» The Youngest Son of Sunyang
The Youngest Son of a Chaebol Family - Chapter 282
[282] Den of Intrigue, Wall Street 3
Goldman Sachs Group, Inc., an American investment bank and the largest corporation in the global financial market, began as a bill brokerage firm founded by the German-Jewish Marcus Goldman, and by the 21st century, it had seized control of the financial market.
With over 30,000 employees across 50 offices in 23 countries, they rake in money regardless of borders or currency types.
Furthermore, during the presidencies of Bill Clinton and George Bush, alumni from the firm served as Treasury Secretaries, leading to it being dubbed "the West Point for U.S. Treasury Secretaries," and they often removed various regulations, effectively giving Goldman Sachs wings.
They manipulated financial records to allow Greece to join the European Union, and as a result, they are considered a primary culprit behind Greece's bankruptcy and the subsequent European financial crisis.
However, because the company reaped enormous profits during this process, it symbolizes the ills of neoliberalism and financial capitalism.
Finally, on D-Day, a Friday morning, as I stood before Goldman Sachs' headquarters, the company's future flashed before my eyes.
Even if nearly ten million American citizens lose their jobs due to the collapse of the U.S. financial system, even if nearly six million people lose their homes, these people will still pocket hundreds of billions of won in dividends, rake in bonuses, and pop champagne.
The crumbling company would, in any case, be propped up again by the taxpayers' money, and once again, they would create derivatives akin to fraud, sweeping up more money.
I thought about spitting, but then I stopped myself.
A sudden realization hit me: I was no different from them, merely pursuing wealth in a different way.
"Let's go."
The TFT team leader, who had followed me, swallowed hard and trailed behind me. A billion-dollar contract had him on edge.
"These crazy bastards...."
As soon as I entered the lobby, a Korean curse word slipped out involuntarily.
Goldman Sachs' lobby was filled with items more expensive than those found in a luxury furniture store in Nonhyeon-dong.
The marble floors and walls were tolerable, but who would think to make even the reception desk out of marble?
Even the chairs, prepared for people waiting only for a moment in the lobby, were luxury items, each costing millions of won. Dozens of such chairs were lined up, as if in a subway station.
Such an ostentatious display of wealth was beyond anything I had ever seen. Just as another curse word was about to escape my lips, the team leader who accompanied me raised his hand and greeted someone.
Following him, I entered the conference room where three people were already waiting for us. One executive, two managers. Their eyes gleamed, their tongues practically flicking out, ready to swallow my money whole.
* * *
"If you are set on proceeding, I won't stop you, but morally, there's something I feel obliged to tell you."
The man, who looked the youngest but had already risen to an executive position, said with a smile.
"Go on."
"There's already a similar swap in place. It was contracted two years ago...."
He must be one of those with excellent foresight that Rachel mentioned.
"The difference is that the contract from two years ago involves a monthly premium. It started with a low premium, but as the price of the mortgage-backed securities rose, so did the premium. Now, they're paying premiums in the 9% range. They're incurring massive losses."
"So, are you suggesting our terms should also be on a monthly, rather than annual, basis?"
"No. I'm merely informing you. If you believe the rumor that mortgage loans are a pile of bad debt, you will incur significant losses."
"You are aware that variable interest rates apply to housing loans starting this year, correct? Delinquency rates are already rising, yet you believe there's no bad debt?"
I wanted to ascertain what they were truly thinking.
I wondered if they genuinely believed it was safe, or if they were trying to conceal the bad debt.
"Mr. Jin, a security is not a loan. It's primarily AAA-rated, with a small portion of weaker loans mixed in. That's what makes it a good product. The AAA rating sufficiently covers any losses from the B-rated portions. You wouldn't throw away a perfect steak just because it has a single tough sinew running through it, would you?"
"Currently, housing prices have risen too much, so we're undergoing a slight adjustment period. There will be no crash."
One of the managers quietly chimed in.
"I understand Goldman Sachs' position perfectly. However, it's not enough to make us withdraw our proposal. Oh, and of course, thank you for the information."
The young executive shrugged, then clapped his hands together.
"Then, shall we delve into Miracle's proposal in detail?"
The three of them unfolded the summary we had prepared and quickly read through it.
"The product analysis is truly outstanding. As expected of Miracle."
"If we can amicably agree on just two points, the contract should be fine."
Seeing their satisfied expressions, I slowly opened my mouth.
"I will accept payment of the insurance premium on a monthly basis. Furthermore, since there's a precedent for a premium agreement, we will follow that method."
The team leader accompanying me glanced at my face with a worried expression.
With a premium, the insurance payments due would rapidly increase if the securities' value rose. The premiums could instantly skyrocket to an unmanageable level.
I gave him a slight nod. It was a signal to reassure him, but the worry didn't vanish from his face.
"You're saying what we needed to say for us; it feels like things are flowing smoothly, doesn't it? Haha."
Before the young executive's laughter had died down, I stated another condition.
"Similarly, since there's a precedent, let's set the premium at 4.8%."
He stopped laughing, his expression turning difficult.
"Oh dear, the same terms as two years ago? That might be a bit difficult."
"Why would it be difficult? If the value of mortgage-backed securities had fallen, meaning the risk had risen, then the premium should indeed go up, but hasn't the value of the securities steadily increased compared to two years ago? Doesn't that imply the risk has decreased? It seems there should be no issue with the same terms, don't you think...?"
The three men, who had been practically licking their lips, excused themselves and exchanged whispers among themselves.
A moment later, he cleared his throat with a cough and spoke.
"What amount are you considering for the swap?"
"That sounds like you'd accept my terms depending on the amount?"
"Precisely. If you exceed 100 million dollars, we will finalize it at 4.8%."
Done!
I would have accepted 5%, no, even 6%. It's rare to find a place like Goldman Sachs that can handle such a large sum in one go.
"My, all remaining issues are resolved in one go."
At my beaming smile, the three men wore puzzled expressions.
"Since it's a billion dollars, perhaps that settles both the total amount and the premium rate in one swoop, wouldn't you say?"
Their expressions were truly a sight to behold.
They were astonished by the immense sum, and also showed joy at the thought of a whopping 48 million dollars—4.8% of a billion dollars—just rolling in as free money.
And just slightly, they showed a hint of weakness, as if holding an ace four-of-a-kind in a poker game, yet wavering at a bluff.
"May I interpret your silence as a positive sign?"
"Ah, my apologies. Of course, you may interpret it positively. No, should we be the ones asking for favors? Haha."
The team leader accompanying me was constantly sending and receiving messages. He was monitoring the real-time status of employees visiting other financial institutions.
I wrote the numbers in the blank spaces of the thick contract.
4.8% and 1 billion dollars.
The moment the contract was signed, both they and I broke into wide smiles.
How often do you find a contract that satisfies both parties so thoroughly?
I pushed my chair back, stood up, and shook hands with each of them. Strength naturally flowed into my grip.
At that moment, the team leader accompanying me whispered.
"Including London, all 26 locations have finalized their contracts."
Seeing my even brighter smile, the young Goldman Sachs executive commented.
"It seems good news has arrived."
"Yes. It's news of a very favorable contract having been signed."
"Ah, congratulations. Could you perhaps give me a hint as to what it entails?"
"You'll know soon enough. Such things are hard to hide anyway. Wall Street has no wall to conceal secrets, does it?"
Two kinds of news spread quickly by word of mouth: either someone hit the jackpot, or they went bust.
"I suppose I'll have to keep my ears wide open. Miracle is renowned for its successful investments, isn't it?"
He didn't realize the sheer irony of his own words.
With the contract signed, there was no turning back now. I threw him a small hint.
"We are Miracle, famous for successful investments. So, wouldn't this contract, concluded here today, also be a successful one?"
I lightly shook the thick contract.
Our success meant their failure. A successful contract that satisfied both parties... was exceedingly rare.
Only then did the smiles vanish from their faces.
Humans are reluctant to think about bad things. Thus, they diminish the possibilities.
They would now be feeling the possibility they had minimized, deeming it something that would never happen, the creeping realization of their worst nightmare: the collapse of the U.S. housing market.
"Well, time will tell who this contract proves successful for. Now, if you'll excuse me...."
Leaving them frozen in place, I exited the conference room.
The clear New York sky seemed even more beautiful today.
"Shall we go grab some lunch? How about a delicious hot dog and a hot coffee?"
Taking the still-anxious team leader with me, I walked toward the food truck visible at the corner.
* * *
That afternoon, I gave all Miracle employees a generous bonus and sent them home early.
I wanted to share a bit of my joyous mood, and I knew that unexpected money coupled with free time to spend it was the best way to do so.
Wanting to celebrate by myself, I went to the bar where I'd once gone with Rachel.
As I sipped my beer, laughing to myself for no particular reason, I heard whispers from various corners of the bar.
"Did you hear... Miracle went on a rampage today?"
"Of course. Is there anyone who doesn't know that news?"
"How much did they even spread around?"
"I don't know the exact amount, but thanks to Miracle, everyone's probably swimming in money, aren't they? I heard Deutsche Bank alone got 12 million dollars."
"Damn it, the executives probably pocketed more bonuses."
"Aren't they worried? If Miracle's crazy stunt succeeds, they'll have to pay out 240 million dollars. Every department that signed those contracts will be fired."
"Have you ever seen a crazy stunt succeed? They'll have to pay astronomical premiums from now on.... Miracle looks like it's headed for closure."
Yet, they couldn't bring themselves to laugh at my "crazy stunt."
If one only considered a single firm, then Miracle's actions certainly seemed insane. However, everyone could guess that the money scattered across Wall Street was immense. Just a few phone calls would reveal that it amounted to billions of won, and even "crazy stunts," when they exceed a certain scale, make everyone start thinking seriously.
For this reason, worried whispers filled the bar, but no laughter could be heard.
"Did you know they did the same thing in London?"
"London? The City?"
"Yes. I heard they threw a 600 million dollar Credit Default Swap contract at the Bank of England. Could they actually be proceeding with tens of billions of dollars in swaps?"
"What if, just imagine for a second. What happens if Miracle's bet is right?"
"What happens? Wall Street gets utterly screwed, that's what."
It was Friday evening. Two days until Monday.
Those who quickly read the warning signs would gather their regular meetings and hold emergency sessions, working frantically, while those who still thought me a madman would be reveling, believing they'd landed a big score.
"Hey, Son."
The middle-aged bartender, whose hair was streaked with white, placed a beer bottle in front of me and spoke.
"Didn't you and Rachel talk about 70 billion dollars or something here last time?"
"We did. Do you know Rachel?"
"Of course. She's a regular here. It's her routine to have a couple of her favorite cocktails and then head home."
"I see."
"I also know Rachel is Miracle's boss. So, is all this crazy talk about Miracle's antics that everyone's whispering about connected to that 70 billion dollars?"
The bartender couldn't hide his curiosity, his eyes sparkling as he asked.
I had wanted to relax and have a drink, but my mood was ruined.
I pulled a hundred-dollar bill from my wallet and laid it on the counter. rA?N0BE,S
"Do you happen to have a house bought with a loan?"
"No. I have no debt."
"That's a relief, at least. Then sell this bar before it's too late."
"What?"
The startled bartender didn't even think to pick up the hundred-dollar bill.
"If you run a bar on a Wall Street teeming with the jobless, you'll go bankrupt."
I gave the dumbfounded bartender a faint smile and stepped out onto the night streets of New York.