A $50 million margin call? I'll short Wall Street.

The key point is the existence of this letter itself.

A man dubbed a "prophet" by global media, a man who precisely profited $700 million from Bear Stearns, has publicly said things that the Federal Reserve only dared to say in encrypted internal memos.

And four days after he said that, a bank went bankrupt.

This gave each word in the letter a weight far exceeding the words themselves.

No, or not entirely, it's not because of logic. Any good analyst can provide logic. It's because of validation. Judgments that have been validated by reality and judgments that haven't are two completely different things in market psychology.

Bernanke never believed that financial markets should be dominated by any one person's voice.

He is an academic by training, believes in data, believes in models, and believes that a sufficiently long historical sample can always provide a reference for dealing with the present.

But he also spent two and a half years in his position at the Federal Reserve, which is enough to make him understand one thing: the market is not an academic seminar.

In academic seminars, the weight of an argument depends on its reasoning process.

In the market, the weight of an argument depends on whether the person who said it was right or wrong last time.

Walker was right last time. And it was the kind of right that everyone remembered.

The collapse of IndyMac does not pose a systemic threat from a technical perspective. A savings and loan bank with assets of over 30 billion is neither small nor large; its collapse is routine work for the FDIC, the process is clear, and the impact is controllable.

Normally, this event would occupy two days of news coverage, financial stocks would drop by two or three percentage points, and then the market would move on.

But this is not the normal situation now.

That letter transformed IndyMac from an isolated case into a footnote. It wasn't "yet another bank has run into trouble," but rather "what that person said is happening."

The difference between these two narratives is enormous. The former is bad news, the latter is a catalyst for panic.

The CDS spreads for Fannie Mae and Freddie Mac doubled in four days. Bernanke had reviewed the internal credit analysis and knew that the fundamentals of Fannie Mae and Freddie Mac did not support such a magnitude of deterioration. Default rates were rising, and capital buffers were thinning—these were facts.

But there's a thick layer of emotion separating the facts from market pricing. That emotion is being continuously nurtured by Farstar's open letter.

He turned the chair slightly to face the window.

He wasn't most worried about the two families.

Paulson's bazooka plan is already in place, and the logic is clear: let the Treasury obtain the authorization to inject capital into and take over Fannie Mae and Freddie Mac, reveal the government's creditworthiness, let the market see the willingness and ability to bail out, and the panic will subside on its own.

There's a need for communication with Congress, but this involves mortgages for tens of millions of families, and neither party can afford to delay on this matter. He felt that Farstar's open letter might create some resistance, but Paulson should be able to handle it.

He could see the end of this road.

What kept him sitting here at three in the morning was something else entirely.

Oil prices.

His speech at the Boston Fed in early June was carefully worded, and the hawkish signal was very clear.

The market reacted. Oil prices fell, and inflation expectations cooled. But the effect lasted less than a week. Oil prices climbed back up, to $130, $140, and approaching $145.

Yuanxing's open letter was more effective in the oil market than his speeches. After Lu Ze announced the liquidation of his long positions in crude oil, prices did indeed drop, and have even fallen to 137 so far.

But Bernanke was unsure how long this effect would last. A fund manager's position adjustments and the Fed's monetary policy signals are two completely different forces. The former is one-off, while the latter is continuous.

Moreover, $130 is also too high; it needs to be reduced to $110, $100, or even $90. That would be the right price.

The consistent signals he can currently provide are contradictory.

The financial system needs easing. The lesson of Bear Stearns is still fresh in our minds: once liquidity tightens, the most vulnerable institutions can be squeezed dry within days. The discount window must remain open, interest rates cannot rise, and the credit market needs a continuous influx of funds.

Inflation needs tightening. Once inflationary expectations, driven by oil and food prices, become unanchored, it can take years and a recession to bring them back under control.

The market needs to see the Federal Reserve's determination to raise interest rates before speculative funds will withdraw from commodities.

Two directions, one tool. He sits right in the middle of this contradiction every day.

Bernanke's gaze fell on the printed manuscript that was turned face down on the table.

The author of that letter must have been aware of the role and mechanism of confidence in the financial system.

A person who could demonstrate that kind of judgment in Bear Stearns and oil could not possibly be unaware of what his voice meant at this point in time.

He understood, but he still sent it.

Because he's on the side of the trade. The greater the panic, the more profitable his position becomes. This isn't illegal. Expressing market opinions based on publicly available information and trading accordingly is perfectly legal. Bernanke has learned enough legal common sense to know this.

But legal and harmless are two different things.

A surgeon loudly discussing the probability of a patient's death next to the operating table, every word of which may be accurate, would not be considered "harmless."

He didn't want to think about that person anymore. At least not tonight.

Bernanke picked up the secure phone on the table and glanced at the time. 3:40.

He wanted to call Geithner. Not to discuss any specific policy issues, just to speak with someone who could understand these things.

Two and a half years ago, when he took this position, he hadn't anticipated this kind of loneliness. During the day, there was no shortage of people talking; the meeting room was always full, with everyone reporting, making suggestions, and debating.

But that kind of conversation is functional, like gears meshing together. It's not between people.

Geithner has his private number. But the fact that he called the New York Fed president at 4 a.m., if leaked in any way, would result in a notification on the Bloomberg terminal the next morning: "Fed Chair makes emergency late-night contact with New York Fed."

He could imagine the reaction of those at the trading desk when they saw the push notification. The CDS spreads for Fannie Mae and Freddie Mac would jump another fifty basis points in the first five minutes after the market opened.

He put down the phone.

The office was quiet. The desk lamp emitted a very faint electrical hum, and the air conditioner had switched to energy-saving mode late at night, blowing less air than during the day, and the temperature was slightly higher.

During the day, this building is a finely functioning machine, but at night it reverts to its original form: an old building constructed in 1937 with its own scent and warmth.

Bernanke picked up a pencil, the notebook in front of him turned to a blank page. He held the pencil tip against the paper for a moment, then put it down.

The tasks at hand are clear: Paulson will formally present the bazooka proposal tomorrow. Congressional communications are already being arranged. The issues with Fannie Mae and Freddie Mac have a clear path and timeline. As for Lehman Brothers, Fuld is still seeking funding, and negotiations with the South Koreans have not stalled; the problems at other financial institutions shouldn't be as severe, and progress is being made on all fronts.

All he needs to do is weather this storm. Once the two-bedroom plan is finalized and the biggest bleeding point in the market is plugged, there will be room to deal with the rest gradually.

Bernanke leaned back in his chair, took off his glasses, and pressed the sides of his nose with his thumb and forefinger.

With his eyes closed, a seemingly unrelated thought suddenly flashed through his mind: When was the last time he had dinner with his wife? He thought for a moment, but couldn't remember. Not so long ago, maybe sometime last week. But the exact date, what they ate, what they talked about—everything was blurry. The past few months felt like a compressed file; once unfolded, it was filled with meeting minutes and market data, leaving only a sliver of his personal life.

He put his glasses back on and looked out the window.

Outside the window, the sky over Washington was still dark. But on the easternmost horizon, a very thin, grayish-white line began to appear.

Once financial institutions stabilize and market confidence recovers, probably in the fall, he can then focus on dealing with inflation. He has noticed that demand from the major Eastern power is also showing signs of slowing, at which point the fundamentals supporting high oil prices will be undermined.

The sun will always rise.

He turned off the table lamp.