Volume 1: Island Nation Turbulence Chapter 9: Industrial Light Magic (5)

  It's clear that Robert Soros' vision has Jerry very satisfied.

  "OK, since no one has left, I'll take that as a sign of support! Now, let's move on to the next thing! I'm sure everyone remembers John Kenneth Galbraith's article in The Atlantic Monthly at the beginning of this year!"

  Andrei Bush suddenly raised his head, "Do you believe in Galbreath's prophecy?"

  "Of course! I believe it! And this is also why I flew from the East Coast to the West Coast!"

  "Do you really believe in Galbreath's prophecy?"

  "Don't doubt this. The American Securities Association released a report in July, which pointed out that the proportion of securities financing in global financial market financing has risen from 44.1% in 1982 to 87% now, indicating that the proportion of financiers directly raising funds in the global financial market through stock and bond issuance has reached a terrifying height. Mr. Paulson, you are a financial expert, and over the years, you have been involved in corporate mergers and acquisitions. Do you know how many cases of corporate mergers and acquisitions there were in the US corporate merger wave from 1974 to 1987?"

  John Paulson shook his head, he really didn't know, but he was very clear that corporate mergers and acquisitions could bring huge profits to investors who specialized in buying stocks, because Gruss Partners Fund did just that!

  "3000 and up! That's the number I've got! Annual M&A value breaks through $10 trillion! Do you know what I call these bonds specifically used for corporate takeovers? Junk bonds! No need to doubt, it's these junk bonds that have inflated US stock prices, creating a false prosperity in the market, and deceived all investors' eyes!"

  "But, boss," Mephisto said, wincing at the title, "the current US economy isn't as bad as you say! The latest August trade deficit released by the US Treasury was $8 billion less than July's, and the fiscal deficit for the year to date is $148 billion, a decrease of one-third from last year. Moreover, in the first three quarters of '87, the growth rate of the nation's GDP reached 3.6%, and Labor Department data showed that the unemployment rate had fallen to 5.9%, the lowest level since 1980. Even the inflation rate was only 0.2% in September, boss, do you really think a stock market crash is possible with all these indicators looking so good?"

  "Mr. Mobius is absolutely right, as far as the current situation is concerned, all major economic indicators in the United States are very good. As of October 1987, the US economy has been recovering for 59 months, which is the longest period of peace since World War II. However, Mr. Mobius, don't forget one thing - these achievements were made under what circumstances? The 'twin deficits' (fiscal deficit and trade deficit) have fallen slightly, but high fiscal deficits, high trade deficits, high national debt, and high foreign debt are still testing Americans' confidence in the economic outlook. Americans now are like walking on a tightrope! A slight breeze can blow him down from the heights!"

  "Want to know what Americans have been doing all along? Borrowing!"

  "Do you know what Rigen's prosperity is based on? Loans!"

  "Everyone knows they are living off borrowed money, just because they don't say it doesn't mean they're not scared inside!"

  "But boss, what makes you think the collapse will happen now?"

  "Mr. Miller, you should be aware that the Federal Reserve announced on September 4th that it would raise the discount rate from 5.5% to 6%! Of course, you also know that some of America's largest commercial banks followed suit, raising their prime lending rates from 8.75% to 9.25%. The increase in interest rates means that entrepreneurs will reduce their investment in enterprises, and stock traders will dump stocks to preserve value, converting them into cash and deposits to achieve the purpose of obtaining dividends. Also, Mr. Miller, don't forget the shadow of war looming over the Persian Gulf!"

  "Are you referring to the situation in the Gulf?"

  "Do you think President Reagan, who is eager to engage in an arms race with the Soviet Union, would really accept Iran's apology and let the Stark incident go like a fart? The answer is no. The Iranian old men should quickly wipe their butts clean and surrender obediently, this is what President Reagan is implying!"

  "So, boss, you mean you're also unsure of the specific time?"

  "That's right, Mrs. Miller, I'm not sure either, I'm also betting, I'm betting that Wall Street in October will witness a bloody massacre! How about it, folks, are you interested in joining me to become the butcher of this massacre?"

  "Boss, are you sure you want to go all in?" Andrei Bush's face was clearly twisted with a kind of reckless excitement, the thrill of a gambler who had nothing left to lose.

  "Yes, I'm absolutely sure! And I haven't gone crazy!"

  "This is too exciting! Alright, boss, tell me your plan! Bill, what are you still hesitating about? Are you going to continue studying that damn P/E ratio? Why bother when you could be studying my formula theory!" After getting a positive response, the reclusive Andre Bush surprisingly became somewhat ecstatic. Because he discovered that in this world, there was actually someone smaller than him who shared his same thoughts!

  "Well, Mr. M?bius, Mr. Paulsen, Mrs. Müller and Robert, what do you think?"

  "You're the boss, you decide!" Robert shrugged his shoulders.

  "Alright, so within two days, withdraw from the stock market! Mr. Bush, Mr. Meriwether, Mr. Miller, have your traders take care of this, I need a quiet withdrawal, do you understand? Mr. Paulson, if JR Investment wants to borrow money, how much can they get from Bear Stearns?"

  "Based on the current stock average yield, JR's market value will be close to $600 million. With 30 times leverage, I can get a loan of up to $18 billion from Bear Stearns!"

  "Alright, you handle this matter then. By the way, get in touch with your old client, Marty Gruss, and ask if he's interested in doing a deal with me. Tell him that if we lose money, JR will take full responsibility, but if we make a profit, we'll take 50% of the gains!"

  "Boss, isn't this going to be too risky!"

  "John, we are not gamblers, but once we start gambling, we will be more terrible than the gamblers! And you should know that sometimes risks and opportunities are equal! You see one side of risk, while I see another!"

  "Alright then, boss, hope you're right!"

  "As for you? Robert, just keep an eye on Karl Ikan for me."

  "Right, I think you won't forget what that big shark looked like!"

  "My pleasure to serve you, boss!"

  "Alright gentlemen, meeting adjourned, let's get moving!"

  Grosvenor Fund

  "Hey... John, my dear fellow, what wind blew you here? I heard that after leaving Belsden, you joined a newly established investment company! What's the name of that company, ah yes, JR Investment!"

  "Yes, Matty, not at all! I've jumped ship, I think I can handle more challenging work, and investment would be a good choice. Bellstedt, who only earns commissions, cannot provide me with such opportunities!"

  "You didn't even come to find me, I've been expecting to cooperate with you all along! You know, over the years, Gruss Partners Fund has made a lot of money with your help!"

  "All I can say is, I'm sorry! Because I was deceived by Soros's son!"

  "Oh, damn Soros!"

  "Yes, damn Soros!"

  "Alright! I think you came to find me, not just to complain about Soros. So, what's the matter?"

  "I need your help, Marty!"

  "Have you encountered any difficulties?"

  "It's like this, Marty, my boss has come across a huge money-making opportunity, but he doesn't have enough funds in hand! So I thought of the Gruss Partnership Fund, and I thought of you!"

  "This is exciting! Tell me, what kind of money-making opportunity is it?"

  "Sorry, Marty, this is confidential! I can't reveal the details to you! All I can tell you is that our boss needs funding badly and his terms are very favorable. If Gruss Partners joins in, JR will take 50% of the profits and bear 100% of the losses!"

  It has to be said that such conditions are really too good, and the goodness is really suspicious. However, after contacting John Paulson for four years, Marty Gruss firmly believes in his character.

  "Mattie, don't even think about getting it out of me, betraying business secrets is something I won't do, it's a matter of principle!"

  "Alright! John, how much funding do you need?"

  "5 billion dollars!"

  "5 billion dollars? Apart from asking Belstead for help, I couldn't possibly come up with that kind of funding!"

  "That's exactly what I meant! Alright, let's go!"

  "May I know JR's fund?"

  "You'll know it!"

  Everything is proceeding quietly!

  "Ham? I'm Joy, do you still have that Mobil Oil stock in your hand? Nothing, Soros's son wants to borrow it from me, they want to short sell! Hmm, yes, plus a premium, the conditions are quite good! Can you believe there are such idiots who would think of short selling? Doesn't Soros see the situation in the Gulf? Once it starts, Mobil Oil's stock will definitely skyrocket! Oh, you mean the time? He means by the 21st, right, 20 days' time! Alright, I'll let him go to you himself! Hey... after making money, don't forget to treat me to a drink!"

  "Betteman, open the door! What are you doing in there? It's taking you long enough to open it! You're actually in your office with your secretary... Alright, that's your business, I have no right to interfere. Mr. Andrei Bush just called, he wants to borrow some of Texas Oil's options from you, short selling, yes, he wants to short sell! How many? He means the more the better, if possible, he wants to borrow them all, with a premium, of course! The conditions are so good it's hard to believe! What, help you get in touch with your wife? She also has some Texas Oil options in her hands? Shut up for a second, I'm on the phone with you, tell that whore to get out of the way..."

  "Mr. Sam Worton? This is Mark Murbach from JR Investments, yes I called you yesterday but your secretary said you were in a meeting! So here's the thing, I'd like to borrow some of the Apple stock you're holding, yeah Apple Inc., we want to short it! Yeah there's an extra premium if that's convenient for you I can come by your place this afternoon to finalize things! IBM stocks? That would be awesome!"

  "Is this Mr. Holmes? I'm Robert from JR Investments, and I'm interested in the Texas Oil stocks you're holding. No, no, no, you misunderstood me, I don't want to buy these stocks from you, what I mean is that I'd like to borrow them from you. Yes, that's right, I'm going to short sell! What? Can you help me get in touch with Carl Icahn, he also has Texas Oil stocks in his hands? Good, good, good, if possible, please help me borrow these stocks from him too, and as a token of appreciation, I'll give you a premium. Hmm, okay, Mr. Holmes, then I'm looking forward to your good news!"

  Robert hung up the phone with a chuckle and then picked it up again, crossing off another name on the paper. OK, next one, Coca-Cola!

  Just then Jerry walked in from the office door!

  "Robert, help me book a ticket to Tokyo in the island country! I, Cai Cai Zi, and John with his trading team, a total of ten people."

  "We've been busy till we're dead tired, and you're actually going to leave! This is so unfair!"

  "Alright, Robert, Wall Street is the financial center of America and also the world. If there's a crash on Wall Street, do you think Tokyo will be spared? You have Leslie here to assist you, and Mark, Bill, and Andre are all capable of handling things on their own, no problem! And even if there is a problem, we can always contact each other by phone. I'll let you know when it's time to close the position over the phone, so stay calm! Once I tell you to close, don't hesitate for a second!"

  "Well, it has to be like this then!"

  Before leaving the United States, Jerry called George Lucas to inquire about the development of simulated digital synthesis technology and the film rights to "Jurassic Park", which Jerry had already given to Steven Spielberg. However, since the effect of simulated digital synthesis did not meet Jerry's requirements, the filming plan was temporarily shelved! Spielberg didn't idle either, as he turned around and followed George Lucas to shoot the third installment of "Raiders of the Lost Ark"!

  As for Microsoft, after the delayed release time, Bill Gates and Paul Allen put aside the development plan of EXCEL and turned to develop Word and PowerPoint. As for Jerry's departure, they were also quite helpless.

  Time has come to October 1st, 1987!