I don’t know why but the yakuza, Japan’s infamous nine-fingered bad boys, remain one of my favorite subjects. They claim to be the last descendants of the samurai class, but live through to modernity as lords of Japan’s criminal underworld. Unlike criminal organizations elsewhere though, the yakuza operate as officially recognized corporate entities with control over not only the criminal staples of sex, drugs, and exhortion but also strong influence in finance and politics. Ummm, criminals with strong influence in finance and politics!? Sounds oddly like bankers, no?
Bankers have their exams, and now it seems the yakuza have theirs! In these tough economic times, yaks are getting their education on, hitting the books in an effort to more fully break into the greatest racket in the world… stocks! They even got a TEST! My boy, the Great Logistician, sent me this link the other day. Seems as though I’m not the only one who sees the yakuza as a barometer of economic indicator of an economy in decline.
Oct. 7 (Bloomberg) — Japan’s underworld can tell you a lot about what’s happening in the legitimate economy.
Gangsters are on the run as growth wanes and deflation worsens. Yet the oddest development by far involves yakuza members sitting for exams covering key aspects of their work.
If you think this is just a law-enforcement issue, think again. It’s a sign Japan’s funk will be longer than economists predict. That may surprise those betting Japan is recovering. Oddly, though, the plight of gangsters tells the story.
Huddled over legal texts and documents isn’t the popular image of Japan’s storied mobsters. When they aren’t collecting debts, shaking down shop owners, overseeing prostitution rings or rigging stocks, members of Japan’s biggest organized crime group, Yamaguchi-gumi, are studying for 12-page tests.
Surreal? Yes, but also a telltale sign of the seriousness of Japan’s deflationary cycle. The yakuza are having to work harder than ever to get by and are stepping up education efforts. This column isn’t meant to convey sympathy for them. It’s that the advent of a yakuza version of the Series 7 exam that stockbrokers take is a bad omen — very bad.
“The yakuza are a real barometer,” saysJake Adelstein, a blogger and the author of a new book, “Tokyo Vice.” “When the yakuza are doing poorly, the economy is doing poorly.”
All this hints at the harsh environment facing even the most industrious of gangsters, never mind average households. And it says lots about the need for growth opportunities. And Japan has a disturbing paucity of them at the moment.
Mob Crackdown
News of all this first appeared last month in the Mainichi newspaper. Police found the exam during a mob investigation in western Japan. Its timing coincides with the fallout from organized-crime laws that went into effect in late 2008. Gangster groups can be held responsible for actions of even the lowest street-level associates. Kobe, Japan-based Yamaguchi-gumi alone has about 40,000 members.
Areas of study include everything from phone fraud to dumping of industrial waste to auto theft to securities laws. The exercise is aimed at avoiding lawsuits as stagnation eats into profits from real estate, construction and stock trading.
This latter category has kept authorities extraordinarily busy. The yakuza invasion of Japan’s financial industry has been amazing and rapid. And intimate observers joke about feeling nostalgic for the days when the yakuza were simply thugs wearing bad suits and sporting full-body tattoos.
Yakuza as Investors
A decade ago, it wasn’t hard to spot who they were and what they might be up to. Now, they are diversified investors in Tokyo’s stock market. Observers are learning finance and forensic accounting to keep up with them. If you don’t understand Japan’s system of stock trading, issuance and manipulation, you can’t understand the modern yakuza.
That diversification often makes the yakuza a more useful economic gauge than one finds elsewhere — and explains why their plight says more about Japan’s outlook than many realize. In late 2008, Adelstein said there might be 600 “yakuza- connected companies.”
There’s no sanitizing the yakuza’s influence — it’s huge. Hence the keen focus on training members on trends in financial markets and key industries. Think of Yamaguchi-gumi’s education push as an M.B.A. for gangsters.
What’s fascinating about the yakuza is how nimble they can be. The shift from old-fashioned crime such as prostitution and drugs to finance has accelerated. Gangsters were quick to exploit a crackdown on consumer-finance companies. The government’s bungling sent more business their way, making organized crime an early beneficiary of the credit crisis.
Signs of Weakness
That was then. The economic signs are getting worse. The strong yen is weighing on Japan’s export-driven economy as the jobless rate hovers near a record high.
Japan will remain in deflation until 2012 because of “significant slack” in the economy, the International Monetary Fund said last week. Proving the point, consumer prices tumbled 2.4 percent in August, the fastest decline on record.
The other dilemma is politics. Gangsters long enjoyed getting a piece of multibillion-dollar public-works projects. That gravy train ended when Yukio Hatoyama’s Democratic Party of Japan took over last month. The prime minister’s government is actually halting projects, never mind devising new ones.
Business opportunities are evaporating, faster than many economists say. The bar owners that members pressure for protection money can’t pay much these days. Prostitutes aren’t raking in customers the way they did two years ago. Households are reluctant to take on fresh debt, especially at extortionate rates. Stock trading and real estate are languishing.
Have no doubt gang members are brainstorming on how to survive the recession. Crime probably still pays well enough to keep some yakuza in the style they are accustomed to. The tension among Japan’s 80,000 or so yakuza is palpable, though, as evidenced by violent altercations between rival groups.
Just don’t be fooled into thinking this isn’t about the economy. It absolutely is. Gangsters studying for exams are a clear sign of where the underworld finds itself today. That goes for Japan’s broader population, too.
My first (and second and third) thought was: カッコイイ!!! [read: kakkoii - dope!!!] But the Japanese media was not impressed! The ill sag, the untucked shirt, the nose stud and the locks to top it…. the media was NOT having it. Instead, they labeled him as somehow “unrepresentative of Japan”. Even politicians were making statements about his “regrettable appearance”!
News | young city extraordinaire | 
February 19, 2010 5:49 am | 
Comments (12) 
Subscribe