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# Chapter 1. Other People's Crises Are Profitable
“Did you see the news yesterday? They're badmouthing us again!”
Early March 2007.
The voice of Assistant Manager Choi, making a fuss as usual, was what woke up the Korea Investment Corporation (KIC),
the country's only sovereign wealth fund, that morning.
His phone screen was filled with one sensational headline after another.
“Korea Investment Corporation Reports Tens of Billions in Losses Two Years After Establishment... Controversy Over Waste
of Taxpayer Money”
“Singapore's Sovereign Wealth Fund Charges Ahead... Korea Investment Corporation, Trapped in Its Own Little World, Can't
Even Compete.”
An elite employee seconded from the Ministry of Finance and Economy fired back.
“That's precisely why we need to demonstrate stability rather than focus on performance. We're not a Yeouido securities
firm making short-term bets.”
“Exactly. We're managing the nation's foreign exchange reserves entrusted to us by the government and the Bank of Korea.
Stability matters more than returns.”
Stability, stability, stability.
I quietly prepared an espresso while listening to their conversation.
Those people had no idea.
They had no idea that the KIC's initial assets of $20 billion, approximately 20 trillion won, were rotting away under
the name of stability. It was more money than all the securities firms in Yeouido combined.
Sure enough, a dissatisfied voice erupted from the other side of the room.
“If we keep going on about stability, won't we end up becoming nothing more than a second Bank of Korea instead of
Korea's very own Temasek?”
“Exactly. A sovereign wealth fund is supposed to increase the nation's wealth. If all we're going to do is protect it,
why was this organization even established?”
Amid the tense exchange, someone burst into hearty laughter.
It was Cha Minjun, the head of the Investment Strategy Team.
“This is exactly when we need to pull off a signature deal! When I was on Wall Street, the dot-com bubble burst and
everyone abandoned tech stocks. I scooped up those garbage stocks and made an enormous amount of money. In the end, what
matters is making money. That's all there is to it!”
After enthusiastically recounting his past exploits, Team Leader Cha glanced at me.
I had been with the company for only a week.
At this stage, people still called me the new recruit more often than they used my name.
“What do you think, Gong Seokjun? Are you settling in at the company?”
Before I could answer, Assistant Manager Choi cut in.
“Oh, right! Gong Seokjun, I heard you graduated from Seoul National University's College of Engineering and even passed
the bar exam. So why did you leave a law firm to come here? To a loss-making corporation that everyone criticizes?”
His face was full of curiosity.
I lifted my coffee cup and answered slowly.
“A lawyer is someone who wins within a set of rules.”
“Exactly, within the boundaries of the law.”
“I prefer exploiting loopholes to blow the whole game wide open. That's where the real money moves.”
“B-Blow the whole game wide open? We're managing national assets...”
As the former Ministry of Finance and Economy employee stammered, Assistant Manager Choi interrupted again.
“Still, isn't being a lawyer much more stable? Once you become a partner, you earn a lot of money, and there's less
risk.”
A faint sneer escaped my lips.
Stable?
That wasn't what I had come here for.
“Of course. Once you become a partner at a law firm, your earnings can easily exceed hundreds of millions of won.”
“Wow\... As expected, those prestigious professions really are the best.”
“But the Korea Investment Corporation deals in trillions of won.”
I smiled faintly as I raised my coffee cup.
“I prefer the kind of job where more zeros get added to my salary and performance bonuses.”
I could feel everyone's gaze in the break room converging on me.
I glanced at my watch and quickly finished my coffee.
“Then I'll get back to work.”
The low murmurs coming from behind me were no longer my concern.
When I returned to my desk, my senior colleague dropped a thick stack of documents onto it as though he had been waiting
for me.
“New recruit, you said you came here to make money, right? Then let's get to work.”
I looked at him without saying anything.
“These are qualified investment reports from American mortgage companies. As you know, we're a newly established
sovereign wealth fund that's only just learned to walk. Stability matters more than taking risks.”
As always, this senior colleague was long-winded when explaining things.
“Last year, we entrusted money to foreign asset managers like Barclays, and the returns weren't bad. Starting this year,
we're planning to include high-quality bonds in our portfolio directly.”
“I see.”
“I heard you came from the law firm Gwangin, Gong Seokjun. Since you passed the bar exam as well, I imagine you have the
sharpest eye for contracts on our team.”
He tapped the stack of documents with his fingers.
“Give these a preliminary review before we send them to the legal team.”
If every single one of these dozens of proposals went straight to the legal team, they'd be overwhelmed.
So he wanted me to put my legal expertise to use and identify any clauses that might pose legal problems.
“Think of it as a warm-up.”
I had only been at the company for a week, so it was natural for me to be assigned work like this.
Besides, legal matters were my specialty, rather than investments.
I nodded.
For now, I was just a rookie analyst.
My first priority was to learn how this game worked.
“Understood.”
I turned over the first page.
SuperWide Financial.
IndyMac Bank.
One after another, the names of mortgage companies doing well on Wall Street appeared before me.
Then my finger stopped.
New Century Financial.
But the moment I picked up that report, everything twisted out of shape.
“Huh?”
A sharp, nauseating stench suddenly hit me.
It was worse than spoiled food, the foul odor of something rotting and decomposing.
The smell of rotten kimchi stew.
I felt like throwing up.
This sort of thing happened to me from time to time.
Just before something terrible happened, I would receive this damned warning, like an ominous premonition.
Whenever it happened, I simply assumed that I had an unusually sensitive sense of smell.
I've smelled this exact same thing before.
It was an unforgettable odor.
An old film began playing in my mind.
Winter 1997. The day the doors of the factory my father operated were firmly shut.
The office, which had been filled with hopeful excitement, was transformed within just a few days. Empty soju bottles
littered the place, and creditors shouted themselves hoarse.
That same smell had filled the air that day, too.
Why am I smelling this again...?
My confusion lasted only a moment before my vision warped.
And then I found myself standing somewhere else.
Wall Street.
The Charging Bull statue was engulfed in flames, burning fiercely.
People poured out into the streets.
Men in suits screamed into their phones.
Someone kicked a coffee cup off a desk and wailed in despair.
When the windows of the buildings opened, stacks of paper fluttered down like ashes.
What's happening to the stock market indices?
They were plunging without any sign of stopping.
Just then, a single sheet of paper drifted out of the flames and landed in front of me.
Words were printed on the burning page.
[April 2. Bankruptcy.]
The name of the company I had just seen overlapped with those words.
[New Century Financial]
“...???”
Someone shook my shoulder.
“Hey, rookie! Are you okay? What's wrong with your face?”
I suddenly snapped back to reality.
It felt as though I had just been dragged out of hell.
The rotten smell had disappeared, but my back was drenched in cold sweat.
My heart was still pounding like crazy.
“...I'm fine.”
I managed to answer and moved the mouse with trembling hands.
What the hell was that? Had I awakened to some kind of supernatural ability?
But this wasn't the time to entertain ridiculous fantasies.
This was information.
I began going through every page of the report like a madman.
Financial statements, balance sheets, cash flow statements.
Everything looked perfect on the surface.
Returns had been steadily rising.
Both Moody's and S&P had assigned the company a AAA credit rating.
It was an unquestionable high-quality asset, one that every investment bank on Wall Street was shouting was a strong
buy.
And yet, the vision and the smell I had just experienced kept pounding at the back of my mind.
Fact 1. New Century Financial would go bankrupt on April 2.
Fact 2. I had seen a vision of all of Wall Street going up in flames.
Let's form a hypothesis.
What if that vision was real?
Then this flawless report was nothing but a lie.
That would mean Wall Street's geniuses, along with the entire market, were participating in a massive fraud.
That's ridiculous. Even a novelist would get criticized for writing something this absurd.
But the smell didn't lie.
I couldn't ignore it.
Still, something was strange. New Century Financial was one of the largest subprime mortgage lenders in the United
States, but...
The collapse of a single mortgage company shouldn't be enough to bring down all of Wall Street.
There had to be a connection somewhere.
I opened the Korea Investment Corporation's internal database.
I needed to find the bug.
Back when I was studying computer engineering, I had heard countless times that a single bug could bring down an entire
system.
I searched relentlessly until—
“Found it.”
It was a short report published by a small credit analysis firm in Florida, one that nobody had paid any attention to.
“Fourth Quarter of 2006: Initial Delinquency Rates on Adjustable-Rate Subprime Mortgages Reach an All-Time High.”
Behind those dazzling graphs showing investment returns, delinquency rates among people who couldn't afford their loans
were skyrocketing at an exponential rate.
Why wasn't anyone aware of this?
No, it wasn't that they hadn't noticed.
They were deliberately looking the other way.
Should I look for evidence of the crime this time?
I opened the offering documents for collateralized debt obligations, or CDOs, issued by Wall Street investment banks.
Just as I had done at the law firm, when I searched through tens of thousands of pieces of evidence for the one sentence
that could determine the outcome of a case, I frantically flipped through the pages.
Then, amid hundreds of pages of English documents, one sentence caught my eye.
[Underlying Asset Portfolio C-3:
Mortgages originated by New Century Financial Corp. – 17.5%]
Approximately 17.5% of the underlying assets in Portfolio C-3 consisted of mortgages issued by New Century Financial.
And the institution that had issued this collateralized debt obligation was Bear Stearns.
I frantically opened documents from other banks, including Lehman Brothers and Merrill Lynch.
They were all the same.
They were all making kimbap out of rotten ingredients from the same factory.
A chill ran down my spine.
New Century's bankruptcy wouldn't be the end.
It would be the beginning.
If this company collapsed, every CDO made with those ingredients would blow up at the same time.
And the ones that had sold the most of those CDOs and gobbled up the largest quantities themselves were none other than
Wall Street's investment banks.
This was going to be a disaster.
I let out a quiet chuckle.
But disasters...
Were profitable.
Just then, lunchtime arrived, and people around the office began getting up from their desks one by one.
“Rookie, let's go eat. Work is important, but you still have to eat...”
I immediately stood up.
Team Leader Cha Minjun was just coming out through the door.
“Oh, Seokjun. Enjoy your lunch and—”
“Team Leader.”
Even I found my own voice unfamiliar. It was cold and unnervingly composed.
Team Leader Cha looked into my eyes and sensed that something was wrong.
I asked quietly.
“What would happen to us if a Wall Street investment bank went bankrupt?”