Chapter 712 – Domino Effect

One after another, phone calls were coming into Masayoshi Kishimoto’s office one after another. What he heard when he answered the phone, it was all about matters related to the plunge of the Korean stock market.

Nanno Takayuki and Takahashi Kazuya saw him so busy, also did not stay to continue to do more to disturb, each went back to their own departments to continue to do their own things.

Once lunchtime arrived, Masayoshi Kishimoto went to Natsui Makoto’s place. In the past, he was in Ueno, Taito District, but now he was in Roppongi, Minato District. The house had changed, but the people were still the same.

As soon as Masayoshi Kishimoto entered, before he had time to change his shoes at the entrance, Makoto Natsui hurriedly came to him with small steps under her feet and said, “The stock market in South Korea has plummeted. Tokyo TV’s midday economic news just reported that eighteen Korean banks have officially declared bankruptcy and closed down.”

Kishimoto justice while not in a hurry to slowly change slippers, at the same time blurted out: “Fast enough! There are already all eighteen Korean banks that have declared bankruptcy and collapsed.”

“Listening to the meaning of your words, it seems that there will be more Korean banks that will go bankrupt and close down?” Natsui Makoto asked seriously.

“The first dominoes have all started to collapse down, then they will fall one after another. As for stopping there, it will mainly depend on what aggressive bailout initiatives the Korean government and central bank take.

Of course, the Korean plutocrats are also a force to be reckoned with; after all, several commercial banks are companies under their respective umbrellas.” Masayoshi Kishimoto said bluntly.

“Why aren’t you surprised at all? I’m nervous for you. Once a bank has a problem with a lack of liquidity funds, then lending will tighten.

As far as I know, you have quite a few investment projects in Korea. Among them, the real estate in the three districts of Gangnam in Seoul will more or less have a lending relationship with commercial banks.

In addition, you have long told me that once the stock market crash, the next will make the real estate plummet, and then it will spread to the real economy.

If this kind of stock market crash is not controlled in time, it will lead to a great depression over time. Stores, factories, and so on will close down one after another, followed by a surge in the number of unemployed people.” Natsui Makoto said in a serious manner.

Masayoshi Kishimoto smiled as he walked towards the living room sofa and said, “It’s not easy for you to still remember what I said to you in the past.”

Natsui Makoto followed him closely as he walked towards the interior, looking at him with an air of calmness he said, “Did I say anything wrong?”

“The real estate industry does need to have a loan with the bank, after all, there is a need for an advance financing. The bigger the project, the more the amount of financing.

Hard Gold Construction does have a loan from a commercial bank for the development of its project in Gangnam District 3 in Seoul, South Korea. However, not any commercial bank in South Korea, but the Hard Gold Group’s Hard Gold Bank.

As the saying goes, the fertilizer is not flowing to the outside world. Even if it is to let people earn interest, it is also given to their own people to earn. The root cause of this stock market crash in Korea is from the banking sector no less.

Why is the banking industry in trouble? It is on top of the credit cards they issue. One person’s overdue credit card debt is completely negligible to any bank.

What if a million people, two million people, three million people, or even more people were late on their payments? What if they were each overdue on not just one, but many credit cards?

That would cause big problems for the entire Korean banking industry. The total population of Korea is only 50 million people. If you subtract minors under the age of 16 and seniors over the age of 60, and count only the economically active population between the ages of 16 and 59, there are far fewer than 50 million people.

The money that so many people previously spent on credit cards has long since gone to the people who provided them with goods or services.

That means that the banks, through their credit card centers, were making a transfer payment for them in advance. Nowadays, they can’t afford to pay the money they owe on their credit cards, and that means the banks can’t collect it.

On top of that, the main lenders of commercial banks are those businesses, companies. When the time for the loan is not up, other people can certainly not be in a hurry to pay it back.

Then there is the commercial bank lending out of the mortgage, buy all kinds of securities, stocks …… it is the actual amount of cash accounted for very little, not at all imagined there, after all, the market value is one thing, and cash is another thing.

There is a control point for the bad debt ratio of a bank, and if it exceeds the red alert line, it will go bankrupt and fail. Commercial banks in Korea are not only facing the problem of extremely high bad debt ratio of credit cards, but also have to cope with the tidal wave of people coming to the banks to withdraw cash.

Just relying on the little reserves that commercial banks have according to the central bank’s regulations is far from enough to cope with the current crisis.” Masayoshi Kishimoto turned around and sat on his butt on top of the long sofa.

Natsui Makoto sat beside him and said with a grave expression, “Then there is no solution?”

“Of course there is a solution. The simplest, crude, and direct solution is for the Bank of Korea to inject a large loan to each commercial bank.”

Masayoshi Kishimoto is not talking nonsense in front of her.The global financial crisis broke out in 2008 in the United States. It is by the U.S. central bank known as the Federal Reserve is an injection of 850 billion U.S. dollars, followed by ten large commercial banks in the United States.

In addition to agreeing with them on the annual interest rate and how many years to pay back, but also forced to accept the additional conditions of the ten large commercial banks is to reduce the content and terms of the regulation.

Otherwise, they would collectively refrain from borrowing this amount of money, and the big deal was to watch the sky fall. This at a time when hundreds of millions of ordinary Americans were oblivious.

“If it’s so simple, then why hasn’t the Bank of Korea rushed to bail out the market?” Natsui Makoto still has something he doesn’t understand and said.

“Who made the Bank of Korea not have that much money? Even if it wants to bail out the market, there’s no way.” Masayoshi Kishimoto laughed and said.

“You lied to me. You are definitely lying to me. A country’s central bank is the only institution that can issue currency. Commercial banks do not have such power. It is absolutely impossible for the central bank to be short of money.” Natsui Makoto said in disbelief.

“What’s the point of the Bank of Korea printing won in a big way and injecting it into the market? That would only increase the current panic and inflation in the market.

Right now at this fateful and critical time, whether it’s the governor of the Bank of Korea or the President of South Korea, only if their heads have been kicked by a donkey would they go on a death-defying operation of massively over-issuing money.

The Korean government wants to stabilize the current situation, the urgent need is hard currency. I am not talking about precious metals such as gold, but rather currencies with good international credit, stable values and strong exchange rates.

This is not only the dollar, but also includes the yen, the pound, the euro, after all, they are part of the currency basket (as a reference to set the exchange rate of a combination of foreign currencies, a foreign currency in the combination of the weight of the foreign currency in the country’s international trade is usually the importance of the benchmark, is composed of multiple currencies by a certain weight of a group of currencies) inside the currency.

The South Korean government and the central bank have seen that it is better to wait rather than smash foreign exchange reserves into the water. This wait is trying to use the power of foreign aid to stabilize the market and restore investor confidence in Korea.” Masayoshi Kishimoto smiled.