September 4, 1998.
Seok-won sat back on a soft leather sofa, one leg crossed over the other, wearing a custom-tailored suit that fit him perfectly.
Through the wide panoramic window beside him, the East River shimmered under the sunlight, and beyond it the Brooklyn skyline stretched out like a painting.
On one wall of the executive office, finished with the finest materials, hung a 1982 piece by the famous Black artist Jean-Michel Basquiat, titled Untitled.
It was a painting Seok-won had personally purchased for a staggering five million dollars.
Landon often joked that it looked like a child's scribble and that Seok-won had overpaid.
But knowing that in just twenty years the piece would sell at auction for $110.5 million—making it the sixth-highest price ever paid for a painting—Seok-won only smiled.
All he had to do was leave it hanging on the wall, and its value would rise twenty-twofold. Not a bad investment.
He turned his eyes to the people gathered around him.
To his sides sat Landon, Andrew the CIO, and Dan Baradan, the senior investment chief, all in the middle of conversation.
Setting down a coffee cup rich with the aroma of roasted beans, Seok-won spoke.
"With Moody's downgrade widening bond spreads even further, I hear the Wall Street investment banks are in quite a panic."
Landon, in his silk tie, smiled as he replied.
"Most of the major Wall Street firms—JP Morgan, Salomon, Merrill Lynch—have portfolios structured almost exactly like LTCM's. It's no wonder they're rattled."
Andrew, seated across, gave a little shrug and added,
"They all tried to copy LTCM's methods after seeing those incredible returns over the past few years. This was inevitable."
Then, glancing at Seok-won at the head of the table, Andrew continued with a note of pride.
"Of course, even with all those returns, LTCM is nothing compared to us."
Unlike LTCM, Seok-won's private family office had no obligation to disclose its performance, so no one really knew how much money the Eldorado Fund was making.
Dan, the square-jawed, dark-haired senior investment chief, grinned broadly, flashing his white teeth.
"If the returns from our fund ever became public, it would turn all of Wall Street upside down. Honestly, some people might even think we're lying."
"Sometimes even I find it hard to believe, so I can see why they would."
Landon nodded, praising Seok-won as he spoke.
With all three of them showering him in compliments, Seok-won felt a little embarrassed and cleared his throat lightly.
"That's why financial stocks have been hit the hardest in the middle of the market crash, isn't it?"
Andrew picked up the thread.
"Yes. Most of them are down more than 15%, and in particular JP Morgan, Salomon, Lehman Brothers, Chase Manhattan, and Merrill Lynch—all of them heavily involved in bond trading or closely tied to LTCM—are being hammered the most."
"Since they're entangled with the bonds at the center of this mess, it'll be hard for them to rebound until things are resolved."
Wearing suspenders over his shirt, just as he did on the trading floor, Andrew asked cautiously,
"How far do you think the financials could fall?"
The other two also looked at Seok-won with the same question in their eyes.
Leaning comfortably against the sofa, Seok-won answered without hesitation.
"In the worst case, the financial sector's total market cap could be cut in half."
"...!"
The three had assumed the maximum drop might be around 10%, so they couldn't hide their shock at an estimate far beyond their expectations.
Andrew, mouth hanging open, quickly gathered himself and stammered,
"H-half? You mean it could really lose half its value?"
"That's just my projection."
Seok-won answered with a faint, knowing smile at his lips.
But since not once had his predictions ever been wrong, the others stiffened and swallowed hard.
While they grew tense, Seok-won continued in an even tone.
"Thanks to Bloomberg's report, parts of LTCM's portfolio that had been hidden are now exposed. That means the market will soon turn against both the Wall Street investment banks and Jacob Wiseman."
"What exactly do you mean?"
Landon leaned forward as he asked.
"The assets held by LTCM and the Wall Street banks will fall further than the rest, and their losses will deepen."
"...!"
"Investors and traders worldwide will scramble to dump LTCM's holdings, like rats fleeing a sinking ship. There's no way to avoid it."
Andrew let out a low groan.
"As LTCM, pressed for cash, reaches out everywhere for funding, their positions will inevitably be exposed. Just as you said, other funds and investors will rush to sell before prices drop even more."
"Exactly. It's not about attacking LTCM—it's an instinctive move to protect themselves."
Landon nodded in agreement.
"Once the secret's out, they're left standing completely exposed."
"That's right."
The casual atmosphere they'd shared over coffee was gone.
Seok-won looked at the three men, each lost in heavy thoughts, and said in a low voice,
"When that happens, LTCM's losses will snowball beyond control."
"At this rate, they could burn through what little assets they still have left," Landon muttered.
Seok-won clasped his hands and rested his elbows on the armrest.
"If that were the end of it, it would almost be a relief. But the reason I call LTCM a time bomb for the entire market is because of their leverage. They've borrowed well over a hundred billion dollars."
At that, the color drained from all three faces.
Dan, seated next to Andrew, looked at Seok-won with unsteady eyes.
"If LTCM collapses after losing even their borrowed funds…"
Seok-won finished the sentence in a dry tone.
"The investment banks that lent them leverage would begin to shake one after another, and Wall Street—or rather, the entire stock and bond markets—could collapse."
For a moment, the room was swallowed by a heavy silence, and the three men froze as if turned to ice.
If events unfolded as Seok-won predicted, it wouldn't just be a stock market crash—it could spiral into an uncontrollable economic depression.
Seeing their serious expressions, Seok-won shrugged lightly.
"Even if the market is driven to the brink and fear peaks, unlike in the past, the Federal Reserve and the U.S. government won't just sit back and watch. Don't worry too much."
"...Do you really think so?"
Andrew asked, his face tense.
"Yes. The Fed and the Wall Street banks know better than anyone that if the dam breaks, it would be unmanageable. They'll do whatever it takes to stop it."
Hearing Seok-won's confident tone, the three men, who had been tense, finally showed slight relief.
Seok-won smiled faintly at the sight.
"But until they manage it, the entire market, gripped by fear, will panic. And that will be the perfect opportunity for us, since we've placed short bets."
Though their faces reflected the chaos and shock to come, the three men couldn't help but admire that Seok-won had foreseen it all and prepared the plan in advance.
They swallowed hard as they imagined the potential profits once everything unfolded according to plan.
Calm under their awe, Seok-won lifted his cup and took a sip of coffee.
Then, breaking the silence, a phone in Landon's pocket rang.
"Sorry."
Landon fumbled slightly to pull out the phone and turn it off, but Seok-won waved his hand, signaling it might be important.
"Better take it—it could be urgent."
"Oh, yes."
Landon bowed his head slightly and carefully answered.
"Hello?"
Landon's eyes widened as he recognized the caller, staring in surprise.
"Oh… yes. Mr. Wiseman has been contacting me directly? What's this about?"
Hearing Wiseman's name, Andrew and Dan, who were with him, also showed expressions of shock.
They both watched Landon intently, curiosity lighting up their eyes as he held the phone to his ear.
"Hmm… I understand. This isn't something that can be decided over a call. Could you send me a proposal first? Yes, that's fine."
After ending the call and lowering the phone, Landon looked at Seok-won.
"Was that a call from LTCM's CEO, Wiseman?"
"Yes."
"Why did he contact us?"
"He asked us to invest in LTCM."
Andrew, who had been perked up and listening, narrowed his eyes sharply.
"If Wiseman—the same man who returned all previous investments—is calling personally to raise funds, it seems LTCM's situation isn't good."
"If news of this spreads on Wall Street, the market will shake again," Dan added.
"Judging by Wiseman's actions, LTCM won't make it past this month—they'll collapse," Dan continued.
Seok-won curled one side of his mouth in a knowing smile, and the three men nodded in agreement.
Desperate to survive, Jacob Wiseman reached out not only to the Eldorado Fund but also to several industry titans, including the founder of Dell Computer and other major funds.
But contrary to Wiseman's expectations, not a single person was willing to invest in LTCM.
This was no longer the LTCM of old—confident, booming, and choosy about investors. Now, after suffering massive losses and faltering, it was no surprise.
Cornered, Wiseman swallowed his pride and even offered to forgo all fees for three years—but it was all in vain.
No one wanted to put money into LTCM, battered and on the verge of sinking in turbulent waters.
In just one year, the situation had completely reversed, leaving Wiseman and his partners in despair.
***
September 19, 1998.
Chris Murphy, President of the Federal Reserve Bank of New York, was just stepping out to attend an opera with his wife when a sudden phone call made him return to the living room and pick up the receiver.
"Fuller. What's going on over the weekend?"
[There's something urgent I need to tell you.]
Considering the notorious traffic in New York and the limited time before the performance, Murphy glanced at the watch on his wrist as he rolled up his sleeves.
"What is it?"
[If nothing is done within the next few days—maybe three days at most—LTCM is going to collapse.]
"...!"
[If that happens, the losses could range from at least five billion dollars to potentially hundreds of billions.]
Hearing this from Fuller, chairman of Bear Stearns, Murphy gripped the phone tightly and widened his eyes in shock.
A sudden default involving hundreds of billions of dollars—it was like a thunderbolt from the sky.
"Explain in detail."
In that instant, all trivial matters in Murphy's mind—the image of his wife waiting at the door in a stunning gown and the fact that there was little time left before the opera began—vanished completely.
TL/n -
Happy Holi