Chapter 68: Soviet Collapse (5)

Nick Leeson thought.

‘I’m f*cked.’

He really screwed up big time.

He shouldn’t have traded that strange thing called CDS and should have just stuck to selling options.

When the news broke that a coup had taken place in the Soviet Union, the stock market crashed. Naturally, Nixon, who had sold options on both sides, suffered enormous losses…

“Mr. Leeson! I-is this okay?”

An employee asked. Even while his insides were burning, a reflexive response came out.

“It’s okay. First of all, there are a few contracts that are nearing expiration, and most importantly, the coup is quite sluggish. Rather, now is a good time because the market is overvaluing the premium.”

“Ah…”

The expression ‘I’m not sure, but it’s Leeson, so I’ll trust him’ was clearly visible.

Is it okay?

No, it will be okay.

For a moment, he felt uneasy, but Nick Leeson, who brainwashed himself with the words he spoke to his employee, swallowed all his worries and encouraged his agitated employees.

“Come on! Let’s take a bigger position when the premium is high! Contact the headquarters and expand the position. Fortunately, we made a good profit in futures trading, so persuade them by showing that.”

‘Yes, it’s okay. It’ll be okay. If I just get through this. Just this one time… The option straddle selling is screwed, but the CDS contract is okay until bankruptcy, so if I just get through this opportunity…!’

Leeson calmed his anxious heart and focused on the TV.

Before long, a speech by Yeltsin in front of the Soviet parliament was reported.

[Citizens of Russia, on the night of August 18 and 19, 1991, President Gorbachev, who was elected by the legitimate elections of this country, was removed from office. Regardless of the reasons for his dismissal, we are facing this illegal coup. Despite all the difficulties and harsh trials that we had to endure because of them, the democratization process of this country is progressing more and more widely, and no one can stop it anymore.]

Soon, exciting news followed one after another. News that the coup forces were unable to mobilize military units, and that the Orthodox Church, a major political force in the Soviet Union – of course, communism hates religion – expressed support for Yeltsin, were reported one after another as breaking news, and it was felt that the coup was gradually nearing its end.

Nixon clapped his hands, cheering.

“That’s right! Ahaha! I knew it!”

This was not the time. He had to enter into additional CDS contracts now and quickly take a long position.

In general, he would have pursued a stable profit with an option selling position, but now it was a bull market. Leeson knew very well that he had to buy when people were scared.

Clink.

-Ring ring!

Just then, a phone call came in. It was a call from headquarters.

“Ah, Nick Leeson speaking.”

-I called just in case, Mr. Leeson. There was a request from headquarters not to increase the position.

“Yes? Ah, yes, yes! Of course, I know! Who am I? Barings Bank’s top manager award winner! It’s Nick Leeson.”

Clink.

He hung up the phone and frowned, spitting out a curse.

“Damn it, what are they so scared of about a risk that will obviously be resolved now…”

It can’t be helped. If so, expanding the position known to the headquarters is difficult for the time being, and I have to deal with derivatives that the headquarters doesn’t know about…

‘I’ll have to do it with a normal leverage of 3 times from below.’

Leeson, who came up with an idea that would make the headquarters gasp if they knew, took a deep breath and checked the amount to be filled. Just in case the margin is not enough tomorrow.

In a typical financial company, it is common to hardly worry about margin, but Nick Leeson even had to steal the margin from somewhere, so he might not even have the margin for tomorrow.

“Hey, there. Bring me the books. Huh? Uh-uh, it’s confidential, so don’t open it.”

He felt a momentary guilt in the eyes of the employee who was looking at him with worried eyes, but as soon as he saw the books, he felt the guilt evaporate.

As is the case with financial people, the weight of the heart was always lighter than thin paper.

“…Hmm, and go home early today.”

“Yes? Ah, yes!”

As salaried workers, the employees, who were not particularly interested in the complicated political situation of another country, left in droves.

Leeson, who was newly calculating with spit on the paper, was frustrated and bit his nails.

I don’t know about other things, but Leeson himself had to do the entire books. All the employees here only knew the fragments of the big picture.

In a way, it was similar to what Yu Hayeon did, but it was more dangerous. First of all, Leeson was not a regressor.

“Nikkei futures 3000 contracts and Japanese government bonds 2000 contracts… If I calculate the profit and loss…”

-Thud.

Leeson’s hand, which was writing the balance sheet, stopped for a moment.

‘Uh…?’

In that short time, the loss had snowballed.

-300 million dollars.

It was the amount he had to fill by the end of the year.

Nick Leeson’s mind became even more numb.

From then on, the employees’ quitting time was brought forward a little earlier.

“A, are you really leaving? Are you leaving?”

“…Well, good work.”

There were employees who looked at him with suspicious eyes, and there were employees who roughly guessed the inside story and quickly prepared to run away.

The fact that all the other employees leave work early and only the representative remains in a financial company… is tantamount to declaring that he will take responsibility for the Singapore office alone. There was bound to be something fishy.

-Even so, can he really handle it alone?

He did think that, but Leeson had no choice.

He was convinced that no one would take his side even if they understood the crazy things he had done so far.

.
.
.

So, the empty room of the Singapore office after all the employees had left work.

Nick Leeson took a deep breath and organized his thoughts.

“Okay, this is an opportunity, an opportunity…”

Since I even brought forward the quitting time, I don’t have to worry about the employees’ eyes in the evening.

Although there was a big loss in option trading due to the straddle selling position, it was okay. The loss will be covered anyway if I get more money from headquarters.

If I take it, I can pay it back.

…I’ll have to hide this loss for a while, though.

It was a severe case of 88888 account addiction, but everyone who could stop it was pushed out by the greatest investment genius who insulted the balance sheet.

‘By the way, I’m worried about the margin.’

It’s obvious to anyone that maintaining the same position here is crazy.

Of course, it wasn’t the thought of him who manipulated the books and mobilized all kinds of illegal means, but as is the case with excellent con men, Nick Leeson also walked the abnormal path in his own rational way.

‘In a safer way… Ah! There was that!’

So, objectively speaking, it was still a crazy act.

“Ahaha! Then it was okay! I have to ask the headquarters for more money!”

He laughed heartily, although there was anxiety mixed in, and quickly ran to the bank.

The dim sunset was illuminating his path.

When Leeson arrived at Citibank Singapore, an employee who recognized him at the counter quickly ran up.

“Ah! Mr. Leeson? What’s the matter? Is there anything I can help you with?”

“Withdraw all the remaining amount. All of it.”

Emphasizing the last word with an accent, Leeson smiled like a nice person.

“Yes? All of it? Ah, yes… I understand.”

The employee tilted his head, but obediently brought the money. It was famous that Nick Leeson was achieving tremendous results with a very unique investment method.

So, Leeson, who took out all the 50 million dollars entrusted by the headquarters, went to SIMEX and handed over the dollars.

“Here, it’s the margin. Ahaha, I’m a little sorry that I seem to be paying the margin late sometimes… I brought it all at once. Um… but next month, I might be a little, a liiiittle late? Hey, let’s not do this between us.”

-Vroom!

Nick Leeson, who drove around the complicated streets of Singapore in his car, returned to the office. He sighed as he walked down the unlit hallway.

“Phew… This time, if I just endure this time…”

-Scratch scratch.

Nick Leeson brought another pile of documents together and modified a few numbers.

The amount remaining in the Citibank account is of course ‘0’. Because I just withdrew it.

But Leeson thought differently.

‘If I’m going to fill it up again anyway… um, it’s just a location change, right? If I don’t lose, the margin isn’t consumed either.’

Then wouldn’t it be okay to just report to the headquarters that the money is still in the Citibank vault?

It’s just a minor ‘location change’ from the vault of Citibank Singapore to the vault of SIMEX. Of course, the amount of 50 million dollars was not very minor…

Anyway, money is a relative concept. Isn’t that much nothing in this great battle where millions of dollars are lost and gained a day?

’50 million dollars is a huge amount, so I have to divert it somehow. If I procure this amount here, I can maintain the position and make a profit!’

It was doublethink worthy of a loyal party member in 1984. The Soviet Union was on the verge of collapse, but the influence they created was being brilliantly inherited by an ardent capitalist.

So, after a few more months…

[December 26, 1991 Declaration on the Establishment of the Commonwealth of Independent States No. 142-N In connection with the establishment of the Commonwealth of Independent States, in accordance with the will of the supreme state organs of the Republic of Azerbaijan, the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Moldova, the Russian Federation, the Republic of Tajikistan, Turkmenistan, the Republic of Uzbekistan, and Ukraine…

The Council of the Republics of the Supreme Soviet of the USSR confirms that with the establishment of the Commonwealth of Independent States, the USSR no longer exists as a state and as a subject of international law.]

The Soviet Union collapsed.

Leeson’s thoughts, which were one step ahead of the regressor, were correct this time too.

Now 50 million dollars has become ‘minor’.