BUBBLE PHENOMENON IN THE FISH MARKET The story must go back a little bit. I suppose that I should mention about the Hokushou bankruptcy in more detail. The reason why I thought like this is because the Japanese fish business world has always been in a state of depression ever since I had started to work there, and the Hokushou scandal was quite important to understand the causes. Nevertheless, fish distribution works by market prices. As I wrote before, perishable fresh fish or processed food like herring fillets are put on auction everyday and their daily market prices get determined. Frozen fish products don't depend much on daily auctions. Situations like the season's whole fishing catch, the economical state of the market, are the major causes of the market prices or prevailing prices throughout the market. Intentional movements of stocking and distribution also make up market prices. Besides these three market prices mentioned here, there are fixed prices relied upon different types of distributions. The "delivered-straight-from-the-sea" type of sales which connects producers directly to consumers takes advantage of the copy that they eliminate profits of middlemen. This is the main strategy of supermarkets and Co-ops in Japan. Though, the fact should not be forgotten that this kind of price deciding system is also under the influence of the market price system. Not any type of fish price deciding system exists only by itself. They all have influence on each other. For example, let's forget about the prices for a moment and talk about the fish itself. At first, fish were all fresh. It's the producers option to sell the fish in any type of production: fresh, salted, dried, frozen. At the same time, it's the con- sumer's option to choose any type of production. Producers and consumers can both choose the distribution they want to sell fish to, or buy fish from: that is, sell to or buy from supermarkets; Co-ops; small retailers; and so on. So, there are many possibilities of prices for one fish to have. The Hokushou scandal would not have happened if not for the speculation in herring roe stocks. But it is also true that it would not have happened if not for it's failure. If not for it's failure, it would have ended in just plain business. The herring roe sales at the end of 1979 had been strange already since October. There was a lack of No. 1 grade herring roe, which was a price leading factor for high prices, but not too serious. In October, major Japanese department stores start showing samples to their customers, preparing for the December New Year's gift season. At that point of time, herring roe prices boomed up rapidly. The price at that point was 12 thousand yen per kilo. The price was high but in contrast, the sales were not actually active at all, so everyone thought that no such level of price would survive until the main season of consumption, December. The majority of people involved in the fish business waited for a fall. But against their expectations, market prices started to rise up higher. From the nature of the case, there had to be some trading for prices to rise, but no one in sight seemed to be active about herring roe. The seller and buyer were invisible. Only the price alone was going up. If the year had been an usual one, herring roe prices probably should have been about 4-8 thousand yen per kilo in December, when the demand is strongest. But in 1979, it climbed up to 20 thousand. Even now, it is still the highest price recorded so far. At the Tukiji Wholesale Market, all the middlemen were astonished. It was not a game that they had played -- but only one middleman was deeply involved in the high prices. The middleman was Tukudaichu (Tuku-big-faithful). After the fall, Tukudaichu believed that everyone had tricked him but that was not the truth. Most of the other middlemen protected themselves from an unpredictable fall that would have happened at any moment. They bought only the herring roe they needed temporary, on daily bases. The cause of the up-going of herring roe was a corner made by Hokushou, Mitsubishi and Dougyoren. Although, the speculation ended up in an absolute failure. Herring roe met a boycott by consumers in December, triggered by a scandal of Dougyoren that there had been financial fake tradings concerning herring roe. December is the one and only big sales chance for herring roe since the food is a very seasonal item. Hokushou, Mitsubishi and Dougyoren ended up with a huge dead stock of herring roe at the end of 1979. In January, 1980, as soon as the New Year's holidays ended and business started moving again, Hokushou failed to pay a business check and went bankrupt. This bankruptcy influenced all the Japanese fish business. Not only herring roe, but prices of all other kinds of fish dropped. No one in the fish business was able to avoid the influence of this depression. The Hokushou bankruptcy seems to me very similar to the recent burst of the Japanese bubble economy. Let me compare both in four of the following stages. At first, there were major causes of prices to rise between both of them: the so-called Great Sea Grab of the 1970s (many nations unilaterally extended their territorial seas to 200 miles), which had shut out Japanese fishing boats from many fishing grounds and lessened the Japanese supply of fish than before; and money flooding into the stock market, which was derived from the Japanese world largest trading surplus. Secondly, there were intentional movements in both of them to skyrocket the prices: Herring roe cornering; and high prices made up by stockjobbers to invite many amateur investors in the stock market. Thirdly, a collapse occurred: the scandal of Dougyoren managing fake trades led to consumer boycotts; and the scandal of stockbroking companies making up major customer losses led to withdrawal of amateur investors. Finally, prices dropped : piling-up of huge herring roe dead stocks led to the Hokushou bankruptcy and fall of entire fish market prices; stock market prices started to fall endlessly. Trading in fish and common stocks are similar because they are close to nature. Both are dubious trading of the capitalist economy, but speculation in fish is more sinful since bonds are made of paper, but fish are raw and perishable. Naturally, a good fish dealer hates to speculate in fish. Although, in cases of intentional price leading, which are derived by adjusting delivery, are hard to tell wrong or right. Even today, Toyo Reizo, a subsidiary of Mitsubishi, hold large amounts of frozen tuna in super high potential refrige- rators, and depending mostly on market prices, they decide daily amounts of delivery. This has a large influence on the whole tuna market and brings them the power of leading the prices among the market. Whether this kind of function is useful for society or not is a question hard to answer. Whether price making is for profit or stabilizing prices, depends on the situation of the market and the way people look towards it. Speaking generally, worlds of businesses are small ones. You walk around and meet the same faces; hear about familiar names. Furthermore, today, the long economic depression has made systematization of enterprises and concentration of business a social trend. Under this situation, exclusive business behaviors have become easy to be born. Up-going delivery costs work favour- ably for big businesses. The question is, how the market prices would be decided when a monopoly type of society is realized. I suggest that we will have to keep an eye to what may happen. |