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

Monday, August 2008, 3.

At 8:30 a.m., there was still half an hour before the US stock market opened.

CNBC's morning financial news program, "Squawk Box," is broadcasting intensive pre-market coverage. The scrolling text at the bottom of the screen is dominated by a bold breaking news item:

[Breaking News] Bear Stearns issued an official statement strongly denying rumors of a liquidity crisis.

In the studio, renowned presenter Becky Quick held a freshly printed copy in her hand and spoke rapidly into the camera:

"Ladies and gentlemen, just ten minutes ago, Bear Stearns, the fifth-largest investment bank on Wall Street, released a strongly worded official statement, launching a full-scale counterattack against the rumors circulating in the market over the weekend regarding its liquidity crunch."

The statement clearly states that Bear Stearns' balance sheet is currently in excellent health, with over $18 billion in cash and highly liquid equivalents on its books. Its core tier 1 capital ratio far exceeds the regulatory requirements of the Basel Accords.

"CEO Alan Schwartz stated in a brief subsequent conference call: 'There are some unfounded and malicious rumors circulating in the market. Bear Stearns' day-to-day operations and funding channels are functioning normally, and we are not facing any liquidity pressures.'"

The camera cut to the guest commentator on the side—a senior analyst based on Wall Street.

"Mike, what do you think of this statement?" Becky asked.

The analyst adjusted his glasses, looking relaxed: "I think this is very timely and necessary."

A $18 billion liquidity buffer is an extremely safe figure for an investment bank with total assets of $400 billion. This is enough to cover all their short-term debt for the next few months.

Clearly, the market panic triggered last week by Moody's downgrade was somewhat excessive. I expect Bear Stearns' share price to see a decent rebound at the opening today.

……

At 9:30 a.m., the opening bell rang at the New York Stock Exchange.

Goldman Sachs headquarters, 43 floors.

Richard Kleiman sat in the large boss's chair, staring intently at the Bloomberg terminal screen.

His palms were still slightly sweaty. Although he had reassured Jason with that same rhetoric over the weekend, the shadow of Rabobank's withdrawal still loomed over him like a dark cloud.

The first price jump occurred after the market opened.

Bear Stearns (BSC) opened at $61.50.

It fell slightly by a dozen cents from last Friday's closing price.

Then, in the next ten minutes, a large number of buy orders flooded the order book. The stock price began to fluctuate upwards, breaking through $62, and then stabilized around $62.40.

There was no sharp drop.

There was no panic selling.

Even the trading volume has returned to normal levels.

Seeing this, Richard's shoulders, which had been tense for two days, finally relaxed completely.

"call--"

He let out a long breath and slumped back in his chair, feeling as if he had just escaped death and been pulled back.

He won his bet.

The $180 billion cash reserve, coupled with the strong denial statement, successfully stabilized market sentiment.

When the market enters a wait-and-see period, time becomes its strongest ally.

Richard accessed the internal clearing page of the options trading desk.

Because another weekend had passed, the time value of Lu Ze's 512 million yuan term options had once again significantly decreased.

"Stupid Chinese kid."

Richard smirked and took a big gulp of his coffee.

In another week, this money will be neatly transferred into his year-end bonus account.

……

At the same time.

W Hotel, Business Suite 2317.

Isabella stood in front of the Bloomberg terminal, her brow furrowed as she looked at the steadily rising intraday chart of Bear Stearns.

"Boss."

She turned to look at Lu Ze, who was sitting on the sofa with his eyes closed, her voice revealing barely concealed anxiety.

Bear Stearns issued a clarification statement, and the market accepted it. They do indeed have 180 billion in cash on their books.

There were no further developments from Harriman over the weekend. Our options... lost hundreds of thousands in time value today.

She bit her lip: "Did I really... pour that glass of warm water the wrong way?"

Lu Ze slowly opened his eyes.

He was holding a glass of water; he wasn't drinking alcohol.

With the decisive battle approaching, he needed to maintain an absolutely clear mind.

"Isabella, when you were at Wharton, did your professors teach you what the 'liquidity illusion' is?"

Lu Ze asked calmly.

Isabella paused for a moment.

Lu Ze stood up and walked to the huge floor-to-ceiling window.

The Manhattan skyline outside the window was illuminated by the early spring sun, and the entire financial district looked prosperous and solid, as if no force could destroy it.

"$180 billion. For a traditional manufacturing company, if it were on the verge of bankruptcy, that amount of money could sustain it for years."

Lu Ze spoke softly, his gaze sweeping down at the steel forest.

"But investment banking isn't manufacturing. Investment banking is a super-leveraged machine sustained by 'trust.'"

"When no one asks you for money, you don't need a single penny; but when everyone thinks you're doomed and starts asking you for money..."

Lu Ze turned around and looked at Isabella:

"Don't even mention 1800 billion, even 180 billion would be drained clean within hours."

"But the market didn't panic today!"

Isabella pointed at the screen.

"Because panic also has levels."

Lu Ze walked to the table and tapped his fingers lightly on the surface.

"Ordinary retail investors and second-tier institutions trade stocks based on news and announcements. That's why they're buying today, maintaining this false prosperity."

"But true predators never look at announcements. They only look at what their own kind are doing."

A cold glint flashed in Lu Ze's eyes:

"Rabobank's divestment is like a drop of blood in a shark-infested ocean. Those top Wall Street giants—Goldman Sachs, Morgan Stanley, Lehman Brothers—must already be secretly severing all ties with Bear Stearns."

"They won't issue a public announcement; they'll just quietly hang up on Bear Stearns and refuse to accept their collateral."

"This kind of silent strangulation is the most deadly."

Lu Ze paused for a moment and glanced at the calendar.

Today is Monday, September 10nd.

"Be patient, Isabella."

Lu Ze picked up his water glass, took a sip,

"Wall Street is a whore with no secrets. The dirty tricks the big players pull under the table can only be hidden for twenty-four hours at most."

"By tomorrow afternoon... Harriman will know who's made a fool of him."

Lu Ze put down his cup.

"There's one more thing."

"In the financial market, debunking rumors is a very dangerous move."