Many, many students over the years have mistakenly believed that "baito" (shortened from arubaito, for the German arbeit, "work, labor") was an English word. "Randoseru" ... "gerende" ... Actually, in my experience a lot of Japanese speakers assume that if a word is written in katakana in Japanese and is not obviously onomatopoeia, it must be English.
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"suka-jan": short for "Yokosuka jumper" = US-military style aviator's jacket, usually with elaborate embroidery on the back.
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I don't hear it much these days, but one that really amused me when I came here was "jasuto-miito" ("just meet"), used to mean "exactly fitting", which apparently came from a baseball coaching expression for hitters: "just meet the ball". But students would say things that sounded like "I was just meat for the job," which confused the hell out of me. Actually, a lot of the baseball Janglish sounds pretty strange: "1-base" for a single, "2-base" for a double, etc. And for the longest time I thought "anda" (安打, "hit safely"）was supposed to be "under", which I couldn't figure out at all, until I saw the kanji for it.
Another one I mis-heard for a long time was 梅雨前線 ("baiu-zensen", "plum rain front" - a rainy-season weather front causing increased precipitation) which I heard as "bio-zensen". I was familiar with "zensen" as a weather front, but couldn't imagine what "bio-" was supposed to refer to, again until I finally saw the kanji.
@Kapuna: speaking of which, you do know that 財布"saifu" is natively Japanese (or at least Sino-Japanese) and not derived from the English "safe", though, right? Not a bad mnemonic device to remember the word, though!
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