Golden Spoon Investment Portfolio - Chapter 112

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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112. There’s No Such Thing as a Free Lunch

The next day.
I opened my eyes in the New York Plaza Hotel Penthouse where I always stayed, but rather than rising immediately, I lingered for a moment, savoring the soft touch of the bedding.
The expansive bed—large enough to comfortably sleep three or four people—and the subtle soap fragrance emanating from the sheets created the kind of serene comfort befitting a luxury hotel.
After indulging in this brief moment of leisure, I cast off the sheets and rose.
I draped a thin robe over my shoulders and walked toward the window.
As I drew back the double-layered curtains, brilliant sunlight flooded in, causing me to reflexively squint.

“Magnificent.”

The vast Central Park spread out beyond the window was blanketed entirely in pristine white from the snow that had fallen overnight.
Watching snow removal vehicles already working the roads, I paused briefly to appreciate the view before turning back into the bedroom, entering the attached bathroom, and taking a shower.
After changing into soft cotton trousers and a shirt, drying my wet hair thoroughly, and checking the time as I stepped out, it was nearly when the room service I’d ordered the previous day would arrive.
Ding-dong—
Hearing the doorbell, I opened the suite door to find a hotel staff member standing in the hallway with a room service cart, who bowed respectfully upon seeing me.

“Good morning, sir. Your room service order has arrived.”
“Please come in.”
“Thank you.”

The staff member wheeled the cart inside and began expertly arranging the meal on the table by the window.

“Shall I add cream and sugar to your coffee?”
“No, black, please.”
“Understood.”

Normally I would have dined on the outdoor terrace attached to the Penthouse, but given the cold weather and fresh snowfall, I decided to eat in the warmth of the suite instead.
Freshly baked bread, bacon, an omelet, fresh fruit, and salad were arranged abundantly across the table.

“Thank you.”

As the staff member poured coffee with its rich aroma into my cup, I withdrew a twenty-dollar bill from my wallet and offered it.
The staff member accepted the tip with both hands, pocketed it, and spoke with an even warmer smile.

“Thank you. Is there anything else you need?”
“No, that’s fine.”
“Then please enjoy your meal.”

As the hotel staff wheeled away the empty cart and left the room, Seok-won took a sip of coffee first.
The bread, freshly baked, had a crispy exterior and moist interior, and the rich butter aroma mingled with a savory flavor that spread abundantly across his palate.
Seok-won stabbed a sausage with his fork and chewed it slowly while picking up the New York Times newspaper that the hotel staff had left with the room service.
Then a headline on the front page immediately captured his attention.

[President Philip Davidson Considers Mexico Bailout Amid Economic Crisis
To assist Mexico, which faces an economic crisis due to foreign currency shortages, the Davidson administration is known to be pursuing emergency financial support amounting to twenty billion dollars.
Mexico had been plagued by chronic trade deficits, heavy dependence on foreign capital, and an overvalued peso.
As various complex issues emerged from domestic political instability starting last year, a sharp outflow of foreign capital occurred, triggering a financial crisis.
Some criticize that this bailout is not for Mexico in crisis, but rather to help Wall Street investors who engaged in speculation seeking high returns escape without losses.
However, President Davidson emphasized that the bailout is necessary to prevent the situation from spreading across all of South America as feared, and expressed his intention to push forward with the financial support.
Meanwhile….]

“So the White House is finally making its move.”

In fact, the United States providing a large-scale bailout could be considered a predetermined course of action.
If Mexico collapsed as things stood, the NAFTA agreement that President Davidson himself had signed and enacted not long ago might flounder right at its inception.
Moreover, if the crisis spread across all of South America and the situation spiraled beyond control, the high interest rate and strong dollar policy being implemented to resolve inflation might have to be abandoned before it could show proper results.

“For President Davidson, who is seeking reelection, both would be fatal.”

So there was no choice but to pour out dollars to prevent the situation from deteriorating further.
While lost in such contemplation, the doorbell announcing a visitor rang.
Seok-won set down the newspaper and rose to his feet, confirmed the visitor’s identity, and opened the door wide.

“Welcome.”
“Pardon my intrusion.”

Landon Shore stood in the corridor with its crimson carpet, dressed as always in an immaculate suit.
Following Seok-won into the room, Landon Shore spoke apologetically upon seeing the food arranged on the window table.

“It seems I’ve arrived too early. Were you in the middle of your meal?”
“Not at all. If you haven’t eaten breakfast yet, why don’t we dine together?”
“I appreciate the offer, but I’ve already had breakfast. I’ll just have some coffee.”
“Suit yourself.”

Landon Shore picked up the silver pot sitting on the table and poured coffee into a fresh cup.
Then, with natural ease, he settled into the seat across from me.

“Mmm, the coffee tastes quite good. It’s certainly a premium hotel, so they must be using quality beans.”
“It suits my palate well too.”

Seok-won replied while spreading orange marmalade jam on bread with a flat knife.
Landon Shore, sipping his coffee, glanced at the newspaper placed to one side of the table before speaking first.

“It appears President Davidson will soon execute a 20 billion dollar bailout package for Mexico.”
“I just read the article myself.”

Seok-won, wiping his hands with a napkin, continued in a composed tone.

“There seem to be considerable criticisms and opposing views that this is meant to compensate the losses of major Wall Street players who invested in Mexico, yet they appear determined to push through regardless.”
“Mexico’s situation is certainly urgent, but there also seems to be a desire to wrap this up quickly before opposition grows stronger.”
“Indeed, dragging things out would serve neither the White House nor the United States government well.”
“The International Monetary Fund also plans to provide approximately 17.8 billion dollars in support, conditioning it on maintaining high interest rates to prevent foreign investors from withdrawing and to attract additional investment, as well as budget cuts and tax increases from the Mexican government, which has been operating recklessly.”
“It’s obvious the United States government has its fingerprints all over this.”

The International Monetary Fund, commonly abbreviated as the IMF, is an international organization established by 190 member nations each contributing a set amount, and it serves to oversee exchange rates, international balance of payments, and financial systems.
One of its crucial functions is lending funds to nations facing foreign exchange shortages and assisting in their stabilization.
The IMF holds voting rights proportional to the amount each nation contributes, and the United States possesses nearly 20 percent of the shares.
Because of this, it was fair to say that the IMF’s decision-making essentially follows the will of the United States.
Observing Seok-won’s composed demeanor, Landon Shore cautiously probed before speaking.

“If massive bailout financing comes from the United States and the IMF, wouldn’t Mexico’s struggling economy finally catch its breath?”
“You’re suggesting we liquidate our position before that happens?”

Landon Shore leaned forward and quickly responded.

“Precisely. We’ve already accumulated substantial profits, and with the news spreading, the peso and Mexican government bonds have hit bottom and are showing signs of rebounding, so liquidating now doesn’t seem unreasonable.”

Indeed, the exchange rate that had surged to 6.5 pesos per dollar plummeted to 5.5 pesos per dollar the moment news of the bailout support broke.
With an average selling price of 3.1 pesos, we were still in profit territory, but a creeping sense of urgency was understandable.
However, Seok-won seemed to think differently, leaning back as he spoke.

“You know the saying—there’s no free lunch.”

At the unexpected question, Landon Shore’s expression shifted to one of puzzlement as he responded.

“Of course.”
“Given the scale of the bailout, neither the United States nor the International Monetary Fund would simply hand over money without conditions.”
“Isn’t that precisely why the White House publicly demanded that Mexico maintain high interest rates and implement fiscal austerity?”
“Exactly.”

Seok-won nodded slightly, then continued in a somewhat subdued tone.

“From the lender’s perspective, it’s only natural to strictly manage the borrower to ensure proper repayment of the loan.”
“….”
“Moreover, there’s already considerable public backlash against such massive bailout support. Without these conditions attached, the funding itself might become difficult to secure.”

Seeing Landon’s expression—as if questioning what the problem was—Seok-won shifted his tone slightly toward seriousness.

“But does that truly help Mexico overcome its crisis?”
“If high interest rates are guaranteed, won’t foreign investors, including those on Wall Street, feel attracted to invest in Mexico again, stabilizing the exchange rate?”
“That’s possible. But what do you think will happen to Mexico’s domestic companies and citizens?”
“…?”
“Even if foreign capital returns and the exchange rate stabilizes, Mexico’s already struggling domestic companies and citizens will suffer even more under the high interest rates.”
“…!”
“When credit dries up like that, corporate bankruptcies will cascade, and unemployment will naturally skyrocket. To prevent this, the government would need to spend on stimulus, but they can’t do that under the watchful eyes of the United States and the International Monetary Fund who provided the bailout. So they’ll have no choice but to endure prolonged, severe hardship.”

The exact same tragedy would replay in Korea just a few years later when it faced its own foreign exchange crisis.

‘Countless companies collapsed in succession, millions suddenly became unemployed, families were torn apart, and countless people suffered the anguish of being separated from their loved ones.’

There was even a saying that Korean society was divided into before and after the International Monetary Fund crisis—such was the indelible wound it inflicted.
The bitter taste that rose in my mouth at the mere thought of it made me push aside the brief reverie and continue.

“When so much sacrifice is clearly visible, will the Mexican people readily accept it?”
“Hmm… acceptance won’t come easily.”

Landon Shore exhaled a low sigh.

“There will certainly be fierce opposition, particularly from the opposition parties and labor movements. But the Mexican government, with fire at its feet, won’t have the luxury of leisurely persuasion, so they’ll try to push through forcefully.”

Then Landon Shore’s eyes brightened as if grasping something.

“If that happens, conflict becomes inevitable, and Mexico’s already precarious domestic situation will only deteriorate further.”
“Precisely observed. Then the exchange rate that briefly surged will collapse again as uncertainty grows.”

Seok-won took a sip of coffee and smiled deeply.

“Since it rebounded on hopes of a bailout, the disappointment will cause it to fall even more sharply than last time.”

Landon Shore marveled greatly at Seok-won’s foresight, looking not merely one move ahead but several moves into the future.

“I never expected you to see that far ahead. My thinking was too shallow.”
“This decline will be the true bottom. Once it breaks above 7 pesos per dollar and climbs, we’ll liquidate all positions at that point.”
“Seven pesos, you say?”

Landon Shore’s mouth fell open in astonishment.

“Good heavens! That would mean more than doubling our returns, wouldn’t it?”
“We’ve invested more than half a year in this. We should generate at least that much profit.”
“By your standards perhaps, but absolutely not by anyone else’s.”

Landon Shore clicked his tongue at Seok-won’s matter-of-fact smile.

“When we liquidate the pesos, should we also close out our positions in Mexican bonds?”
“Do that.”
“Understood.”

Landon Shore smiled refreshingly as he acknowledged the instruction.

“We’ve drawn this out quite long. It seems the time to finally conclude our Mexico investment is approaching.”

Seok-won nodded in agreement and naturally shifted the conversation.

“By the way, Tom arrives in New York tomorrow, correct?”
“Yes. As you instructed, I sent the company’s private jet to San Francisco where Silicon Valley is located, so he’ll be arriving on that.”

Now it was time to harvest the seeds I had sown at Netscape.
My eyes gleamed with anticipation at how substantial the returns would be.

“Well done.”

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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