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

Saturday, March 8, 2008, 10:40 a.m.

Hampton Beach, Long Island, New York.

Richard Kleiman sat on the terrace of his villa, a freshly brewed cup of Blue Mountain coffee and today's weekend edition of The New York Times in front of him.

A sea breeze blew across the neatly trimmed lawn, carrying a faint salty scent. In the distance, several seagulls circled in the azure sky, emitting long, drawn-out cries.

This is Richard's favorite moment.

The Hamptons are always a haven for Wall Street elites on weekends—away from those damn Bloomberg terminals, away from compliance emails, away from those traders who are always screaming.

He took a deep breath, filling his lungs with the scent of the ocean.

The email he sent yesterday still felt like a red-hot iron block pressing down on his stomach.

But under the bright Long Island sun, the burning sensation seemed to lessen somewhat.

Richard told himself: You made the right decision.

Harriman is just an overly cautious old-fashioned person.

That anonymous email was indeed very professional, but ultimately it was just a short-selling fund spreading panic.

Bear Stearns' balance sheet remains healthy, with $180 billion in liquidity reserves on its books.

Even if the subprime market experiences some volatility, the Federal Reserve will not stand idly by.

Bernanke, that old fox, will never let an investment bank with an 85-year history collapse.

Richard picked up his coffee cup and took a sip.

The bitterness spreads on the tip of the tongue, but the sweetness returns quickly.

He opened the financial section of the newspaper.

The headline was an analysis of the Federal Reserve keeping interest rates unchanged, accompanied by a photo of Bernanke testifying before Congress.

Everything seems normal.

The market is still functioning.

The sun still rises as usual.

"Beep—beep—"

The Blackberry phone on the glass coffee table suddenly vibrated, breaking the silence.

Richard frowned. This was his personal cell phone, a number accessible only to a select few key clients and a handful of high-ranking executives within Goldman Sachs. Who would be calling him at 10 a.m. on a Saturday?

He picked up his phone and glanced at the caller ID.

It's Jason Rodriguez.

The head of customer relations at Bear Stearns.

Richard's brow furrowed even deeper.

He hesitated for a second, but still pressed the answer button.

"Feed? Jason. Have a nice weekend."

"Richard..."

Jason's voice came from the other end of the phone.

But the voice sounded completely different from usual—it carried a suppressed, almost suffocating tension.

Richard's heart skipped a beat.

"What's wrong?"

"Richard, I...we've run into a bit of a problem here."

Jason's voice sounded like it came from an enclosed space, with the faint background noise of other people talking in hushed tones. He must be in his office.

Saturday morning at 10:00 AM.

The Bear Stearns people are in the office.

Richard put down his coffee cup and leaned forward slightly:

"What's going on?"

"In Europe... Rabobank."

Jason took a deep breath, as if trying to make his voice sound calm.

"They called our senior management last night. There's a $5 million short-term repurchase agreement that expires next Wednesday."

Richard's fingers tightened slightly: "And then?"

"They said... they're not renewing it."

Richard was stunned.

"What?"

"Labo Bank said they don't plan to renew the lease."

Jason's voice carried a hint of bitterness.

"Their wording was very polite, saying it was 'based on adjustments to internal risk management policies,' and that it wasn't targeting Bear Stearns, blah blah blah. But you know what that means."

Richard, of course, knew what that meant.

On Wall Street, buyback agreements are the lifeline of investment banks.

Bear Stearns borrowed tens of billions of dollars daily in the overnight market to stay afloat—using its own bonds as collateral to borrow money from other banks, which it then repaid the following day.

This is an extremely fragile cycle.

Once the lender thinks your collateral is worthless, they won't lend you money.

And when the news gets out that no one can borrow money, everyone else will follow suit.

This is the investment banking version of a "bank run".

But Labo Bank...

Richard frantically searched his mind for the name.

Rabobank.

The only agricultural bank in the world with an AAA rating is known for its conservative and prudent approach.

Their risk control standards are among the strictest in all of Europe.

If even Rabobank starts refusing to renew visas...

Is there only one?

Richard asked, his voice a little tense.

"Currently, it's one company."

Jason said,

"But Richard, you know how these things spread. Rabobank called late Friday night, which was already early Saturday morning in Europe. The news will definitely spread over the weekend."

He paused:

"Even more critically, Rabobank mentioned a phrase—'concerns about the deterioration of the underlying asset quality.'"

Richard's back instantly broke out in a cold sweat.

How could they...?

"I have no idea."

Jason's voice was tinged with obvious anxiety.

"It could be the news about Moody's downgrading the rating outlook, or it could be... some other source."

Other channels.

"What did your superiors say?"

Richard forced himself to calm down.

"The CEO called an emergency meeting at 9:00 AM this morning."

Jason said,

"The CFO presented the latest liquidity report, stating that we have $180 billion in cash and cash equivalents on hand, which is more than enough to cover short-term debt. If this $5 million buyback isn't renewed, we can raise funds from other sources."

"The board is also having a conference call to discuss whether to issue an announcement on Monday to clarify the liquidity situation."

Richard breathed a sigh of relief.

$180 billion in liquidity.

This number is not small.

Bear Stearns certainly still has enough buffer.

"So...you guys think it's not a big problem?"

"That's what management said."

Jason's voice still carried a hint of hesitation.

"But Richard, you work at Goldman Sachs, you're very knowledgeable. I just want to ask you..."

He lowered his voice:

Do you think this is the beginning, or an accident?

Richard remained silent.

He stared at the cold coffee in front of him, at Bernanke's wrinkled face on the newspaper, and at the hazy mist on the distant horizon.

"Accident."

He finally said,

"Jason, Labo Bank is notoriously conservative."

They may simply be tightening all risk exposure, not just targeting you. The regulatory environment in Europe is different from ours; they've always been very cautious about subprime mortgages.

"Moreover, $5 million is not a large sum for Bear Stearns. You have $180 billion in liquidity, which is more than enough to handle."

"Really?"

Jason's voice carried an almost pleading tone.

"real."

Richard said,

"Release an announcement before the market opens on Monday, emphasizing healthy liquidity, to quell those rumors. The market will understand."

"Okay...okay. Thank you, Richard."

Jason let out a long sigh of relief.

"I'm just... a little nervous. You know, there are so many rumors going around lately."

Don't listen to that nonsense.

Richard tried to make his voice sound as relaxed as possible.

"There are rumors on Wall Street every month. How many of them actually happen?"

I said that a few days ago.

"you're right."

Jason chuckled.

"Okay, then I won't bother you this weekend. I'll let you know if there are any new developments."

"good."

Richard hung up the phone.

He put his phone back on the coffee table.

Then lean back in the chair and close your eyes.

A suffocating feeling slowly wrapped around his neck, making it hard for him to breathe.