Reverberations of Dark Money: The Financial Underworld in Kabukicho, 1999-2010

Reverberations of Dark Money: The Financial Underworld in Kabukicho, 1999-2010

From the late 1990s through the 2000s, as financial instability and joblessness spread after the bursting of the bubble economy, black-market finance spread through Kabukicho like a nighttime blood stream. These companies, which offered short-term, same-day loans with no collateral and no guarantees, turned their money over behind the scenes to brothels and host clubs, entangling young people in a cycle of debt.

At that time, before the Money Lending Control Law was revised in 2006, gray-zone interest rates, where the maximum interest rate was actually over 40%, were tacitly accepted. Many operators exploited this gap in the law, making exorbitant interest rates and violent collections the norm. Hosts and cabaret girls, in particular, were forced into a cycle of borrowing money from other companies when they could not repay their debts.

After the collapse of Lehman Brothers in 2008, a new type of black-market money emerged, targeting the financial difficulties of non-regular workers and night workers. Loans were made in smaller amounts, and the emergence of a system where transactions could be completed on line or via e-mail made it easier to evade detection.

The social background is the expansion of the poor that has proceeded on the back of monetary easing policies. The structure of repeated lending and borrowing in a corner of the city, using human relationships as collateral, has supported the backstreet economy of Kabukicho. Even if the surface of the nightlife district is cleansed, the shadow of the black money will not disappear. This is because it is the last form of credit transactions by those whom the system has abandoned.

Even today, the tactics of black-market finance continue to evolve, with exploitation taking on new forms, such as instant job offers on social networking services, solicitations under the guise of personal loans, and anonymous loans using virtual currency and electronic funds transfers. The shadows that linger in the back alleys of Kabukicho tell another story of financial history, one that lives on at the lowest level of capitalism.