fictionpage Chapter 56 Free Fall
Chapter 56 Free Fall
October 17, 1987, Saturday.
Saitama Prefecture, Kasumigaseki Country Club.
The lawns here are manicured as smooth as a velvet carpet, and the red leaves of late autumn adorn both sides of the fairway, with the faint outline of Mount Fuji visible in the distance.
The sun was shining brightly, and the breeze was gentle.
This should have been a perfect day for playing ball.
"Smack."
A crisp sound of the ball being struck.
The white golf ball soared high into the air, tracing a less-than-graceful arc before veering off the fairway and landing in the bunker on the right.
"Oops, it went off course again."
Managing Director Tanaka of Sumitomo Bank handed the golf clubs to the caddie next to him, took off his white gloves, and wiped the fine beads of sweat from his forehead.
"The executive director doesn't seem to be in good spirits today."
Shuichi stood to the side, leaning on his golf club, a polite smile on his face.
"Maybe he didn't sleep well last night."
Managing Director Tanaka sighed and took the towel from the caddie. He glanced around.
The stadium was still packed with luxury cars, and tycoons in polo shirts gathered in small groups. But the usual hearty laughter was gone, replaced by hushed whispers.
Everyone had that bulky "big brother" mobile phone clipped to their waist, and every now and then someone would stop and answer the phone with a nervous expression.
"Saionji-kun."
Tanaka lowered his voice and moved closer to Shuichi.
"What do you think of what happened in New York last night?"
On Friday, the Dow Jones Industrial Average fell 108 points. That number felt like a fishbone stuck in everyone's throat.
"It's a technical adjustment."
Shuichi answered casually, bending down to insert the golf ladder into the grass.
"After all, it has been rising for more than a year, so a correction is normal. As long as the fundamentals of the Japanese economy are sound and NTT is still rising, we don't need to worry."
This is standard official rhetoric. It's what everyone's saying to each other now when they're trying to comfort one another.
"Yes, yes."
Tanaka seemed to breathe a sigh of relief, but the wrinkles between his brows did not disappear.
"However... I heard that foreign capital has been withdrawing quite aggressively recently. It seems that Goldman Sachs and Morgan Stanley are secretly reducing their holdings."
He glanced at Xiu Yi, his eyes flickering.
"Saionji-kun, what's been going on with your SA Investment lately? I heard you're doing quite well overseas."
Xiuyi set up the ball and took a test swing.
"It's all just small stuff. You know, Satsuki likes to follow trends, so she bought some American tech stocks. It seems like they're all stuck in the hole lately, and she's really worried about it."
"Oh? You're trapped?"
A barely perceptible hint of relaxation flashed in Tanaka's eyes.
That was a comfort when seeing one's fellow human beings suffer.
"Then there's nothing to worry about. Since everyone is stuck with their positions, it means the overall market is fine. As long as we hold on, it will eventually rebound."
Tanaka patted Shuichi on the shoulder and burst into laughter, as if the gloom from before had been swept away.
"Come on, let's play ball! We have to catch that bird today!"
Shuichi watched Tanaka's retreating figure as he walked towards the sandpit.
The figure from behind seemed somewhat bluffing.
He gripped the cue stick tightly in his hand.
If Tanaka knew that SA had not only liquidated its stock holdings but also bet hundreds of millions of dollars on a market crash, his expression would probably be worse than tears.
"Smack."
Fix your swing.
The ball flew straight toward the green and came to rest three yards from the flagstick.
A beautiful pole.
But to Shuichi, the ball was more like a rock hanging precariously on the edge of a cliff. A gust of wind could send it tumbling down.
……
October 18th, Sunday.
Fear is brewing.
The weekend market closure did not calm the market down; instead, it provided fertile ground for rumors and panic.
The main family teahouse of Saionji Temple.
The television was on. NHK was broadcasting news from the United States.
On the screen, U.S. Treasury Secretary James Baker stands in front of a microphone, his face grim.
"If West Germany does not lower interest rates to stimulate its economy, the United States will have to consider allowing the dollar to continue to depreciate..."
Satsuki sat cross-legged on the tatami mat, peeling an orange in her hand.
"Did you hear that sound?"
She put a segment of orange in her mouth, not looking at Shuichi, but staring at the TV screen.
"That was the last nail in the Louvre Agreement's coffin lid."
"What do you mean?" Xiu put down his teacup, feeling a little uneasy.
"Six months ago, the G7 countries reached an agreement at the Louvre to jointly stabilize the dollar exchange rate. They agreed that you would not raise interest rates, I would not devalue the currency, and we would all work together to inflate the bubble."
Satsuki swallowed the orange, and the sweet and sour juice exploded in her mouth.
"But now, the Germans are afraid of inflation and have secretly raised interest rates. The Americans are getting anxious, and Secretary Baker is now openly threatening Germany."
"This is tantamount to telling speculators around the world: the G7 has fallen out, and nobody cares about the fate of the dollar."
Satsuki took out a tissue and wiped her hands.
"That's good."
"The funds that were originally observing are now left with only one thought: to run."
"Run away from the US dollar, run away from the US stock market. Run anywhere, as long as it's not in this house that's about to catch fire."
Shuichi watched the American official in a suit on TV.
The man was still talking non-stop about "macroeconomic regulation".
In fact, every word he uttered was pushing global stock markets into an abyss.
"Tomorrow..." Shuichi's voice was a little hoarse, "Tomorrow is Monday."
"Yes, Monday."
Satsuki picked up the remote and turned off the TV.
The screen went black, revealing somewhat blurry reflections of the father and daughter.
"The Asian markets will open first. Hong Kong, then Tokyo."
"We were fortunate enough to sit in the front row and watch how this wave came about."
……
Monday, October 19th.
Eight o'clock in the morning.
The sky over Tokyo was somewhat gloomy, with low-hanging clouds.
Marunouchi, headquarters of Saionji Industrial.
In the secret trading room set up specifically for SA Investment, the air was as thick as glue.
The dozen or so screens on the wall were flashing.
The leftmost panel displays the futures prices for the Hong Kong Hang Seng Index.
"Boss, the Hong Kong market has opened!"
Itakura—although he is nominally the president of the entertainment company, he was also dragged here today as Satsuki's designated scapegoat—pointed at the screen and shouted.
The previously calm green curve plummeted precipitously the moment the market opened.
-120 points.
-200 points.
-300 points.
There was absolutely no decent rebound. Sell orders poured in like a waterfall, instantly overwhelming the buy orders.
The Hong Kong Stock Exchange has issued an announcement stating that trading may be suspended!
"So fast?" Shuichi loosened his tie, feeling a little short of breath.
"What about Tokyo? How's Tokyo?"
Nine o'clock sharp.
The Tokyo Stock Exchange opened.
The Nikkei index opened 200 points lower.
The trading floor was in an uproar. Telephones rang incessantly, and traders were gesturing rapidly.
"It's alright... I think I can hold on."
Xiuyi stared at the screen. Although it had fallen, it hadn't crashed like Hong Kong. The drop was kept to around 1%.
After all, the fundamentals of the Japanese economy appear stronger than those of the US and Hong Kong. NTT, the stabilizing force, is still there, albeit somewhat shaky, but it hasn't fallen yet.
"This is just an appetizer."
Satsuki sat in a chair in the corner, holding a cup of iced coffee.
She didn't even look at the screen.
"The current drop is just a polite panic caused by the influence of Hong Kong."
"The real Grim Reaper is still asleep."
She glanced at the clock on the wall.
9:30 AM Tokyo time. 8:30 PM New York time.
Wall Street is still in the dark.
Those fund managers holding huge short positions are probably tossing and turning in bed or praying to God.
"Just wait and see."
Satsuki took a sip of coffee.
"Wait until 10:30 tonight. Wait until the clock in New York rings."
……
A long day.
The Tokyo market has closed. The Nikkei index fell more than 600 points, a drop of 2.35%.
Although prices have fallen significantly, people have actually breathed a sigh of relief during this turbulent period.
"It seems Japan is still safe."
"As long as it doesn't collapse, it's fine. It should rebound tomorrow."
In the izakayas after get off work, office workers drink beer and encourage each other.
But the trading room of the Saionji family was brightly lit.
No one is leaving get off work.
The sushi delivered by takeout was placed on the table, already cold, and no one touched it.
The clock on the wall pointed to 10:25 p.m.
Shuichi stood in front of the red telephone that connected directly to New York.
His palms were sweaty, and he had to wipe them on his pants every now and then.
"Beep...beep..."
The phone is on.
The call wasn't answered immediately.
It rang five times.
"Feed..."
Frank's voice came through.
His voice was hoarse, tense, and carried a trembling quality as if he were about to be executed.
"Boss, five minutes left."
In the background, the pre-market bell for the New York Stock Exchange had already rung. The noise was louder than ever before, like countless flies buzzing around in a sealed jar.
"How is it?" Satsuki answered the phone.
"It's terrible. It's awful."
Frank's voice was trembling.
"The pre-market instructions were all sell orders. Sell orders were piling up like mountains. There were practically no buy orders in sight."
"Market makers are all hiding. Nobody wants to catch a falling knife."
"Many blue-chip stocks... IBM, General Electric, Merck... may not even be able to open for trading. Because the bid-ask spread is too large, making it impossible to match orders."
"This was practically... the last second before the dam broke."
Satsuki held the receiver, her gaze falling on the digital clock on the wall.
22:29:50
ten seconds.
Nine seconds.
Eight seconds.
……
"clang--!!!"
A clear, crisp chime was transmitted via an overseas telephone call to the trading room in Tokyo.
The New York Stock Exchange has opened.
"How is it?!" Shuichi couldn't help but exclaim.
There was a two-second silence on the other end of the phone.
Then came Frank's almost heart-wrenching roar.
"No opening price! IBM isn't opening! Alcoa isn't opening! Damn it, half the component stocks aren't trading!"
"S&P 500 futures! Watch futures!"
Satsuki gave the order loudly.
On the trading floor screen, the candlestick chart of the S&P 500 futures index flickered.
Then, there was an almost vertical bearish candlestick.
It smashed right through the floor.
"The stock has hit its daily limit down! Futures prices have hit their daily limit down!"
Frank screamed on the other end of the phone, his voice filled with fear and a twisted ecstasy.
"The machines! Those damn machines are starting to dump their shares!"
"This is called 'combination insurance'! Hahaha! Screw insurance! They're killing each other!"
"Boss! Our options... our put options..."
Frank was breathing heavily, as if he had just inhaled pure oxygen.
"The market maker's pricing system has gone mad. Implied volatility (IV) has soared to 150%!"
"Our options value... has increased tenfold! Twentyfold! And it's still rising!"
On the screen, the Dow Jones Industrial Average finally displayed its first number.
-200 points.
The stock price immediately dropped by more than double the amount of last Friday's decline upon opening.
But this is just the beginning.
As those stocks that couldn't open for trading were finally managed to be matched up, the index began to plummet like a kite with a broken string.
-300 points.
-400 points.
-500 points.
That's free fall.
There were no support levels, no technical indicators. All candlestick theories became a joke at this moment.
There was only panic.
Pure, primal, bestial panic.
In the trading room, Bancang collapsed to the floor, his face deathly pale. He stared at the ever-growing red line (red indicates a drop in US stocks) and felt as if the world was ending.
"Five hundred points..." Shuichi gripped the table, his fingers trembling uncontrollably. "That means... trillions of dollars have evaporated?"
"It's not over yet."
Satsuki was still holding the receiver.
There was neither fear nor ecstasy on her face.
There is only one kind of solemnity that witnesses history.
"Frank, don't sell it."
She spoke to the somewhat deranged trader on the other end of the phone.
"It's not at its lowest point yet."
"When those fund managers start jumping off buildings. When the exchanges want to cut off the internet connection."
"Wait until the drop exceeds 20%."
"Then we'll close our positions."
Frank was speechless on the other end of the phone. He could only stare at the frantically fluctuating account balance on the screen.
The string of numbers was so long it made him dizzy.
That was flesh and blood squeezed from the corpses of countless bankrupts.
Outside the window, the Tokyo night remained tranquil.
The Tokyo Tower in the distance shimmered with a red light.
Most Tokyoites are still asleep, unaware that a financial nuclear explosion is taking place on the other side of the ocean.
Satsuki put down the phone and walked to the window.
She picked up the glass of ice water and pressed it against her burning cheeks.
"Father."
She said softly.
"Get your nets ready."
"Tomorrow morning, when the sun rises."
"The sky is falling in Tokyo."