Following SoftBank’s unprecedented 500-billion-yen share buyback and a violent plunge in the Tokyo Stock Exchange, this essay adds a critical addendum to a long-held hypothesis. It examines foreign dominance, yen appreciation, short selling, and the question Japan refuses to answer: will it defend its own market?

2016-02-17

Among my friends are several former employees of financial institutions.
As I have already noted, about ten years ago I resolved that the final missing piece needed to write The Turntable of Civilization was an understanding of the stock market—the third pillar alongside real estate and banking—and I therefore continued to watch the market closely for several years.

The announcement published in the Nikkei the day before yesterday, that SoftBank would carry out a massive 500-billion-yen share buyback, was among the largest I had ever seen during my years of observation.

The moment I saw that article, I felt compelled to add an addendum to my hypothesis.
I spoke of this to the friend mentioned at the beginning.

Masayoshi Son, the owner of SoftBank, has risen to become one of Japan’s top one or two wealthiest individuals, with assets exceeding 500 billion yen—almost perfectly inversely proportional to Japan’s “lost twenty years.”
At the same time, he is a major shareholder in Chinese companies such as Alibaba, from which he has earned enormous profits.
Yet the acquisition of Sprint in the United States, undertaken by a man who embodies ambition itself, has long been questioned by the market.

As I have already explained, it is now an obvious fact that the recent massive plunge in the Tokyo Stock Exchange was clearly intentional.
The other day, the Sankei Shimbun even described it as a “violent decline.”

The Tokyo Stock Exchange is the safest, most stable market with enormous liquidity.
Yet it is also a market utterly devoid of the resolve to protect national interests or defend the country, unlike China.

In a country where even legislation that is standard elsewhere—laws meant to protect the nation from external, and especially malicious, threats—are denounced as “war bills” by scholars from the highest academic institutions, there can be no resolve to protect one’s own market, one’s own companies, or the hard-earned money of one’s citizens.

The instigators understood this perfectly well from the start.

Moreover, the Tokyo market is extremely simple: a stronger yen means lower stock prices.
Foreign investors control roughly 70 percent of daily trading volume.

In China, they cannot unleash massive selling of the yuan even if they want to.
But in Tokyo, driving the yen sharply higher is easy.

Why?
Because Japan, both public and private sectors alike, has almost no conception of national interest.
Anything goes.
At the same time, massive short selling was placed on the Nikkei Average.

Enormous sums of money were taken from Japan.
In other words, the instigators gained enormous profits.

I added this as a note to my hypothesis when speaking to my friend: SoftBank—namely, Masayoshi Son—was among them.

If my hypothesis is correct, yesterday’s limit-up would not be enough.
It is only natural that those who engineered the collapse bear responsibility for restoring the Tokyo market.
And the exchange must disclose to the public who continued to place short sales.

If Japan truly has no intention of even defending its own country, and therefore no intention of defending its market, then it must declare that openly to the Japanese people and to the world.

The question is simply whether the nation will defend itself or not.

To be continued.