In 'The Big Short', I finally understood why American mortgages stopped Toyota's factories + Realigning money and financial literacy

[Table of Contents]

Introduction
- The words 'I don't know the cause' heard at a new product exhibition

Part 1: The Story of Sound Finance

1. Starting with my own mortgage story

2. In the financial world, a loan is a 'future flow of money'

3. What does it mean to sell a debt to a third party?

4. Why is the calculation benchmark '20 million yen'?

5. Discounting is not a 'loss' but 'buying time'

Part 2: The Story of Abnormal Finance (The Core of the Lehman Shock)
6. When the players change, the meaning changes
7. Bundling loans (looking at the numbers)
8. The seemingly sound mechanism of dividing into A, B, and C
9. The obvious question: 'Who would buy the C-tier?'
10. The core trick: Collecting only the C-tier and creating an A again
11. Why did even the solid A-tier buyers all collapse?
12. Why did credit disappear globally at the same time?
13. Why did housing demand plummet?
14. Why did Toyota's factories stop?

Conclusion
- To understand the words of that day, now

Introduction

The words 'I don't know the cause' heard at a new product exhibition

2007, the Lehman Shock.
At the time, I was working as a mid-level manager in a large organization, and my annual salary was about 10 million yen on paper. 12 months of salary and two bonuses a year. Thatbonus portion was almost entirely reducedthat year.

The main factory visible from the window on the 6th floor of the headquarters was in a non-operational state.
The production lines stopped, and the factory without operating sounds continued for months. I still remember that scene clearly.

There is an event I cannot forget.
It was a large event called theAisin Seiki New Product Exhibition.
The venue was the gymnasium next to the Aisin headquarters.
It was a major event to showcase our new automotive parts to the executives of Toyota Motor Corporation all at once.

In the opening remarks, the thenPresident of Toyota Motor Corporationtook the stage and said this.

The head of the world's number one automaker saying 'I don't know the cause' in a public place.
At that moment, I had an intuition.
This is not a normal recession.

At the same time, a strong sense of discomfort remained.
Why did a financial problem that occurred in America stop a factory in Japan, and one right in front of my eyes?
I couldn't explain it.
It was the moment I realized that my financial literacy was critically lacking.

Ever since then, I have always wondered.
"What on earth was that?"

Now, with the help of artificial intelligence, I am re-analyzing what the Lehman Shock was,from the very basics,starting from scratch.
The starting point is the Netflix movie 'The Big Short'.

At the beginning of the movie, you are suddenly told this.

To be honest,I didn't even understand this one sentence.
So, I researched everything from this point on.

Part 1: The Story of Sound Finance

1. Starting with the story of my own mortgage

I built my house in 1985.
The building cost 25 million yen. My own funds were 5 million yen. I borrowed the remaining 20 million yen from the Housing Loan Corporation.
A 25-year repayment plan with a fixed interest rate of 4.5%. It was a very standard mortgage.

From a consumer's perspective, this story is simple.

• Borrowed from the Corporation

• Repay to the Corporation

• The terms do not change for 25 years

I thought this loan was a matter only between me and the Corporation.

2. In the financial world, a loan is a 'future flow of money'

However, from the perspective of a financial institution, a loan looks like this.

In other words,
For the borrower, it is a debt.
For the lender, it is an asset (receivable) that generates money into the future.

3. What does it mean to sell a receivable to a third party?

When many consumers hear 'selling a receivable,' they feel uneasy.
However, under a sound system,

• my repayment terms do not change

• The counter remains the same.

• My life remains unchanged.

Only the backend changes.

4. Why is the calculation benchmark '20 million yen'?

The total amount I will pay over 25 years
will be approximately 33.35 million yen, consisting of the 20 million yen principal plus interest.

However, the benchmark for financial transactions is the 20 million yen principal.
This is because interest is a future outcome, not a confirmed fact.

5. Discounting is not a 'loss' but 'buying time'

When the Government Housing Loan Corporation sells its receivables, a discount occurs.

This is not a loss.
It is a choice to shorten the time frame.

The purpose of the corporation is
not to maximize interest,
but to circulate funds to provide housing to as many citizens as possible.

This is what constitutes sound finance.

Part 2: The Story of Abnormal Finance (The Core of the Lehman Shock)

6. When the players change, the meaning changes

The main players in the Lehman Shock were not public institutions.
They were investment banks, securities firms, and hedge funds.

They had only one goal.

Mortgages were
no longer 'tools to help people own homes,' but
ingredients for creating financial products.

7. Bundling loans (Looking at the numbers)

• 20 million yen mortgage × 1,000 units

• Total principal: 20 billion yen

We put this into one box.

8. A seemingly decent mechanism of dividing into A, B, and C

We divide them by repayment priority.

• Layer A: 15 billion yen

• Layer B: 3 billion yen

• Layer C: 2 billion yen

Losses are absorbed from the bottom up.
Layer A is protected.
Up to this point, the logic still holds.

9. The obvious question: 'Who would buy Layer C?'

Naturally.

So, they made their next move.

10. The core trick: Collect only Layer C and create an A again

They collect only Layer C from various securities.
They put them into a box again, and
re-divide them into A, B, and C once more.

So, what happens?

The rating is AAA.
It looks safe.

This is just

That is the trick.

11. Why did even solid A-tier buyers all collapse?

Entities that originally could not buy C,

• pension funds

• insurance companies

• major banks

bought them, believing the 'AAA' label.

The contents were C. The moment the structure collapsed, their true nature was exposed.

12. Why did credit disappear globally at the same time?

These fake A-tier assets had become the assets of financial institutions around the world.

They broke simultaneously, capital disappeared simultaneously, and lending stopped simultaneously.

13. Why did housing demand plummet?

It is not that people stopped wanting them.

• They became unable to buy

• They became afraid to buy

These two things happened at the same time.

14. Why did Toyota's factories stop?

Credit stops -> Consumption stops -> High-ticket items do not sell.

After housing, the next thing to stop was automobiles.

Conclusion

To Understand the Words of That Day, Now

The words I heard at that exhibition,
"We don't know the cause."

That was not a sign of incompetence, but evidence that
the financial structure itself was distorted beyond intuition.

Financial literacy is not knowledge for making money. It is
a language for understanding the connection between the world and our lives.

Conclusion (Closing Remarks)

This article was written asa process of self-study to realign my own financial literacy.
I chose the long-form format specifically to explain things one by one to the version of myself who could not understand what was happening during the Lehman Shock.

If there is anyone who has read this far, I offer my heartfelt thanks.
At the same time, this article is not intended to be read only from beginning to end.
Please come back here and reread only the parts you need.
Or, feel free to pick and choose only the parts that interest you from the table of contents.
I have structured it in a table-of-contents format so that readers who prefer to read that way will experience as little inconvenience as possible.

Financial topics can be difficult to grasp, and even when you think you understand them, you may find yourself confused again as time passes.
I myself am deepening my understanding by going back and forth many times.
If this text can help your understanding, even in just one small part, there is nothing that would make me happier.