Arbitraging Japan: Dreams of Capitalism at the End of Finance
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Arbitraging Japan This page intentionally left blank Arbitraging Japan Dreams of Capitalism at the End of Finance Hirokazu Miyazaki University of California Press Berkeley • Los Angeles • London University of California Press, one of the most distinguished university presses in the United States, enriches lives around the world by advancing scholarship in the humanities, social sciences, and natural sciences. Its activities are supported by the UC Press Foundation and by philanthropic contributions from individuals and institutions. For more information, visit www.ucpress.edu. University of California Press Berkeley and Los Angeles, California University of California Press, Ltd. London, England © 2013 by The Regents of the University of California Library of Congress Cataloging-in-Publication Data Miyazaki, Hirokazu. Arbitraging Japan : dreams of capitalism at the end of fi nance / Hirokazu Miyazaki. p. cm. Includes bibliographical references and index. ISBN 978-0-520-27347-4 (cloth : alk. paper) ISBN 978-0-520-27348-1 (pbk. : alk. paper) 1. Stockbrokers—Japan—Case studies. 2. Investment analysis—Japan—Case studies. 3. Arbitrage—Japan—Case studies. 4. Finance— Japan—Case studies. I. Title. HG5774.3.M59 2013 332.60952—dc23 20120 27300 Manufactured in the United States of America 22 21 20 19 18 17 16 15 14 13 10 9 8 7 6 5 4 3 2 1 In keeping with a commitment to support environmentally responsible and sustainable printing practices, UC Press has printed this book on Rolland Enviro100, a 100% post-consumer fi ber paper that is FSC certifi ed, deinked, processed chlorine-free, and manufactured with renewable biogas energy. It is acid-free and EcoLogo certifi ed. For Annelise and Xavier This page intentionally left blank Contents Acknowledgments ix Introduction 1 1. Shakespearean Arbitrage 24 2. Between Arbitrage and Speculation 43 3. Trading on the Limits of Learning 70 4. Economy of Dreams 89 5. The Last Dream 112 6. From Arbitrage to the Gift 133 Notes 153 References 169 Index 191 This page intentionally left blank Acknowledgments This book is based on longitudinal ethnographic fi eld research among Japanese fi nancial market professionals in Tokyo completed between 1998 and 2011. It seeks to recapture these professionals’ excitement about techniques of fi nance and the capacity of those techniques to transform economy and society. My research was assisted by a grant from the Abe Fellowship Program administered by the Social Science Research Council and the American Council of Learned Societies in cooperation with and with funds provided by the Japan Foundation Center for Global Partnership. The initial phases of the project were supported by the American Bar Foundation, and more recent research trips to Tokyo were made possible by research funds generously pro- vided by Cornell University. Special thanks are due to Jacquelyn Ball, Laura Cocora, Alexander Gordon, Davydd Greenwood, Vinny Ialenti, Annelise Riles, Jennifer Shannon, and Chika Watanabe for reading the entire manuscript and generously offering line-by-line comments. I also benefi ted a great deal from detailed comments on individual chapters provided by the follow- ing people: Tom Boellstorff, Walter Cohen, Tony Crook, Yuji Genda, Douglas Holmes, Naoki Kasuga, Webb Keane, Donald MacKenzie, Bill Maurer, Katrina Moore, Adam Reed, and Richard Swedberg. Over the last ten years, I have presented versions of the argument I develop in this book at various seminar series, workshops, and confer- ences. I thank all who attended and commented on my presentations, especially Allison Alexy, Michael Allen, Anne Allison, Masahiko Aoki, Diane Austin-Broos, Frank Baldwin, Brett de Bary, João Biehl, Luc ix x | Acknowledgments Boltanski, James Boon, John Borneman, Laura C. Brown, Timothy Choy, Jean Comaroff, John Comaroff, Veena Das, Elizabeth A. Davis, Brett de Bary, Joseph Dumit, Lieba Faier, James Faubion, James Ferguson, Paul Festa, Melissa Fisher, James J. Fox, Bryant Garth, Carol Greenhouse, Chris Gregory, Jane Guyer, Ghassan Hage, Koichi Hamada, Abdellah Hammoudi, William Hanks, Yonosuke Hara, Karen Ho, David Holm- berg, Waheed Hussain, Miyako Inoue, Reginald Jackson, Casper Jensen, Jennifer Johnson-Hanks, Margaret Jolly, Mamoru Kaneko, William Kelly, Christopher Kelty, Shuhei Kimura, Sharon Kinsella, Karin Knorr-Cetina, Naveeda Khan, Junji Koizumi, Eisei Kurimoto, Benjamin Lee, Haiyan Lee, Vincent-Antonin Lépinay, Michael Lynch, Neil Maclean, Ramah Mckay, George Marcus, Francesca Merlan, Yuval Millo, Timothy Mitch- ell, Koji Miyazaki, Henrietta Moore, Atsuro Morita, Fabian Muniesa, Karen Nakamura, Victor Nee, Ryoko Nishii, Michio Nitta, Katsuro Niwa, Emiko Ohnuki-Tierney, Aihwa Ong, Takashi Osugi, Morten Ped- ersen, Trevor Pinch, Mary Poovey, Alex Preda, Michael Pryke, Nigel Rapport, Kathryn Robinson, Janet Roitman, Carolyn Rouse, Hugh Ruffl es, Minako Sakai, Naoki Sakai, Steve Sangren, Ryan Sayer, Teruo Sekimoto, Michael Silverstein, Kenneth Singleton, David Slater, Rogers Smith, David Stark, Hirokazu Takizawa, Sachiko Tanuma, Philip Taylor, Nigel Thrift, Takuya Toda-Ozaki, Ikuya Tokoro, Matt Tomlinson, Greg Urban, Katherine Verdery, Jeff Weintraub, Kazuo Yamaguchi, Shinji Yamashita, Sylvia Yanagisako, Tomiko Yoda, and Alexei Yurchak. A workshop organized for me in July 2010 by Naoki Kamiyama, then managing director and chief equity strategist at the Tokyo offi ce of Deutsche Securities was also a valuable opportunity for me to present my work to fi nancial market professionals. Daisaku Yoshida, an editor for Chuokoron, a monthly Japanese opinion magazine, helped me present the core argument of the book in a two-part essay published in the February 2012 and March 2012 issues of the magazine. The process of writing this essay allowed me to sharpen my argument considerably. The chairs of Cornell University’s Department of Anthropology— David Holmberg, Nerissa Russell, and Andrew Willford—and deans of Cornell University’s College of Arts and Sciences have been generous in granting me extra funding and time away from teaching over the last ten years. I would not have been able to complete my fi eld research and this book without their support. I thank Stan Holwitz for taking interest in the project in the fi rst place. Reed Malcolm patiently waited for the completion of my Acknowledgments | xi manuscript and sustained my work through his timely and generous intellectual interventions. I am profoundly indebted to Reed and two anonymous reviewers for their deep engagements with my ethnographic analysis. I have gained substantially from their penetrating comments, and I am very grateful for their generosity. At the fi nal stage of the project, Emily Park made the manuscript signifi cantly more readable. I cannot thank her enough for her careful and thoughtful work. I thank all who have participated in my ethnographic research in Tokyo since 1998. I especially would like to thank those traders I call Aoki, Ibuka, Ishida, Koyama, Sasaki, Tada, and Tanaka for their patience, guidance, and friendship. Their continuous critiques of my writings about them have enriched my understanding of their lives and careers. I also thank Tokyo Stock Exchange offi cials, former Osaka Stock Exchange offi cials, and others who participated in my research for their time and generosity. Needless to say, views and opinions expressed in the book, and errors that may be found, are entirely mine. I also would like to add a special note of thanks to my uncle, Takeji Yamashita, a retired securities analyst at a major Japanese securities fi rm who published Kabushikishijo no kagaku (The science of stock markets), an early Japanese effort to approach fi nancial markets in scientifi c terms (Yamashita 1987). He introduced me to a number of securities industry insiders at the beginning of this research project. My mother, Keiko Miyazaki, has shown keen interest in this project since its inception. It was one of her close friends who introduced me to the manager of a derivatives unit inside a securities fi rm where I later conducted fi eld research. Without this introduction, the project would never have taken off. The scope of my original project went beyond the approximately forty former members of the proprietary trading team of a securities fi rm on whom I have focused my research over the last ten years. I also have studied Japanese commodity futures merchants, exchange offi cials, and industry insiders involved in the establishment of the market for Japanese government bond futures in 1985, and more recently, credit derivatives specialists and their responses to the crisis of Tokyo Electric Power Company following the earthquake, tsunami, and nuclear power plant accident in March 2011. This project has been part of my long-term collaboration with my partner, Annelise Riles. Whereas my work has focused on derivatives traders, fund managers, and structure fi nance specialists, her work has focused on central bankers, regulators, and lawyers involved in the xii | Acknowledgments regulatory infrastructure of fi nancial transactions in Japan. In this sense, Arbitraging Japan is a companion volume to her book Collateral Knowledge: Legal Reasoning in the Global Financial Markets (Univer- sity of Chicago Press, 2011). My book’s connection to her work goes well beyond this research collaboration, however. Her scholarship has been the single most important source of inspiration for my work. I would not have been able to bring this project to completion without Annelise and my family’s encouragement and generous support.