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

Monday, August 2008, 3.

When the New York market opened, the entire market resembled a wild beast that had just been awakened but had not yet fully emerged from its nightmare.

The TV is yelling.

The phone is ringing.

The trader is swearing.

Reporters camped out at both ends of Capitol Hill and Wall Street, like a pack of hyenas smelling blood.

Bear Stearns is dead.

But before its body had even cooled down, everyone was already vying to write down the cause of its death.

……

[8:12 AM, CNBC Live Broadcast]

"The real question isn't why Bear Stearns collapsed!"

In the footage, a former regulatory official with gray hair raised his voice, his fingers almost touching the table.

"The question is, at its most vulnerable moment, were there people in the market deliberately spreading panic, maliciously attacking liquidity, and amplifying the stampede through naked short selling?"

The host tried to interrupt:

"But some argue that Bear Stearns' own balance sheet—"

"Every company has a problem with its balance sheet!"

The man immediately interrupted, his voice growing increasingly rapid.

"Not every company can be crushed within 48 hours! There must be something wrong here; someone must be pulling the strings!"

The red subtitles at the bottom of the screen keep scrolling:

[The Death of Bear Stearns: Has the Market's Short-Selling Mechanism Gone Out of Control?]

Several lawmakers have called on the SEC to thoroughly investigate "malicious short selling."

Is naked short selling the final blow that will shatter market confidence?

In the studio, another guest frowned, about to say something, but the host interrupted him before he could even open his mouth:

"We have just received information that Congress will hold an emergency hearing briefing later today regarding the Bear Stearns scandal, and several members of Congress have publicly stated that it is imperative to find out who profited the most from this collapse—"

"right!"

The white-haired old man immediately chimed in, as if he had finally heard what he wanted to hear.

"Follow the money! Investigate the funds! Investigate the holdings! Find out who crushed Bear Stearns this week!"

The camera zoomed in, and his face was flushed with excitement.

"The market needs an answer. Investors need an answer. The American people need to know whether Bear Stearns died from its own problems or from an organized hunt!"

The host nodded, as if he was listening attentively.

But she had clearly connected to a new message source in her earpiece, and the speech was faster than before:

"Wait a minute, our producer just added some information—a list is circulating within Wall Street detailing some of the institutions that made the most astonishing profits through short positions during Bear Stearns' final week..."

Off-camera, the director whispered:

"Switch to the chart! Quickly!"

The next second, a hastily prepared form popped up on the screen.

The top line clearly states:

Far Star Capital

This was followed by a figure that, while not yet fully verified, was already striking enough.

Estimated Profit: $747,000,000

The studio was silent for less than half a second.

Then, like a ladle of water being poured into a pot of oil, it exploded completely.

"What's the background of this Farstar Capital?"

"I've never heard of it before."

"A new fund?"

"A 26-year-old Chinese-American manager?"

"Seven hundred and forty-seven million? This can't be just a simple directional judgment!"

The host practically rushed to speak:

"Ladies and gentlemen, we must emphasize that this list has not yet been officially confirmed—but there is no doubt that such abnormal gains will come under regulatory scrutiny."

She spoke cautiously, but her tone carried the excitement typical of a media professional.

Because she knew that the audience wouldn't remember those vague qualifying words.

The audience will only remember one question:

Who killed Bear Stearns?

……

[9:04 AM, Washington, D.C., Capitol Hill corridor]

The flashes of light were continuous.

Reporters, microphones in hand, completely blocked the already narrow corridor.

A member of the Financial Committee was immediately surrounded by the crowd as soon as he stepped out from behind the door.

"Mr. Congressman, do you believe that Bear Stearns' collapse was related to malicious short selling?"

Do you support the SEC's temporary restrictions on naked short selling?

"Is Wall Street engaging in short selling through a coordinated effort between the options and repurchase markets, thereby triggering a liquidity crisis?"

The congressman kept walking, his face grim as if he hadn't slept at all last night.

"All I can say right now is this—"

He raised his voice, trying to drown out the questions that were being asked by the seven or eight people around him at the same time.

"If someone uses market mechanisms to deliberately create panic and undermine the liquidity of a systemically important financial institution, then this is not normal trading."

"What is that?" the reporter immediately asked.

The senator paused, turned his head, and spoke into the nearest microphone:

That was murder.

Click, click, click—

Countless camera shutters clicked simultaneously.

This sentence was like a bullet, instantly flying into the recording pens of all the reporters, and also into the headlines of every financial media outlet in New York half an hour later.

[10:27 AM, Manhattan, trading floor of an investment bank]

Less than an hour after the market opened, the air was already thick with tension, like a taut string stretched to its limit.

The sounds of telephone ringing, keyboard clicking, cursing, and Bloomberg terminal notifications mingled together.

A bond trader, with the phone tucked between his fingers and his eye on the screen, cursed under his breath:

"Now that Bear Stearns is dead, everyone's started pretending that what they care about most is market fairness."

The person next to him replied without looking up:

"The market is fair, of course. As long as it's someone else who dies, it will always be fair."

A few people laughed, but there was no real relief in their laughter.

Not far away, the head of the prime brokerage business line was standing between two tables, making a phone call, his voice very low:

"Yes, I know. It's Farstar Capital."

"We're also looking into it internally."

"No, I'm not asking you how much he made. I'm asking if he plans to continue using options to increase his position—"

As he spoke, he glanced up at the television.

The screen then cut back to the Capitol Hill corridor, where footage of the congressman uttering the word "murder" was played on a loop, accompanied by an even more jarring headline:

Who killed Bear Stearns?

The person in charge stared at the line of text for two seconds, then suddenly let out a cold laugh.

My colleague next to me asked, "What's wrong?"

He put down the phone and loosened his tie.

murder?"

The person in charge scoffed, as if watching an extremely clumsy farce.

He loosened his tie and casually tossed the folder he had brought onto the table with a "thud".

"These politicians really know how to pick their words."

He pointed at the indignant congressman on the screen, his voice not loud, but tinged with sarcasm:

"Bear Stearns' leverage ratio is 33 to 1! 33! Their balance sheet is crammed with hundreds of billions of dollars of subprime garbage that would pollute the river if thrown in. They were playing with matches in a room full of explosives, draining the entire industry of liquidity, and now they've blown themselves to pieces—"

He paused, a mocking glint in his eyes, typical of a Wall Street veteran:

"And now, these idiots in Washington are telling the public that the responsibility doesn't lie with the person who made the explosives, or the person who played with the matches, but with the person who stood on the street corner, predicted the explosion, and bought himself an exorbitant fire insurance policy?"

His colleague next to him understood what he meant and stopped typing.

"You mean, Farstar Capital was just lucky?"

"luck?"

The person in charge gave him a cold glance.

"You think you can make over 700 million in profit by luck? That 26-year-old kid wasn't lucky at all. He just brought an extremely precise scalpel and precisely cut off the fattest piece of meat before Bear Stearns, this elephant with terminal cancer, breathed its last."

My colleague stared at the scrolling red text on the screen: "But now, no matter how the elephant died, Wall Street and Congress need a killer."

"That's right, that's the most ridiculous part. Because he's too perfect."

The person in charge rested his hands on the table, his eyes still fixed on the words "Far Star Capital" on the television screen:

"Too young, too unfamiliar, has made too much money, and has a clean background. Most importantly, he is an outsider."

Believe it or not, Lehman Brothers, Merrill Lynch, and those of us sitting on the top floor are all thanking God right now for sending us such a perfect scapegoat.

"As long as the media focuses the fire on 'Yuanxing,' no one will care about the trillions of dollars in hidden debt on Wall Street."

All the public needs to know is that a greedy, exploitative young short seller killed a century-old business that had existed since their grandfathers' generation.