We dumped over 2 trillion yen worth of sell orders right at options expiration. The Nikkei index plummeted vertically, like a waterfall.
The stock market, along with the futures and options markets, was in turmoil.
Fortunes diverged between call options and put options, between buying and selling. Those who bought put options cheered, while institutions that sold put options groaned.
Hyunjoo noona murmured, as if to herself,
"This reminds me of the 2010 Options Shock incident."
"Ah! I was thinking the same thing."
It was an incident in the Korean stock market where foreign securities firms profited from options by dumping sell orders at the closing simultaneous quotation, causing the index to plummet.
And here I am, doing something similar in another country's stock market.
I nodded.
"History does tend to repeat itself."
We suffered a huge loss from selling spot equities as Toyota's stock price crashed. However, thanks to foreign hedge funds jumping in and dragging the index down, we hit the jackpot with the futures and options we had bought in advance.
Golden Gate had also placed appropriate bets within acceptable limits, and both OTK Company and Golden Gate were diligently profiting from the stock market crash.
On the TV turned on in the corner, news about the situation in Japan was playing.
Ellie asked,
"What do you think will happen to Prime Minister Okazaki?"
"Hmm, I wonder."
It's true that Prime Minister Okazaki revived the Japanese economy by shooting three arrows. But why hadn't previous prime ministers used these good policies before?
It's because of Japan's astronomical fiscal deficit.
After implementing Abenomics [Note: Okazaki-nomics is likely a modified reference to Abenomics], Japan's fiscal deficit exceeded 1,000 trillion yen. This is more than twice Japan's GDP and the largest among OECD countries.
No government can continue to bear this level of fiscal deficit.
The original plan was to stimulate the economy through monetary easing and fiscal expansion, and then reduce the fiscal deficit by increasing consumption tax revenue. However, unlike exports, domestic demand did not recover as much as expected, and the consumption tax hike rather led to a contraction in consumption.
In this situation, what would happen if even the booming stock market crashed? Moreover, this wouldn't have happened in the first place if the Government Pension Investment Fund hadn't entrusted Nishida Securities with exclusive management.
Someone will have to take responsibility for sure.
Hyunjoo noona said, sipping her coffee,
"The Japanese government will protest again. What are you going to say?"
Then Taekgyu replied,
"Can't we just say it was a mistaken order again?"
"..."
History does tend to repeat itself.
Toyota stock fell by 36 percent, and the stock market crashed by 8 percent. In the midst of this, the yen strengthened by nearly 4 percent, dealing a final blow.
Individual investors were devastated.
Who is the worst person in the world for someone who invests in stocks?
It's not corrupt congressmen or criminals in the news. It's the person who makes your stock price fall.
During the bubble economy, house prices and stock prices rose every morning when you woke up. Everyone rushed in with money, but the final destination was a mountain of debt.
After Japan entered a prolonged recession, people stopped looking at real estate and stocks. They only piled up cash. Bank interest rates were zero, but in a deflationary state, the value of money increased over time, so in reality, there was a profit.
During the Great East Japan Earthquake, there was one scene that surprised people around the world. It was safes that filled the beaches along with debris. Thousands of safes swept away by the tsunami and washed back ashore were filled with 10,000 yen bills neatly stacked.
Since everyone was neither investing nor consuming, the economy could not function properly.
Okazaki-nomics also included policies to revitalize the stock market. It supported export-oriented large companies through a weak yen and mobilized the Government Pension Investment Fund to buy stocks.
As corporate profitability improved and investment funds flowed in, stock prices naturally soared. People here and there started making money from stock investments, and even individuals who only knew about savings accounts slowly turned their eyes to stock investments.
Thanks to this, the number of individual investors in the Japanese stock market is currently at its highest since 2000.
But suddenly, the stock market crashed overnight. Naturally, curses were bound to come out.
- Chikusho! How much more does Kang Jin-hoo intend to bleed Japan dry?
- To be defeated by Chosun-jin!
- Stocks are gone, and what is this mess?
- Why are they leaving such speculators alone?
- What the hell is the government doing?
- Declare war, whether the opponent is Korean or American!
Japanese securities firms were in chaos checking the payments they had to make for futures and options. With stock price declines compounded by losses in derivatives, estimated losses reached hundreds of billions of yen.
The entire Japanese financial sector looked like it had been hit by a nuclear bomb.
The most problematic place was the Government Pension Investment Fund. The stock market crash further increased the losses of the Government Pension Investment Fund. The proportion of domestic stock investment in the Government Pension Investment Fund is 20 percent. In terms of amount, it is 30 trillion yen. This proportion was increased according to the government policy of revitalizing the domestic stock market, and the rise in stock prices also had a significant impact.
Out of this, 2.3 trillion yen evaporated due to the mistaken order. And with this stock market crash, another 3 trillion yen was additionally evaporated. The loss was greater than the index decline because of the clumsy attempt to defend stock prices.
Over 5 trillion yen of the people's retirement funds vanished!
- Who will take responsibility for the pension fund losses?
- What the hell was the government doing until it got to this point?
- It's impossible for OTK Company to have swept up 15 million shares in less than a second without inside information from the beginning.
- It's not a mistake! There must have been collusion!
- What kind of backroom deal did Nishida Securities have with OTK Company?
- How much did the LDP [Liberal Democratic Party] receive from Kang Jin-hoo? Reveal the truth!
- Who is responsible?
- Punish the traitor Prime Minister Okazaki!
- Cabinet ministers are all accomplices!
- Who can trust the country to those kinds of people? Replace them all!
Japan is traditionally a bureaucracy-centered society. Politicians are always replaced according to election results, but bureaucrats always stayed in their positions.
Unlike Korea, which elects a president for a single five-year term, Japan, being a cabinet system, frequently changed prime ministers. Because of this, even Japanese people are confused about who was prime minister when.
When Okazaki first became prime minister, it was thought that he would not last long, just like previous prime ministers. However, he pulled the Japanese economy out of recession and became the second longest-serving prime minister in the postwar era.
Prime Minister Okazaki established a Personnel Affairs Bureau in the cabinet and used it to remove unqualified individuals from senior bureaucratic positions. Of course, 'unqualified individuals' meant those who displeased the personnel manager.
It is natural for bureaucrats and business people alike to pledge allegiance to those who hold the power of personnel appointments. As a result, bureaucrats uniformly pledged allegiance to the Okazaki cabinet.
In Japan, there is a word called 'sontaku.' It originally had a positive meaning of anticipating others' feelings, but it has been distorted to mean that subordinates act according to their superiors' wishes without explicit instructions.
Bureaucrats moved by anticipating the wishes of their superiors even without instructions. They manipulated statistics to make the economy look good and reported them upwards, and when suspicions of undervalued sales of state-owned land surfaced, they falsified Ministry of Finance documents and meeting records.
Then, when problems arose, cabinet ministers would invariably distance themselves, saying they didn't know and that it was something done at lower levels.
This time was no different.
Why did the Government Pension Investment Fund increase domestic stock investment, and why did it entrust it to only one company, Nishida Securities? Would Nishida Securities have been given such preferential treatment if it had not been related to the prime minister's wife?
While mainstream media remained silent, one internet media outlet intensively investigated this matter. The more they investigated, the more suspicions arose, not just one or two.
Nishida Securities, which had been exclusively entrusted with management, surpassing all other leading securities firms, earned enormous commission income every year. With the profits earned in this way, they held dividend feasts, and Endo Mori, the major shareholder, took huge dividends.
However, improvement of operations and staffing were not properly implemented. Employees suffered from excessive workloads and overtime, and had to handle two or three tasks simultaneously. The system for detecting abnormal orders was also useless.
It was truly a total mess.
Originally, Japan was a country with stronger principles and regulations than any other country. However, everyone was busy trying to please their superiors, leading to this worst financial accident.
After the article was released, the entire Japan was in anger.
- How is this different from the Korean president being the real owner of PAS?
- Is it reasonable to entrust the retirement assets of the people to such a third-rate securities firm?
- Prime Minister Okazaki should be sent to prison like the former Korean president!
- Okazaki Prime Minister should pay back the full amount!
- Even if you get paid 40 million yen a year as prime minister.
- Work in the underground for 100,000 years! If you die of old age, your descendants should continue to work to repay it!
- Just commit seppuku with samurai spirit cleanly.
- No excuses needed, overwhelming apology is needed! Do dogeza on a hot iron plate!
This time, the opposition parties were not just standing by either.
Opposition lawmakers criticized the government and again intensively pursued the so-called Aoko scandal.
"Even if we concede OTK Company, CarOS is a completely American automobile company. Why did the government take the lead in criticizing a company that is cooperating with GM and Ford, especially when the US is sensitive to the automobile trade deficit?"
"Do you have any countermeasures against the US tariff imposition measures?"
"The Government Pension Investment Fund is an independent institution responsible for the people's retirement assets. But wasn't it actually acting according to the government's wishes?"
"Why was Nomura Securities excluded and only Nishida Securities given everything?"
"The major shareholder of Nishida Securities is Endo Mori! The prime minister's father-in-law was the chairman of Endo Mori, and his brother-in-law is currently a director! Do you expect the people to believe that there was no preferential treatment under these circumstances?"
"Who made such decisions?"
"How did Japanese bureaucrats become like this?"
Prime Minister Okazaki did his best to deny the allegations.
"As Prime Minister, I have never given any instructions. Also, Nishida Securities is a company that has nothing to do with my wife. I would like to reiterate that this incident was caused by overseas speculative capital."
Finance Minister Matsukata also played dumb.
"As a result of the investigation, it has been confirmed that the investment was made in accordance with procedures, and there are no problems whatsoever. It was an unavoidable measure for efficient investment and stock market revitalization, and there was no preferential treatment whatsoever."
The sight of no one taking responsibility and making excuses further angered the Japanese people. This time, even heavyweight veterans within the LDP, feeling that this could not go on, joined in the criticism.
A vote of no confidence in the cabinet was initiated, and Prime Minister Okazaki, cornered, had no choice but to make a decision.
[(Breaking News) Prime Minister Okazaki Decides to Dissolve the House of Representatives!]
[(Urgent) Cabinet Resignation En Masse! Japan Enters General Election System!]
[Can the LDP Regain Power?]
[Opposition Parties Vow to Win the General Election!]
[Responsibility for Prime Minister Okazaki Strongly Raised Even Within the Party!]
[LDP Veterans Say Victory is Hard to Guarantee Without Replacing Party President...]
News outlets around the world poured out articles.
Korea also stopped broadcasting and aired breaking news.
- Unbelievable. They blew away even the Japanese Prime Minister after the Korean President.
- LOL, they got into this mess by messing with Kang Jin-hoo.
- I told you, why did they provoke Kang Jin-hoo who was just minding his own business?
- Okazaki must be so pissed lol If I were him, I would have committed seppuku out of shame.
- Iron plate dogeza is the only answer. If he does that for 10 minutes, the Japanese people will forgive him.
- It's about time for him to step down from the prime minister's seat.
- Apologize to the comfort women halmeoni, you sshkkiya.
- Send him to prison like Park Si-hyeong. Or send him to forced labor in Battleship Island.
Just as China is a one-party dictatorship under the Communist Party, Japan is also practically a one-party dictatorship under the LDP. The number of times other parties have taken power can be counted on one hand.
As the opposition parties were disorganized, the LDP was likely to regain power even if a general election was held again. However, it is uncertain whether Prime Minister Okazaki will be able to retain his position. Immediately, within the LDP, talk arose that the party president must be replaced to win the general election.
Since Japan is a cabinet system, the president of the ruling party becomes the prime minister.
"Well, even if he becomes prime minister again, it will be difficult to secure the same level of approval rating as before."
For the time being, they will not have the capacity to pay attention to foreign affairs.
Neighboring countries were all reacting with satisfaction. As soon as Japan recovered from the recession and the economy recovered, it started territorial disputes with Korea over Dokdo, with China over the Senkaku Islands, and with Russia over the Northern Territories.
In addition, they showed movements to deny the past history of invasion wars and colonial rule, and the Pacific War, and to increase military power.
With the cabinet resignation en masse and the dissolution of the parliament, the revision of the Peace Constitution, which Prime Minister Okazaki had pledged to achieve within this year, was out of the question. Korea is also in a relieved atmosphere.
Taekgyu said,
"After defeating Japan, peace has come to the world."
I nodded.
"This is why people should live righteously in everyday life."
Having a lot of money does not make a country an advanced nation, and having strong military power does not make it a superpower. A superpower must have the dignity of a superpower.
This is why China and Japan are not respected in the international community.
[TL/n: Here's some JP words that were used:
Noona (누나): Korean term used by males to refer to older sisters or older female friends.
Halmeoni (할머니): Korean term for grandmother or elderly woman, often used respectfully.
Chikusho (畜生): Japanese curse word, roughly translates to "bastard" or "damn it".
Chosun-jin (조센징): Derogatory Japanese term for Koreans.
Sshkkiya (새끼야): Korean curse word, literally means "son of a bitch" or "you bastard".
Dogeza (土下座): Japanese term for prostration on the ground as a sign of deep apology.
Seppuku (切腹): Japanese ritual suicide by disembowelment, often referred to as "harakiri" in the West.]