[281]Pandemonium, Wall Street 2
“I know very well that I can’t understand why you do things like this, so I refuse to ask fundamental questions. All you have to do is focus on the numbers and accurately calculate the financial company’s solvency. “You understand, right?”
In the conference room, analysts and fund managers surrounded by accounting data from each financial company, PCs, and laptops were listening to me with sparkling eyes.
Among them were people who taught me about funds and financial derivatives a few years ago, but they also just listened quietly.
I can’t understand it, but there is nothing more frustrating than having to complete a given mission.
Everyone expressed their doubts, and there were some who could not stand it anymore and opened their mouths.
“Howard. These companies are mainstream on Wall Street. “Isn’t it a little ridiculous to calculate the limit of ability to pay when this is a place that makes money dozens of times more than our Miracle?”
They waved around a list of companies handling money around the world to check whether it was truly meaningless.
You don’t want them to understand everything, but you should at least explain the possibilities.
“Think of it this way. All of our Miracle customers lose their money at once. “There’s no problem up to this point, right?”
“I guess so. “What if the customer takes the risk of losing money due to sudden withdrawals?”
This is a very normal answer. We only use our customers’ money, we don’t gamble.
“But suddenly someone shows up and presents a credit default swap contract and asks for $100 million. This $100 million must be paid with Miracle’s money, not with the customer’s money. Is it possible?”
The question’s premise is wrong.
There is no case where money is taken from all customers at once as if they had promised. But now is the time to think only about numbers.
They were reluctant to say out loud answers they already knew.
“Our Miracle is possible. But you’ll have to give up your bonuses this year and some of you will have to pack up and leave. A loss of $100 million is something someone has to account for.”
Looking at their uncomfortable expressions, I continued speaking.
“Imagine the same thing happening to Goldman Sachs, Deutsche Bank, Morgan Stanley, Merrill Lynch, etc. However, the claim amount is $10 billion. “Can you survive by reducing staff and not receiving bonuses like we do?”
The figure of 10 billion dollars, which is more than 10 trillion won, probably made them lose confidence, so they still could not open their mouths.
“This is what I want. To what extent can large financial companies pay with the company’s own money rather than with customers’ money? You can afford to pay, but how much is too much to push you to the extreme of declaring default and going bankrupt? ?”
One of them who had been listening quietly opened his mouth.
“It’s time for the kidnapper to calculate the ransom.”
Everyone’s eyes were on him.
“Oh, it was a study conducted at school. “When a child is kidnapped and the parents are asked for money, the study was conducted to calculate the appropriate amount of money the parents would hand over without informing the police.”
He was a little embarrassed by the stares, but shrugged his shoulders and explained.
“If the ransom is set too low compared to the parents’ assets, it is less than the risk of crime that the kidnapper must bear, and it is foolish to call it higher than the child’s ability to pay. Another thing is, we need to understand the characters of our parents.”
“Parent’s character?”
I became curious about what he said.
“yes. So, most kidnappers are criminals known to them. In the case of parents who cannot tolerate injustice, they have the ability to pay, but if they think it is a little too much, they will report it to the police.”
“So in this case, the parents are the CEOs of the relevant financial companies?”
“That may be true, but we must also consider their management philosophy, reputation, shareholders, and social awareness.”
“Does this mean that it is difficult to determine the absolute maximum solvency just by looking at the numbers?”
“The appropriate amount of payment may be possible with numbers alone, but it will not reach the maximum.”
Without another thought, I pointed at him.
“You are the team leader of this TFT. The deadline is 2 weeks. “Bring the maximum number, not the optimal number, and report it to me.”
Everyone, including the person I pointed to, looked confused, but it didn’t change my decision.
* * *
While I was assessing the solvency of financial companies, I was drafting swap contracts with other experts as assistants.
Because mortgage-backed securities are not a single product but a mixture of numerous liabilities, it was essential to set a standard for each security.
We selected the top 50 products traded at the highest price and gave them our own rating of AAA. To others, AAA is a symbol of safety, but to me, it was like a lottery that could offer the biggest payouts.
When I was in the middle of analyzing securities, Rachel Ariev quietly called me out. With a very urgent expression.
“What’s going on? The expression is young… .”
“I went around Wall Street and got information… . Howard, I found some people who think the same way you do.”
Of course it exists. Because I already know how they make their money and I follow the same method as them.
But I pretended to be surprised and asked.
“Already? “Who is it?”
“Greg Lippman, Steve Eisman. John Falls, Ben Hockett… . There are individuals and institutions… .”
“When did they start?”
“The early ones already started two years ago. “It was last year that money began to flow in earnest.”
“Those people must have lost a lot of money. “Hehe.”
It is a bet that loses money as the value of mortgage bond products rises. Since betting continued for two years, if it were an institutional investment, there would have been a lot of complaints from customers or a lot of investment money would have been withdrawn.
“Goldman Sachs manages more than $200 billion in mortgage-backed securities. The largest bet they have against is only $700 million. Just by making a simple comparison, they are probably suffering huge losses right now. “Maybe it was cut in half.”
200 billion dollars is 200 trillion won. Our country’s budget in 2007 is 230 trillion won, so the United States is the United States. How can one financial company control the national budget?
I said to Rachel.
“Are you anxious because you got cut in half? “So you’re telling me to stop you?”
“no. “I wanted to tell you that your prediction might not be wrong.”
“Then you want to bet with me?”
I said it with a smile, but she still didn’t loosen her stern expression.
“I want to keep my beliefs. I will only make investments, not bets, and investments that produce stable and steady returns. Most customers have already supported my method and agreed to withdraw from investing in mortgage-backed securities. But he didn’t want to bet. customer
“Because my way is to follow their demands.”
Rachel wants a defender, not a striker.
“Please. I also support Rachel’s management style. So, please continue to be Miracle’s CEO.”
I mean this.
Isn’t New York Miracle’s top priority as a safe for storing my money? Rather than a return on investment, what I want is to earn money little by little without being noticed.
Of course, the name Miracle will go up and down on Wall Street because of this bet, but the credit should go to the people here.
They want fame, I want money.
And I know what Rachel Ariev’s anxious eyes mean.
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This is because she realized that the moment I invested a large amount of money into the precarious financial market of the United States was the beginning of a slump.
* * *
“Keep this in mind. At the same time, a credit default swap contract is concluded. If we sign contracts one by one sequentially, there will definitely be someone who examines our contracts. “We have to deal with it quickly before the information leaks.”
I could see the people holding the contract holding back their laughter as if they were dumbfounded.
The thinking is that such foolish contracts are welcomed anytime, anywhere, and no one would be suspicious and investigate.
“It’s Friday morning in New York, Friday afternoon in London. The London team can enjoy their weekend there.”
Silent smiles spread across the faces of those leaving for London.
The other party will be very happy if you bring a contract with a lot of money, and it is a vacation-like business trip where you can easily sign a contract and enjoy it all weekend before returning.
They set off, suppressing the urge to cheer.
I got everything ready and waited for Friday, drinking with Rachel at a small bar.
“How much is it all? Total investment amount?”
Rachel asked, moistening her lips with cocktail.
“I set the insurance rate a little high. Some people may have sensed this crisis to some extent by now. “You have to pay enough money to blind that anxiety.”
“What percentage?”
“Minimum 4% to maximum 7%.”
“How long?”
“Five years.”
“what… . If you think about it, 5 or 10 years won’t make a difference, right? “It’s next year anyway.”
Rachel smiled self-deprecatingly.
“Yes. “You only have to pay one year’s worth of insurance premiums.”
“What is the total amount?”
“If we set the average insurance rate at 5%, it would be about $3.5 billion… .”
“You make 20 times your $3.5 billion on this bet. “Is it $70 billion?”
The bartender who was filling our drinks turned around with his brows furrowed.
It may be because of the number of middle-aged women and young Asian men talking nonsense.
Actually, it sounded like nonsense to me too.
70 billion dollars, 70 trillion in our money.
To me, it is an unrealistic number that is no different from a password or a digital signal with lots of circles.
“Do you think Wall Street can pay $70 billion?”
“What do you think Rachel? Did she hold it too low?”
She thought deeply and opened her mouth.
“Right now, it’s low enough that there won’t be any problems. “But next year, I think you might be concerned that the amount may be high.”
“It will be safe because it has been dispersed to London and New York.”
“Next year you will catch up or surpass Warren Buffett. “Wouldn’t you like to become the world’s richest person right away?”
“Just as I am not revealed, there are many rich people in this world who are not revealed. So, next year’s Forbes magazine ranking of richest people will still be number one, Warren Buffett, and number two will be Bill Gates.”
Korean conglomerate presidents are also among those who have not been revealed. Personal wealth is reported to be around 3 or 4 trillion, but how much money is hidden away by using companies worth hundreds of trillions as safes?
“I’ve lived my whole life immersed in numbers, but when numbers that go beyond the boundaries of thinking appear in front of me in reality, it’s confusing.”
Rachel emptied her drink again.
“Do you have any plans on what to do with that money?”
Of course there is.
Although I can’t tell this woman.
“My respected grandfather once said this.”
Rachel’s gaze, which had been staring at her glass of wine, turned to me.
“The purpose of money is to make it. Don’t think about where you will spend the money. In life, there comes a time when you have to spend that money anyway. “You can worry about spending money then.”
She laughed quietly.
“As expected, the rejectionists think differently. “Your grandfather was also very rich, wasn’t he?”
“yes. But he would be incredibly surprised if he were still alive. “He never made $70 billion in one year.”
“I guess you’re the first since the advent of capitalism?”
is it? I’m sure there must have been another one, right?
“Isn’t there a story that the Rothschild family made enough money to buy the whole of England during Napoleon’s Battle of Waterloo?”
Rachel shook her head.
“It’s a story that stems from a conspiracy theory. “I made a lot of money just by investing in government bonds, and even at today’s prices, it didn’t exceed $1 billion.”
The $1 billion earned by the Rothschild family is ultimately the people’s taxes, and the money I will earn also comes from the pockets of American citizens.
Fortunately, my heart feels lighter because I am not a Korean citizen.
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