These days, it felt like I was practically commuting to the HW Group chairman’s office. I was there to keep a daily check on the funds being poured into Dubai, which were poised to become a financial bomb ready to explode over Vice Chairman Jin Dong-ki’s head.
“Do-jun, are you sure about this? Isn’t the financial crisis from the U.S. turning out to be weaker than expected?”
Chairman Lee Hak-jae tossed the morning paper aside.
“If the shockwave from the U.S. financial crisis is weak, it’ll be like giving wings to Jin Dong-ki. If liquidity issues are resolved, he’ll make a fortune next year and solidify his position even further.”
As I unfolded the newspaper he had thrown, I could hardly believe my eyes.
How could they be so clueless about the state of the world?
Is this the extent of the insight of those who claim to lead Korean finance?
“Industrial Bank of Korea explores acquisition of U.S. financial giant Lehman Brothers. Specific acquisition terms proposed: $23, $18, and $6.4 per share in three stages.”
“Idiots. What are they thinking, acquiring a company on life support?”
“Are you sure?”
“Absolutely. Lehman Brothers won’t even receive bailout benefits from the U.S. government. They’re beyond saving. Bankruptcy is imminent.”
After Lehman Brothers’ bankruptcy, Nomura Securities, aiming to become a global investment bank, would only acquire Lehman’s Asian and European divisions. The acquisition price was a mere $2 for the European division, with a condition to retain all employees, and $225 million for the Asian division.
With a capital of 11 trillion won, Nomura Securities saw this as an opportunity to step up as a global investment bank, so they were willing to invest that much.
Offering $23 per share for a company that could be acquired for just $2 is either foolish or indicative of some dirty dealings being hidden. The Industrial Bank of Korea isn’t that foolish, so it’s clear what’s happening behind the scenes.
The Industrial Bank of Korea is a state-run bank. Acquiring a bankrupt Lehman Brothers would obviously result in massive losses, which would ultimately be borne by taxpayers.
While it’s not my concern if taxpayers’ money is wasted, this is a golden opportunity.
“I think it’s time for a press conference.”
“What? To stop the Industrial Bank?”
“That’s just an excuse. The real purpose is different. It’s a prophecy and warning that the U.S. financial crisis will become a tsunami that engulfs Korea.”
Chairman Lee Hak-jae frowned.
“So, you’re planning to set off the bomb early.”
“There are only a few days left. The moment Lehman goes bankrupt will signal the collapse of the global economy. Whether I announce it or CNN does, it makes no difference, but I need to boost my credibility with this opportunity.”
“Are you planning to go into politics? What will you do with that credibility?”
“When the time comes to expose the corruption in the succession process of the Sunyang Group, won’t public opinion be on my side?”
“You’re always scheming…”
His words were a needless jab, perhaps to hide his surprise at my plan.
“Hold the press conference in two days. There’s a local apartment complex project underway. Both Sunyang and Daehyeon are mired in it, so I’ll push them further in.”
As I suspected, Chairman Lee Hak-jae and I make a good team.
“The Bush administration is injecting hundreds of billions of dollars in public funds. Over eight million homes have turned into ghost houses, Bear Stearns is beyond recovery, and the mortgage-backed securities are deemed irrecoverable, freezing the entire U.S. The Lehman Brothers’ bankruptcy is inevitable.”
“Mr. Jin Do-jun, the Lehman Brothers you’re referring to is the same company that the Industrial Bank of Korea is currently negotiating to acquire, correct?”
“Yes, there’s only one Lehman Brothers.”
“Can we interpret this as the Industrial Bank’s acquisition negotiations being a mistake?”
“It’s a colossal mistake. No matter how you look at it, it’s incomprehensible. When a company goes bankrupt, its stock value is zero. Buying worthless assets at $26 per share? You’d be better off buying a rock on the street with that money. At least you can throw it when you’re angry, which makes it more valuable.”
As the press conference progressed, I felt my anger rising, but I kept my voice calm.
“Have you already forgotten what happened ten years ago? The reckless spending of dollars resulted in the pain being passed directly to the people. The U.S. financial crisis has already cast a shadow over the global economy. Instead of preparing, pouring dollars into a failing company is akin to treason.”
“Are you comparing this U.S.-led financial crisis to the IMF crisis?”
“Essentially, they’re the same. The only difference is that the epicenter is the U.S. instead of Asia.”
The mention of the IMF stirred the reporters. They realized this wasn’t a time to watch from afar.
“Mr. Jin Do-jun, are you saying a crisis like the IMF is starting again?”
The IMF is a powerful term. It’s like a national trauma that never fades.
“It depends on how we respond. Strict analysis from each institution is crucial. We must not show any laxity.”
The words of Korea’s young Warren Buffett.
Economic newspapers featured me on their front pages, while central newspapers placed me in their economic sections. Even sports tabloids, akin to entertainment magazines, printed my face.
Broadcast stations were no different.
They knew that the title of a young genius investor and a third-generation Sunyang heir guaranteed ratings.
Though not the top story, my press conference was given significant coverage.
It was unprecedented for a conglomerate to issue a warning to a national institution. This role was usually reserved for universities or economic research institutes.
It was a rare occurrence, so it successfully captured public interest, and the public opinion was favorable towards me.
In just one day, the Industrial Bank of Korea seemed to backtrack on its Lehman Brothers acquisition. They claimed it was merely under review and that there were no concrete plans.
I achieved the result I truly wanted.
Economics professors, who had been silent, began to speak out, and many economic research institutes released papers warning of a bleak future.
Moreover, when Lehman Brothers filed for bankruptcy on September 14, 2008, with an astronomical figure of 700 trillion won, the major foreign news outlets broke the story as urgent news, and my name resurfaced.
As a result, I gained additional benefits.
“Director, the press conference was a masterstroke. Haha.”
Vice President Jang Do-hyung laughed heartily.
“Did you see the news articles?”
“About being a prophet?”
“Yes. Genius investor, prophet… These are the nicknames following you now. And while the social elite always talk about a rosy future, urging people to buy stocks and houses, you’re the only one who spoke the truth, warning of a crisis and advising people to close their wallets.”
“Praise is useless unless it brings benefits.”
“The most ethical business. That’s the benefit for our Sunyang Financial Group. Our stock prices are rising, and customers are flocking to us. It’s more effective than running hundreds of TV ads. Haha.”
Lehman Brothers’ bankruptcy plunged our country’s financial market into panic.
The combined market capitalization of the KOSPI and KOSDAQ markets evaporated by 51 trillion won in just one day, and stock prices in the securities sector plummeted by over 12%. Yet, Sunyang Securities was the only financial company to show a miraculous rise in stock prices.
Vice President Jang Do-hyung laughed heartily but kept an eye on my reaction.
“Reporters want to do follow-up interviews. Should we schedule some?”
“No. If I say more, I’ll reveal my hand. It’s best to leave it at that. As long as the public’s curiosity remains, they’ll keep listening to me. What about the Industrial Bank? Did you handle what I instructed?”
“Yes. We treated the bank president and executives to a meal and gave them some gifts. Enough to ensure they don’t hold a grudge.”
“Well done. Now we must be thorough. The domino effect of the global economic collapse is beginning. Make all investment decisions cautiously.”
Predictions were already emerging that the U.S. unemployment rate would increase by at least 10%, and Europe wouldn’t be an exception.
Articles reported that the number of foreclosed homes in the U.S. had already surpassed nine million. The U.S. domestic economy would freeze completely.
If the U.S., the world’s largest consumer, freezes, China, known as the world’s factory, would suffer a massive blow.
Signs of the collapse of Chinese manufacturing were already visible. The number of unemployed had exceeded ten million.
These unemployed workers were laborers earning a mere 70 to 80 dollars a month.
When the upstream flow is disrupted, it’s always the poorest who suffer the most in the end.
Technicians built computers and spacecraft.
Financial technicians created dreams of becoming rich and received salaries tens of times higher than those of technicians.
But when dreams turn into nightmares, those who bought the dreams go bankrupt, while those who sold them remain unscathed.
The financial technicians on Wall Street, the culprits of this tragedy, threw another lavish party on October 4th with President George Bush’s $700 billion government bailout.
The U.S. government bought AIG Life’s shares for $160 billion, becoming the largest shareholder, and injected $15 billion into Goldman Sachs.
Morgan Stanley, upon receiving government support, paid $14 billion in bonuses to its executives, and Goldman Sachs distributed the entire bailout amount as bonuses among its executives.
Finally, Rachel from New York Miracle sent a photo of an account with an astounding figure of $56 billion, accompanied by a single line message.
“Congratulations! World’s Richest Person!”
As the U.S. approached its presidential election, it had already injected over $7 trillion to contain the financial crisis and planned to inject a similar amount in the future.
The status of the U.S. dollar as the world’s reserve currency was at risk, but thanks to this, the tsunami of crisis seemed to halt in Europe.
As it became clear that the typhoon would only be a strong storm, everyone in Asia breathed a sigh of relief and let their hidden greed resurface.
As always happens in times of crisis, the rich get richer while the poor become poorer.
The new government, aiming to overcome the economic slowdown and domestic market contraction, implemented sweeping tax cuts and relaxed reconstruction regulations.
Thanks to this, the conglomerates began to sing a happy tune once more.
“Maybe your plan’s gone awry. At this rate, we’re just making Sunyang Construction richer,” Chairman Lee Hak-jae fretted as he anxiously scanned the status board.
“We’re borrowing and trading on credit. If we can’t collect on those debts, it’s over. Don’t worry, just do whatever Sunyang Construction or Daehyun Construction wants. If they want to build apartments, build them. If they want shopping centers, go ahead.”
“But Dubai’s doing fine! Didn’t they say it would collapse with the U.S. crisis?”
“It’s festering. It’ll take time before it rots away completely.”
“We’re already over 3 trillion won in debt to those two companies. By next year, it might be 5 trillion.”
“With that money, we might just buy out Sunyang Group’s heavy industries and Daehyun’s construction division. It’s a bargain.”
I showed calm to the anxious Chairman Lee. We need to invest more, give more. There’s plenty of money. I met with bank presidents one after another, not to spend, but to entrust more funds.
The moment they saw me, they bowed their heads as if they had met a savior.