Wall Street of the third generation chaebol

Chapter 59

＜ War Bonds. (1) >

Bank of Detroit (BOD)

The top floor of the Detroit Investment Bank.

All of the executives involved were called and brought to the conference room. I sat at the top of the conference room and looked around the executives.

“It’s our job to get the big banks on Wall Street to buy war bonds.”

Just because war bonds are issued randomly, people don’t buy them. It’s the same with bonds, so large corporations like the Railroad Trust throw mouth-watering baits on their hooks to buy their bonds.

high interest rates.

high discount rate.

high creditworthiness.

Coordinate these three to make the bait.

“However, this war bond has a different purpose from ordinary bond issuance.”

“Is the purpose different?”

My words caused a commotion in the conference room.

The purpose of the bond issuer is to draw as much money as possible to the company that will issue the bond, so that the investment bank itself also incurs huge fees.

But not this time.

I shrugged.

“This war bond issuance is aimed at incorporating the Detroit Investment Bank into the Wall Street commercial banking cartel.”

“…!!!”

“Don’t you know? “While the commercial banks that dominated the U.S. economy monopolized the clients of large corporations and created trusts, investment banks were in a state of chaos.”

The executives widened their eyes.

But then he nodded heavily. At the time, American financiers regarded lending and trust as sacred, and despised investment banks’ securities business and commercial paper discounts. To put it simply, the stock business was downplayed.

“By the way, sir, can we enter the trust of those strong commercial banks? No matter how much you say you are Morgan’s son, the commercial bank cartel that has been solidly built up for decades seems difficult.”

“Yes, but the moment Jack Tracy was painted and kicked out, there was a gap in JP Morgan. I can be a good focal point for those who are wandering because the focal point of Jack Tracy is gone.”

vacate an empty house

By issuing war bonds to large banks on Wall Street who have lost their center of gravity, they form a bond between the Detroit Investment Bank and the Commercial Banking Cartel.

In other words, this war bond issuance will be issued on favorable terms for large Wall Street banks.

“I also talked to Treasury Secretary Gage.”

– Yes, please. There’s nothing more nightmare than a stockpiling of unsold war bonds!

There is no loss from the Treasury’s point of view.

Even if I issue it on favorable terms to investment banks on Wall Street, isn’t it right that war bonds are ‘sold’?

From the point of view of the Treasury, which has to sell war bonds somehow, there is no better issuer than the Detroit Investment Bank.

“Then what conditions are you going to offer to the big banks on Wall Street?”

“Of course, high interest rates and high discount rates, right? However, high interest rates (coupons) are certainly attractive terms. U.S. interest rates are currently bottoming out.”

In the future, if you watch the US print war bonds with an interest rate of 7% like crazy and the German economy goes to hell, it seems like interest rates will be suffocatingly high.

In fact, the US economy at the end of the 19th century was a battle of demons, but interest rates were much lower than expected.

‘Thanks to that, the era of great trust opened, and monopoly companies were created one after another.’

about 2%.

Interest rates remained at only 2%, and even declined until the turn of the 20th century.

“We plan to issue a 5% discount on the interest rate (coupon) and 10% on the discount rate to investment banks on Wall Street.”

“…!!!”

10% discount.

This means that it is issued at a price 10% cheaper than the maturity date.

Anyone familiar with bonds knows how crazy these terms are. War bonds are, in fact, government bonds.

Isn’t the country going to collapse?

especially the US.

So, in reality, it is common for government bonds to have no interest rate, and there is almost no discount rate.

It’s a safe asset.

So, with a lot of exaggeration, they are saying that they will sell gold at the price of silver.

“Aren’t Wall Street investment banks going to salivate?”

It’s not the money I’m going to repay anyway.

Fees are also expensive.

It will hurt a little (?) from the US Treasury’s point of view, but just selling bonds will make you feel good.

Big Wall Street banks are getting stronger with their high interest rates and high discount rates.

everyone has a happy ending

f*ck.

But my secret pact with the big banks on Wall Street doesn’t stop there.

***

“Is it a loan fee?”

Wall Street hedge fund headquarters.

Returning to my office after a long time, I was drinking Coke from the refrigerator with James.

“Uh, even if you sell war bonds to the big Wall Street banks, they either hold it to maturity or sell it, right? So I’m going to give them one more bait to nail them down.”

widely-

I handed over the bond fund plan to James. James picked up the file folder and scanned it.

“If you lend me war bonds, I will pay you a fee.”

“From the standpoint of a large bank on Wall Street, high interest rates, high discount rates, and even loan fees. If you don’t bite this, you’ll starve to death on Wall Street.”

“You have to bite your tongue and search.”

In all, the minimum bond yield exceeds 15%, and that is also a bond of safe-haven assets equivalent to government bonds. There is no Munchkin in the bond world.

It doesn’t matter if you spit out if you don’t eat.

‘Cause I’m going to spit it out and eat it all up. After all, I was planning to acquire up to 10% of the war bonds.

Churp.

“But what about bond funds?”

“Exactly, a comprehensive bond fund. They combine several bonds into one and sell them as one fund product.”

“ah.”

“But shouldn’t people believe that bond funds don’t fail? That’s why you should put war bonds, which are safe assets, in your portfolio.”

It is a type of debt-secured security (CDO).

The financial derivative that blew up the U.S. economy with its subprime mortgage. For example, it is to mix A-grade bonds with C and D-grade bonds and sell them as a single bond product. In this way, bonds of grades C and D are bundled and the credit rating is boosted to bonds of grade B or higher.

Why?

Since it is based on the overall debt performance ratio, the CDO is destroyed and at a loss only when all of the A-grade bonds default.

It’s a sub-prime mortgage, and even if the content of high-grade bonds is less than 20%, it went back to the market because it randomly printed aa and AA, but if you mix it properly, it’s a pretty useful product.

“But is there any reason to do this?”

“Newport News Shipyard.”

The main character of sorrow who fell into a swamp of 100 million debt.

Junk bond among junk bonds that are on the verge of bankruptcy. It is a fund devised for the issuance of bonds by the Newport News shipyard.

“Once you launch a bond fund like a CDO, you have more than 30 corporate bonds tied together.”

The 30 components are as follows.

Rail Trust Bonds.

New York Ordnance Bonds.

Federal Steel Bonds.

war bonds.

etc.

There can be more than 30 railroads alone, so it’s easy to build a portfolio.

In a situation where most of the high-quality bonds such as the Railroad Trust are used, the credit rating of the bond fund is even higher.

Moreover, there was a time when there were no credit rating agencies.

If you ask the U.S. Department of the Treasury or JP Morgan Bank to get your credit certified, your credit rating is just a piece of cake.

“The calculation is that even if you mix bad debts from Newport News shipyards with it, it doesn’t make any difference at all. If the ratio is less than 10%, the bond fund won’t go bankrupt, right?”

“The rest are high-quality bonds or semi-premium bonds. In the case of the New York Ordnance Bureau, it is treated as a high-quality bond because it is a monopoly and semi-state-owned company.”

This also benefits bond fund customers.

Because the bond of the Newport News shipyard is combined, the fund’s return will increase dramatically.

There is very little chance of default.

The yield is also great.

We also charge some fees.

That’s why CDOs created a frenzy in the subprime era.

If it is well designed and runs soundly, it will eat pheasants and eat eggs.

“It’s best to do business with someone else’s money.”

“This will save the Newport News shipyard. Of the $100 million, it’s $40 million after the penalty.”

“Uh, the penalty can be settled through a lawsuit. Rather, if you re-order ships that are not built, you can get the full payment and the balance instead of the penalty.”

The Newport News shipyard is also a blue-chip company as long as it pays off debt.

In addition, if you exclude 10% of Newport News shipyard’s bonds, the rest of the bond fund was almost all high-quality bonds, so there is no reason for it to go bankrupt.

The ratio of war bonds (treasury bonds) issued by the Ministry of Finance is high, and in the future, war bonds will also overlap.

‘…I have no intention of making that mistake again. Those terrible memories still haunt me as a nightmare.’

2007, 2008.

When I woke up the next day and went to work, I didn’t want to hear any more about the manager next to me committing suicide. Therefore, risk management should be adequate.

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Or you’ll strangle me

“James. Do you know what the biggest advantage this bond fund gives us?”

“Are there any benefits other than the ability to finance the Newport News shipyard?”

I lifted my head and looked at James.

“As long as the bond fund doesn’t go bankrupt, you don’t have to pay it back. forever.”

“….!!!”

James widened his eyes.

To be sure, if you incorporated it into a bond fund, you only had to replace it with a new bond (rollover) when it reached maturity, and there was no need to pay it back.

In addition, even short-term bonds function like long-term bonds because they only need to be swapped out for new bonds.

“…that crazy.”

◙.

James shut his mouth at the momentary gossip, but it was already too late.

But I raised the corners of my lips.

“If there is a need to issue non-performing bonds in the future, you can incorporate it into this bond fund. Of course, the proportions will have to be adjusted.”

“Ha, but Master. There are a lot of rich people who buy high-quality bonds, but can you handle this huge bond fund?”

“Oh, that’s a good question.”

The question is whether there is no one to live.

However, this was one of the reasons I bought the war bonds.

“James, do you know that? Patriotism is money.”

“…Do you feel like using domestic products?”

No.

not that cute

“By its nature, bonds are usually issued in tens to millions of dollars at a time. And only rich people and institutions can buy bonds issued in such a large quantity.”

The bond market is a battleground of monsters.

Can ordinary people intervene in a battle of evil spirits fought by monsters who trim dragons with huge capital? Ordinary investors can never buy bonds. Billions of dollars are traded at a time in Korean Won.

can’t

“But the moment it becomes a bond fund, ordinary people can buy bonds. First of all, they can get a safe asset called bonds through our fund.”

But what if you pour patriotism here?

“James, turn your head. It’s a war bond. war bonds. And the shelling of Charleston.”

“….!!!”

James widened his eyes.

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Okay. That’s it.

“If the Port of Charleston is bombarded by the Spanish, will American public opinion explode? Then the Ministry of War and the federal government will fan the outraged public opinion, inspire patriotism, and wipe out the youth with the draft law.”

“And if you pour out patriotic marketing in such a way as to protect the country with war bonds…”

f*ck.

I raised the corners of my lips.

“Bond funds, won’t you be able to buy them because there isn’t enough?”

Now all we have to do is wait for the shelling of Charleston Harbor. Lots of steel and fire to buy us dollars.

***

bang-!

Quiet early morning.

A single gunshot ripped through Charleston Harbor.

“firing!!!”

Kwagga River-!

17 August 1898.

The battleships and cruisers of the Camara Fleet of the Spanish Empire appeared off the coast of Charleston Harbor. The barrels were loaded with ammunition, followed by a massive bombardment of artillery on the Charleston Harbor.

——-!

The earth’s axis trembles in the roar.

The bombardment that embroidered the sky fell like a meteor shower.

Wow-!

Fire pillars soared over Charleston Harbor due to the bombardment, and emergency evacuation orders were issued for cities near Charleston Harbor. Army units of the 4th Corps, deployed from Florida to the Port of Charleston, quickly evacuated.

– Whoa!

– Everyone, please calm down and evacuate according to the instructions of the army!!! Increased chaos is dangerous!!!

-You guys lost, so that Spanish fleet came to the mainland!!! What do you believe!!! Move!!!

– Whoa!!!

However, distrust in the army was soaring to the sky.

In this way, the vicinity of Charleston Port was transformed into a chaos, and citizens were terrified by the bombardment of Spanish battleships at the scene of the panic.

They saw with their own eyes their homes torn apart by artillery, and saw the Port of Charleston burn like a sea of fire.

Their eyes lost focus.

– …….Charleston.

their hometown.

destroyed by Spanish guns. Burning. was collapsing

“No darling!!!”

bang-!

—–!

The cries of the citizens were drowned out by the roar.

Thus, a long dawn began at Charleston Harbor.

and.

widely. tap. widely. widely.

The Camara Fleet begins shelling Charleston Harbor. The Army’s coastal artillery units are engaged. Completed the construction of the trench line encirclement of the 4th Corps machine gun ambush in preparation for the landing of the Marines.

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Office of the Assistant Secretary of the Navy, United States of America.

widely.

A telegram from the Navy Department arrived at me.

As I read the telegram from the news agency, I smiled wryly.

“When you come in, you want, but when you leave, you don’t.”

About 20 years ago though.

Huge cannonballs ripped through the skies over Charleston Harbor to awaken the American giant.

and.

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“I’ll have to put the work in Spain soon.”

The climax of this war was also approaching.