Bubble

May 31st, night. Old house in Nakayama.

After a long day of hustle and bustle, the tranquil Japanese-style courtyard exudes a sense of peace and serenity.

In the living room after dinner, Nakayama Takuya was chatting with his father Nakayama Hayao.

"Father, those guys at Konami really made a killing this time." Takuya's tone carried an undisguised envy. "Their Teenage Mutant Ninja Turtles, thanks to the popularity of the animated series in North America, sold over a million copies in a week across the NES and MD versions combined."

"A single IP license can bring in enormous wealth; it's incredibly enviable."

Nakayama Atsuo held his teacup, nodded calmly, and waited for Takuya to continue.

"Therefore, Tom Kalinske must take office as soon as possible. The North America market can't wait any longer. We need to get him through the handover with Lawson quickly and get him into practical work as soon as possible, snatching those high-quality IPs into Sega's hands one by one." Takuya's tone was full of aggression.

The father and son were discussing Sega of America, while on the television on the wall, the evening news anchor was delivering a financial news report in a standard and steady voice.

"Today, Bank of Japan Governor Satoshi Sumita announced at a press conference that, in order to curb overheated speculative activity, the official discount rate (benchmark interest rate) will be raised from 2.5% to 3.25%*—this move ends a 27-month-long period of ultra-low interest rates since Showa— "

The broadcast continued, but Nakayama Takuya's voice abruptly stopped.

He seemed to be frozen in place, his gaze fixed on the television screen. The smile vanished from his young face, replaced by a solemn expression.

Nakayama Atsuo keenly noticed the change in his son.

He followed his son's gaze to the television, where he saw Satoshi Sumita's serious face.

It's just an interest rate hike.

For most businesses, this isn't even news worth discussing all night.

But Takuya's reaction was highly unusual.

The air in the living room seemed to freeze, with only the voice of the news anchor flowing from the television.

Nakayama Hayao remained silent, simply observing his son. This powerful figure from the Showa era was now more interested in seeing what his beloved son would think about this matter.

After a long while, Takuya slowly came back to his senses. He turned to look at his father, his gaze more serious than ever before.

"Father, let's talk in the study."

Nakayama Atsuo was somewhat surprised by Takuya's formal attitude, but he still went into the study with Takuya first.

Inside the study, the scent of cypress wood was calming and soothing.

Takuya didn't rush to speak, but skillfully poured a pot of jade dew for his father and himself.

Boiling water was poured into the teapot, and the steam from the nitrogen box carried the aroma of tea. He poured the clear tea into an antique teacup and handed it to his father with both hands.

His entire set of movements was fluid and graceful, displaying a composure that belied his youth.

Nakayama Hayao took the teacup and took a sip.

Seeing his son's unusually serious demeanor at home, he knew that what he was about to say would carry significant weight.

"Father, Sega has invested a considerable amount of money in the stock market and real estate, hasn't it?" Takuya finally spoke up.

Nakayama Hayao's gaze sharpened. "Indeed, quite a lot. The profits from the past two years are more than what we made selling arcade machines over ten years."

This is a consensus among almost all companies in Japan.

"We should probably call it a day," Takuya said.

"All of them?" Nakayama Atsuo frowned.

"Yes, all of them. And it has to be fast and decisive."

Takuya looked directly into his father's eyes and said, word by word, "That news just now was a wake-up call. The Bank of Japan raised the discount rate..."

This shows that they have already seen the bottomless abyss of bubble beneath this false prosperity.

"By simply raising the discount rate (benchmark interest rate) by this small amount, the risk-reward ratio for speculation is no longer so worthwhile."

"Moreover, we're dancing on a knife's edge. If the winds suddenly shift, our information and channels won't be as reliable as those of the large conglomerates that traditionally operate in the stock and real estate markets. Those conglomerates that have been operating in Japan for many years will not hesitate to push out 'newly emerging aristocrats' like us as sacrifices, then withdraw and leave us to foot the bill. Hasn't this happened countless times in Japan history?"

"In finance, ultimately it all comes down to 'securing profits'!"

Nakayama Atsuo's expression gradually darkened. He put down his teacup and leaned forward slightly.

Takuya hadn't finished speaking.

"What's even more frightening is that this could very well be just the beginning."

"President Satoshi Sumita has only six months left in his term. What does it mean that an official about to step down would make such a significant policy adjustment before leaving office?"

Takuya's eyes were sharp as knives. "This could very well be a manifestation of the will of the entire faction of the next successor! This means that the future central bank may only adopt more aggressive and severe tightening policies! They might even actively burst this bubble!"

"I fear that an unprecedented storm is brewing, and we, in Japan, are now standing in the eye of it."

H

A silence fell over the study.

A storm raged through Nakayama Hayao's heart.

What shocked him was not his son's conclusion to "withdraw from the stock market and real estate," but the entire reasoning process that led him to that conclusion!

Starting with a seemingly insignificant news item about an interest rate hike, the analysis extended to changes in the risk-reward ratio, delving into personnel changes and policy continuity within the government, and ultimately rising to a judgment on the overall trend of the Japan economy, even predicting the self-preservation strategies of traditional zaibatsu during the crisis.

This is hardly the perspective a young person in their twenties should have!

This insight, this understanding of human nature and politics, impressed him greatly.

He looked at his son, the young man who once needed his protection, who had unknowingly grown to a height where he could guide the entire Nakayama family and the entire Sega empire.

A mixture of indescribable pride and lingering fear welled up inside me at the same time.

"I will immediately have the Finance Department audit all relevant investment accounts and data." Nakayama Atsuo's voice regained its usual composure, but the power it contained was completely different.

He stood up, walked to his son, and for the first time, instead of acting like an elder, he solemnly patted Takuya on the shoulder as if he were treating a true successor.

"At the same time, I will use all my connections to investigate all possible candidates for the next governor of the central bank and their policy inclinations."

"Takuya, this matter can't be rushed. Wait for my news first. The handling of Sega's stock and real estate needs careful consideration. Also—we can consider stepping aside for some ungrateful people on the board!"

"Thank you for your trouble, Father." Takuya bowed deeply to his father.