Enough theory. Here's how it actually went. On Friday the story was finally broken by The Wall Street Journal, a little squib in "What's News," with a short two-column analysis on page 3. The piece revealed that all the heavy new activity building in the high-tech sector of the market represented buys being coordinated by a new Japanese investment concern.
This sudden, unexpected program of foreign investment was heralded at first as a salubrious omen, refuting those doomsayers who were claiming the world had lost confidence in the U.S. In fact, if anything it was proof that overseas enthusiasm was actually increasing. Japan's previous practice of focusing on debt instruments was at best passive investment. But buying heavily into a sector of the economy that appeared weak was something else entirely. It was a rousing endorsement of America's prospects.
To be fair, there was still a modest case to be made in that direction. Our high-tech sector wasn't all struggling high fliers operating out of some one-story cinder block on Route 128 or the Washington Beltway. America had plenty of solid industry in high tech—computers, aerospace, office machinery—and American laboratories and universities were the envy of the world. The problem lay with the downside. We'd lost our lead in electronics, drugs, scientific instruments, plastics, communications equipment . . . it's a long list. In fact, America's overall trade balance in high-tech products had actually gone negative, shrunk from a twenty-five billion dollar surplus as recently as 1980. The ignored question, therefore: Given the direction things were headed, why were the Japanese suddenly supposed to be so impressed?
The market's initial euphoria didn't last long however. By the end of the second week the SEC was sniffing the air and the lunch talk downtown, from the AMEX traders at Harry's to the expense-account crowd at historic Fraunces Tavern, was
focused on what appeared to be a major shift in Japan's investment strategy. Now that the stock market was in shambles, they weren't just dabbling anymore; they were cashing in on the fire sale hand over fist.
Thus the Street's early cheering melted into apprehension. Japan had already taken apart our debt and currency markets, turned them upside down, and scored a bundle. Now Noda had Wall Street looking over its shoulder and reminiscing about the good old days when all it had to worry about was rich, crazy Arabs. When it became clear that Dai Nippon was assaulting the U.S. securities markets with high-speed computers and a checkbook that just kept coming, there weren't all that many wisecracks about camels and tents.
Wall Street, however, merely counts; it doesn't think. The real disquiet was reserved for corporate boardrooms. Take it as a given that when the Securities and Exchange Commission reports some ten, twenty, or thirty percent of your company's stock has just been swallowed by a cash-rich Japanese raider, your attention can focus most exquisitely. In a word, Matsuo Noda was the talk of industrial America. More to the point, and exactly what he had expected, the boards and CEOs of the companies being bought were beginning to be scared shitless. A major player with seemingly bottomless pockets was gobbling up heavy blocks of their publicly traded shares. Worse still, nobody had the slightest inkling why.
What all those entrenched CEOs didn't realize, in their wildest paranoia, was that seven-figure salaries and cushy executive perks were about to go the way of Cadillac tail fins. World competition, not executive compensation, would be the new game. Playtime was over; America was about to get serious again.
My early suspicions concerning my role in Noda's design had been precisely on the mark. I was indeed the freelance gunslinger he wanted by his side when the companies he was aiming at started to shoot back, which they surely would. Needless to say, if his plan was ever allowed to reach the courts, it would create a virtual "living trust" for half the corporate lawyers in the land. He'd be in litigation through the twenty-first century as managements fought to the last stockholder's dollar to keep their jobs.
Enter Matt Walton. Time for some samurai-style legal swordsmanship.