information out of them at a later date.
“We have no choice,” a man said in another, similar bathhouse, not so far
away. “We need your help.”
It wasn’t unexpected, the other five men thought. It was just a matter of
who would hit the wall first. Fate had made it this man and his company.
That did not lessen his personal disgrace at being forced to ask for help, and
the other men felt his pain while outwardly displaying only dispassionate
good manners. Indeed, those men who listened felt something else as well:
fear. Now that it had happened once, it would be far easier for it to happen
again. Who would be next?
Generally there could be no safer form of investment than real estate, real
fixed property with physical reality, something you could touch and feel,
build, and live on, that others could see and measure. Although there were
continuing efforts in Japan to make new fill land, to build new airports, for
example, the general rule was as true here as it was elsewhere: it made sense
to buy land because the supply of real land was fixed, and because of that the
price was not going to drop.
But in Japan that truth had been distorted by unique local conditions.
Land-use policy in the country was skewed by the inordinate power of the
small holders of farmland, and it was not unusual to see a small patch of land
in the midst of a suburban setting allocated to the growing of a quarter hec-
tare of vegetables. Small already-the entire nation was about the size of
California, and populated with roughly half the people of the United
States-their country was further crowded by the fact that little of the land
was arable, and since arable land also tended to be land on which people
could more easily live, the major part of the population was further concen-
trated into a handful of large, dense cities, where real-estate prices became
more precious still. The remarkable result of these seemingly ordinary facts
was that the commercial real estate in the city of Tokyo alone had a higher
“book” value than that of all the land in America’s forty-eight contiguous
states. More remarkably still, this absurd fiction was accepted by everyone
as though it made sense, when in fact it was every bit as madly artificial as
the Dutch Tulip Mania of the seventeenth century.
But as with America, what was a national economy, after all, but a collec-
tive belief? Or so everyone had thought for a generation. The frugal Japa-
nese citizens saved a high proportion of their earnings. Those savings went
into banks, in such vast quantities that the supply of capital for lending was
similarly huge, as a result of which the interest rates for those loans were
correspondingly low, which allowed businesses to purchase land and build
on it despite prices that anywhere else in the world would have been some-
where between ruinous and impossible. As with any artificial boom, the pro-
cess had dangerous corollaries. The inflated book value of owned real estate
was used as collateral for other loans, and as security for stock portfolios
bought on margin, and in the process supposedly intelligent and far-seeing
businessmen had in fact constructed an elaborate house of cards whose foun-
dation was the belief that metropolitan Tokyo had more intrinsic value than
all of America between Bangor and San Diego. (An additional consequence
of this was a view of real-estate value that more than any other factor had
persuaded Japanese businessmen that American real-estate, which, after all,
looked pretty much the same as that in their own country, had to be worth
more than what the foolish Americans charged for it.) By the early 19908
had come disquieting thoughts. The precipitous decline of the Japanese
stock market had threatened to put calls on the large margin accounts, and
made some businessmen think about selling their land holdings to cover
their exposures. With that had come the stunning but unsurprising realiza-
tion that nobody wanted to pay book value for a parcel of land; that although
everyone accepted book value in the abstract, actually paying the assumed
price was, well, not terribly realistic. The result was that the single card sup-
porting the rest of the house had been quietly removed from the bottom of
the structure and awaited only a puff of breeze to cause the entire edifice to
collapse-a possibility studiously ignored in the discourse between senior
executives.
Until now.
The men sitting in the tub were friends and associates of many years’
standing, and with Kozo Matsuda’s quiet and dignified announcement of his
company’s current cash-How difficulties, all of them saw collective disaster
on a hori/.on that was suddenly Car closer than they had expected only two
hours earlier. The bankers present could offer loans, but interest rates were
higher now. The industrialists could offer favors, but those would affect the
bottom-line profits of their operations, with adverse effects on already-stag-
gering stock prices. Yes, they could save their friend from ruin, along with
which, in their society, came personal disgrace that would forever remove
him from this intimate group. If they didn’t, he would have to take his
“best” chance, to put some of his office buildings, quietly, on the market,
hoping, quietly, that someone would purchase them at something akin to the
assumed value. But that was most unlikely-this they knew; they them-
selves would not be willing to do it-and if it became known that “book
value” was as fictional as the writings of Jules Verne, then they would suf-
fer, too. The bankers would have to admit that the security of their loans, and
consequently the security of their depositors’ money, was also a hollow fic-
tion. A quantity of “real” money so massive as to be comprehended only as
a number would be seen to have vanished as though by some sort of evil
magic. For all these reasons, they would do what had to be done, they would
help Matsuda and his company, receiving concessions in return, of course,
but fronting the money he and his operations needed.
The problem was that although they could do it once, probably twice, and
maybe even a third time, events would soon cascade, finding their own pre-
cipitous momentum, and there would soon come a time when they could not
do what was necessary to support the house of cards. The consequences
were not easily contemplated.
All six of the men looked down at the water, unable to meet the eyes of the
others, because their society did not easily allow men to communicate fear,
and fear is what they all felt. They were responsible, after all. Their corpora-
tions were in their own hands, ruled as autocratically as the holdings of a
J. P. Morgan. With their control came a lavish lifestyle, immense personal
power, and, ultimately, total personal accountability. All the decisions had
been theirs, after all, and if those decisions had been faulty, then the respon-
sibility was theirs in a society where public failure was as painful as death.
“Yamata-san is right,” one of the bankers said quietly, without moving
his body. “I was in error to dispute his view.”
Marveling at his courage, and as though in one voice, the others nodded
and whispered, “Hai.”
Then another man spoke. “We need to seek his counsel on this matter.”
The factory worked two hectic shifts, so popular was what it turned out. Set
in the hills of Kentucky, the single building occupied over a hundred acres
and was surrounded in turn by a parking lot for its workers and another for
its products, with an area for loading trucks, and another for loading trains,
run into the facility by CSX.
The premier new car on American and Japanese markets, the Cresta was
named for the toboggan run at St. Moritz, in Switzerland, where a senior
Japanese auto executive, somewhat in his cups, had taken up a challenge to
try his luck on one of the deceptively simple sleds. He’d rocketed down the
track, only to lose control at the treacherous Shuttlecock curve, turned him-
self into a ballistic object and dislocated his hip in the process. To honor the
course that had given him a needed lesson in humility, he’d decided in the
local casualty hospital to enshrine his experience in a new car, at that time
merely a set of drawings and specifications.
As with nearly everything generated by the Japanese auto industry, the
Cresta was a masterpiece of engineering. Popularly priced, its front-wheel
drive attached to a sporty and fuel-efficient four-cylinder, sixteen-valve en-
gine, it sat two adults in the front and two or three children quite comfortably
in the back, and had become overnight both the Motor Trend Car of the Year
and the savior of a Japanese manufacturer that had suffered three straight
years of declining sales because of Detroit’s rebounding efforts to take back