Chapter 710: The Banking Industry

As soon as Takayuki Nanno sat down, he couldn’t wait to report seriously, “The head of the Seoul office in South Korea, Hidetaka Sato, personally came to the phone to say that the South Korean stock market had suddenly plummeted.

According to him, the direct cause of the South Korean stock market’s plunge was the total setback of the banking sector. As for the trigger, as far as he knew, it was because a Korean commercial bank had serious debt problems.

This one confirmed news is what immediately caused the market to panic, and so it started with organizations dumping a lot of stocks related to the Korean banking sector.”

“I just can’t figure out why the emergence of debt problems in a Korean commercial bank would trigger such a big stock market movement. Is it hard to believe that it’s a large commercial bank?” Kazuya Takahashi threw out his doubts and said.

“At the moment, the intelligence I’ve gotten indicates that that one Korean commercial bank with serious debt problems is not a large bank, but a small local bank in Seoul.” Takayuki Nanno said truthfully.

“Then I understand even less.” Kazuya Takahashi said with a look of incomprehension.

“Let me explain it to you. When a fire breaks out in a neighbor’s house that lives not far from your house, would you choose to stand out and watch the spectacle, or would you take the initiative and actively go to the rescue?

The answer is yes, you would absolutely choose the latter, that is, to actively go to the rescue. Because you are afraid that the fire is too big to burn to your side, and then let your property therefore suffered losses.

The same applies to the banking sector. That small bank in South Korea that had serious debt problems inevitably had various pleas for help before it was exposed to trouble.

One was to ask for help from his peers with whom he had made friends during the day. Either directly from the capital for a loan, or with its grasp of high-quality assets or shares for a business exchange.

The second is to have a certain intersection with their own bank to carry out a capital overnight borrowing. The interest rate naturally fluctuates according to the size of the risk at the moment. ……

Regardless of which method is used, there is only one purpose, which is to stabilize the situation and not to collapse, and to live first and then talk about things later.

In my opinion, I am afraid that the reason for such a big panic in the Korean stock market is not a simple case of a bank having serious problems with its debt due to mismanagement.

If my guess is correct, this should be the outbreak of a persistent problem that has long existed in the entire Korean banking industry.

The further deterioration of the serious debt problems of that one small bank in Seoul will eventually lead to bankruptcy.

If none of the other Korean banks, large or small, have come to their aid, it only proves that they are all too busy trying to protect themselves.” Masayoshi Kishimoto knew that Kazuya Takahashi’s specialty and strength was in law, not finance.

Takahashi and Kazuya came to a realization, “From what you’re saying, South Korea is about to have another financial crisis? It’s only been a mere 5 years since they last had an Asian financial crisis in 1997.”

“Do you know why the Second World War broke out? It is a continuation of a series of problems that were not completely solved by the First World War. The Great Depression was just a trigger or a fuse.

This worst catastrophe in the history of mankind was an economic crisis that originated in the United States between 1929 and 1933 and later spread throughout the capitalist world, including capitalist countries such as the United States, Britain, France, Germany and Japan.

The catastrophe bankrupted the system in many countries of Central and Eastern Europe, causing German bankers to defer repayment of their foreign debts in order to protect themselves, and in turn endangering British bankers who had large investments in Germany.

The shortage of capital, in all industrialized countries, brought about a sharp decline in exports and domestic consumption. The absence of markets inevitably closes factories, and the fewer goods there are, the fewer goods are transported, which inevitably jeopardizes the shipping and shipbuilding industries.

In all countries, the consequence of recession is mass unemployment. 13.7 million in the United States, 5.6 million in Germany, and 2.8 million in the United Kingdom (the largest figure for 1932).

The Great Depression also had a major impact on Latin America, resulting in the loss of foreign investment and merchandise exports in a region almost completely dominated by European and American bankers and merchant entrepreneurs.

I cite this example to show that the root cause of Korea’s stock market plunge is from the residual problems left over from the 1997 Asian financial turmoil.

In the five years after the Asian financial crisis, many South Korean banks were on the verge of bankruptcy because of bad corporate loans, but they turned around as consumer lending rose rapidly.

They all did it in a very risky and short-sighted way, with card issuers scrambling to issue cards for short-term gains.

You all use credit cards as well and should understand that within the dozens of days they are interest free, even if you spend the money, you are not paying additional interest.

Banks that issue credit cards are not charities, let alone fools, so why would they let people use them for free without interest for nothing?

That is, their goal and focus is on profiteering from some other people. The other people are those with strong materialistic desires, weak self-control, vanity, and low income ……

In the future, there will be people who will only be able to pay off the minimum amount of their credit card when it expires and then pay it off in installments, people who come up with installments, people who need to make a cash withdrawal with their credit card.

The interest they charge on this piece, the handling fee and so on, is not much worse than the underground money changers, loan sharks practitioners. If we have to say there is any difference, one is a hypocrite, while the other is a real villain.

There is no lack of formal loan sharks and underground money changers who clearly state to the borrower from the beginning how much principal and interest is due, how much is the installment, how long it takes to pay back, etc.

In Korea, the entire banking industry issues credit cards arbitrarily without sufficiently examining the creditworthiness of the customers; credit card companies hire salesmen to chase pedestrians everywhere to sell credit cards; and even issue them to underage students and the unemployed, and so on.

Before this, there was already such a widespread credit card mess in Korea. At the beginning, I personally flew to Seoul, South Korea to inspect, not only you, but also the outside world are mistaken that I saw the great signs of economic recovery in South Korea, it is to go to the field inspection, in order to increase the investment in South Korea.

In fact, I am specifically to examine the Korean consumer credit market, that is, how many credit cards they hold per capita.

Credit card is a good thing in itself. It’s just like a good scripture recited by a bad monk, it’s not the same as the original meaning of the scripture.” Justice Kishimoto spoke eloquently.

“I basically understand what you mean. You think that Korea will trigger a scene like the Great Depression because of this stock market crash.” Kazuya Takahashi said in a serious manner.

“Even if Korea doesn’t have a situation as severe as the Great Depression in the future, it will still make a generation of Koreans pay a huge sacrifice for it.

Banking is not an ordinary industry. This one area of finance is something that was created out of thin air outside of the physical. The so-called wealth created by finance is 3.5 times the real wealth.

What is the main thing that keeps the banking industry functioning? All that gold in the vaults, cash? No, it all depends on the credit system.” Masayoshi Kishimoto threw down the gauntlet.