Chapter 282: Goldman Sachs

Goldman Sachs Group, Inc., an American investment bank and the largest entity in the global financial market, began as a promissory note trading company founded by the German-Jewish immigrant Marcus Goldman. By the 21st century, it had come to dominate the financial markets.

With over 30,000 executives and employees in 50 offices across 23 countries, they rake in money regardless of borders or currency types.

Furthermore, during the presidencies of Bill Clinton and George W. Bush, alumni from Goldman Sachs served as Secretaries of the Treasury, leading to the moniker ‘the West Point of Treasury Secretaries.’ These individuals often deregulated industries, effectively giving Goldman Sachs free rein.

They manipulated Greece’s financial records to facilitate its entry into the European Union, and as a result, are considered a primary culprit in Greece’s bankruptcy and the subsequent European financial crisis.

However, the company amassed enormous profits in the process, symbolizing the abuses of neoliberalism and financial capitalism.

Finally, on D-day, Friday morning, standing before Goldman Sachs’ headquarters, the company’s future came to mind.

Even as nearly ten million American citizens lost their jobs and almost six million lost their homes due to the American financial collapse, they pocketed billions in dividends and bonuses, popping champagne bottles.

Any failing company would inevitably be bailed out with taxpayer money, allowing them to create fraudulent derivatives and rake in even more cash.

I almost spat on the ground, but stopped myself.

A sudden thought struck me: I was no different, just employing different methods to make money.

“Let’s go.”

The TFT team leader, who had followed me, swallowed hard, visibly nervous. The billion-dollar contract had him on edge.

“These crazy bastards…”

Korean profanity slipped out the moment we stepped into the lobby.

Goldman Sachs’ lobby was filled with items more expensive than those in a Nonhyeon-dong luxury furniture store.

The marble on the floor and walls was tolerable, but who conceived the idea of making the reception desk out of marble?

Even the chairs prepared for those briefly waiting in the lobby were luxury items costing millions of won each. Dozens of these chairs were lined up like in a subway station.

This level of extravagance was unprecedented. As another curse word threatened to escape my lips, the team leader accompanying me raised his hand, greeting someone.

Following him into the conference room, I saw three people already waiting for us: an executive and two managers. Their eyes gleamed, their tongues practically lolling out, eager to devour my money.

* * *

“If you’re set on proceeding, we won’t stop you, but we feel obligated to inform you of something,”

said the man who looked the youngest but had already climbed to an executive position, a smile playing on his lips.

“Go ahead.”

“There’s already a similar swap in place. It was contracted two years ago…”

He was likely one of the insightful individuals Rachel had mentioned.

“The only difference is that the contract from two years ago requires monthly premium payments. Initially, the premiums were low, but as the price of mortgage-backed securities rose, so did the premiums. Now, they’re paying around 9%. They’re incurring significant losses.”

“So, you want our terms to be monthly instead of annually?”

“No, we’re simply informing you. If you believe the rumors about mortgage loans being bundles of bad debt, you’ll suffer substantial losses.”

“You’re aware that variable interest rates apply to mortgage loans starting this year, right? The delinquency rate is already increasing. You don’t think there’s any bad debt?”

I wanted to gauge their thinking.

Were they genuinely convinced of its safety, or were they trying to conceal the risks?

“Mr. Jin, securities aren’t loans. They are primarily AAA-rated with a small mix of lower-quality loans. That’s what makes them a good product. The AAA rating sufficiently covers the losses from the B-rated portions. You wouldn’t discard a perfect steak just because it has one tough sinew, would you?”

“Housing prices have risen so much that we’re just experiencing a slight adjustment. There won’t be a crash.”

One of the managers chimed in smoothly.

“We understand Goldman Sachs’ perspective. However, it’s not enough to make us change our minds. Ah, and thank you for the information.”

The young executive shrugged and clapped his hands together.

“Then, shall we delve into Miracle’s specifics?”

The three of them unfolded the summary we had prepared and read through it quickly.

“The product analysis is excellent. Truly, this is Miracle.”

“If we can agree on just two points, the contract will be seamless.”

After confirming their satisfied expressions, I slowly began to speak.

“I’m willing to accept monthly insurance payments. Moreover, since there’s precedent for premium conditions, we’ll follow that method.”

The team leader who came with me glanced at me, a worried look on his face.

With premiums, the insurance costs skyrocket when the value of the securities increases. The premiums could quickly reach levels that are impossible to handle.

I gave him a slight nod, a signal to relax, but the worry didn’t leave his face.

“You’re saying everything we need to say; it feels like things are flowing smoothly. Haha.”

Before the young executive’s laughter subsided, I stated another condition.

“Similarly, based on precedent, let’s set the insurance rate at 4.8%.”

His smile vanished, replaced by a look of disapproval.

“Now, matching the conditions from two years ago? That might be difficult.”

“Why is it difficult? If the value of the mortgage-backed securities has decreased, increasing the risk, then the insurance premiums should rise. But hasn’t the value of the securities steadily increased since two years ago? Doesn’t that mean the risk has decreased? It seems perfectly reasonable to have the same conditions…”

The three men who had been licking their lips exchanged glances and then whispered amongst themselves.

After a moment, one of them cleared his throat.

“What amount are you considering for the swap?”

“Does that mean you’ll accept my conditions depending on the amount?”

“Indeed. If you exceed one hundred million dollars, we’ll agree to 4.8%.”

Yes!

I would have accepted 5%, even 6%. There are few places besides Goldman Sachs that can handle such a large sum at once.

“Well, that resolves the remaining issue at once.”

My bright smile elicited puzzled expressions from the three men.

“Since it’s a billion dollars, wouldn’t that settle both the total amount and the insurance rate immediately?”

Their expressions were priceless.

They were astonished by the massive sum, and they also showed the joy of a huge windfall—4.8% of a billion dollars, a cool forty-eight million.

And there was a hint of weakness, like someone holding a four-ace poker hand but wavering against a bluff.

“May I take your silence as a positive sign?”

“Ah, excuse me. Of course, you may interpret it positively. No, should we be the ones asking? Haha.”

The team leader who accompanied me was constantly sending and receiving text messages, checking the real-time status of employees visiting other financial institutions.

I wrote numbers in the blank spaces of the thick contract.

4.8% and 1 billion dollars.

The moment the contract was signed, both sides broke into broad smiles.

Where else can you find a contract that satisfies both parties so thoroughly?

Pushing back my chair, I shook hands with each of them. My grip tightened involuntarily.

Just then, the team leader whispered in my ear.

“All 26 locations, including London, have signed the contracts.”

Seeing my even brighter smile, the young executive from Goldman Sachs commented.

“Sounds like good news.”

“Yes. News of a very favorable contract being signed.”

“Ah, congratulations. Could you perhaps offer a hint about the details?”

“You’ll find out soon enough. These things are hard to keep secret. Wall Street doesn’t have walls when it comes to gossip, does it?”

Rumors spread quickly about two things: someone hitting the jackpot or someone going bust.

“We’ll have to keep our ears open. Miracle is known for successful investments, isn’t it?”

He didn’t realize the irony in his words.

With the contract signed, there was no turning back. I offered him a subtle hint.

“Our Miracle is famous for successful investments. Wouldn’t that make this contract we just signed here today a success as well?”

I lightly waved the thick contract.

Our success means their failure. A successful contract that satisfies both parties… is very rare.

Only then did the smiles fade from their faces.

Humans are reluctant to dwell on negative possibilities, so they downplay them.

They were now beginning to feel the subtle creep of the worst-case scenario they had minimized—the collapse of the US housing market.

“Well, time will tell who this contract benefits. So…”

I left the frozen men behind and exited the conference room.

The clear New York sky seemed exceptionally beautiful today.

“Shall we grab some lunch? How about a delicious hot dog and a hot coffee?”

I walked towards a food truck on the corner with the still-uneasy team leader.

* * *

That afternoon, I gave all of Miracle’s employees hefty bonuses and let them leave work early.

I wanted to share my joy, and I knew the best way to do that was with unexpected money and the leisure time to spend it.

Wanting to celebrate on my own, I went to the bar I had visited with Rachel.

Sipping my beer and chuckling to myself, I overheard whispers from around the bar.

“Did you hear that Miracle went on a crazy spending spree today?”

“Of course. Who hasn’t heard?”

“How much did they throw around?”

“The exact amount is unknown, but thanks to Miracle, everyone’s getting a windfall. Even our Deutsche Bank is getting 12 million dollars, I heard.”

“Damn, the executives probably got bonuses again.”

“Aren’t they worried? If Miracle’s crazy gamble pays off, they’ll have to pay out 240 million dollars. The department that signed that contract is toast.”

“Have you ever seen a crazy gamble succeed? They’ll have to pay enormous insurance premiums going forward… Miracle will be bankrupt soon.”

But they weren’t laughing at my crazy actions.

Thinking about only one contract, it’s true that Miracle did something crazy. But everyone in Wall Street suspects the immense amount of money Miracle spread around. A few phone calls would reveal billions were involved, and when crazy actions reach that scale, people start taking it seriously.

Because of this, there were worried whispers throughout the bar, but no laughter.

“Did you know they did the same thing in London?”

“London? The City?”

“Yeah. I heard they threw a 600 million dollar credit default swap contract at the Bank of England. Aren’t they really processing billions of dollars in swaps?”

“If, just if, Miracle’s bet is right, what happens?”

“What do you think happens? All of Wall Street gets screwed.”

It was Friday evening. From now until Monday, there were two days.

Those who quickly recognized the warning signs would gather their people, hold emergency meetings, and work tirelessly. Those who still thought of me as a madman would be celebrating their big score.

“Hey, Son.”

The gray-haired middle-aged bartender placed a bottle of beer in front of me.

“Didn’t you and Rachel talk about 70 billion dollars or something here last time?”

“That’s right. Do you know Rachel?”

“Of course. She’s a regular here. Her routine is to have a couple of her favorite cocktails and then head home.”

“I see.”

“I also know that Rachel is the boss of Miracle. So, the crazy things Miracle did that everyone’s whispering about, is that related to the 70 billion dollars?”

The bartender couldn’t hide his curiosity, his eyes sparkling as he asked.

I wanted to enjoy a quiet drink, but the mood was ruined.

I pulled out a hundred-dollar bill from my wallet and placed it on the counter.

“Do you have a mortgage on your house?”

“No. I have no debts.”

“That’s a relief. Then sell this bar before it’s too late.”

“What?”

The startled bartender didn’t even think about taking the hundred-dollar bill.

“You’ll go bankrupt running a bar in a Wall Street full of unemployed people.”

I gave a faint smile to the dazed bartender and stepped out into the New York night.