The Return of the Ruined Chaebol's Third-Generation Heir - Chapter 59

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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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Regression of a Fallen Chaebol’s Third Generation — Episode 59
“Can I get you something to drink?”
That night.
Danny Kim came to the Accommodation.
It hadn’t even been two hours since we’d parted at the Banquet Hall.
“No, thanks. As you know, I drank quite a bit at the Banquet Hall earlier.”
When Danny Kim politely declined, I nodded and took a seat.
“I’m sorry for asking you to come by so late at night.”
“Well, I was the one who reached out first. If anything, I should be the one apologizing.”
“Why don’t you speak more casually? The formal speech seems a bit uncomfortable.”
Perhaps because he’d been living in the United States, his speech mixed formal and casual tones.
I thought it might be better to give him permission to drop the formality, and as I said so, Danny Kim smiled and glanced around the room.
“What about the lady I saw at the Banquet Hall?”
“Oh, Han Jae-yi? She’s resting in her room.”
I hadn’t contacted Han Jae-yi separately.
This conversation needed to be just between Danny Kim and me.
“She’s your senior?”
“Yes, she was my senior at High School. We met in the Stock Investment Club.”
At my words, Danny Kim nodded.
His expression suggested he understood why both Han Jae-yi and I were interested in stocks.
“You’re asking to see me at this hour because you’ve come with an answer to my proposal, right?”
At my question, Danny Kim studied me quietly.
I couldn’t read every emotion in his gaze, but it felt as though he was taking my measure.
And perhaps asking himself something too.
What was I doing right now, and was it right that he’d come here because of a university student’s proposal?
“Let me ask honestly. Why did you make that proposal to me?”
At Danny Kim’s question, I paused to look at him.
“There are plenty of people on Wall Street wanting to short the market. If you just invest money, there are plenty of people who’d do it instead. So why did you choose me?”
“Because you’re not trying to short for the money.”
At my words, Danny Kim’s eyes flickered slightly.
“How did you know that?”
“I could feel it in your tone. You were angry. At the system.”
Danny Kim simply stared at me.
He didn’t deny it.
“When you were explaining at the Banquet Hall, I watched the faces of the people listening. They all had that look—’here we go again.’ But you didn’t stop. It wasn’t because you wanted to make money. It was because you wanted to make them understand.”
Silence fell.
Danny Kim met my eyes and opened his mouth.
“A client of my company died three years ago.”
His voice was calm and matter-of-fact.
“He wasn’t my client, so I didn’t care at first.”
Danny Kim let out a self-deprecating laugh.
“After joining this industry, I only thought about promotion. Team lead in two years, head of Derivatives in seven. I set the record for the youngest. I thought that was something to be proud of.”
I listened quietly.
“But when I looked at the structure of the product that client had bought…”
Danny Kim’s voice paused for a moment.
“It was exactly the same as what I’d created.”
Only then did something like regret flicker in Danny’s eyes.
“For seven years, I only looked at numbers. Rates of return, fees, bonuses. I never thought about the people behind those numbers.”
Danny Kim turned his head to look at me.
“When that person’s bereaved family came to the company, do you know what it said? ‘The responsibility for investment lies with the investor.’ That was it. End of story.”
A brief silence fell.
“That’s when I first thought about it. What had I been doing for seven years? Just running with my eyes closed?”
Danny Kim exhaled heavily.
“And that’s when I realized. I felt like I was manipulating the system and succeeding because of it, but now I see—I was just a cog turning inside the larger system of the company.”
Sometimes, certain events can change a person’s values and their entire life.
It seemed such a moment had come for Danny.
“So I left. For three years I did nothing. I just watched. Watched the same thing happen on a much larger scale.”
“And this time?”
At my question, Danny Kim fell silent for a moment.
Then he slowly opened his mouth.
“This time I’m going to watch with my eyes open. Knowing what I’m doing.”
I nodded.
This was the person I’d been looking for.
“Then let’s do it together.”
“Why are you doing this? For money?”
At Danny Kim’s question, I answered honestly.
“Money is part of it. But it’s not just that.”
“Then what?”
“I’m angry too, like you. Only I’m not angry at the system—I’m angry at a person.”
Danny Kim’s expression grew puzzled.
“Someone who thinks money can solve everything. Someone who controls everything through their own thinking and tramples on others’ lives. I’m angry at that kind of person.”
I didn’t elaborate further.
It wasn’t yet time to tell him my circumstances.
“So I’m curious about what you’ve been doing since leaving the company. What are you up to these days?”
“As you can see, I’ve been living like a bum.”
“Are you not working anywhere?”
Danny nodded slowly.
He seemed a little embarrassed about doing nothing.
“That’s perfect, then. Let’s talk specifics. The capital we have is about 140 million dollars.”
Danny Kim’s eyes widened at my words.
“140 million dollars?”
“Yes. 140 million dollars.”
“You’re a university student?”
I shrugged.
“We’re not exactly ordinary university students.”
With that, I handed him the documents beside me.
“Information about the company we manage. More precisely, the company that manages my capital.”
“Ribbon… Capital?”
“Yes. A company that started with minimal capital and grew to 100 million dollars.”
Danny Kim stared at me blankly for a moment, then burst into a helpless laugh.
“Jesus. You’re insane.”
“We’re going to use that money to buy Credit Default Swaps. Our targets are Bear Stearns, Lehman, and Merrill Lynch.”
Credit Default Swap.
In simple terms, it was insurance.
A Derivative structured so that if a specific company defaults, you receive payment.
You have to pay a Premium each month, but if default occurs, you get back several times the principal.
The market is currently drunk on the Goldilocks narrative, so Credit Default Swap premiums are at rock bottom—this is the right time to buy.
“All three?”
All three were also among the first companies to collapse in the future I knew.
“Can I ask why three?”
“Because those three are the ones issuing and investing in the most problematic Derivatives right now.”
At my answer, Danny smiled with satisfaction.
“You and that girl really came to the United States well-prepared, didn’t you?”
“…….”
“I mean, I’ve been monitoring it every day, but for university students from South Korea to know that… it wouldn’t have been easy.”
The way he looked at me had changed.
“How about it? Will you do this with us? I’ll match your salary to what you were earning before you quit.”
Danny Kim shook his head and murmured.
“You’re really insane.”
But the corners of his mouth were turned up.

* * *
The next morning, we gathered in the Hotel Suite Room.
Han Jae-yi was eyeing Danny Kim with caution. They’d met at the Banquet Hall, but hadn’t had a proper conversation.
Besides, she likely knew that Danny Kim and I had met alone the night before.
“The question you asked at the Banquet Hall yesterday.”
Danny Kim spoke first.
“You asked why AAA came out when we collected garbage. You hit on the core.”
Han Jae-yi raised her eyebrows slightly.
“Isn’t that a basic question?”
“Wall Street doesn’t ask that basic question. They only look at returns, not at structure.”
Danny Kim shrugged.
“I spent seven years creating Derivatives, and that’s the first time I’ve seen someone ask that question.”
Han Jae-yi’s expression relaxed a bit. She’s still a sucker for compliments. Really.
“Then shall we get to the main point? Senior, please brief us on the current situation.”
At my words, Han Jae-yi nodded and opened her laptop.
“On August 9th, BNP Paribas froze redemptions on three of its subsidiary funds.”
Han Jae-yi’s voice was calm and steady.
“The reason was that Liquidity had completely evaporated and they couldn’t assess asset values. One of France’s largest banks officially raised the white flag.”
Danny Kim nodded.
“After that announcement, banks started refusing to lend money to each other. No one knows who’s holding Toxic Assets. The LIBOR Rate and OIS Spread blew out to record highs.”
Han Jae-yi turned the screen to show a graph.
Two lines that normally tracked almost identically began to diverge sharply from August 9th.
“The ECB injected 95 billion euros that day alone, and the Fed released 24 billion dollars. On August 17th, they even cut the Discount Rate by 50 basis points.”
Han Jae-yi looked at me and continued.
“The central banks officially acknowledged the crisis. This is just the beginning.”
I nodded.
The summary Han Jae-yi had prepared was accurate.
From now on, the market will slowly begin to face reality.
But full-scale panic hasn’t arrived yet.
“Danny, did you think of anything last night?”
At my question, Danny Kim pulled out a bundle of documents.
“All-in on Credit Default Swaps is a good strategy. But I think it could be better with some adjustments.”
Danny Kim spread the documents on the table.
“First, instead of putting 100% into Credit Default Swaps, let’s put 70%, and the remaining 30% into Put Options on financial stocks.”
Han Jae-yi tilted her head.
“Put Options?”
A Put Option simply means the right to sell at a predetermined price.
For example, if you buy the right to sell a stock currently worth 1,000 won for 1,000 won a month later.
If the stock price crashes to 700 won a month later, you gain 300 won on the difference.
Conversely, if the stock price rises, you incur a loss.
“With Credit Default Swaps, you have to pay the Premium every month. The longer it goes, the more you bleed. But with Put Options, you only pay once until expiration. It’s good to mix them for risk diversification.”
Han Jae-yi nodded.
“Reduces the Premium burden. Sounds solid.”
Danny Kim passed the next document.
“Second, let’s scale in over three months rather than entering all at once. It’s impossible to time it perfectly.”
It was a reasonable proposal.
I know the future, but I don’t remember exactly which day things will blow up.
Scaled entry was a way to reduce that uncertainty.
“Third, let’s add AIG to our targets.”
I looked up and met Danny Kim’s eyes.
“AIG?”
The name of one of the largest insurance companies in the United States came up. Recalling my previous life, AIG also suffered massive losses during this period and ended up bankrupt.
Danny Kim, who didn’t know the future, was reminding me of a name I’d forgotten in my focus on investment banks—I, who knew what was coming.
It was proof that my instincts hadn’t been wrong.
“AIG issued guarantees on Derivatives like a madman. The volume of Credit Default Swaps it issued is enormous. If losses surface, they’ll have to honor those guarantees, but they won’t be able to handle it.”
Han Jae-yi chimed in.
“I’ve also done some research, and the Credit Default Swaps issued by AIG’s financial products division exceeded 400 billion dollars. It’s an insane level relative to their capital.”
Danny Kim nodded as he looked at Han Jae-yi.
“Exactly. That’s why AIG needs to be on our target list.”
I paused to think.
All of Danny Kim’s proposals were sound.
They were refinements born from hands-on experience.
“Sounds good. So if we sum it up, this is what we have, right?”
I said.
70% Credit Default Swaps, 30% Put Options. Targets: Bear Stearns, Lehman, Merrill Lynch, AIG. Scaled entry over three months.”
Danny Kim and Han Jae-yi both nodded simultaneously.
“We should also decide on role assignments.”
I said, looking between the two of them.
“Danny, you handle the operational side of Credit Default Swaps and Put Options. And securing Counterparties.”
Every transaction required both a buyer and a seller. If we wanted to buy Put Options or Credit Default Swaps, we’d need banks, securities firms, hedge funds, and other entities willing to sell—those were the Counterparties.
Danny, a seasoned Wall Street operator, would be able to find them. That was also why we’d come to the United States.
“Got it.”
“Senior, you handle Ribbon Capital position management and data monitoring. And coordinate with South Korea as well.”
“Sure, I’ll handle that.”
“I’ll take overall coordination, final decision-making, and fund approval.”
The roles were assigned.
Finally, we had a team.
“So how do we allocate it?”
At Danny Kim’s question, I sank into thought.
I know the future, but deciding exactly where to place the money to maximize profit was entirely up to me.
“I want to place the most on Lehman.”
At my words, Danny Kim’s eyes narrowed.
“Lehman? Not Bear Stearns first?”
“Bear Stearns will be acquired. But Lehman…”
I stopped.
Lehman goes all the way.
I knew exactly what that end would look like.
“Lehman?”
Han Jae-yi asked.
I looked at both of them and opened my mouth.
“Lehman collapses. Completely.”
My voice was firm and unequivocal.
Danny Kim and Han Jae-yi both stopped breathing.
“I’m going to place 40 million dollars of the 100 million on Lehman.”
Silence fell. Forty percent—nearly half of all our capital—bet on a single target.
Danny Kim slowly opened his mouth.
“What’s the basis?”
“The government won’t bail them out twice.”
I spoke, looking between them.
“They’ll save Bear Stearns. The government will step in. They have to prevent systemic collapse. But will they keep saving as more failures cascade? No. Political logic doesn’t work that way. If they did, everyone would believe they’re Too Big to Fail.”
Too Big to Fail.
The premise that an institution is too massive to be allowed to fail.
“The government isn’t stupid. They can’t handle the criticism that they keep using taxpayer money to bail out Wall Street pigs. After saving Bear Stearns, they’ll face a firestorm of criticism about Moral Hazard. So what about the next batter?”
“…….”
“The government will need a scapegoat to demonstrate they’re following principles. It will be Lehman—the biggest and most rotten. Believe me.”
Han Jae-yi studied me intently.
There was no doubt in that gaze.
It held the trust of someone who had been with me for a long time.
“Okay, I’m in.”
Han Jae-yi nodded first.
Danny Kim exhaled and shook his head.
“You’re really insane. And somehow you’re convincing me.”
But the corners of his mouth were turned up.
“Then let’s begin today.”

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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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