Bomb Collar (5)
The clamor and heat of the stock exchange receded into a distant haze, separated by one thick pane of glass. The cafe Galleria, elegantly appointed in shades of blue, was the exclusive domain of the empire’s elite. From the entrance onward it demanded proof of financial assets above a certain threshold; even the air inside felt rarer, more refined. On the second-floor window seat that commanded a perfect view of the frenzied trading floor below, two dog beastkin had settled in. They sipped their drinks and nibbled desserts while treating the chaotic spectacle outside as light entertainment.
“Just look at them! People really are trash!” Roger, the one with coarse yellow fur the color of ochre, jabbed a finger at the window and bellowed. His voice boomed, but the secluded corner kept the stares to a minimum. Three different slices of cake sat artfully arranged before him; he had already demolished one. He stabbed his fork into the cocoa-dusted tiramisu, scooped up a messy chunk, and shoved it into his mouth. Soft cream smeared across his lips and chin. He didn’t seem to notice.
Across from him, the pure-white-furred Hector let out a familiar chuckle. “That line again? You never get tired of it?” He lifted his cup of freshly brewed coffee with refined grace and inhaled the aroma. Every motion was calm, the polar opposite of his companion’s.
“Hey, buddy. Heard the latest?”
“Latest what?” Roger mumbled, cheeks puffed out like a squirrel’s as he struggled to swallow the cake.
“That Valeriano Trading Company. They just spun off a new financial subsidiary and have been hoovering up bonds like crazy. Using them as backing, they’ve rolled out something called asset-backed securities and collateralized debt obligations.”
“The hell is… oh, right. That thing everyone’s been whispering about from the Valeriano outfit?” Roger finally managed a coherent sentence after washing the cake down with coffee. His fork was already migrating greedily toward the next target: the cherry-topped Black Forest cake.
“Exactly.” Hector nodded, utterly uninterested in Roger’s gluttony. He continued in the same measured tone. “Asset-backed securities are instruments issued against a company’s receivables, real estate, or other assets. Essentially, you’re pulling future cash flows into the present.”
“Huh…” Roger gave an indifferent snort. His entire nervous system was still locked onto the cake.
“And collateralized debt obligations bundle multiple bonds together, then issue new securities against that pool. They tranche them by risk and yield. Both concepts originated with the Valeriano Trading Company.”
“You know I hate anything to do with bonds. Why are you telling me this?” Roger asked, eyeing the last slice of cheesecake with open regret. His fork had already carved deep into the Black Forest cake.
“Because there’s something tied to all this that I know you’ll love.”
Hector pulled a book from his bag. The word Salcher was stamped simply on the cover—Conrad Salcher’s credit-rating agency publication. He slid out the thick envelope being used as a bookmark and passed it over.
“What’s this?” Roger accepted it suspiciously and tore it open. Inside were several neatly organized documents. The moment he began reading, his bored expression vanished. His eyes widened. He forgot to lick the cream from his lips. The fork froze in midair. After staring at the papers for a long moment, he finally exhaled in awe.
“This… is fucking perfect?” His voice shook with excitement. “You get paid if the credit rating drops or there’s a default? Damn! Sure, you pay a premium, but the risk is way lower than straight short-selling!”
Roger’s eyes glittered with naked greed. He set the documents on the table and began poring over them again, far more intently than he had attacked the cake, savoring every single word.
“Still… it’s brand new. Right now the only credit default swaps being issued are on Valeriano products. Feels premature.” Disappointment flickered across his face. “Everything that company releases is blue-chip. These things almost never fail.” For someone who only bet on collapse, they held zero appeal.
“Shame. Don’t they offer anything like this for some backwater noble’s territory? The kind that looks solid from the outside but is rotten to the core—the sort that would cough up blood and die if the wind so much as sneezes on it.”
“You really do wish the whole world would burn, don’t you?” Hector shook his head in mild exasperation. “Can’t you just buy stable stocks or bonds like a normal person? Steady returns are nice, you know.”
“There’s a special thrill to short-selling,” Roger said, setting his fork down with unusual seriousness. “When the entire world is screaming ‘rise,’ you alone call for the fall—and then you prove it. The ecstasy of watching those idiots who thought every shiny thing was gold climb the stairway to heaven, only to plummet and smash their skulls open! The joy of picking up gold coins from atop their corpses—do you have any idea how good that feels?”
“Investment is for making money, not for fun,” Hector replied, clearly unimpressed.
“Ha, says you. Work’s more efficient when you enjoy it, my friend.” Roger sneered, picking up his fork again. He carved off a huge piece of the remaining cheesecake, chewed, rinsed his mouth with coffee, and continued. “Credit default swaps sound delicious, but I’ll sit on the sidelines for now. Once every idiot and his dog starts issuing them, that’s when I’ll bite.”
Hector drank his coffee in silence. He glanced at the chaotic exchange outside, then shook his head.
“Of all the dog bastards I’ve met, you’re the worst. When you die, you’re definitely going straight into the sulfur flames.”
It was an old, familiar curse. Roger threw his head back and roared with laughter.
“Puhaha! Too bad indulgences have been abolished!”
“Why’s that a shame? Suddenly eager for heaven?” Hector asked, incredulous.
Roger swallowed the last of the cake and grinned wickedly. “So I can short it, obviously.”
“Crazy bastard…” Hector muttered under his breath.
The two stared at each other for a beat. Then, as if on cue, they both exploded into laughter—loud, unrestrained, and utterly shameless.
Mikhail lounged deep in the sofa of his office, slowly turning the pages of the thick report Laura had delivered. Under normal circumstances he would have skimmed it and tossed it aside. Today was different. He read every line with care, tracing each sentence with his fingertip. It was worth the effort.
The Asset-Backed Securities (ABS) and Collateralized Debt Obligations (CDO) issued by the Valeriano Trading Company, along with all the copycat products rushed out by other firms and banks. And layered on top of every single one of them, like insurance, were the Credit Default Swaps (CDS) issued in Mikhail’s own name. The premium income rolling in was nothing short of astronomical.
“As expected, everything is proceeding exactly according to Your Highness’s design,” Laura said with a satisfied smile. Pride colored every syllable. “Once a heavyweight like Conrad Salcher opened a credit rating agency, no one even thought to question it. They’re all rushing into the new market on the strength of his name alone.”
Mikhail gave a silent nod. This world still lacked any real framework for finance. Systematic accounting audits for securities? Nonexistent. The reputation of the issuer and sufficient issuance volume were all anyone needed. Slap on a plausible exterior and nobody cared how rotten the interior was. The only thing guaranteeing the value of the underlying assets was the CDS—Mikhail’s own credit and the collateral behind the securities.
Everything was going according to plan.
Josepina, however, clearly felt otherwise. Arms tightly crossed, she made no effort to hide her unease.
“I… still don’t fully understand how this is possible,” she said carefully. “No matter how I look at it, the structure is too dangerous. There’s far too much room for abuse. The central government will surely impose regulations soon.”
Her observation was sharp. It was a colossal game of hot potato that could collapse from the slightest jolt.
“This whole thing is insurance for the day we take down that Anastasia bitch,” Mikhail said, finally looking up from the report as though the answer were obvious. “Why else would I issue it under my own name? It’s a threat: if that woman tries to ‘wine, carriage, terrace’ me, the entire imperial economy goes down with me.”
His tone was lazy, almost bored, but the meaning behind the words was chilling.
Laura immediately backed him up. “Since the Second Princess’s power base is largely built on luxury goods, a serious economic contraction would hurt her badly.”
“And before we cause an accident on this scale, I’ll simply present the Toto business to His Majesty as a gift. He’ll have to overlook it, won’t he?” Mikhail chuckled. “I mean, I’m his son. He’s not actually going to kill me. Worst case, I kneel in front of the capital walls and bang my head on the ground for a few days. That should do it, right?”
At the mischievous joke, both women’s expressions froze. There wasn’t a trace of laughter on either face—only clear worry and anxiety.
Still, there was no turning back. The die had been cast the moment they chose to oppose Anastasia. In this world, if you didn’t want to be the one who got screwed, you had to kill first. The anti-drug policy had bought them some quiet, but no one could predict when that cunning woman would try her next trick. Risk or not, they had to finish this as quickly as possible. And for that, the success of the Toto business was non-negotiable.
Mikhail rose from the sofa.
“Before I send letters to Dmitri and Brother Clement, let’s wrap up the Toto business first.”