Rehearsal (5)
“…So, when are you going to do it? That…, the France downfall plan.”
Seo Ji-yeon fidgeted with her fingers as she asked. For someone who told me to do whatever I wanted, she was being awfully timid.
“When the time comes. Ideally, overlapping with options expiration would be perfect, right? I'm calculating it now.”
Stocks don't drop immediately when something blows up. You have to factor in market closures, people's psychology, and how long it takes for things to process. Derivatives are even trickier than stocks because they include time value and other factors, making the math incredibly complex. Sure, there are math whizzes eyeing it, but... most of the masters of financial engineering flocked to LTCM recently, so no one's available. Oh, what's LTCM? It's the fund of geniuses who turned into Wall Street legends by posting 30x returns just three years after starting. Founded this year, it's set to become Wall Street's biggest fund by '96... managing $140 billion in assets with less than $10 billion of their own money. Insane, objectively. LTCM eventually couldn't weather Russia's moratorium and went bust (though the Fed bailed them out with loans). I could've handled that leverage somehow... but Alpha Fund lacked the prestige for those levels. Leverage requires lenders, and I invest in high-volatility spots anyway.
Sometimes when you're rolling money around, the units start to feel off.
This time, Crédit Lyonnais's losses were $25 billion, and Alpha Fund's assets sat around $17 billion. And obviously, even $100 million is an absurdly huge sum. That's why I wanted to hand off the big calculations to experts...
Just you wait... Rejected my scout? Even if a Nobel laureate in economics calls, you can't just blindly follow.
Hmph, guess I'll have to do it myself for a while. Sure, my brain's sharp, but compared to top-tier pros, I lack experience in spots... but knowing the future makes up for it nicely.
-Scritch scritch.
I paused my calculations and bit my lip lightly.
“Yeah, six weeks from now should do it. One week to hit the peak..., and six to the bottom.”
“Six weeks?”
I nodded slowly, wiping the graphite smudges from my hands. My calculations were flawless.
“Gotta call Sun-jun oppa. Time to sell.”
Real estate sell-off in one week, France bond short in three, options... start buying now.
The Crédit Lyonnais scandal that rocked every French newspaper quickly faded away. It didn't seem deeply tied to politics, and above all, almost nothing had been properly uncovered. Of course, the real reason was probably the French government clamping down on the press as hard as they could.
Luckily, the government had bait to distract the media. Good news on third-quarter price stability came from the stats office for once..., and real estate, centered on Paris housing, was slowly recovering. So France looked peaceful at a glance. The economy was in recession, but no major corps were dropping like flies, and felt inflation was stable.
But... in less than a week, inflation restarted like a lie.
Russia's situation suddenly destabilized, messing up commodity supplies. Not entirely my doing with Yoo Ha-yeon’s schemes. Russia was always like this. I just temporarily hid it—post-Soviet collapse, it never stabilized once. When basic resource prices spike from external factors, inflation follows. And this inflation stemmed from supply chain issues, unrelated to economic health, so the recession dragged on. The start of stagflation.
Once Russia's sudden shifts came to light, bad news poured in relentlessly.
“Hm, I didn't even touch this part. Wall Street's stepping up for real now.”
I don't move the whole world. I move the few power players, institutions, and groups who do. Same result, though.
“...This is brutal. France had no way out no matter what, huh?”
Seo Ji-yeon muttered, knowing how much effort I'd put in.
I shrugged with a smile. “Exactly. The buttons were wrong from the start.”
So of course there's no fix. This was France's karma piling up for ages. The fall was inevitable. And a plunge after a rise hurts deepest. Hope's embers snuffed out, investor sentiment crushed. Worse than a long slump.
“The trick is framing this not as the Republicans' failure, but the Socialists'...”
-Tap tap.
I drummed my fingers, deep in thought. France's stocks and real economy were already tanking, but there was more meat left on the bone.
“Uh..., you've already made a ton, right? I think you hit the target return yesterday.”
“More money's always better, no?”
Seo Ji-yeon tilted her head. “But you're not really that type, miss. You usually bail after eating your fill.”
Sharp as ever. She's right—I'm not as risk-loving as I seem. At least not in this life. And no, it's not caution.
“True. Better to rip 30%+ from fresh meat elsewhere than gnaw bones for 5%.”
“...No idea where it comes from, but you keep finding money pits.”
I wonder too. Why's the world so full of incidents?
“Hm, this one's different. Politics in play. We've got enough cash—now's for building influence.”
“Politics?”
“France's current president's from the Socialists. That's all.”
I didn't bother elaborating. No need for a Korean to know French politics; it wouldn't click anyway.
French Prime Minister Édouard Balladur ground his teeth.
“After all that tax money...!”
A whopping $9 billion in dollars. They'd pumped bailout funds. Public backlash was fierce, but what choice? The losses were done. What now? Even the greatest econ bureaucrat can't conjure vanished cash. Or reverse sunk losses. If Crédit Lyonnais's bad loans had surfaced earlier...
But what was this? Money spent, yet extreme recession hit.
“...Sorry.”
The Economy and Finance Minister bowed his head.
“No, no. No one saw this coming...”
Breath caught. Vision blurred. France was a cohabitation government. Socialist president, Republican PM. Like minority government in Korea— prez power limited. Neoliberalism was the PM's push.
Just for austerity, President Mitterrand's approval tanked. First Socialist gov in 20 years; folks expected social democracy.
...Maybe time now. Neoliberal failure was this mess. Over-freedom to state banks blew up in their faces—nationals would learn.
“The blame... falls on me, huh.”
Bitter taste. Mitterrand tried reforms early, failed, then handed econ to the PM. In hindsight, better to keep it from a rival. Dodge blame.
Maybe the prez knew no policy could boost econ, tossed the hot potato to Republicans.
“...Wait.”
An idea flashed in the PM's mind. Tough for next election, but regime change possible. Mitterrand's old trick—why can't Republicans pull it?
“What if we push Socialist policies instead?”
“...Pardon?”
“Don't propose outright—let Socialists or Communists do it, just don't block. Subtly, like losing a political fight.... Not total lies, right? I'll issue a statement, step back from real power temporarily.”
Folks don't track who really pushes what. Just whose policy it is. If nothing saves the econ...
Step aside first.