Chapter 118: Rubin’s Proposal, and the Counteroffer.

“You’re here, boss.”

We arrived at the New York airport.

Eric and Team Leader Oliver, who were managing Black Bear’s operations, greeted me warmly.

“Oliver, weren’t you heading to Kosovo?”

“Ah, it’s been slightly delayed. We’ll take care of you while you’re in New York.”

“We figured it would be more convenient for you, boss.”

Eric added in explanation.

“Sounds good to me. But shouldn’t you be resting? How’s your injury?”

“I’ve rested plenty.”

“Let’s get going.”

We continued chatting as I walked with Eric.

“I heard your first deal with the U.S. government went smoothly. You handled it well.”

“They can’t ignore public opinion in Washington, especially with so many veterans. They likely trusted us because of that. Of course, the official lobbying helped too.”

“You’re really earning that paycheck, huh?”

Eric nodded with a laugh.

“It’s a good deal, and there’s no real danger. We’re mainly supporting the U.S. peacekeeping forces in Kosovo.”

He kept reporting as we reached the limo Eric had prepared.

“I trust you’ll do well.”

“Yes, boss.”

“Once we’re done in New York, let’s grab a bite together.”

After shaking hands with Eric, I got into the car.

Team Leader Oliver and the rest of the team hopped into another vehicle.

“Oliver, you received my schedule, right?”

“Yes, boss.”

“First stop: Dream High.”

As I stepped out of the car, Han Gyeong-yeong greeted me.

“Mu-hyeok! It’s been too long.”

“Good to see you, bro.”

“The trip must’ve been rough. Come on, let’s head inside.”

We took Han Gyeong-yeong’s private elevator up to his office.

“You’ve changed things around a lot.”

“Well, I do most of my business here now, so I had the place decked out with computers. What do you think?”

“Impressive.”

“Take a seat. We have a lot to talk about.”

The moment I sat down, Han Gyeong-yeong wasted no time asking.

“How did things go in Korea? Everything alright?”

“I never thought I’d actually have to go through with it. It was just a backup plan, but I ended up using it.”

“Wall Street made a killing thanks to us, but the U.S. government might not be so happy. They might make some unreasonable demands.”

Han Gyeong-yeong shook his head with a bitter expression.

“What are they saying?”

“They said they’d talk it over with you, but it seems the damage is pretty serious. There’s speculation that the losses might surpass what we earned in Japan.”

Wall Street had invested most of their profits from Japan into Russian bonds.

Investors had placed their bets on Russia’s rich natural resources and started buying up its government bonds. Sure, there was some risk, but the returns were as high as 50%.

Until the summer of 1998, Russian investments looked safe. No one had anticipated that the economic crises in Korea and Japan would ripple into Russia.

Even the day before they declared a moratorium, Russian officials had sworn they wouldn’t devalue the ruble, and investors believed them.

But Russia broke that promise, triggering a hurricane that swept through Wall Street.

“Traders were asking why we weren’t investing in Russia. Looking back, you were right. A few months ago, they called us crazy, saying Dream High’s glory days were over… Wall Street guys, man, they just don’t get it.”

“Japan got the short end of the stick. If they’d just hung in there, Wall Street’s money would’ve flowed back to them. Instead, they had to grovel to the U.S., not realizing that hand they extended might turn their ‘lost decade’ into thirty years.”

Because of me, the scale grew larger than expected. But if Japan had relied on their foreign reserves, Wall Street would’ve eventually pulled out due to Russia.

One Wall Street fund lost billions overnight, betting on a yen crash and selling yen to buy dollars.

Everyone had predicted the dollar would strengthen.

But Japan sold dollars and bought yen to prevent their own crisis, causing the dollar to weaken and costing Wall Street dearly.

“Even Wall Street didn’t see this coming. They hesitated despite pressure from the U.S. Treasury. Their greed blinded them.”

“That’s not our problem. It’s time for us to make some money too. We spent too much back in Korea. Did you finalize all the gold contracts?”

“Yeah. But why leave it in Korea? Seems like a waste.”

“What does it matter where it is? Whether it’s in Korea or the U.S., it’s not going anywhere. It’s just a carrot for Kim Hak-gwon. Gold prices are bound to rise.”

Han Gyeong-yeong nodded in agreement with my words.

“Secretary Rubin’s no joke. He’s been through the wringer on Wall Street and still stands strong in Washington. Be careful he doesn’t eat you alive.”

“Who, me? I can turn any unfair demand to our advantage. Don’t worry so much.”

“True, I guess I’m not too worried about you.”

Han Gyeong-yeong grumbled about how following me was wearing out his heart and liver.

“Soon, Russian bonds will flood the market at dirt-cheap prices. Our U.S. Treasury bonds (TB) will be in high demand. Wait until next week, then sell off the TB and buy up all the distressed bonds, including the Russian ones.”

“Again with this.”

I smiled at Han Gyeong-yeong, who was starting to feel deja vu.

“They’ll drop to a tenth of their value. Everyone will be selling, but no one will be buying. Bonds are one of those things that rise eventually, as long as the country doesn’t collapse. And we’ve got time. Right?”

When a global crisis hits, U.S. Treasury bonds soar.

As the world’s strongest superpower, no one believes the U.S. will fall.

Investors from all over will flock to the U.S. bond market.

They’ll sell their currencies and buy U.S. dollars, keeping the dollar strong.

“The dollar will likely stay strong for a while. But it won’t last forever. When the time comes, other bonds will rise in value again.”

“I’ll keep an eye on the market and time the buy and sell points.”

With Han Gyeong-yeong’s sharp instincts, he’d probably time it perfectly.

“What do you think Rubin will ask for?”

“Maybe he’ll want us to lend money to Wall Street banks.”

“No way. The U.S. Treasury Secretary asking you for help?”

“We’ll see soon enough.”

After discussing investment strategies with Han Gyeong-yeong for a long time, we parted ways.

“Let’s head to the Plaza Hotel.”

“Yes, boss.”

We made our way to the Plaza Hotel in New York, where Secretary Rubin was staying.

‘Come to think of it, Trump, who once owned the Plaza Hotel, became president later on.’

It was a fleeting thought.

As we arrived at the hotel and stepped out, I turned to Oliver.

“Everyone else stay back. Only Manager Ma and Oliver will come with me.”

“Understood.”

Bringing too many guards to meet the U.S. Treasury Secretary would’ve been disrespectful.

We took the elevator to the top floor.

“Mr. Kim?”

“Good to see you, Secretary. I’m Charlie Kim.”

“Hahaha, finally! It’s a pleasure to meet you.”

Secretary Rubin stood up as if he’d been waiting for this, extending his hand with a smile.

“It’s an honor to meet the owner of Dream High.”

“The honor is mine. I still can’t believe I’m meeting the U.S. Treasury Secretary face-to-face.”

In person, Rubin looked every bit the quintessential Russian-American.

He was one of the key figures behind the Clinton administration’s economic boom.

He had taken some flak for his pro-Wall Street policies, but ironically, the criticism only highlighted how much the U.S. economy had grown under his watch.

“Your victory against Wall Street is still a topic of conversation. Of course, James took the lead, but we believe your advice was crucial.”

“You flatter me. It was James who did the hard work. And the world knows how much America’s economy has thrived under your policies. Hearing praise from someone like you is truly humbling.”

For a while, we traded compliments.

There was no need to disrupt the friendly atmosphere, but the longer the small talk continued, the more I knew a difficult request was coming.

Rubin, who had been wearing a polite smile, finally began to speak slowly.

“This latest request has caused quite a bit of trouble. Both the State and Defense Departments have raised objections…”

“I understand. Just tell me what you need. As long as it’s not an unreasonable request, I’ll see what I can do.”

I decided to be direct, and Rubin, after downing his now-cold coffee, finally responded.

“Do you know about Long-Term Capital Management (LTCM)?”

“Who doesn’t? Isn’t it that hedge fund known for its astronomical returns, run by geniuses?”

“I’m glad you’re familiar. It makes things easier. The situation is this: LTCM has taken a huge hit due to Russia. It’s not just about them—the entire U.S. financial market could collapse. The Federal Reserve Board (FRB) is pushing for a consortium of 16 banks on Wall Street to provide a bailout.”

The FRB’s influence over U.S. economic policy is immense.

Rubin continued, looking troubled.

“But… Wall Street has its own agenda, and that’s where the problem lies.”

“If the FRB is pushing for it, the banks can’t exactly ignore them.”

“The wolves on Wall Street are looking to buy them out for pennies. Warren Buffett has already issued his ultimatum, demanding they sell their shares at a fraction of their value. He gave them just 30 minutes to decide.”

Warren Buffett’s attempt to acquire LTCM was a well-known story.

The moment Russia defaulted, he took the opposite position and started shaking them down.

As LTCM teetered on the brink of collapse, Buffett, pretending to be a savior, offered to buy 100% of their shares for $250 million.

If they accepted, he, along with Berkshire Hathaway, AIG, and Goldman Sachs, would invest over $4 billion into the fund.

“Of course, Mayweather turned him down, but that incident almost shattered the banks’ alliance.”

Goldman Sachs had leaked the bailout discussions to Warren Buffett during their meeting.

Panicked, Buffett had issued his 30-minute ultimatum, but Mayweather, a seasoned financial veteran, wasn’t shaken.

He used his connections to hear rumors of the bailout discussions and rejected Buffett’s offer.

“So, what do you need from me?”

“We’d like Dream High to join the consortium and lend money to the Wall Street banks. They’ve suffered heavy losses, so even a few hundred million dollars would make a difference.”

In short, he wanted me to bankroll the bailout.

“What’s the total bailout amount?”

“About $3.65 billion.”

“That’s enough?”

“As long as the positions aren’t liquidated, the losses won’t be realized. All we need is enough to buy time and cover the margin calls.”

He’s good at this.

I smiled and asked.

“I heard their liabilities exceed $1 trillion. Do you really think a few billion dollars will put out the fire?”

In truth, $3.65 billion was enough.

But Rubin couldn’t know that, given his lack of foresight.

When I pushed back, Rubin cleared his throat and fell silent.

“If LTCM collapses, it won’t just be Wall Street. The entire U.S. financial market will crumble, and if that happens, global markets will follow.”

Rubin nodded at my words.

“If we step in, we won’t let them fail. We’ll return every investor’s principal and buy 100% of LTCM’s shares for $400 million. Even if it costs $10 billion or $100 billion, we’ll handle it without government assistance.”

Rubin appeared deep in thought.

I decided to nudge him a little further.

“Wouldn’t it be better to avoid the stigma of a hedge fund bailout? There’s bound to be resistance to your proposal.”

Indeed, the LTCM bailout would go down in history as a negative precedent for the U.S. banks.

“Rather than orchestrating the biggest bailout in U.S. history, wouldn’t it look better if I took over? I’m confident I can handle it. With Wall Street banks on shaky ground, who’s really in a position to help?”

As impressive as Rubin was, he couldn’t compete with someone who knew the future.