The Sinking of Mount Fuji
One month later. The cover of the Economist, Britain’s renowned economic magazine, featured an image of Mount Fuji collapsing. The headline was even more provocative: “Is Mount Fuji Sinking?” The special feature likened Japan to the sinking mountain, coldly analyzing how the nation’s status as an economic superpower had crumbled in mere years.
Thanks to NextCom, which had recently expanded its news service to include weekly magazines, Yoo Jae-won could read the article comfortably from his seat without visiting a bookstore.
“As expected from a weekly with 149 years of tradition.”
The Economist identified the collapse of the real estate bubble as the primary cause. Japan’s real economy had been sound, but what had supported it was the sky-high land prices. Companies had poured their profits into real estate speculation, and countless gap investments had emerged—borrowing billions on the back of tiny plots to purchase cheaper land. This had all been possible because of the unshakable belief that property prices would keep rising forever.
But every lavish feast ends with an unimaginable bill, and after the stock market peaked in 1989, it began to fall. When Japan’s Ministry of Finance imposed strict limits on housing loan financing, real estate prices plummeted, triggering a chain reaction of collapses. The Economist concluded that the Nikkei’s crash in May 1992 was merely an extension of the bubble’s collapse that had begun two years earlier, warning that an even greater Japanese economic tsunami could be coming and that the world must prepare.
“Yes. This is it.”
Yoo Jae-won gave the monitor a thumbs-up. Not just with his finger—he clicked the thumbs-up icon at the bottom of the article, adding one more to the count. It was a recently added feature on the NextCom bulletin board, still little more than a simple recommendation system, but it enabled sorting by user recommendations. Through it, other users could now see which articles were currently popular.
Japan’s economic situation remained deeply negative.
“I was just the lever,” Yoo Jae-won grumbled at the article. Anger toward ID Investment in Japan was no joke. Japanese television portrayed him as a villain who had single-handedly destroyed the once-healthy Japanese economy. He didn’t deny his role. He had merely provided the spark; the fundamental responsibility lay with those who had mismanaged the economy.
The method Yoo Jae-won used to deliver the final blow to the already reeling Nikkei was simple: the collapse of psychological support lines. No matter how far prices fell, people clung to the belief that they would never drop below a certain level. Of course, it was baseless superstition. Stock prices could always hit new lows. Yet once charts and moving averages appeared, psychological barriers emerged as well. When prices approached the 15-day, 30-day, or 120-day moving averages, people attached all sorts of reasons to interpret them. Reaching the 120-day line suggested the decline was over; nearing the 5- or 10-day lines implied resistance that would prevent further rises.
Coincidentally, when Yoo Jae-won decided to strengthen his short position, the Nikkei was hovering right around its 120-day moving average. The psychological support line activated, and many began betting on a rebound, believing the bottom had been reached. ID Investment appeared to follow the market’s judgment by closing out its existing positions.
That was when ID Investment demonstrated just how terrifying unfounded market assumptions could be. Thirty minutes before the close, it launched a massive short bet worth three billion dollars. The Japanese exchange, which had seemed poised to close in the red, was suddenly flooded with blue. On the chart, a long blue bar stretched dramatically downward. The psychological barrier created by the 120-day moving average collapsed completely. The day ended.
Still, some believed tomorrow would surely be better. Though the session had ended in disarray, it had at least shown signs of bottoming out. Of course, that never happened.
“You have to give Wall Street’s greed its due. How else could they break the 10,000 line?”
From the next day onward, it was the turn of ID Investment’s copycats. Once ID Investment reset its massive short position, they followed suit. Enormous foreign capital flooded back into Japan’s financial markets, exploding the downward pressure. Against such overwhelming force from big players, psychological barriers meant nothing. The Nikkei’s 14,000 line collapsed immediately.
In the month since that day, the index had closed higher on only four days. The remaining eighteen days had been a relentless decline.
“Well, the Japanese government had to do something stupid.”
What fanned the flames was the Japanese government’s intervention in the foreign exchange market. When foreign money entered Japan’s financial markets, investors sold dollars and bought yen. Since the yen was the base currency on the Japanese exchange, the dollar’s value fell while the yen’s rose. For Japan, which lived on exports, this was catastrophic. A stronger yen raised the price of export goods, dealing a massive blow to competitiveness. With companies already going bankrupt due to chaos in real estate and financial markets, losing export strength on top of everything else was the worst possible outcome.
Eventually, the Ministry of Finance had no choice but to intervene artificially to stabilize the exchange rate. This time, currency speculators seeking arbitrage rushed in. The international foreign exchange market was several times larger than Japan’s financial market, and its ripple effects were correspondingly stronger. Artificial intervention became prime hunting ground for currency speculators. Japan’s situation was so urgent that the intervention was announced and executed simultaneously, sparking a direct confrontation between the Ministry of Finance and global currency speculators.
“I wonder what the end will look like.”
Yoo Jae-won had provided the spark, but even he couldn’t predict the final outcome.
“Surely not IMF?”
He mentioned the IMF, but remained skeptical. He remembered when the Asian financial crisis that began in Southeast Asia reached Korea. Weakened Korea had been unable to hold out and had no choice but to request IMF bailout funds. But Japan was a different caliber of nation. The idea of Japan requesting IMF assistance seemed far too excessive.
“Anyway, there’s still plenty of room for further decline. It’s no longer our concern, though.”
ID Investment had already closed out the additional three-billion-dollar position it had taken and washed its hands of the matter. Though it had been a short-term trade, returns exceeded 100 percent. Thanks to the strong yen, the profits were even larger. The additional capital deployed had been three billion dollars, but after settling all trades and transferring the funds to Hong Kong Shanghai Bank, the total reached seven billion dollars. Adding the 13 billion already set aside brought the grand total to 20 billion dollars—an enormous sum. Yoo Jae-won was confident that only a handful of people worldwide held 20 billion dollars in cash.
Yet when he looked at his account balance, his reaction was merely, “Hmm, quite a lot.” If he had stacked the cash physically and admired it, the reality might have felt more vivid, but now it was just numbers on a screen. More than anything, Yoo Jae-won believed cash should be kept only for emergencies; the rest should be converted into tangible assets.
There was a word: bourgeois. During the height of ideological conflict, it had appeared countless times paired with proletariat. Bourgeois meant capitalists who possessed money, but Yoo Jae-won defined it more strictly as the small number of people who owned the means of production. In the Middle Ages, they would have been feudal lords with land; in the modern era, they were those who owned massive factories, service outlets, or distribution networks. The reason a minority could control the world was precisely because they held such means.
“I suppose it’s time I did some serious shopping myself.”
Yoo Jae-won had no desire to become a bourgeois. After all, once the production revolution arrived in the future, the very concept of labor would change completely. In his previous life, misunderstanding of the production revolution and conflicts of interest between nations and classes had led to the worst possible outcome, but this time would be different. To make that happen, he needed to wield powerful influence in reality, and nothing was better for that than owning the means of production and technology.
“What would be good?”
A new report appeared on Yoo Jae-won’s monitor. It was a Japanese corporate trends report compiled by Goldman Sachs and JPMorgan. It analyzed everything from major Japanese conglomerates well-known to the public—Toyota, Sony, Sanyo—to niche powerhouses known only to specialists, such as Yaskawa Electric, Fanuc, and Inomata Chemical. This was originally a task for ID Investment’s managers, but since they had all been given vacation as a reward for exceeding targets—from Vice President Vincent Greenhill down to ordinary office staff—the report had been commissioned externally.
ID Investment’s group vacation had become the envy of everyone—not only other ID Group employees, but also on Wall Street and in Korea. After all, they had taken a chartered flight to the Maldives for a five-day group trip, followed by a week of personal leave—nearly two weeks of rest in total. The bonuses had been generous as well. Some received tens of millions of dollars without blinking. Even clerical staff who only handled paperwork received 100,000 dollars. There had been much talk about it. The bonuses were said to be excessive. Yoo Jae-won found it amusing that people who didn’t even own a single share of ID Investment stock were debating the bonuses.
There was a clear reason Yoo Jae-won had set such large bonuses: to secure absolute loyalty. After all, each investment manager at ID Investment handled at least hundreds of millions of dollars. In the case of the Nikkei futures trade, it was hundreds of millions of dollars as a baseline. Of course, safeguards had been installed to prevent embezzlement, but anything could happen during operations. With complex financial products, abnormal trades could go unnoticed by superiors for some time. Moreover, they dealt with many business secrets. The Nikkei futures trade had been conducted completely openly, but there would be many occasions in the future when secrecy was required. Leaks through investment managers were common, and some even sold information at high prices. The best way to prevent that was to reward their efforts properly.
Of course, all major decisions had been made by Yoo Jae-won, and he had also mobilized the capital. While some investment funds had been raised in Korea, they were not a large portion. Therefore, nearly all of the 20 billion dollars belonged to him, but distributing 0.3 percent to those who had executed the operation was hardly excessive. To Yoo Jae-won, even 0.3 percent seemed insufficient, yet people had made a fuss calling it too much—that was the problem. Still, the recipients themselves were satisfied, and talented individuals from other investment firms were showing signs of being swayed, so he was content.
“Hmm? Toyota? I’d love to buy it, but the owners won’t sell. Even if they did, the Japanese government would block it.”
Yoo Jae-won’s desire for Toyota was genuine. Toyota’s dominance in the American market was ongoing and would likely continue for decades. American-made cars, notorious for poor fuel efficiency and frequent breakdowns, were rejected even by Americans themselves. Acquiring Toyota would have put him on easy street, but it was never a company that would come up for sale. The same went for Sony or NTT.
“Sanyo?”
Yoo Jae-won’s gaze, which had been moving slowly down the list, stopped at Sanyo. Its industry classification was electronics, but its core business was actually batteries and secondary batteries. It also produced many electronic products and had even ventured into semiconductors, boasting an octopus-like expansion. As was typical of companies that aggressively diversified, it had no major hits. The only somewhat decent product was its camcorder technology, which achieved moderate success with its compact size and good image quality.
“Camcorders? That’s a product that will disappear once smartphones arrive anyway.”
It held little appeal for Yoo Jae-won. With high-performance cameras, portable recorders, camcorders, and Walkmans all firmly categorized in his mind as products that would soon vanish, none of them interested him.
“I wish I could just buy the battery division.”
Sanyo’s core business unit was batteries. It held a vast number of original patents and possessed several leading technologies. It was also developing solar power, making it an ideal company for future growth. But it had far too many unnecessary appendages, so even if it came up for sale, he was reluctant to purchase it outright.
“I really wish I could buy just the battery division.”
Though grumbling, Yoo Jae-won placed a star next to Sanyo—an indication that he intended to acquire it.
After that, Yoo Jae-won’s checklist continued to grow. There was Nichicon, which made high-performance capacitors, and Kobayashi Seisakusho, a leader in CNC machining. There was also Onex, which produced special aluminum alloys. The stars kept accumulating until they exceeded ten. The common trait of the companies that received stars from Yoo Jae-won was that they possessed outstanding technology and know-how in their core fields.
“Let’s see.”
After extracting specific companies from the list, Yoo Jae-won began tapping on his calculator to roughly estimate how much it would cost to acquire the selected firms. For listed companies, he used the previous day’s closing price; for unlisted ones, he used known revenue figures.
“Huh? Did I calculate this right?”
The number that appeared was so coincidental that Yoo Jae-won recalculated.
“Three billion dollars?”
The total cost of acquiring more than ten large and small companies matched the amount he had first invested in the Nikkei when it was still high. Back then, the price had been so elevated that even acquiring Sanyo alone would have been difficult. Now, with Japanese stock prices having crashed through the floor, the same money could buy not only Sanyo but also a dozen other strong niche companies with plenty left over.
Yoo Jae-won felt he needed to add another line to his list of preconceptions about Japan: a tree that gives generously.
Once his shopping list was complete, Yoo Jae-won was about to send it to Vincent Greenhill but stopped. It wouldn’t be right to dump work on someone who was in the middle of vacation.
“He must be having fun in the Maldives right now.”
After the group trip, there was still a week of personal leave, so he would have to wait about ten more days. Since Japan’s economy wasn’t going to recover anytime soon, he could afford to give them that much time. After all, this Nikkei crash was unprecedented. From its 1989 peak of 38,857, it had fallen below 10,000 in just three years. In terms of the index, it had returned to 1983 levels. In his previous life, this bubble collapse had been called Japan’s “Lost Decade,” but this time it might become twenty years—or perhaps thirty.
“Oh, right! Other countries can proceed.”
Come to think of it, there was no need to wait until ID Investment’s staff returned. While ID Investment, which had been dealing with the Japanese exchange for months, was the ideal party for acquiring Japanese companies, other countries were different. The United States and Korea had plenty of suitable people.
“The time has finally come.”
—Yes? What do you mean by “time”?
“It’s time to begin acquiring cable operators.”
With his ample balance, Yoo Jae-won’s mood had grown considerably more generous, and he kindly explained to Henry Samuel, president of NextCom, who had accepted the sudden one-on-one chat request in a hurry.
—What? Already? Henry Samuel was startled. He had been the one who, after completing the ADSL modem and repeater, had insisted they should acquire cable TV. He had been overjoyed when Yoo Jae-won agreed. He had been counting the days until the D-Day he had been told would come that summer.
“Yes. Thanks to the tree that gives generously, funding came two months earlier than expected.”
—Ah! I see! Henry Samuel simply thought it was fortunate. Normally he would have immediately connected it to Japan, but being a born developer, he didn’t look into news unless it was technology-related.
—Then I’ll proceed with negotiations with California Cable TV right away. I’m sure we’ll get good results!
“Really? Is there some good sign?”
—Yes! Until now, cable companies had been retransmitting terrestrial broadcasts for free without any compensation, but a law has now passed requiring them to pay retransmission fees. Smaller operators will struggle to afford those fees, so it should make acquisitions easier.
Smaller operators. That phrase no longer suited ID Group. Still, the terrestrial retransmission fee issue would clearly help with acquisitions.
“Good. Then go to Comcast and check if they’re willing to sell.”
—Yes! I’ll do it right away. Wait, did you say Comcast?
“Comcast.”
—You mean the Comcast that has cable networks across the entire country?
“That’s the one. We have plenty of funds, so don’t worry and look into it.”
Henry Samuel was so shocked that he didn’t respond for several dozen seconds. After all, he had thought even acquiring a small cable company covering California would be a stretch. Now they were talking about acquiring Comcast, which had cable networks nationwide. He was speechless with astonishment.
Having startled Henry Samuel of NextCom, Yoo Jae-won gave similar instructions to Choi Kang-wook. He ordered him to pursue more aggressive purchases of shares in Ilseong Group’s major affiliates. He also told him to buy shares of any other solid companies if they were available. Choi Kang-wook, who now followed Yoo Jae-won’s instructions with complete sincerity, found this particular order difficult. As word spread that ID Investment was targeting Ilseong Group shares, fewer shares appeared on the market and prices had risen sharply. While acquiring the target 10 percent stake wouldn’t be a problem, buying shares of other quality companies would be tight.
When Choi Kang-wook expressed his difficulty, Yoo Jae-won immediately wired an additional two billion dollars, as if he had been waiting for it. To the startled Choi Kang-wook, Yoo Jae-won proudly recounted his exploits in Japan. It wasn’t much different from receiving prostrations, but hearing Choi Kang-wook’s genuine admiration still felt good.
Finally, he sent the carefully selected checklist to ID Investment, which had returned from its two-week vacation, and ordered them to acquire the companies by any means necessary. If any refused to sell, he told them to at least secure technology agreements or minority stakes. Having finished their recharge, ID Investment once again charged toward Japan like enraged hunting dogs.
Having issued a series of instructions from his seat, Yoo Jae-won felt a fresh sense of emotion. He had dreamed of an organization where astronomical capital and elites moved in perfect unison at his single word, and he had finally achieved it.
“This is truly Command & Conquer in reality.”
Yet he felt neither satisfaction nor arrogance. Looking at the master plan as a whole, he had only just completed a single chapter.