PDLP Chapter 216 The First Snowflake of Collapse
Chapter 216 The First Snowflake of Collapse
(No snowflake can escape an avalanche; let's cheer for the collapse of the bubble!)
January 4, 1990, Tokyo.
The lingering effects of the New Year holiday have not yet faded, and the streets are still adorned with lush pine and bamboo decorations. The first words people exchange when they meet are still the enthusiastic "Happy New Year," their faces beaming with smiles full of anticipation for the coming year.
After all, just a few days ago at the Osaka summit, they had witnessed the Nikkei index reach a historic high of 39,890.50 points. Everyone on the street firmly believed that the 1990s would be Japan's "golden decade." In their eyes, 40,000 points was nothing more than a thin veil that could be easily pierced, and 50,000 or 60,000 points were just around the corner.
At 8:00 a.m., the Tokyo Stock Exchange held a grand "Daihkai" (opening ceremony).
The enormous brass ceremonial bell was polished to a spotless shine. Five female staff members, dressed in ornate furisode kimonos, stood respectfully beside the bell with their hands clasped together.
The Minister of Finance, beaming, walked up to the platform, took the gavel from the female staff member, and raised it high.
"Long live!"
With a powerful roar from the minister, the gavel slammed down.
"Thump—"
The clear chimes echoed under the empty dome, instantly drowned out by the deafening cheers of thousands of red-vested traders.
"It's really lively."
Marunouchi, Chiyoda Ward. Top-floor strategy room at Saionji Corporation headquarters.
Saionji Satsuki sat on a soft armchair, watching the live broadcast on the television on the wall. In her hands, she held a delicate lacquerware bowl filled with steaming red bean soup.
Two slightly browned white mochi balls float on a bed of rich red bean paste, emitting an enticing sweet aroma.
Gaoyue picked up the wooden spoon and gently scooped up a little red bean paste, putting it into her mouth. The sweet taste spread on her tongue, dispelling the slight chill of the early winter morning.
Shuichi stood in front of the huge floor-to-ceiling window, his hands behind his back. He looked at the frenzied faces at the party, his brows furrowed slightly.
"People from the Ministry of Finance and the Bank of Japan are all here. Mieno Yasushi finalized the interest rate hike decision just a few days ago, and today they're leading the chants of 'Banzai!' again." Shuichi turned around, a hint of confusion in his voice. "What are these bureaucrats thinking?"
"The more lively the festival, the more deserted it becomes when it ends, Father."
Satsuki put down the small lacquer bowl in her hand. The porcelain spoon touched the rim of the bowl, making a soft sound.
She pulled out a clean white napkin and gently touched the corner of her mouth.
"The bureaucrats are scared, but they still need the appearance of prosperity to cover up the fact that things are peaceful."
"They wanted a 'smooth landing' for the economy, but it was too late."
Satsuki raised her head and glanced at the clock on the wall.
The second hand skips to the last tick.
"It's nine o'clock."
"opening."
……
Tokyo Stock Exchange, trading floor.
The excitement of the Dafabet conference hadn't even faded when all two thousand traders rushed back to their trading desks.
Above the main hall, a mechanical flip-board, over ten meters long, emitted a series of extremely rapid "clicking" sounds. The black plastic flip-board with white lettering spun wildly under the drive of a motor.
Everyone craned their necks, their faces flushed, holding their breath as they waited for the number representing a new era to appear on the screen.
If it rises another 110 points, the historical milestone of 40,000 points will be fully illuminated.
The gears mesh. The plastic flap stops rolling.
In the bustling trading hall, a faint, confused monosyllable rang out from some corner.
"Why?"
The senior traders in the front row stopped shouting, their raised arms frozen in mid-air.
Nikkei 225 Index: 35,025 points
Contrary to everyone's expectations, the first trading day of the new year did not see the anticipated surge.
The Nikkei index opened higher but then fell. Although it initially surged upwards by more than ten points due to inertia, it quickly seemed to hit an invisible wall and began a sluggish decline.
The entire hall fell into a deathly silence that lasted for several seconds.
"This is a shakeout! Institutional investors are shaking out weak hands!"
A sweating retail investor, leaning against the glass of the second-floor observation corridor, suddenly let out a hysterical laugh.
"A technical adjustment before the 40,000-point mark! They're shaking out the cowards before the train even starts moving! Absolutely do not sell!"
This self-deceptive roar, like a spark thrown into dry tinder, instantly reignited the emotions in the entire hall.
At the control panel, young trader Matsumoto gripped the black telephone receiver tightly, sweat trickling down his temples and into his collar.
"Buy! 20,000 shares of Daiwa Construction! Buy at market price!"
Matsumoto yelled at the liaison officer outside the venue, his fingers frantically typing on the terminal keypad.
Selling orders surged forth. Although the individual amounts were not large, they were continuous. Like dark red water flowing from a rusty pipe, they gradually consumed the mountain of buy orders piled up below.
Every time Matsumoto pressed the buy button, the system would indicate a trade within two seconds. It was as if countless invisible hands in the market were patiently and continuously distributing the shares they desperately needed.
Something's not right...
An older trader next to Matsumoto wiped the cold sweat from his brow and stared at the scattered sell orders on the screen.
"The selling pressure is too even. There are absolutely no signs of panic selling like retail investors. This indicates that large funds are unloading their holdings."
"Who cares who's dumping! Just buy it!" Matsumoto's eyes were bloodshot; he completely ignored his senior's warnings. "This is the last discount before the 40,000-point mark! All our clients' margin accounts are maxed out!"
The sounds of keyboards clicking and phone calls urging each other created a dense, impenetrable web in the lobby.
Greed dominates every body.
……
"Slap, slap, slap."
The rapid clatter of keyboard clicks echoed in the dark room.
Midtown Manhattan, New York City. SA Investment trading floor.
It was the dead of night. Outside the huge floor-to-ceiling windows, the cold winter rain lashed against the bulletproof glass, the water streaks winding down and distorting the neon lights of Wall Street into mottled patches of color.
The main lights in the hall were off, with only hundreds of terminal monitors emitting a cold, eerie green glow.
Chief Actuary David stood in front of the control panel. His white shirt was completely soaked with cold sweat, clinging tightly to his back.
"The market has opened." David's voice trembled violently, his Adam's apple bobbing laboriously. "The spot market is declining."
Frank, dressed in a dark gray tailored suit, stood quietly behind David, one hand in his pocket. He picked up the mug beside him and took a sip of his now-cold black coffee.
"Who's dumping shares?" Frank asked calmly.
David swallowed hard, his fingers flying across the keyboard as he typed commands to retrieve underlying data for analysis.
"It's foreign capital." David stared at the fluctuating data stream on the screen. "Goldman Sachs, Morgan Stanley, Barings Bank... they're selling off. Through hundreds of scattered shell accounts, they're pushing prices down at an extremely gentle pace."
David turned his head and looked at Frank with bloodshot eyes.
"Those Wall Street bastards. Yesterday they were on financial television shouting that the Japanese stock market would rise to 100,000 points, but privately they were the first to sell. Their actions speak louder than words."
"It's normal business practice. Someone has to be there to take over at the top so they can make a safe exit."
Frank's expression remained unchanged. His gaze passed over David and landed on the huge scrolling text screen directly above him.
What unusual activity is occurring in the options trading?
"The Nikkei 225 forward put option market on the Chicago Mercantile Exchange (CME)." David's breathing became extremely heavy. "In the past ten minutes, implied volatility has risen slightly. The option premium for those contracts we buried in the deep sea has jumped from $0.05 to $0.07."
A mere two cents' worth of change.
However, with the maximum leverage amplified by the $300 billion nominal principal, this tiny fluctuation is generating a dazzlingly large unrealized profit on the books.
"Should we also short some of our spot positions? Or sell a small portion of our options to lock in profits?" David scratched at the edge of the table. "The market liquidity is extremely fragile right now. If we apply even the slightest pressure, the market will collapse immediately."
"Shut up. Take your hands off the keyboard."
Frank coldly interrupted David's suggestion. He walked to the screen, his gaze sweeping over the green quote numbers.
"Those people in Tokyo are in a state of extreme excitement right now. They see this as a technical shakeout, as an opportunity to make a quick buck."
Frank turned his head and looked at David.
"The avalanche hasn't really started yet. Trying to manipulate the order book and create panic now will only wake up the retail investors who are frantically buying in."
"Keep quiet."
"These retail investors have a lot of money; it would be a shame not to take advantage of them."
Frank placed the mug he was holding steadily on the cork coaster on the walnut table.
"Let the bullets fly a little longer."
……
3 PM.
Tokyo Stock Exchange.
The closing bell rang precisely on time.
The final results of the day were presented to everyone.
Nikkei 225 Index: 35,025 points
It fell 202 points.
This drop is not significant. For Tokyo stock market investors who are used to daily swings of hundreds of points, a mere 200-point decline is hardly even a significant "severe blow."
Retail investors were still chatting and laughing as they left the exchange. The evening paper's headline had already been typed and printed, featuring bold black text: "Dafabet meeting proceeds smoothly; minor adjustments present a once-in-a-lifetime buying opportunity."
But in the most luxurious booths of the upscale club "Lumiere" in Ginza 7-chome, the atmosphere presents an eerie sense of disconnect.
Matsuura, the president of Matsuura Construction, was leaning back on the sofa.
His French shirt collar was wide open, and his expensive silk tie was torn to shreds, hanging loosely around his neck. His face was flushed with a sickly pallor, and his forehead and the tip of his nose were covered with beads of sweat.
Two female public relations staff dressed in sexy evening gowns nestled on either side of him, their faces adorned with professional smiles, as they added ice cubes to the empty glass in front of him.
Several real estate developers sitting next to me were talking in hushed tones, creating a somewhat oppressive atmosphere.
"The market looked really bad today," a building materials merchant frowned, a cigarette between his fingers. "The market has been declining all day. Is the aftereffect of the Bank of Japan's interest rate hike a few days ago starting to show?"
"Yes," another trading company executive sighed. "It feels like there's less money in the market than at the end of the year. The loan officers at Chiba Bank have also become more ambiguous lately, and they're very strict about approving new bridge loan amounts."
"Bang!"
Matsuura suddenly straightened up and slammed his large hand hard on the marble coffee table.
The wine glasses on the table shook violently, and a few drops of amber-colored wine splashed onto the smooth surface.
"A bunch of cowards!"
Matsuura roared, his voice hoarse from the alcohol. He pointed at his worried colleagues across from him, a smug smirk playing on his lips.
"A tiny, insignificant technical adjustment has scared you all half to death? The fact that the market didn't break 40,000 points today means foreign institutions are doing their last round of profit-taking before they go all in! This is a golden opportunity!"
He shoved aside the female PR person next to him, grabbed the freshly filled whiskey glass, and waved it forcefully in the air.
"This morning, I mortgaged three plots of land under the company's name and got a 5 billion yen bridge loan from the bank! I'm going all in on the bottom!" Matsuura's eyes were bloodshot as he stared intently ahead. "When the market opens tomorrow, and the market rebounds violently, the money I made today will earn me ten years' worth of profits in a single day!"
The others remained silent, only looking at him with an almost pitying gaze.
He tilted his head back and gulped down the strong liquor in his glass.
The spicy liquid slid down my esophagus.
Matsuura abruptly slammed down his glass. He gripped the glass tightly, his fingers trembling uncontrollably.
He gritted his teeth, forcibly suppressing the spasm that surged up his throat.
Baka baka baka!!
Why am I not an idiot?! Why did I have to study that damn finance?!
A debt ratio as high as 600%. Short-term bridge loans with an annual interest rate of 9%. Today's 200-point drop in the market instantly caused his paper losses to reach nine figures. His cash flow has completely dried up. He must rely on tomorrow's surge to cover today's losses.
If the market continues to decline, even if it only drops a few hundred points, Chiba Bank will immediately start calling to demand exorbitant margin calls.
He simply didn't have any cash left.
Oh... I think I'm going to die.
Fear, like a cold, venomous snake, coiled tightly around his heart.
He had to use extreme arrogance and high-decibel screams to forcibly drown the debt formulas in his mind that were driving him crazy.
On the wall opposite the booth, a large color television was silently playing the evening financial news.
At the bottom of the screen, a line of green solid candlesticks is clearly visible.
The Nikkei 225 index closed lower on its first day of trading. The index showed weak volatility throughout the day.
Matsuura slowly raised his head, his gaze sweeping over the green shadow line.
Damn it! Damn it, damn it!!! There's no way it can be promoted any further, is there?
"What are you looking at! What's so interesting!"
Matsuura suddenly let out a roar like a wild beast.
He suddenly grabbed the heavy crystal ashtray from the coffee table, used his waist and back strength, swung his arm in a semi-circle in mid-air, and slammed the ashtray hard against the television set.
"Bang!"
A deafening cracking sound echoed through the club's lobby.
The television's picture tube was instantly punctured, and the screen glass shattered into countless sharp fragments that flew in all directions. Sparks flickered on the damaged circuit board, and a crackling sound of electricity accompanied by a burnt smell filled the air.
"ah--!"
The two female public relations staff were terrified, screaming and covering their heads as they huddled in the corner of the sofa.
The surrounding guests stopped talking and stared in shock at the man who had gone mad.
Matsuura was panting heavily, his chest heaving violently. He stared intently at the smoldering scrap metal, his eyes filled with despair and madness.
"Music! Turn the music up to the maximum!"
He turned his head and roared angrily at the madam who had rushed over after hearing the news.
"Bring the wine! Bring up all the most expensive wines in your cellar! It's on me today!"
Matsuura, panting heavily, grabbed the hostess huddled in the corner and forcibly pulled her into his arms. He buried his head in the woman's neck, which reeked of strong perfume, while listening to the deafening electronic dance music that suddenly filled the hall.
He closed his eyes, trying to completely shut down his senses amidst the bombardment of bass.
……
Saionji Industrial Headquarters, Top-Level Strategy Room.
3:10 PM.
The data on the big screen had completely stopped changing. That green line was forever frozen on the axis of history.
Xiu Yi stood in front of the terminal, staring at the frozen green number for a long time.
"It fell."
He let out a long breath, took out a clean white handkerchief from his pocket, and wiped the cold sweat from his palms.
"The market has fallen by 200 points. The lagging effect of the Bank of Japan's interest rate hike is beginning to appear. The market momentum has changed."
"However, only... two hundred points." Xiu Yi frowned slightly, a strange undertone in his voice. "It's... already started?" He turned to his daughter sitting on the sofa, a self-deprecating smile on his face. "This is too uneventful. I thought I'd at least hear a few screams today... but what do we see? Those people outside are still blindly grabbing at the points, aren't they?"
Satsuki put down the small silver scissors in her hand.
On the surface of the terracotta basin, a cut, withered branch of a black pine tree lies quietly in the soil.
"When an avalanche begins, it's often just a small pebble rolling down."
She spoke as she looked at the potted plants on the table.
She's been so busy with work lately that her skills seem to have declined somewhat.
"The market is currently in a deadly 'anesthesia period.' Those gamblers who think they are smart will treat every drop as an opportunity to buy more, until they have poured all their last drop of cash into this bottomless pit."
She picked up a clean white cotton cloth and carefully wiped the plant sap that had seeped onto the surface of the scissors.
"Only by cutting flesh with a dull knife can you draw the most blood from them."
She placed the cleaned scissors flat on the rosewood tabletop. Satsuki stood up and walked straight to the large desk.
Several international fax documents marked "Top Secret" were stacked on the table.
"The market decline was within expectations. The subsequent gradual decline will drain the last bit of liquidity from retail investors and small and medium-sized enterprises."
Satsuki sat down in the swivel chair. She opened the top English file and quickly scanned it with her eyes, looking at the complex equity penetration diagram and offshore trust structure model.
"The legal separation of the offshore SPV matrix has entered its final stage. In Europe, Dr. Weber's optical laboratory also needs to secure a new batch of M&A funding to cut off Nikon and Canon's upstream supply chains."
She glanced at the Jaeger-LeCoultre watch on her wrist.
"In ten minutes, I will have an encrypted call in New York to finalize the equity investment plan for Shin-Etsu Chemical's peripheral suppliers."
She held the dark blue Montblanc pen in her hand, her gaze returning to the densely packed English data.
"Let the bullets fly a little longer."
Outside the window, the first snow of 1990 quietly fell.