Safety valves without safety nets

In what some are calling the Japanese cognate of the American subprime fiasco, poorer residents of Japan have recently started defaulting on their mortgage payments, prompting banks to foreclose and put their homes up for auction. As in the U.S., a large portion of these unfortunates are immigrants who were simply trying to buy into the Japanese dream, as it were. They were mostly lured into coming here to fill low-paying blue collar jobs that Japanese people no longer wanted to fill. Now they’ve been dumped without a safety net.

 

The majority of these immigrants are from Brazil and have some ancestral connection to Japan. Starting about a century ago, the Japanese government encouraged emigration during bad economic periods, mainly to Latin America, where people were promised cheap, arable farm land (in some cases, like Dominica, it was a total lie). In the 90s, when Japanese manufacturers couldn’t find cheap labor, the government gave visas to any foreign born person who could prove blood ties to Japan going back no more than two generations. This was easy to do because of Japan’s family registration system, though there has been the inevitable fraud, with some Brazilians having no Japanese ties buying family registration documents from those who do. 

 

In most cases, the Brazilians brought their families and settled into communities. And while a few have assimilated into Japanese society, the majority have remained in Brazilian enclaves in the vicinity of the main manufacturing hubs, in particular the Aichi region (automobile manufacturers) and the northern Kanto plain. The Japanese government has made no concerted attempt to help these immigrants assimilate, since they are basically thought of as “economic safety valves,” and as a result many still do not speak Japanese and their children attend Brazilian schools. In 2007, an estimated 300,000 Brazilians were living in Japan, accounting for about 15% of the foreign resident population.

 

In the mid-00s, Japan’s manufacturing base was doing pretty well, especially the automotive sector, and these Brazilians were making good money. Many wanted to buy houses, and local banks were eager to lend them money because there weren’t that many local businesses looking for loans. Some were so eager to lend that they offered terms with no down payments. Also, they didn’t require collateral or guarantors. 

 

Since the economic downturn last year, many of these new homeowners have lost their jobs. Last week, public broadcaster NHK ran a documentary on their plight. Breadwinners have already started shipping their families back to Brazil (where there are no jobs either, according to the report) with the idea of riding out the recession here alone, but banks are already sending out foreclosure notices. The thing is, foreign contract workers are the first to get laid off, even before Japanese contract workers and temps. After all, that’s the purpose of a safety valve.

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One comment

  1. wonker · March 19, 2009

    Interesting blog, I’ll try and spread the word.

    Like

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