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

Chapter 12 Chess Match

The Lower East Side of Manhattan, at the corner of East 12th Street near First Avenue.

This place is a full twenty blocks away from the glamorous area of Wall Street.

During the day, this area is frequented by artsy young people and NYU students. At night, the corner bar is packed with band members in flannel shirts and young people writing scripts on MacBooks.

No Wall Street elites will be here.

"Sushi Masashi" is a small Japanese restaurant hidden in a basement on a street corner, with a storefront so small that it is almost easy to miss.

The shop's name was written in Chinese characters on the wooden noren (warm curtain), without any English translation.

The owner is a Japanese man in his sixties who has run a shop in New York for thirty years. He never does GG and doesn't accept reservations—unless you are someone he knows.

At 7:40 p.m., Lu Ze pushed open the wooden door, and the copper bell on the noren (warm curtain) rang crisply.

The shop is small, with only an eight-seat bar and three low tables.

There are no other guests at the moment.

The owner was standing behind the bar, wiping a Yanagiba sword with a damp cloth. When he saw Lu Ze come in, he nodded slightly and then gestured with his chin toward the table in the corner.

Greenberg has arrived.

He sat at the low table against the wall, facing the doorway.

He was wearing a dark gray Brooks Brothers three-piece suit, the style of which was at least ten years old, but the cut was extremely well-fitting, and the fabric had a soft matte sheen due to long-term wear and care.

His white hair was neatly parted in a 3/7 ratio, without a single detail missing.

At the age of sixty-two, the wrinkles on his face looked as if they had been carved by a knife, but his eyes were extremely sharp.

A steaming cup of green tea sat untouched in front of him. His hands were clasped together on the table, like a still sculpture.

Lu Ze walked over and sat down opposite him.

The two stared at each other for a full five seconds, neither of them speaking first.

The owner brought over another cup of green tea and placed it in front of Lu Ze. Then, he quietly retreated to the bar and began to process a goldeneye snapper. The sound of the knife cutting through the fish flesh was particularly clear in the quiet space.

"Walker," Greenberg finally spoke, his voice deep and hoarse, with the characteristic huskiness of an old smoker.

"You're younger than I imagined."

"Mr. Greenberg."

Lu Ze's voice was equally calm, "You're older than I imagined."

Greenberg's lips twitched slightly, it was hard to tell if it was a smile or some other expression.

"I've known the owner of this shop for thirty years."

He said,

"On Black Monday night in 1987, I sat here all night. That's when I made my first ten million."

He picked up his green tea, took a slow sip, and didn't look at Lu Ze.

"After that, whenever I needed to make a big deal, I would come here and sit for a while. The owner wouldn't ask any questions or say anything, he would just give me a cup of tea and leave me alone."

He put down his teacup, looked up at Lu Ze:

"Today, I made an exception."

Lu Ze didn't reply, but simply picked up his cup of tea and took a small sip.

Brewed tea at the perfect temperature, with a slightly astringent taste, but a quick and sweet aftertaste.

Greenberg leaned back in his chair, his long fingers tapping lightly on the table in a slow rhythm, as if he were thinking or exerting some kind of invisible pressure on the other person.

"I heard about your deal."

He finally got to the point.

"Bear Stearns put options, with a premium of $5.12 million and a strike price of $25."

He paused,

"Due date: March 21st."

Lu Ze nodded: "It sounds like you're very well-informed."

"There are no secrets on Wall Street."

Greenberg said,

"Especially just a few days ago, it was brought up as a joke by a Goldman Sachs vice president at a dinner party."

He stared into Lu Ze's eyes:

"Either you're crazy, taking your last bit of money to the casino and going all in."

Greenberg said,

"Either you know something that others don't."

He placed his hands back on the table and leaned forward slightly.

"But what intrigues me isn't that you bought put options. What intrigues me is—"

He spoke slowly and deliberately:

"Why did you choose March 21st as the due date weeks ago, instead of April or June?"

The air seemed to freeze in that instant.

The owner used a willow-blade to cut open the belly of the golden-eye snapper behind the bar.

The blade scraped against the cutting board, making a faint sound, like some kind of background music.

Lu Ze put down his teacup and looked at Greensberg.

This question hits the nail on the head.

Choosing a later maturity date can reduce the loss of time value and give the transaction a greater buffer.

A true gambler would choose April or June as the expiration date—because he is uncertain about the exact time of the collapse and needs a margin of safety.

But Lu Ze chose March 21st.

This means that he may not be betting that "Bear Stearns will collapse sooner or later," but rather that he knows it will collapse before this date, and he is so precise that he doesn't need any extra time.

Lu Ze did not answer immediately.

He picked up the teacup, took another small sip, then put the cup back on the table, his finger lingering on the rim for a second.

"I don't need any more time."

His voice was soft, but every word seemed to be nailed into the air.

Greenberg stared at him for a full ten seconds.

He smiled.

The smile held appreciation, bitterness, and an indescribable sense of nostalgia, as if seeing a reflection of one's own youth.

"You know what, Walker,"

Greenberg said his voice was even hoarseer.

"In the fall of 2006, I established a short position in subprime mortgages."

He picked up his teacup and stared at the pale green tea inside:

"I could already see it then; the subprime market was a complete mess. I had my quantitative team build models, and the data all pointed in the same direction—a collapse was just a matter of time."

He took a sip of tea:

"I established a position. CDS, a clean and efficient tool, uncomplicated, yet effective."

He paused for a moment:

"But the position I established was only one-third of what I originally planned."

Lu Ze listened quietly without interrupting.

Do you know why?

Greenberg placed the teacup back on the table, looked up at Lu Ze,

"Because my risk control committee said that the market is not at that point yet."

They pulled out a bunch of reports, told me the housing market was resilient, told me the Federal Reserve would bail it out, and told me not to be overly aggressive.

His fingers began tapping on the table again, this time at a slightly faster pace.

Then in mid-2007, the subprime market experienced a brief technical rebound.

The risk control committee asked me to reduce my holdings, saying I needed to 'stop the loss.'

Greenberg closed his eyes, as if recalling a moment he didn't want to remember:

"I compromised. I cut my position by two-thirds."

He opened his eyes, and there was something in them, something deeper and sharper—a hunter's judgment of himself.

"Then, you know what happened."

Lu Ze said, "Paulson."

"Yes." Greensberg's voice turned cold.

"John Paulson, using the same logic I sensed but didn't act on, made $15 billion in 2007."

He looked at Lu Ze:

"I saw the right direction, but I couldn't hold on. A hunter, in a hunt he should have been in, holding his gun, watching helplessly as his prey escapes. Do you know what that feels like?"

Lu Ze said, "I know."

Greenberg narrowed his eyes: "You've experienced it?"

Lu Ze didn't answer the question, but simply said, "In my understanding, the hunter's greatest enemy is never the prey, but hesitation."

Greenberg remained silent.

The owner came over with two plates of appetizers and placed them on the table.

One dish is the belly of a bluefin tuna, thinly sliced and arranged in a fan shape;

The other dish was grilled mackerel, sprinkled with a little coarse salt.

He remained silent, simply nodding to the two of them before retreating to the bar.

Greenberg picked up his chopsticks, took a piece of tuna, put it in his mouth, and chewed slowly.

After a while, he put down his chopsticks and said:

"I'm not here to ask you for information, Walker."

He looked at Lu Ze:

"I came here to see—what's the difference between someone who has truly grasped the essence of things and me?"

Lu Ze also picked up his chopsticks and took a piece of mackerel.

The grilling gave the fish skin a slightly charred aroma, but the flesh remained tender. He finished chewing and put down his chopsticks.

"Mr. Greensberg, if I may be so bold, I don't think there's any fundamental difference between you and me."

Greenberg raised an eyebrow.

"The only difference,"

Lu Ze said,

"You care about what the risk control committee says, but I don't."

Greenberg stared at him for a long time, then suddenly laughed again, this time a more genuine laugh:

"You're really fucking rude."

"I don't have time to be polite," Lu Ze said.

Greenberg leaned back in his chair, crossed his arms, as if re-evaluating the young man before him.

"Alright. Then I won't stand on ceremony."

He leaned forward:

What do you need?

Lu Ze didn't seem surprised, as if he had expected this question.

He tapped his fingers lightly twice on the table, then said:

"I need insurance."

What kind of insurance?

"I need to make sure that when Goldman Sachs realizes they're going to lose over a billion dollars on this deal, they don't flip the table."

Greenberg's eyes narrowed: "You mean, they'll argue the contract is invalid?"

"Richard overstepped his authority by falsifying my qualification review report and bypassing the risk control committee's review."

Lu Ze spoke slowly and deliberately.

"These are all facts. Goldman Sachs' legal department could argue that the options contract was signed under 'fraudulent preconditions' and therefore is not binding on Goldman Sachs."

Greenberg remained silent.

This is a very real risk.

When faced with huge losses, Wall Street giants will use any means necessary.

If Goldman Sachs were to actually go down this path, Farstar Capital—a tiny hedge fund with only two people—would simply not have enough legal resources to fight a protracted legal battle.

"So you need me," Greensberg said.

"Yes," Lu Ze said.

"You've been on Wall Street for thirty years and have worked in government. You have enough legitimacy and influence. If you hold a portion of the rights to these options, Goldman Sachs can't simply treat me as someone they can easily crush."

Greenberg looked at Lu Ze, something flashing in his eyes—not surprise, but a kind of…admiration? Or rather, the complex emotion of an old hunter seeing a young hunter display his true claws.

"What do you want to do?"

"I am transferring 20% of my option contract rights to you at the agreed price."

Lu Ze said,

"The condition is: if Goldman Sachs attempts to invalidate the contract on the grounds of Richard's overstepping of authority, you, as a co-owner, will fight this matter to the end with me. I will cover the legal fees, and you will provide your Wall Street connections and reputational endorsement."

Greenberg did not answer immediately.

He picked up the teacup, took a big gulp, then put the cup back on the table and tapped the rim of the cup three times with his fingers.

"You're not looking for allies,"

He said, "You're buying insurance for yourself."

"Yes." Lu Ze didn't shy away from the question.

"Then what do I get?"

"Twenty percent of the profits."

Lu Ze said,

"If Bear Stearns really collapses, and the option is exercised at $25 but ultimately traded at $2, the agreed price you paid would be…"

"I don't need you to calculate it for me."

Greensberg interrupted him.

"The opposing party is Goldman Sachs. If Bear Stearns really goes under... do you know what Goldman Sachs represents?"