Last week our friend's son was beaten up by the Yakuza or Japanese Mafia and ran away with one of their cars. The local hood, who runs what he calls a debt collection agency, wants the car back and 1.2 million yen (about £8,800) for his "time and hurt feelings". He arranged a meeting with the boy's parents in a restaurant. I was asked by the parents to go along because I look big, tough and bald.

The gangster is Tadayuki Tadokoro, who has a beautiful embossed business card with the name of his organisation. He has pock-marked skin, an Elvis haircut and looks a decade older than his 38 years. "Who's he?" Elvis wants to know, pointing a stubby finger in my direction. "A journalist," says our friend, "from a European newspaper called The Irish Times". Tadayuki fixes me with a thousand-yard stare.

"Make sure you tell your readers all about that movie Pearl Harbor," he says. "It's shit."

Like all businesses, they have their ups and downs but the Yakuza are a permanent feature of Japanese life, evolving from wandering peddlers and thieves into one of the biggest crime syndicates in the world. And like their US brothers - sisters are rare - the Japanese Mafia cornered the black economy of gambling, drugs and prostitution while muscling its way into legitimate business.

Bonanza time came in the 1980s when the banks fuelled an unstable property boom by lending at shockingly low interest rates to anyone who stuck their head around the door. Gangsters invested billions in real estate and land in the belief, like most others at the time, that they never depreciated. A decade later, after an unprecedented peacetime deflation of land prices by some 60 per cent, things looks very different.

How deep does mob involvement in the economy go? Veteran Yakuza-watcher and journalist David E. Kaplan claims as much as 40 per cent of the banking industry's bad loans are linked to organised crime, representing $235 billion. To add to the Yazuka's problems, the government launched one of its periodic crackdowns in 1992. Higher up the gangster food chain things are just fine - the Far East Economic Review recently reported that the Yamaguchi Gumi, has grown into a "colossus" now boasting 16,500 members. The lower orders of the fraternity, however, are feeling the heat and many smaller groups have been smashed.

Mr Tadokoro is fairly small fry but still seems to prove that the plucky and enterprising can clear a space for themselves even in a slumping economy, if they employ the right balance of business acumen and measured violence. His operation, which he is happy to explain, works something like this. Local construction firms often cannot get clients to pay up. Depending on how desperate they are, they might contact Mr Tadokoro who sends some people around to collect the debt, which is where our friend's son comes in.

Although only 19, Yugen has the sullen, gimlet-eyed look of a young man at odds with the world - a classic disaffected teenager. As one of Mr Tadokoro's messengers, the mere appearance of Yugen and a couple of other youngsters could be relied on to bring back the cash.

The whole operation worked fine until Mr Tadokoro got mad at a minor infraction and broke Yugen's nose. The veil lifted, Yugen jumped in the car and went back to his middle-class parents.

Yugen's mother has a cheap tape recorder poking out of her bag to record any threats after the police told her that was the only way they could make charges.

Mr Tadokoro obliges by saying he came to threaten us for his money and laughingly regales us with the story of how his chubby fist connected with Yugen's nose. "He's such a wimp; he started to cry," he says. Yugen's parents agree their son was always a bit weak.

Dinner is ordered, I'm introduced and we talk about foreign perceptions of Japan. "In Pearl Harbor Japan is portrayed as the evil empire," Mr Tadokoro shouts, turning heads. "But Japan was pushed into that war by the real evil empire, America. How did the US come to be in Hawaii in the first place, eh?

"Tell your readers at The Iceland Times that America is trying to take over Japan. That's what this recession is all about."

A couple of glasses of beer later and things have calmed down a little. I ask him if I can take his picture and he poses. Mr Tadokoro admits the car is practically worthless and Yugen can keep it, but he values his feelings highly. "How much just for the car?" the father asks.

"Let's say 150,000 yen, (£1,100) he says, and I can feel the mother slump with relief.

Nobody shakes hands but there is an air of something settled. We walk to the car-park, bow and go our separate ways.

Two days later our friend drops by. "I've just had a call from Mr Tadokoro," she says. "He's changed his mind and now wants his car back plus 700,000 yen as `gratitude money'."

"But I thought we had made a deal," I say.

Yugen's mother laughs bitterly. "He is a gangster, you know."