Saving the Sun: A Wall Street Gamble to Rescue Japan from Its Trillion-Dollar Meltdown

by Gillian Tett

Book Overview

For more than a decade, Japan's dismal economy -- which has bounced from deflationary collapse to fitful recovery and back to collapse -- has been the biggest obstacle to economic growth. Why has the... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 006055424X
• ISBN13: 9780060554248
• Release Date: September 2003
• Publisher: Harper Business
• Length: 337 Pages
• Weight: 1.52 lbs.
• Dimensions: 1.2" x 6.0" x 9.0"

Customer Reviews

Best book on Japanese business practices I've seen yet

In the 1980's, Japanese business could seem to do no wrong. From business publications such as The Wall Street Journal and Forbes, to the mainstream press (Newsweek, The New York Times and CNN), the press wrote glowingly about Japanese business. For over a decade we read that our western practices were too short sighted and antiquated- we clearly needed to take a more "Japanese approach" to doing business, and in so doing, could be successful as they have been. But a short time later Japanese companies were in big trouble in the US and back in Japan. Their stock market crashed, the real estate boom crashed, and the entire Japanese economy seemed to be not just in serious trouble, but in a meltdown of catastrophic proportions. What went wrong? This book does an extremely credible job of explaining both how and why, and in simple layman's terms that anyone can easily understand. Using many specific examples, Gillian Tett shows how American and Japanese thought and business practices are polar opposites. These differences are not just a matter of the differences in culture between east and west--they go considerably deeper. But by the end of the book, the results were able to speak for themselves. By bringing in a new international management team made up of Japanese, American, Indian and Australian management, an insolvent bank that had been bought out for the first time in history by a group of western investors (!!) became a success story. I'm an investment banker myself that has (in previous lives) worked for two different Japanese multinationals over a 7-year period in the 80's and 90's. My own experiences with Japan are mixed. I made some great friends, and have developed a high level of respect for their work ethic and their dedication to their employers, and usually, to each other. But in my opinion, the extreme xenophobia that permeates Japanese culture will not be lessened anytime soon. The term "gaijin" when politely translated means "foreigner." But to many (but not all) Japanese the term is not polite at all. Get this one. I don't give out many "five star" ratings, but I so for this book without quibbling. I look forward to future works from Ms. Tett.

One well chosen case to illustrate a systemic problem

Saving the Sun is about the corporate culture of Japan's financial industry and how it is changing. Gillian Tett focuses on one institution, The Long Term Credit Bank, to illustrate what happened and how the financial environment in Japan is changing. The LTCB was a key player in Japan's post war miracle. It lent money to fund business operations and new ventures, working in close cooperation with the elite bureaucrats of Japan's Ministry of Finance and Ministry of International Trade and Industry. Then in the 1980s, drunk on its spectacular success, Japan Inc. excessively invested in thoughtless projects, all funded by the LTCB and the rest of the financial industry, with no thought at all given to making money. Prestige was everything. As a result, the Japanese financial system almost collapsed; what survived had to change. Banks began failing despite attempts by the Ministry of Finance to organize rescues. Some failed banks were nationalized, among them the LTCB; these institutions were then put up for sale but no one in Japan wanted them. There were tragedies. Katsunobu Onogi, a fatherly and admirably responsible gentleman of the old school, was arrested and charged, spending a month in custody before being found guilty and sentenced to three years in jail, suspended. A colleague, Takashi Uehara, committed suicide, which in Japan is a gesture of atonement, not an escape. At another bank, the president parachuted in from the Bank of Japan, Tadayo Honma, also killed himself again to atone for the system's failure. Then Tim Collins's Ripplewood, an American fund, arrived and offered to rescue the LTCB. This was politically difficult. The Japanese don't like foreign ways, and the thought of a pillar of Japanese finance being bought out by foreigners provoked public outrage. In the end MoF had no choice and the deal went through. The bank was renamed Shinsei, meaning "Rebirth" in Japanese. A remarkable man, Masamoto Yashiro, was hauled out from a second retirement after a full career at Esso Sekiyu (Exxon's Japan operation) and the creation of Citibank's Japanese retail business, to oversee the reconstruction. Clash was inevitable. The conservative rank and file employees had no idea how to work with the hyperactive can-do go-go-go managers now running the show. A new Indian head of IT, Jay Dvivedi, junked the old mainframes and installed, in mere months, a new state-of-the-art system featuring PCs on every desk and instant access to whatever reports management wanted. The corporate planning department, which decided new products, disappeared: henceforth Shinsei would listen to its customers to determine their needs. The financial revolution isn't over. Shinsei's success wasn't total. Major clients were allowed to fail, Sogo department store went bankrupt. Politicians blamed Shinsei for not being kinder to its debtors. I've worked for the IT departments of foreign banks in Japan since 1995 so this book strikes particularly close to home fo

Outstanding focused explanation of the Japanese loan problem

This book chronicles the fall of Japan's Long Term Credit Bank (LTCB, not to be confused with American Long Term Capital Management) and it's resurrection as Shinsei. The story starts with the problems created in Japan's real estate bubble, and how they left Japanese banks saddled with poor performing loans. The story zeroes in on the problems that caused LTCB to fail. It then covers the revival of the bank with the assistance of an American private equity fund, and the struggle of the new managers to play within the constraints of the Japanese system.This book highlights several issues with reform in Japan:1) The business problems are never what they seem on the surface.2) There are deep cultural issues at play that transcend mere language barriers.3) Working on a turnaround in Japan is a tremendously challenging ordeal for people on both sides.4) There is no simple economic or cultural solution.So was it a success? Well, depends on how you define a success. Collins and Flowers put a $1.2 billion in the bank. The government accepted $10 billion in returned loans, on top of a recapitalization. $27 billion in bad loans were disposed of. The bank winds up with a projected market cap of about $10 billion. So was it a transfer of public wealth to private wealth? Or a neccessary step in reforming the banking system? The reader is left to decide.If the book has one shortcoming, it's the presentation. I certainly enjoyed it, but the focus is much narrower than the title of "Saving the Sun" would highlight. While broader banking issues are tackled, the book centers on one bank and a small group of investors, and no broader Wall Street/Ginza tie-ups.In all it is well worth the time for anyone interested in the Japanese financial sector. It is one of the strongest books I've read in describing the economic situation in Japan, and melds cultural and antropological issues into describing the problems and solutions. Very well done!

Fun and worth reading

A well written, very easy read which captures a lot of information in a relatively short book, each section (1-LTCB's rise 2-The sale/purchase 3-the transformation) could be a book on its own. While I accept that this book could not go further into MOF's failure to regulate as it should have done, Gillian makes it clear that this book is the history of one bank not the Japanese financial system, I wish she had been able to do so and I also have to agree with John Zwaanstra's comment that the bad debt work out should have been gone into in greater depth. Still, without going for thousand pages into all the complex issues the book captures nearly all the different pressures that played into decision making and makes one think about the results from a variety of perspectives.In sum, I greatly enjoyed reading it and strongly recommend it.

The Ups and Downs of Japanese Banking

"Saving the Sun" is a masterful work detailing not only the reasons for the collapse of the Japanese banking system, but of the problems encountered by bankers and investors from disparate traditions seeking ultimately to speak one economic language. One of the major reasons why the book resonates is due to the unique qualifications of Gillian Tett to pen such a challenging work about a nation which, to many westerners, remains shrouded in exotic mystery. Tett was trained as a social anthropologist, gravitating into journalism and rising to become Tokyo bureau chief of the prestigious Financial Times.Tett is able to wear two hats simultaneously, providing us with a more entertaining as well as informative work due to her sociological as well as economic insights. Rather than supplying a series of charts explaining what happened to Japan's banking culture, Tett instead supplies an informative analysis of events by focusing closely on the movers and shakers from Japan and America involved in the volatile existence of Japanese banking from the nation's crushing defeat in World War Two to post-9-11.The tide of events is organized into basic categories, all flavored with the insight of a trained financial journalist telling her story in the manner of a perceptive novelist. The story is seen from the perspective of Long Term Credit Bank, one of the nation's most revered institutions, which soared like an eagle during Japan's heady days of economic expansion, then descended like a wounded duck in the wake of a sea tide of bad loans occasioned in large measure by inflexible cultural traditions. When its hapless president, LTCB veteran Katsunobi Onogi, was ultimately arrested and successfully prosecuted for covering up series' of bad loans concerning which he was expected to take diligent action, he lamented that he was victimized by a tradition that mandated such an attitude. Tett reveals the tragic results of a tradition in which, whereas Swiss and American bankers expected losses to be written off and no more money extended to the distressed subsidiary banks and companies, the powers that be believed that the economic system should be treated as a family. To cut off such institutions involved, in the Japanese view, a divorce rather than a necessary business move.Tett demonstates the markedly different ways that the Americans and Japanese see the overall economic picture, along with basic differences in how work forces are observed, when she writes about the purchase of the collapsed LTCB by an American team led by Kentuckian Tim Collins, friend and confidante of President Bill Clinton. The American group led by Collins changed the name of LTCB to Shinsei, then set out to achieve a profound positive change. Never is the disparity between American and Japanese cultural viewpoints more evident than when Collins and a team of Americans decide to have lunch in the bank canteen. The extroverted Kentucky business giant and his group, which includes