The Chaebol Returns To The Presidency 1967 [EN]: Chapter 179

179. Public Benefit Main Gun!

“Your Excellency, isn’t the sovereign wealth fund enough for financial planning?”

“I thought so too. But humans aren’t uniform machines. They don’t just comfortably accept what the state feeds them; they choose high risk, high return to earn more than others. Investing isn’t illegal either. But unfortunately, the price paid for realizing the devastating results of such speculation is too high and irreversible. If they had practiced with small amounts in school beforehand, wouldn’t that prevent such fatal trial and error?”

“…….”

“The investment education that’s actually needed in real life is missing. One of the reasons why people easily fall for the temptation of high-risk investments is the textbooks, in my opinion.”

“The textbooks?”

“Diligence, sincerity, and saving are the main philosophies flowing through the textbooks. Cleanliness, integrity, and so on… it’s all about denouncing materialism.”

“…….”

“Capitalism is a life lived with money. But is there a lack of a life philosophy of managing money in textbooks? Why don’t schools teach the most important subject of capitalist life? Is money a sin?”

“…….”

“Living in capitalism, we should educate people to make value investments, but why demonize investment itself?”

“…….”

“These textbooks are nothing more than manuals for educating wage-slave laborers in modern industrial society who are subservient to capital, just like the educational philosophy of obeying the king in the Joseon Dynasty [Korea’s last dynastic kingdom, lasting for approximately five centuries].”

Slave education!

The audience flinched in shock at the enormity of the criticism.

The Minister of Education lowered his head.

“Listening to Your Excellency, I realized I missed something. Until now, education has ignored how to demonstrate abilities with fair rules in the capitalist competition, other than noble moral codes such as diligence, sincerity, and saving. At best, it was all about acquiring vocational skills.”

“That’s exactly it. There’s no education on becoming a CEO or a capitalist. A doctrine against materialism in the age of capitalism! Isn’t the reason why America is strong because they teach how to create ventures and become owners?”

“That’s a correct point. I’ve finally realized today why the venture courses newly established in universities haven’t been well-received.”

“It’s not the end if you just make the starting salaries for high school and college graduates the same. They need to become investors in their own assets, manage their finances and risks to enrich their later years, and produce leaders who can dominate the world market of the survival of the fittest.”

“We will form an educational innovation TF [Task Force] team to review a major innovation plan for educational goals and curriculum content, Your Excellency!”

“Change it drastically so that it feels like education isn’t just about lengthening the academic career, but about practical education needed for life. Not as someone who labors in subservience to capital, but as an expert who manages capital.”

“Yes, I will keep that in mind, Your Excellency!”

The President suggested to the Minister of Economy and Finance.

“Find a way to imprint on people that the stock market is a place for value investment, not a gambling den for manipulative forces.”

“I understand, Your Excellency! I will research it!”

It was a sense of problem that was possible because he was a conglomerate chairman from the future.

Since curriculum content innovation doesn’t require parliamentary consent, the ministers of the relevant ministries moved quickly.

The ‘Financial Planning and Investment’ theme was newly established in the social studies, ethics, and economics subjects in the existing curriculum, and mock investment practice time for correct stock investment and housing purchase, and invited lectures by financial planning instructors were allocated.

The government reorganized the tax system and entered enlightenment to prevent real estate from degenerating into a means of speculation.

Conservative citizens and teachers were startled to see the newly changed curriculum.

“Teaching how to play with money in textbooks!”

Some teachers protested, but rather, parents protested to those teachers.

“We’re being educated to earn money, buy a house, and live well. Why are you stopping us from teaching that?”

“…….”

“Poverty of officials was integrity in the Joseon Dynasty, which was a class-based bureaucratic society, but is this the Joseon Dynasty now? Why is it immoral to live well?”

“…….”

“Shouldn’t the knowledge learned in school be helpful in real life? Why is it vulgar to be rewarded for ability with money?”

The repercussions of the default became an opportunity for the people to awaken, turning it into a blessing in disguise.

*

The President’s office.

The Minister of Economy and Finance reported.

“This is a draft of a bill to prevent stock price manipulation and strongly punish it. It’s a super-strong bill that adds not only imprisonment but also recovery of unjust gains and punitive compensation. There is also a plan to reduce overheating by lowering the upper and lower price limits in stock market transactions.”

However, the President knew very well that the stronger and more numerous the stock market transaction regulations, the more they would hinder and distort the stock market’s revitalization, and the forces would somehow look for gaps to exploit individual investors.

The President said.

“We must find a way to realize value investment without impairing the autonomy of the capital market, where ups and downs are a fact of life. This is what I’ve been thinking.”

“Is there a way to catch two rabbits at once?”

“Just as there is social infrastructure in construction, we need to create financial infrastructure.”

“Financial infrastructure?”

“It’s about using the sovereign wealth fund in the stock market.”

“I’m sorry, but I don’t understand what you mean, Your Excellency.”

“The sovereign wealth fund or the Tiger Fund buys construction stocks within the range that does not impair the ownership of the major shareholders to make value investments. And it’s about leading the ups and downs of stock prices.”

“…….”

“For example, if Company A’s profit is expected to be -20% that year, it will be lowered to -20%, and if Company B’s profit is expected to be +20% that year, it will be raised to +20%. If you increase capital, you lower it by the increased stock ratio.”

The minister’s eyes widened like a startled rabbit.

“Your Excellency, are you saying that you are artificially manipulating the market price?”

“That’s right. It’s a kind of stock price manipulation. Instead of the stock price manipulation forces, the fund becomes the main gun. If the price manipulators raise the price, we sell to crush them, and if they lower the price, we raise it to swallow them. Until value investment is ingrained in individual investors’ minds, the sovereign wealth fund plays that role. It’s about changing the stock market’s constitution through transactions in the market, not by law. Since the purpose of the fund is public interest, it means investing for the public good.”

“Public interest investment! I’m bewildered because it’s an idea I’ve never thought of, Your Excellency.”

“You can think of it as a public interest main gun, a public interest force.”

“Since the fund is also a clear investment entity, it is not illegal, and it is very public-spirited because it smoothly maintains stock prices stably and induces value investment while facilitating market functions, Your Excellency. However, if you make public interest investments instead of profit investments, the fund’s rate of return will not be good. In fact, stock is a zero-sum game, so there are many cases where there must be losers for there to be winners.”

“According to my calculations, even if the fund buys 10% of all construction stocks, it’s less than 1% of the total assets under management of the Tiger Fund. The real profits are earned from overseas funds and futures, so even if there are losses in Korea, there is almost no impact. According to my rough calculations, it will break even if it goes up and down.”

“Ah, that’s really fortunate.”

“Then verify and review my proposal with the people in charge. I’ve finished talking to President Jung of the National Wealth Fund.”

“Ah, already?”

“It’s a measure that’s only possible if the National Wealth Fund says okay.”

“That’s right. Then there’s no need to change the transaction regulations.”

“That’s right. But strongly push ahead with the revised bill you presented for the punishment of market manipulation by the forces. It may seem excessive, but in capitalism, fair game rules determine the victory or defeat of the market.”

“I understand, Your Excellency!”

The minister took out a document and said.

“And this is the data Your Excellency requested.”

The minister handed over a document with a list written on it.

“Thank you. I asked knowing it wasn’t a legitimate route. I will keep the security.”

“Is there any doubt? But isn’t it dangerous to step in directly instead of entrusting it to the prosecution? They are professional card sharps.”

“They won’t repent just because they’re punished. They’ll think they were caught because they were unlucky. There must be a demonstration case so that other stock price manipulation forces feel the fear that even if they avoid the legal net, they will be filtered out by the market itself.”

“I wish you success, Your Excellency!”

The data was a list of the three major stock price manipulation forces and their securities accounts, which were investigated and organized by the Securities Supervisory Service.

The prosecution was about to arrest and investigate them immediately, but the president requested a postponement, saying he wanted a chance to punish them.

The president called President Jung and decided that the National Wealth Fund would use blue-chip stocks [stocks of well-established and financially sound companies], and the Tiger Fund’s money and accounts would be used for small and medium-sized stocks with high volatility.

*

Myeongdong Stock Exchange.

A member of the Bumblebee’s gang, a stock price manipulator, ordered an employee at the exchange.

“Buy 50,000 Dongjin Construction shares.”

“Dongjin 50,000!”

The slip was passed to the exchange’s tally staff.

The Bumblebee gang was slowly buying up 10% of Dongjin Construction’s total shares.

Since Dongjin Construction belongs to small and medium-sized stocks, the number of outstanding shares is only 60% excluding the owner’s family’s shares, so 10% was enough to manipulate the market price.

However, there was another force buying Dongjin’s shares.

A member reported to Bumblebee in the customer waiting room.

“I placed the order, boss. But the deal isn’t going through well.”

“It’s not working? Why?”

“Every time, the transaction is made right above our quote.”

“Did the information leak? If that’s the case every time, there’s a planned buying force. Is another force also nibbling at Dongjin?”

“These days, the catfish guys [another term for stock manipulators, implying they stir up the market] are running wild, so isn’t it their doing?”

“Damn it! We can’t back down. Give up low-price buying and buy even if you raise the price!”

“Yes, boss!”

They barely finished buying at a price that had risen 18% in a week.

Bumblebee had no idea that President Jung’s Tiger Fund had made a 15% profit by continuing to raise the price and sell to the Bumblebee gang.

*

The following week, Monday.

An announcement was posted on the stock exchange.

– Dongjin Construction, rights offering at 1:1 [offering existing shareholders the right to buy additional shares]. Subscription price for new shares, 1,000 won (30% discount).

The announcement that the number of shares would double caused a sharp drop of -7%.

Individual investors who were aiming for a rebound began to buy at the lowered price.

Construction stocks often recovered to their original price or even rose after only a month, so it was a bet aimed at a rights offering jackpot that would earn a profit equal to the discount price.

Bumblebee instructed.

“Attract individual investors at -10%, and then slip them from then on [gradually sell off shares to them]!”

“Yes!”

As it plummeted by 10%, individual investors rushed to buy in large quantities at low prices.

The volume released by the force was sold.

“Now, shall we start slipping them in earnest!”

The next day, the stock price plummeted by -9% in an instant.

Individual investors who had bought in large quantities could not dare to cut their losses due to the huge drop and waited helplessly for a rebound.

But the next day, the stock price continued to slide endlessly. -5%, -6%, -3%.

“Boss, sell-offs have already started this morning.”

“Sweep up all the sell-offs and forced liquidations!”

“Yes, boss! .”

Half of the ammunition (the force’s operating funds) was used to lower the stock price, and the other half was used to swallow up forced liquidations and sell-offs.

Since there were no resistance levels and a large amount of stock had been secured, it was easy to raise the stock price by buying and selling the stock secured at such a low price from several accounts.

And if they received the rights offering at a discounted price, they would easily earn a 200% profit. At least, that was the plan.

“Okay, today is the Pink Room Salon!”