Eagle, I don't want to form an alliance anymore.

"When Recruit lured Kawasaki City, his assistant obtained related stocks and sold them for a profit of 100 million yen!"

Here's what happened: A company called Recruit sold shares of one of its real estate subsidiaries at a low price to a local government official before it went public. In Japan, this position is called a "suke" (訓役).

Once the stock was listed, its price skyrocketed, and the assistant officer immediately sold it, making a fortune. That's bribery.

With the help of "well-informed sources," a reporter from the Yokohama bureau of the Asahi Shimbun first found a small opening in the area, and then uncovered the whole dark secret.

Licurte Corporation used the same tactic—giving away shares at a low price before its IPO—to feed not just a Kawasaki executive, but the entire political and business elite of Japan.

Politicians, bureaucrats, business leaders... the list is frighteningly long. These people bought Recruit's initial public offering (IPO) shares and all made a fortune after the company went public.

Even a local government official could profit 100 million yen from this, not to mention the high-ranking officials!

Just when the outside world thought Japan was about to begin a major purge, the reporter who covered the news mysteriously disappeared in Tokyo Bay. With the combined efforts of Japanese conglomerate banks and mysterious forces, all reports about Recruit were banned.

Who are these mysterious experts? Why should we help them?

The conglomerates initially wanted to continue their investigation, but as they went on, everyone fell silent. The chain of events had already reached the CIA, and it wouldn't do for the son to investigate the father, would it? Besides, it was the American "father" who had intervened to stabilize the Japanese political and business circles; everyone was overjoyed, so why question it? Thus, everyone learned to read the room and pretended not to know that this had happened.

In fact, the CIA has collected a list of bribe recipients in Japan over the years, covering almost the entire political and business elite, including detailed accounts of who received how many shares and how much money they made.

Then the CIA shared these things with the KGB.

Historically, this was the largest commercial bribery case in postwar Japan. Since its exposure in June, the case has spread rapidly, affecting over 7000 people in the political and business spheres, and directly leading to the resignation of more than 50 political figures, including Finance Minister Kiichi Miyazawa and Prime Minister Noboru Takeshita.

It was this incident that made the Bank of Japan gradually realize that the Japanese economy was overheated and needed to be cooled down, otherwise the bubble would continue to blow and cause big problems.

Many conspiracy theorists believe that the Bank of Japan is behind the continued spread of the incident rather than its suppression by conglomerates and banks.

In short, the US and the USSR now have leverage over this, and as for how they will use it...

There are some things the Americans can't do, but the Soviet Union can; and there are some things the Soviet Union can't do, but the Americans can. With these two sides cooperating, Japan will reap the benefits.

Now, if any politician disobeyed, the US and the Soviet Union could "accidentally" leak their name to specific media outlets. Any business tycoon who dared to resist would have their bribery details "coincidentally" published. The entire elite lived in fear, everyone knowing their weaknesses were in someone else's hands. No one knew if they would be the next to be fed into this system.

An elite group will never be able to stand up again once everyone has something to hide and everyone is afraid of being called out.

The noose is already in place. Now, it's up to the person who's pulling the strings to decide how to make this Japanese puppet move.

A week after the Licourt incident, on June 21, the G7 summit was held in Toronto, Canada. This was the 14th G6 summit, chaired by the Canadian Prime Minister.

Participants in the summit included Italian Prime Minister De Mita, US President Reagan, Japanese Prime Minister Takeshita, Canadian Prime Minister Mulroney, British Prime Minister Ford, French President Mitterrand, West German Chancellor Kohl, and European Commission President Delors.

This summit took place at a crucial time in the late 80s. The Berlin Wall and the Iron Curtain still divided the world into two major camps, East and West, and South Africa remained under the formal rule of apartheid. Unlike the 1981 Montebello Summit when Canadian Prime Minister Trudeau focused on the "North-South issue," by 1988, the world order had undergone profound changes.

The resurgence of the Soviet Union, the return of communism to the Third World, the Great Depression in the United States, and the smooth progress of the arms reduction issue... the world is undergoing profound changes unseen in a century.

As a beacon of the free world still struggling to climb out of the abyss of the Great Depression, the United States urgently needs to revive its economy. Therefore, the world media's attention to this G7 summit has been almost entirely focused on international fiscal policy.

...

加拿大 多伦多

"Ding Ding Ding!"

The fax machine woke Saeki with a piercing scream at four in the morning.

He slept on the sofa in the outer room of the suite so he could keep watch over the machine—Tokyo and Toronto are thirteen hours apart, and telegrams from the province always arrived around this time.

He shuffled over in his slippers, and by then half of the paper had already been dispensed. It contained a report from the Japanese Ministry of Finance regarding the state of the Japanese economy, urging the Prime Minister to do his best to preserve Japan's future.

He sighed, read the paper twice from beginning to end, and then stood in front of the fax machine for a while.

The curtains in the outer room weren't fully drawn. In Toronto, the days are long in June, and a beam of grayish-white light fell on the Japanese flag on the wall.

A few minutes later, the chief aide, Owada, folded the paper into quarters and put it in his suit pocket, telling Saeki he would mention it to the Prime Minister. However, no one at the breakfast table said anything about it. Prime Minister Takeshita drank half a bowl of miso soup as usual, asked about the day's schedule, and then remarked that Lake Ontario looked like the sea.

“That’s right,” the Foreign Affairs Officer agreed.

The bilateral talks were held in a small hall on the third floor of the conference center, which the Canadians called the Maple Leaf Hall. Saeki sat at the notepad against the wall.

President Reagan looked better than he did on television. In front of the media, he shook hands with Prime Minister Takeshita and told a joke, saying that he had learned a Japanese phrase last week and then said "yoroshiku" (please take care of me) in a California accent, pronouncing "ro" as the English "R".

The Japanese side laughed, the American side laughed, and the translator breathed a sigh of relief—at least the start was pretty easy.

Treasurer Baker sat to Reagan's right and casually placed a very thin folder on the table.

In his five years in this industry, Saeki has seen Americans come to negotiate trade. During the semiconductor deal, the documents the Americans brought in were packed in cardboard boxes, and the negotiators could read the data for half an hour straight. The thicker the documents, the more they wanted to reason things out.

But this time there was only one thin clip.

After the initial pleasantries, Reagan continued his speech by flipping through the cue cards one by one. When he got to the topic of the global economy, he paused, removed the card, and spoke briefly. He said that three weeks earlier he had been in Moscow, the weather in Red Square was wonderful, and that Soviet General Secretary Ivanov was a very approachable person. The two of them had a long conversation, discussing the whole world and concluding that the US and the Soviet Union could achieve friendship.

"His Excellency the President believes that the United States and the Soviet Union can achieve friendship." The translator looked at Prime Minister Takeshita when he translated this part.

Takeshita nodded and said that the détente between the US and the Soviet Union was a blessing for all mankind.

“Yes,” Reagan said, “so now it’s the economy’s turn. Forty years after the war, America carried the free world. Now America is sick, and our friends have to lend a hand.”

The prompt card was turned to the next one, and Reagan read out the main course that was served. The communiqué later used the American terminology: the yen is a key currency for global recovery.

After reading that sentence, Reagan handed the conversation over to Baker.

Baker didn't stand on ceremony. He opened the thin folder and glanced at it for a moment. There seemed to be only a few pages inside, but he barely looked at them.

Finance Secretary Baker said, "The framework of the 1985 Plaza Accord was designed three years ago, and the world then is a different world now. The old framework cannot handle the new reality, and we believe that the framework needs to be upgraded."

Saeki had a bad feeling when he wrote the word "upgrade" on the notepad. Equipment could be upgraded, warships could be upgraded, but he couldn't recall any international agreement that used that word.

"As for the specific format," Baker said, "we'll have a plan by the fall, and we hope to discuss it in New York, or at the Plaza Hotel."

Takeshita's expression was somewhat grim, but he had no choice. West Germany, Britain, France, and the United States all wanted Japan to be sacrificed. The Plaza Accord of 1985 forced the yen to appreciate. Japan was already heavily reliant on exports—it's an island nation with extremely scarce resources, and it has almost no industries that can generate domestic revenue and create an internal cycle. It's far too dependent on exports!

Since the yen is a "key currency for global recovery," its status needs to be elevated, and its exchange rate needs to rise further. The Americans will not allow the yen to transfer risks through devaluation and inflation.

Unless... unless the real economy is moved overseas and more financial institutions are developed domestically.

Prime Minister Takeshita forced a smile and began to speak: "Japan-U.S. relations are the cornerstone of Japan's diplomacy, and international coordination is Japan's consistent position. Japan will conduct a careful study of the U.S. proposal with the utmost sincerity and continue to exchange views in depth at all levels."

The translator translated fluently. He had translated this passage hundreds of times; every word seemed meaningful, but together they conveyed nothing.

Baker nodded after listening, closed the folder, and didn't ask any further questions, as if Japan's reaction had already been planned in his thin folder.

Saeki later realized that was the worst sign of the entire meeting.

If the US presses for further questions, it means that the US still needs Japan's consent. The US's current stance is clearly one of notification rather than seeking opinions.

Subsequently, at the summit, the seven countries reached a so-called gentleman's agreement—that none of them would engage in unilateral austerity measures during the Great Depression.

This clause sounds like a call for countries to work together to overcome difficulties, but it's actually a handcuff specifically placed on the Bank of Japan.

Because the Bank of Japan is planning to raise interest rates—domestic asset bubbles are growing wildly, with stock and housing prices soaring out of control. The most direct way to cool down this bubble is to raise interest rates, which is essentially tightening monetary policy.

The last country to do this was West Germany, which triggered a series of actions by the United States, ultimately leading to the Great Depression. Even now, Americans remain very hostile towards West Germany.

When West German Chancellor Kohl met with Reagan, he always kept his tail between his legs, fearing that the Americans would find fault with him and impose sanctions on West Germany.

The US made the mistake of allowing West Germany to raise interest rates, and it will never make the same mistake again.

If Japan were to unilaterally raise interest rates at this time, it would be a breach of faith! It would undermine the unity of the Western free world! Does the Bank of Japan want to put the brakes on its bubble? No, it won't work! The bubble can only continue to inflate.

As July arrived, the US and Japan entered a period of negotiations.

Throughout these negotiations, Japan was completely manipulated. In the first round of talks, the Japanese representatives were still thinking of taking a hard line.

After all, the exchange rate is crucial to Japan's exports and the entire Japanese economy! The Japanese representatives argued their case forcefully at the table, refusing to back down easily. They presented data and reasoned arguments, saying that if the yen appreciated further, Japanese export companies would not be able to survive.

The Ministry of Finance's finance minister, Kabayama, was extremely anxious. He not only complained to the Americans but also pleaded with the other countries participating in the negotiations: "How much has the yen appreciated since the beginning of the year? If it continues to appreciate, Japanese companies will be the first to go bankrupt!"

But nobody cares that Japan's biggest role as a G7 member is simply to be a dish on the table.

"Excuse me for interrupting." The U.S. Under Secretary of the Treasury, who had been impatiently tapping the table, glanced at his watch after waiting for the Japanese side to speak for half an hour, whispered something to the person next to him, and got up to leave. He said he was going to take a phone call.

The Japanese side took a break to catch their breath.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

It was evening in Moscow at that time.

On Slava's desk lay a briefing from the Ministry of Agriculture, discussing the poultry and egg supply in several major cities before autumn. Some problems had arisen in several newly established coastal unions, and some republics believed that the pricing of goods exported by the unions was unreasonable. The briefing included a list of CIF prices for eggs from each republic.

He was getting annoyed when there was a sudden knock on the door.

"Comrade General Secretary, it's a phone call from the White House."

"Put it in." Slava nodded and answered the call, listening for a while.

“…Okay, I’ll keep applying pressure,” Slava said.

He put the microphone back, pressed the intercom button, and gave instructions to the person on night duty outside, telling them to start the operation at the Zurich Stock Exchange.

Thus, whenever negotiations reached a stalemate, the Soviet Union would launch a financial surprise attack, causing the yen to appreciate by 4% within three days and export stocks to plummet.

"Ding Ding Ding-"

Major Japanese conglomerates were exerting pressure, and the telephone lines from Tokyo through the embassy had been constantly busy. Prime Minister Takeshita's secretary stood at the door, holding the receiver, watching the Americans with barely suppressed anger.

As long as Japan refused to concede, the yen began to appreciate. The G7 countries watched all this with indifference. The Americans could absolve themselves of all responsibility by not intervening, but that didn't mean West Germany, France, Britain, and the Soviet Union wouldn't take action! Japanese export companies' book profits were halved that very day, and the Tokyo stock market opened with a sea of ​​red.

One phone call after another. These people were fighting against the United States for Japan's national interests, but now they were caught in a fire on both the front lines and their rear, and they had no choice.

The U.S. Under Secretary returned at that moment. He sat down, his face expressionless, as if the previous phone call had truly been an unrelated one. He waited for the translator to hand him the microphone before slowly speaking:

"Oh, I'm so sorry to hear this bad news from your home country. The yen's appreciation is really terrible, isn't it?"

So chaotic, so out of control, no one could stop it. I feel very sorry for them; Japanese companies really shouldn't have to endure this.

Then the Americans pushed forward the Plaza Accord II plan.

"But if your country is willing to sign an agreement to coordinate monetary policy with the United States, then I think this appreciation can be managed. An orderly appreciation, a controlled appreciation, and then your country will no longer have to suffer from this uncontrolled and disorderly appreciation."

Signing the petition signifies an orderly promotion; not signing it signifies an uncontrolled promotion.

Either way, it's all the same – death.

Prime Minister Takeshita was exhausted; Saeki could see a dark patch stuck to the back of his shirt. Everyone on the Japanese side knew they had been set up. Every time they hardened their stance, a surge of money from unknown sources would appear in the market, pushing the yen up, crashing the stock market, and forcing the Keidanren (Keidanren Federation of Industry and Commerce) to cry at the Prime Minister's residence.

Americans say it's the market, international hot money, speculators, an invisible hand.

Prime Minister Takeshita felt completely disoriented by this unseen dark force.

In the end, the Japanese representatives were like tamed livestock, letting the US and the Soviet Union lead them forward.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

Just as the negotiations between the US and Japan were at a stalemate, another agreement was signed in Basel, Switzerland in July.

This agreement sets a rule for banks worldwide—that banks must have a capital adequacy ratio of no less than eight percent.

The rule itself was intended to make banks more stable. However, Japan secured a special privilege for itself within this agreement:

If a Japanese bank has unrealized gains on its stock holdings—that is, the money earned on paper from a stock price increase that it hasn't yet sold—45% of these unrealized gains can be included in the bank's Tier 2 capital.

This seems to be a win for Japan. Japanese banks hold a large number of corporate stocks, and with the bubble economy driving up stock prices in recent years, their paper profits have been enormous! By including 45% of these paper profits in capital, Japanese banks suddenly have ample capital and can extend more loans.

The Bank of Japan thought it had gotten a huge advantage. But the US and the Soviet Union saw it clearly: this agreement now tightly linked the Bank of Japan's capital adequacy ratio to the stock market. If the stock market rose, the bank's unrealized profits would increase, and its capital would be more sufficient.

But what if the stock market crashes?

When the stock market crashes, all those paper profits evaporate instantly. Once those profits are gone, the Bank of Japan's capital adequacy ratio will immediately fall below the 8% threshold. Without sufficient capital, the bank will have to quickly tighten lending and even stop lending altogether.

When banks withdraw loans, the lifeblood of the entire economy is cut off. Businesses can't borrow money and collapse one after another. As businesses fail, the stock market crashes even more, causing banks to suffer even greater losses on their unrealized profits, widening their capital gap, and forcing them to withdraw even more loans...

This is the death spiral. One link leads to another, spinning faster and faster, dragging the entire economy into the abyss.

Japan, which relied on the bubble economy to rise to the top, will one day pay the price for it.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

At the same time, Slava started giving the Japanese carrots.

Moscow in July wasn't hot, but the atmosphere in the Politburo meeting room was heavy. A bottle of mineral water sat every two seats on the long table; no one drank from it, and the row of green bottles stood there like a guard of honor.

The agenda is stuck in the Far East.

Director Nian cleared his throat and read out the plan: "Regarding enticing Japan, our three signals have been released as planned—the Southern Kuril Islands issue can be discussed within the framework of a peace treaty; the preparatory plan for the Far East Free Economic Zone has also been sent to Tokyo through the Ministry of Foreign Affairs."

Cooperation with Japan on oil and gas in the Sakhalin region has also been put on the agenda, and a draft exploration agreement with Japan is under discussion.

There's a lot of activity in Tokyo; the political scene is chaotic, the business world is buzzing, and everyone's looking towards Moscow.

Ligachev put down the pencil in his hand, and everyone heard it.

"Comrade General Secretary, I don't quite understand."

Slava gestured with his chin, waiting for him to speak.

“Your policies change too quickly,” Ligachev said. “You come up with a new idea every few days. One minute you’re cracking down on food supply and chicken farms, and the next you’re planning to open special economic zones for capitalists in the Far East.”