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The Enlightenment of Financial “Sinking”

  In many Japanese and Korean film and television works (whether it is a movie or a series), we can easily find a common plot: the protagonist or supporting role is often deeply in debt crisis and cannot extricate himself. They took loan sharks and were chased by the underworld everywhere. The tactics of the underworld are also very good. In addition to the bloody methods we can think of, there are also all kinds of exaggerated harassment. For example, two thugs with bed sheets, live in the debtor’s house, and lie on the bed in their bedroom to sleep.
  The probability of usury episodes in Japanese dramas and Korean dramas is very high. Friends who love dramas can even make a statistic, which will definitely confirm my observation. In the underworld movies shot by the famous Japanese director Takeshi Kitano, there are more episodes of loan sharks. Loan sharks, pornography and drugs are the three main economic pillars of the Japanese underworld. In order to compete for the usury “franchise” in a certain block, the gangsters in the movie often have fires, killing many young brothers.
  Literary and artistic works originate from the soil of social reality. In East Asian economies such as Japan and South Korea, private usury is indeed a common phenomenon. In South Korea, there have even been more than one occasions in which celebrities were unable to repay because of borrowed loan sharks, and were finally pursued by the underworld, and they went to the end. It can be seen that Korean stars do not earn as much as Chinese stars.
  Then, under what conditions will a general usury appear in a society? According to the experience of Japan and South Korea, usury will become more common during the shift period of economic growth from high speed to low speed. Supply and demand determine the prosperity of usury.
  On the supply side, banks as the ultimate source of funds will face the problem of a massive reduction in high-quality customers. In a recession, most “rational” businesses reduce lending. First, because the external investment opportunities are decreasing, the investment yield is lower, and the desire for corporate loan investment is not as strong as before. Second, interest can eat into a company’s cash flow. During a recession, companies must reduce interest payments to preserve valuable cash.
Excessive debt is never a wise move in special times.

  When high-quality enterprises reduce loans, the interest income of banks will inevitably decrease, and banks will have to think of other ways. As a result, banks began to do “sink” business, and lenders with worse credit (small businesses and low-income individuals) became candidates, and as a result, banks’ “subprime loans” began to grow. Banks don’t necessarily do “sink” business themselves, they often do it by handing out money to lending companies. These loan companies either cooperate with the underworld, or they are the underworld themselves.
  On the demand side, in times of recession, there will be a lot of new demand for usury. The economy is not good, and the unemployment rate will naturally rise. At this time, many people have no jobs and often start their own businesses blindly. They have no resources, no education, no experience, only flesh and blood and an unyielding heart, but in the end they can only enter those industries that are overly competitive, and the probability of failure is extremely high.
  In the Japanese drama, some loan sharks borrow money in order to open a convenience store! You know, this is an industry with no barriers to entry, and the “roll” is terrible. Moreover, retail emphasizes scale effect and network effect. How can small convenience stores outperform large chain giants? Take the convenience store industry as an example, Japan is the most “rolled” market in the world. The reason why the 7-11 convenience store model was born in Japan is because the market is “rolled” enough, so practitioners must do their best to please consumers, and it is not a problem to be open 24 hours a day.
  In addition to convenience stores, the debtor is also engaged in business such as restaurants, coffee shops, milk tea shops or roadside lunch sales. The common feature of these industries is that competitors are everywhere, and the “rolls” are more ruthless.
  Of course, many debtors are also addicts who love gambling or drugs. But more debtors have indeed done small businesses and once had respectable dreams, but they didn’t come true. In the end, the ashes of the economic recession fell on the entrepreneurs of these small and micro enterprises and turned into a mountain – interest, which will never be repaid.
  As the two richest economies in East Asia, Japan and South Korea have already gone through the stage of rapid growth. When the economy changes gears or stagnates, the “rolls” within the society will become larger, and usury is only a section. It has revelatory value for all.
  Excessive debt is never a wise move in special times.

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