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

Chapter 92 A Little Bit

One afternoon in the first week of July.

Lu Ze sat in his office for three whole hours without glancing at the Bloomberg terminal.

On the table in front of him were four sheets of A4 paper. Each sheet was filled with writing, most of which had been crossed out, and the blank spaces were crammed with corrections and annotations.

He was writing that letter.

He started writing last night and wrote until 2 a.m., slept for four hours, and continued revising at the office at 9 a.m. this morning.

The first draft was too radical; it read like a declaration of war. He crossed it out entirely.

The second draft was too mild; it read like an academic paper abstract. Nobody remembers an academic abstract.

The third draft got the tone right, but the structure was problematic. The section on oil was too long, and the section on the financial system was too short. He reversed the proportions of the two sections.

Fourth draft.

He looked at the final draft on the table, which was covered with dense handwritten annotations, and read it through from beginning to end again.

It is mainly divided into two parts: an assessment of the current price of oil and a commentary on the financial system.

Regarding oil, he wrote very directly: "Current oil prices have significantly deviated from fundamentals," and "Yuanxing Capital is systematically reducing its long positions in energy."

These are things he couldn't say when he still held a large number of long positions, but now that the major positions have been largely cleared out, saying them will not only not harm his interests, but will also become the most powerful evidence of his judgment in the future—when oil prices really collapse.

He wrote with extreme caution regarding the financial system section.

He needed to make the wording flawless, so that it appeared on the surface to be a "well-intentioned" warning letter that regulators couldn't find any fault with.

It does not name any specific institution, and does not use terms such as "short selling," "collapse," or "bankruptcy."

The entire document uses wording typical of central bank governors, such as "suggestions," "prudent," and "attention."

But every "suggestion" precisely targets the most fatal weaknesses of Lehman Brothers, AIG, and several other institutions.

Anyone with a brain can understand it.

He revised the last paragraph five times.

He looked at the finished draft and sent a message to Isabella.

......

When Isabella pushed open the door, she was carrying two cups of coffee.

This is a habit she's recently developed—she grabs two cups from the break room before being called into the main office each time.

One cup for myself, and one cup for Lu Ze's desk, replacing that old cup of coffee that always went cold after being only half-drunk.

She placed the hot coffee on the corner of the table and casually took the cold one.

"You were looking for me?"

Lu Ze pushed the unmarked folder in front of her.

"Take a look at this."

Isabella sat down and opened the folder.

The first line of text she saw was:

Yuanxing Capital Management Co., Ltd. – An Open Letter Regarding the Current Market Environment and Yuanxing Capital's Investment Stance

Her fingers paused for a moment as she turned the page.

Then she began to read.

The office was quiet for about seven minutes.

During those seven minutes, Isabella turned the pages one by one, her gaze lingering longer and longer on each passage.

Lu Ze didn't rush her. He picked up the freshly brewed hot coffee, sipped it slowly, and looked out the window.

At the third minute, Isabella flipped to the section about oil. Her brow furrowed slightly.

At the fifth minute, she turned to the section on the financial system. Her brow furrowed even more.

At the sixth minute, she turned to the sections on "Transparency of Level 3 Assets" and "Vulnerability of Short-Term Financing Structures." Her page-turning speed noticeably slowed down.

Seventh minute.

She turned to the last page and read the phrase "the most dangerous moment."

Then she closed the folder.

The closing motion was very gentle, but in the quiet office, the sound of the paper rubbing together was still clearly audible.

Isabella put the folder back on the table, leaned back in her chair, and took a deep breath.

"Boss."

"Um."

"If this letter is sent out..."

Her voice was steady, but Lu Ze could hear something beneath that calmness—not entirely worry, but more like a precise calculation of the consequences that only appears under extreme pressure.

Do you know what's going to happen?

"you tell me."

Isabella looked at him and organized her thoughts.

"The oil sector is alright. Your public announcement that you're liquidating your long positions will only accelerate panic among those still holding long positions. But oil price trends are determined by macroeconomic factors, not by a single letter. At most, it might bring forward the peak by a few days."

"But the financial part."

She tapped the folder lightly with her finger.

"You didn't name any specific institution. But for every issue you raised—commercial real estate valuation, tertiary assets, reliance on short-term financing—in the current market context, which company would be the first to be investigated after reading this?"

"Lehman?" Lu Ze said.

"Yes. Lehman."

Isabella looked at him.

"Your letter, on the surface, is a systemic risk warning, but in reality, it's a needle. It won't directly burst the bubble, but it will make everyone aware of its existence. Then people will start to panic, start checking their holdings, and start withdrawing funds from the most vulnerable institutions."

"And Lehman Brothers, precisely, was the most vulnerable one."

Isabella picked up her coffee, took a sip, and put it down.

"Boss, I'm going to say something that might not be very pleasant."

"explain."

"If Lehman Brothers really collapses within a few months after this letter is sent out, the first person those politicians looking for a scapegoat at congressional hearings will think of is you."

"They would say: Lu Ze of Farstar Capital, while shorting Lehman Brothers, published an open letter deliberately creating market panic and accelerating Lehman's collapse. This is not normal market behavior; it is deliberate financial murder."

Lu Ze took a sip of coffee.

"you're right."

"Then why did you post it in the first place?"

Lu Ze placed the coffee cup on the table and looked at her.

"Because if I didn't send that letter, even if Lehman Brothers collapsed a few months later, Congress would still come after me. They would say: Farstar Capital made 700 million on Bear Stearns, billions on oil, and billions more on Lehman's CDS—this person must have inside information, must be manipulating the market."

"Whether I send this letter or not, they will come."

"The difference is that if I had issued the warning, I could have said at the hearing: 'I publicly warned everyone back in July that the risks were building. It's not my fault you didn't listen.'"

"If I didn't issue the statement, all I could say at the hearing was, 'I made money, but I didn't say anything.' Which do you think is more convincing?"

Isabella thought for a moment.

"The former," she said.

"Yes," Lu Ze said, "This letter is more of a shield than a weapon."

Isabella picked up her coffee again and took a big gulp this time.

She put down the cup and remained silent for a few seconds. Then she smiled, a smile tinged with helplessness and a hint of mockery.

"Boss, can I ask you a not-so-serious question?"

Lu Ze glanced at her and raised an eyebrow: "Ask."

"You write this letter," Isabella said, a smile still playing on her lips.

"What percentage of the reason is due to risk control considerations, and what percentage is simply because you dislike Richard Fuld?"

Lu Ze's finger paused on the coffee cup for a moment.

Isabella continued, "I heard about the Metropolitan Gala. Lin Tao was scrolling through Bloomberg's IB group that night, and it was all over the news that Fuld had publicly lost his temper at the charity gala, pointing his finger at you and Eindhoven and yelling at them for five minutes."

She leaned back in her chair, crossed her arms, and looked at Lu Ze's profile.

"Then you used an Egyptian sarcophagus from a museum to shut him up."

"Lin Tao's voice trembled as he relayed this. He said he thought you were the most terrifying person he had ever met."

Lu Ze's lips twitched slightly.

It was so subtle that Isabella probably wouldn't have noticed it if she hadn't gotten used to observing every tiny muscle movement on his face over the past few months.

I have no personal likes or dislikes towards Fulde.

Lu Ze said calmly.

"real?"

"Really. He's just someone who's sitting on a sinking ship but refuses to admit it's sinking. There are plenty of those kinds of people on Wall Street. He's nothing special."

Isabella tilted her head and looked at him, the smile still lingering.

"So when you confronted him at the dinner party, did you really not feel any satisfaction at all?"

This issue caused a very subtle change in the atmosphere of the office.

Lu Ze looked at Isabella.

Today she was wearing a dark gray silk shirt, and her hair was loosely tied into a low ponytail at the back of her head, with a few stray hairs hanging down beside her ears.

Her eyes were full of composure, and she did not look away even when Lu Ze looked at her.

"Perhaps a little."

A barely suppressed smile appeared on Lu Ze's lips.

Isabella raised her eyebrows slightly.

"Just a little bit," Lu Ze added.

Isabella laughed out loud.

"All right."

She stopped smiling, picked up the folder again, and asked, "When will this letter be sent?"

"July 7th, I suppose."

July 7th.

Isabella mentally calculated the date, "Five more days."

"Yes. Before that, make sure we've completed all our positions on the S&P 500 and VIX. We also need to establish short positions in oil."

"After this letter is sent out, the market reaction will be reflected in the charts within a few hours. I need to load all the ammunition into the chamber before sending the letter."

Isabella stood up and tucked the folder under her arm.

"I'll arrange it."

She walked to the door, opened it, and then paused.

"Boss."

"Um?"

Isabella turned around and looked at him. The office light shone from behind her, casting a soft profile on her face.

"That sentence is very well written."

Which sentence?

"The most dangerous moment is when everyone stops talking about risks."

She paused for a moment.

"If someone asks me in the future what Wall Street was like in 2008, I might only need to quote this one sentence."

Lu Ze looked at her standing at the door and remained silent for two seconds.