what we could. We resolved to distribute what was left of the money to unit holders, and let the screen go blank.
In March 2009, the Tokyo stock market ebbed to yet another low for the quarter-century – below even the level recorded last October – before rebounding a little. GDP growth for the first quarter of 2009 was minus 15 per cent, the worst result since World War II. The OECD is expecting Japan's gross public debt to increase to double its GDP in 2010.
The Nobel economics laureate Paul Krugman wrote recently, ‘Japan's lost decade – yes, growth was slow, but there wasn't mass unemployment or mass suffering – is actually starting to look pretty good.' True, depression was averted; but mass unemployment and mass suffering still lie ahead if Japan can't address its low return on capital, ossified political institutions and anaemic domestic-consumption growth. An American friend – a long-time Tokyo resident now married to a local – told me Japan has become a ‘can't-do culture'. He's relocating to San Francisco to ensure his infant son has more opportunities than Japanese boys.
Six months have passed since I ended my association with Japan. I'm puzzled by an absence of emotion: some of the stoicism and resignation of the Japanese has rubbed off on me. I am desensitised to crisis. Whatever regret I might have felt is offset by relief that I'm back home and not broke. I'm out. ♦