The Conglomerate Family Became A Villain [EN]: Chapter 205

1986 (3)

The opinions on Wall Street were divided regarding Victoria Fund’s investment announcement in Japan.

Media outlets, including the Wall Street Journal, presented differing predictions, as did investment analysts, funds, and traders.

The negative reactions were as follows:

“Investing in Japan when the Yen has already risen by 25%? Aren’t you starting at -25% just by standing still?”

Those who viewed Victoria Fund’s investment negatively focused on the significantly increased value of the Yen.

“I think Charlie Jung has made a bad move.”

“That’s right. Charlie Jung is the problem. He always makes bold, even risky, gambles. He’s succeeded a few times, but gambles can’t always succeed.”

Some still focused on the Hilton family as the background of Victoria Corporation and Victoria Fund.

“Perhaps Sarah Hilton made this decision. She doesn’t really know Wall Street or investments yet.”

“If Sarah Hilton is behind this decision, then the Hilton family is behind her.”

“If the Hilton family chose Japan, they have greatly misunderstood the global situation.”

Those who viewed Victoria Fund itself negatively focused on the lack of experience of the two young owners.

“If the investment atmosphere changes, Victoria Fund will face losses too great to handle.”

“Since the amount borrowed in Japan is 12 billion dollars, even a 20% loss would wipe out the principal. In other words, there’s a high chance of becoming completely insolvent.”

“Those who make such unreasonable investments are often young investors who haven’t experienced failure.”

“People aren’t stupid enough to entrust their money to inexperienced investors.”

The collapse of Victoria Fund meant the collapse of Victoria Corporation.

Along with the negative issues, Victoria Corporation’s stock price fell to $15.4.

“It seems Victoria Corporation’s success was only until 1985.”

“I think so too. Victoria Corporation has been too successful.”

“Come to think of it, shouldn’t Citibank and JP Morgan stop Victoria Corporation?”

Citibank and JP Morgan were major shareholders, holding 10% of Victoria Corporation’s shares.

“JP Morgan’s behavior is the most disappointing. They even sent a CEO to Victoria Fund.”

Wall Street people said that John Peer’s move from JP Morgan to Victoria Fund was JP Morgan sending an expert to help Victoria Fund, which lacked investment experience.

However, this was not true.

JP Morgan Headquarters.

Henri Arnault, head of JP Morgan Investment Bank, was sitting alone with Edmund Norman, Chairman and CEO of JP Morgan.

“Henri, what are you going to do?”

Henri Arnault raised his voice at Edmund Norman’s question.

“What do you mean, ‘What am I going to do?'”

“Are you going to let it go like this?”

“Victoria Fund is not our affiliate.”

Edmund Norman frowned and said.

“Didn’t you send John?”

Henri Arnault shook his head vigorously.

“Absolutely not. I stopped John from going to Victoria Fund several times.”

“Is that true?”

Edmund Norman looked like he didn’t know.

“Didn’t I tell you before?”

Edmund Norman had no memory of that.

“Did you?”

“I told you clearly. I even asked if we should raise John’s salary to keep him.”

“Hmm, I remember that story.”

At the time, Edmund Norman did not allow John Peer’s salary to be raised.

The reason was simple. He had never shown outstanding ability to warrant a significant salary increase.

“All we can do is call Charlie Jung and ask him not to make reckless investments.”

Edmund Norman sighed deeply.

“Hoo… Isn’t it already water under the bridge?” (Meaning: the situation is irreversible)

Because it had been widely reported in the media, including broadcasts and newspapers, it was difficult to reverse this.

“I think we can only hope to get out with minimal losses.”

Henri Arnault and Edmund Norman viewed Jung Hyun-woo’s investment negatively.

“There’s no chance of making a profit, is there?”

“How can we make a profit in Japan? Will real estate prices rise? Or will the Yen rise even more than it is now? I don’t think either is easy.”

Henri Arnault thought the value of the Yen had risen excessively.

‘The Plaza Accord [an agreement between the US, Japan, West Germany, France and the UK to depreciate the US dollar relative to the Japanese yen and German Mark] is clearly an agreement to raise the value of the Yen. But a 25% increase in less than a year is excessive.’

He argued that a 10% increase per year was right. And according to his argument, the Yen was overvalued by more than 15%.

“So, it’s a loss no matter what.”

“We will have to accept some stock price decline.”

Edmund Norman groaned softly.

“Umm, it seems that our good handling of short selling has backfired.”

He thought that winning against Terra had become a poison.

‘If we had tasted bitterness back then, this wouldn’t have happened now.’

Edmund Norman had seen several people fall into ruin because of victory or success. He just hoped that Jung Hyun-woo would not become one of them.

‘As Henri says, getting out with a moderate loss is best for us.’

If Victoria Fund suffered losses too great to handle, Victoria Corporation’s stock price would plummet, and that plummet would be JP Morgan’s loss.

“Have John meet him once.”

“John, you mean?”

“We need to check how things are going, don’t we?”

John Peer would be much easier to talk to than Jung Hyun-woo. Henri Arnault agreed with his thought.

“Okay. I’ll meet John.”

Victoria Fund’s office was in New York, so meeting John Peer was not difficult.

At the same time.

Bank of America Headquarters.

Thanks to the warm breeze blowing in from the Pacific, it wasn’t too cold here even in winter.

Paulo Giannini sighed as he looked at his niece.

“Charlie Jung has caused another stir again.”

On the other hand, Lyra Marine was in favor of Jung Hyun-woo.

“I don’t think he caused a stir.”

“Really?”

“There are quite a few Wall Street investors who are giving positive opinions.”

“Positive? In what way?”

Lyra Marine cleared her throat and answered.

“There are many predictions that the Yen will continue to rise.”

“The Yen will continue to rise? You mean it will rise even more than it is now?”

“Because that’s the purpose of the Plaza Accord.”

“Hmm. There are many opinions that it is overvalued, but you don’t think so.”

Lyra Marine nodded and said.

“I definitely don’t think it’s overvalued.”

“Can you tell me why?”

It was not difficult for Lyra Marine to explain her reasoning.

“Because American products are still not selling well.”

Two months after the Plaza Accord was signed, the trade deficit between the United States and Japan had not improved at all. Rather, in some areas, the deficit had increased.

“You mean the value of the Yen will continue to rise until the trade deficit between the United States and Japan improves.”

“The Reagan administration has put itself in a position where it cannot back down.”

The Reagan administration could only move forward.

And that meant a continuous rise in the Yen.

“How much do you think the Yen will rise in the future?”

Lyra Marine looked at Paulo Giannini and answered.

“It will rise up to 50%.”

Currently, the Yen has risen by 25%, so even if the real estate Jung Hyun-woo invested in does not rise, he could make a 25% profit.

“Hmm, so does that mean Charlie Jung will win this time too?”

Even if it didn’t turn out as Lyra Marine said, he didn’t think Jung Hyun-woo had made a reckless gamble.

‘Charlie Jung also has connections with the American political world.’

The problem was that Wall Street investors also had connections with the American political world.

“I can’t be sure.”

Lyra Marine smiled at his words.

“I can’t be sure either.”

“Really?”

“If I were sure, I would have used all of the investment bank’s funds to buy Yen.”

The amount Lyra Marine moved towards Japanese investment was only about 5%.

Of course, considering the size of Bank of America, 5% was not small.

But she did not consider Japan and Japanese companies as her main investment areas.

“Is there anything else that would be advantageous to Charlie Jung?”

He was asking if there was anything else he could benefit from besides the rise in the Yen.

“I wonder if he’s betting on maintaining the competitiveness of Japanese companies.”

“The competitiveness of Japanese companies?”

“The price of cars produced in Japan has risen slightly, but consumers will not buy American cars because of that difference.”

In the 1980s, American car companies were still producing only large, fuel-inefficient vehicles.

“Compared to American companies, you mean Japanese companies have overwhelming competitiveness.”

“From automobiles and electronics to high-tech industries. Japan is overwhelming the United States.”

In the 2020s, Japan’s semiconductor industry had collapsed to the point of being described as a collapse, but in the 1980s, it was threatening the American semiconductor industry.

“Even if Japan’s momentum lasts only two more years, Charlie Jung can make a big profit.”

“He borrowed 12 billion dollars to increase leverage, so the profit will probably be enormous.”

Paulo Giannini smiled.

“You’ve become a fan of Charlie Jung.”

Lyra Marine blushed slightly and said.

“I’m just analyzing his investment.”

“How much do you think he can earn in two years?”

Two years.

It was a long time for some and a short time for others.

“Considering the loan, I think he can earn 5 billion dollars.”

If he invested 3 billion dollars and earned 5 billion dollars, the return on investment would be 167%.

‘Even on an annual basis, it easily exceeds 80%.’

Paulo Giannini sighed briefly.

“If he succeeds in this investment again, we will have missed out on a great talent.”

“Talent?”

“If we had entrusted him with our Bank of America’s fund, we could have made a profit that would have gone down in history.”

Lyra Marine clenched her fist slightly.

“I will try not to lose to Charlie Jung.”

The person in charge of Bank of America’s fund division was her.

“Lyra.”

“Yes?”

“Go and meet Charlie Jung.”

Lyra Marine raised her eyebrows.

“Charlie Jung, you mean?”

“I want to know his thoughts exactly. What he was thinking when he invested in Japan, how much profit he expects. I want to hear the truth from his mouth.”

Lyra Marine bowed her head at Paulo Giannini’s words.

“Okay. Then I’ll go to Boston next week.”

Unlike JP Morgan, Bank of America was on the side that viewed Jung Hyun-woo’s investment positively.

Besides them, there were others who viewed Jung Hyun-woo’s investment positively.

They were the power players in Washington.

Justin Balmer, a member of the Federal Reserve Board of Governors, Ain Perman, First Deputy Managing Director of the IMF [International Monetary Fund], and Paul Joseph, Deputy Secretary of the U.S. Treasury, sat facing each other in an old social club.

“The black-haired friend has caused another stir.”

At Justin Balmer’s words, Ain Perman, First Deputy Managing Director, narrowed his brows.

“Didn’t Justin give him the information?”

Justin Balmer raised both hands to shoulder height at his question.

“Not at all, why would I do such a thing?”

“Because you like that black-haired friend.”

“Don’t you?”

Paul Joseph, Deputy Secretary of the U.S. Treasury, asked the two.

“Is the black-haired friend you’re talking about Charlie Jung of Victoria Corporation?”

Justin Balmer nodded.

“That’s right.”

“Then you’re obviously talking about Victoria Fund’s investment in Japan.”

Justin Balmer nodded again.

“That’s right.”

The three were quite close.

Ain Perman, First Deputy Managing Director, turned his gaze to Deputy Secretary Paul Joseph and said.

“Paul, don’t believe that friend’s words.”

Justin Balmer looked wronged.

“Have I ever lied?”

Ain Perman, First Deputy Managing Director, still seemed to doubt Justin Balmer.

“If it wasn’t you, who else would leak information to that friend?”

Justin Balmer clicked his tongue and answered.

“Maybe that friend didn’t invest after hearing the information.”

Ain Perman, First Deputy Managing Director, asserted.

“That can’t be.”

He thought that someone had given him information because Jung Hyun-woo’s investment direction was so accurate.

‘No one can borrow several times the investment amount to invest in a situation where the market is half-believing.’

Deputy Secretary Paul Joseph, who had been listening to the two’s argument, said.

“Justin, is that friend a young man worth giving information to?”

Justin Balmer shook his hands as if he was wronged.

“I didn’t give him information.”

“Yes, let’s say you didn’t give it to him. But couldn’t someone else have given it to him? That’s what I’m asking about.”

Justin Balmer sighed briefly at his words.

“Hoo… Just think of him as a bold kid.”

Deputy Secretary Paul Joseph was not satisfied with his answer.

“Is he just a bold kid?”

Ain Perman, First Deputy Managing Director, raised his right hand and answered instead.

“Charlie Jung is a bold young man with the ability to change the world.”

Deputy Secretary Paul Joseph tilted his head.

“Is he that good?”

“A young man who is not even twenty years old is shaking up Wall Street. He must have that much ability.”

Deputy Secretary Paul Joseph cleared his throat and said.

“Hmm, hmm. Actually, we had a meeting because of that friend.”

Ain Perman, First Deputy Managing Director, turned to him.

“The Treasury Department even had a meeting? Is it because of tax evasion?”

“That’s not our responsibility.”

“Then?”

“We couldn’t decide whether it was right to send 3 billion dollars to Japan.”

Justin Balmer said.

“He’s selling dollars and buying Yen, so isn’t he following your intentions?”

The U.S. Treasury Department wanted the Yen to be overvalued.

“That’s true, but the amount is so large that I’m worried it will shock the market.”

“Are you underestimating the American economy too much? Will a shock come if about 3 billion dollars goes out?”

Deputy Secretary Paul Joseph put his hands together and supported his chin.

“That’s the thing. The trade deficit with Japan is getting worse and worse.”

The rapid rise of the Yen could increase the trade deficit.

“Hmm, the value of the Yen shouldn’t rise too high at once. Is that what you mean?”

“In short, yes.”

Justin Balmer clicked his tongue.

“Tsk. It’s a problem either way.”

“Isn’t it our job to coordinate those problems?”

Those who manage financial policy needed to pay close attention.

If they handled things carelessly, a typhoon, not a storm, could blow through the market.

Justin Balmer asked Paul Joseph.

“So, what was the result of the meeting?”

“We decided to allow it.”

That meant that the U.S. government had decided to allow Jung Hyun-woo’s investment in Japan.

“Charlie Jung decided on such an investment without even consulting the U.S. government.”

At Justin Balmer’s words, Ain Perman, First Deputy Managing Director, shook his head.

“We are a country with freedom of investment. We are not a country that invests with the permission of the government.”

Paul Joseph narrowed his brows as if he felt guilty.

“You’re usually right, but now you can say it’s an emergency.”

Ain Perman, First Deputy Managing Director, tilted his head to the side.

“An emergency? Is it that bad?”

Paul Joseph released his clasped hands and answered.

“It’s that bad. If the situation doesn’t improve, we’re thinking of negotiating again this year or next year.”

That meant that if the situation did not improve with the Plaza Accord, they could enter into a second negotiation.

“I didn’t know it was that bad.”

“We also knew that it would be difficult to improve in the short term. But the atmosphere in the White House is unusual.”

President Reagan and his staff wanted results that could be seen with their own eyes.

“Do you meet the President too?”

“Sometimes.”

“That must be difficult.”

Deputy Secretary Paul Joseph nodded slowly.

“It’s not easy. How about you guys?”

Justin Balmer answered first.

“Things have gotten a little better on our side. We have room to lower interest rates.”

People thought of the Federal Reserve Board of Governors as devils who raise interest rates.

But they didn’t raise interest rates because they liked it. They also wanted to keep interest rates stable if possible.

“How about you?”

At Deputy Secretary Paul Joseph’s question, Ain Perman, First Deputy Managing Director of the IMF, answered.

“Things don’t feel good on our side. I feel like something is going to happen.”

His chilling feeling soon became a reality.

The Chernobyl nuclear power plant accident in 1986 shook the world once again.