New York, Manhattan.
Inside the CEO office of Eldorado Fund, with a panoramic view of the East River through the large glass windows.
Seated on either side of Seok-won, Landon and Andrew were having a serious conversation.
"It was a close race till the end, but the ruling party eventually won," Landon said, adjusting his blue designer tie.
"Even though Zedillo won, the margin was razor-thin—just 2%," Andrew added. "If it weren't for the wave of sympathy following Colosio's assassination, the ruling party might have lost this election."
Seok-won, agreeing with the sentint, nodded slightly.
"What's the mood like on Wall Street?" he asked as he picked up the teacup in front of him.
Landon answered promptly. "Overall, the reaction has been positive."
"They're likely focusing on his credentials—an economics PhD from Yale and his experience as a bureaucrat in the xican Central Bank and Ministry of Planning and Budget."
"Exactly," Andrew chid in. "Objectively, Zedillo seems like the best person to normalize xico, which is on the brink of a currency crisis. Maybe that's why, as soon as his victory was confird, the exchange rate, which had dropped to 4 pesos per dollar, rebounded to 3.5 pesos."
"There's also so improvent in the bond market. xican bonds, which had been scraping the bottom, are showing signs of life again."
While these developnts weren't ideal for Eldorado's short positions on the peso and xican bonds, Seok-won seed unfazed as he set down his teacup.
"It might have been different if this had happened back in March or April when the crisis first erupted, but it's far too late now to reverse the tide," he said.
"…"
"The optimism surrounding Zedillo's election might create a brief improvent, but it won't last long," Seok-won continued.
Landon cautiously voiced a differing opinion, "Now that the election is over, won't the xican governnt actively work to stabilize the exchange rate?"
Andrew nodded in agreent, but Seok-won leaned back in his chair and shook his head.
"Do you really think they will?"
"…?"
As Landon & Andrew exchanged puzzled glances, Seok-won elaborated on his reasoning.
"If the governnt announces a peso devaluation now, they'll have to shoulder all the bla for the currency crisis. Do you think President Salinas is willing to do that?"
"…!"
"He'll likely stall until the inauguration and then pass the ticking ti bomb to Zedillo," Seok-won predicted.
Adjusting his glasses, Andrew countered, "That would undoubtedly tarnish his legacy, but considering they're from the sa ruling party, would he really do such a thing?"
Landon leaned forward in agreent. "That's right. It would only exacerbate the situation, and it's not like he can entirely escape responsibility anyway."
Their points were valid, but Seok-won disagreed.
"While that may be rational, emotions often override logic," he said calmly.
"…"
"President Salinas takes great pride in the high GDP growth rates of 4-5% and stable inflation achieved during his tenure. These are his crowning achievents," Seok-won explained, shrugging.
"Of course, this success wasn't due to the governnt's competence but rather the influx of dollars from NAFTA and low interest rates. But Salinas likely sees it differently."
Indeed, the xican stock market had tripled in the past three years, thanks to this massive dollar influx. Had the governnt used this liquidity to boost industrial productivity and employnt, the situation might have turned out differently. Unfortunately, they hadn't anticipated the U.S. Federal Reserve's aggressive rate hikes, leaving them unprepared.
"So, you're saying Salinas wants to leave office with his reputation intact as the leader who revived xico's economy," Landon summarized.
Seok-won nodded. "That's a natural desire for anyone, especially a politician like Salinas who wouldn't want to shoulder such a disgrace."
Reflecting on Seok-won's words, both n nodded, their expressions changing to one of understanding.
"That does make sense."
"If I were in his shoes, I'd want to deflect responsibility too," Andrew admitted.
Crossing one leg over the other, Seok-won continued, his voice steady, "By dragging things out until the end of his term, President Salinas will deplete what's left of the foreign reserves."
"In that case, Zedillo will inherit a company on the verge of bankruptcy," Landon remarked.
Interlocking his fingers, Seok-won agreed, "Which will leave Zedillo with only one choice."
Andrew's eyes lit up as he spoke the term that ca to mind. "A moratorium."
A moratorium—a temporary suspension of debt repaynt, including principal and interest—was often a last resort for nations in financial crises.
"Declaring a moratorium will tank xico's credit rating and freeze financial transactions, but the alternative is outright bankruptcy," Seok-won said.
xico was already struggling to weather the crisis alone. If Salinas were to delay decisive action as Seok-won anticipated, the situation would only deteriorate further.
"Having declared a moratorium once before, it'll be easier for them to do it a second ti," Seok-won noted.
Andrew recalled the historical precedent. "You're referring to 1982."
"Exactly."
Back in 1982, xico's governnt had relied heavily on foreign loans to cover its fiscal deficit. When oil prices, their primary source of foreign currency, plumted, the country faced a foreign exchange crisis, leading to a moratorium and an IMF bailout.
"It's true; the first ti is always the hardest. The second ti is easier," Landon mused aloud.
"If our calculations are correct, xico's reserves are already below half their original levels. If they burn through the rest defending the exchange rate until year-end, Zedillo will have no other options," Andrew speculated.
Picking up his teacup, Seok-won realized the coffee had gone cold and set it down. "Being an economist with a Ph.D., Zedillo might act decisively and resolve this sooner."
"He'll know better than anyone that delaying will only worsen the situation," Andrew agreed, with Landon nodding in concurrence.
Seok-won glanced at them with a sly smile. "When the moratorium is declared, the peso and xican bonds will hit rock bottom."
"I'm already looking forward to seeing how much we'll profit this ti," Landon said with a light laugh.
Andrew's gaze was full of admiration as he looked at Seok-won.
"Both our short positions on the peso and bonds are still in the profit zone, right?"
"They are," Andrew confird.
Seok-won leaned back in his chair and said leisurely, "The real collapse will co after the presidency changes hands in December. Until then, hold our positions."
"Understood," Andrew replied.
As the weighty discussion concluded, Landon lightened the mood by bringing up a different topic.
"By the way, boss, it seems the owner of this building might be changing soon."
"Isn't Chase Manhattan Bank the current owner?" Seok-won asked, recalling what he had heard before.
"That's correct," Landon confird.
"Are they putting it up for sale?"
"Originally, this building was their headquarters, but as you know, they moved to their new Brooklyn offices a few years ago. Now, they use it purely as a rental property," Landon explained.
Seok-won nodded as Landon continued, "With their decision to sell off surplus real estate, they've decided to put One New York Plaza on the market."
"This is a pri location overlooking the East River, and it's a historic landmark. Selling it seems like a waste. Surprising," Seok-won remarked.
Andrew chid in, "It's a well-known building, but it's also 35 years old and has significant maintenance costs. A few years ago, they spent $50 million just on renovating the lobby, replacing elevators, and removing asbestos."
"Still, spending so much on renovations only to sell it seems wasteful," Seok-won said, furrowing his brow.
"Perhaps they want to sell it while it still fetches a high price after the renovations," Landon speculated.
The strategy made sense: a newly renovated property would command a better price.
After a mont of thought, Seok-won asked, "There are barely any vacancies in this building, correct?"
"That's right. The pri location and direct connection to the stock exchange's dedicated lines make it highly desirable," Landon replied.
Having these lines allowed tenants to execute trades faster, a critical advantage in the financial world. This unique feature made One New York Plaza a preferred choice for financial institutions like Goldman Sachs and Prudential Securities, which rented multiple floors.
"How much is Chase Manhattan Bank asking for the building?" Seok-won asked.
"$300 million," Landon answered.
"It's not a small sum, but it's not outrageously expensive either. Let's buy it," Seok-won declared casually.
"Excuse ?" Both Landon and Andrew widened their eyes in shock.
"Did you just say you want to buy this building?"
"Yes. With the fund's assets growing significantly, owning a building in Manhattan doesn't seem unreasonable," Seok-won replied matter-of-factly.
Landon stamred, "W-Well, that's true, but this is a 50-story skyscraper we're talking about. Shouldn't we think this through more carefully?"
Andrew nodded in agreent, mirroring Landon's hesitation.
However, Seok-won remained resolute. "Delaying only wastes ti. This is a pri property with guaranteed rental inco and future appreciation potential. What's there to hesitate about?"
Looking at the bewildered expressions of both, Seok-won added nonchalantly, "And it's not like we don't have the money. If you want sothing, just go for it."
It was a bold move—whether to call it audacious or simply fearless was hard to decide.
Buying a $300 million skyscraper on a whim wasn't sothing Landon and Andrew had anticipated. Both were too stunned to hide their surprise.
Yet, as impulsive as the decision seed, Seok-won wasn't wrong. They had the funds, and the building's real estate value was undeniable. Buying it would almost certainly not lead to a loss.
Both Landon & Andrew, aware of this, couldn't argue. They simply exchanged looks that silently scread, What just happened?
"You know what they say, strike while the iron is hot. Let's call and lock in the deal before soone else snatches it up," Seok-won said decisively.
"Uh, yes. Right away," Landon replied, still dazed, as he nodded in agreent.
TL/n -
xico's first moratorium occurred in 1982 and was a pivotal event in the country's economic history. It marked the beginning of the Latin Arican Debt Crisis, a period of financial turmoil across the region.
Excessive Borrowing: During the 1970s, xico, like many Latin Arican countries, borrowed heavily from international creditors, taking advantage of low global interest rates and abundant liquidity. The loans were often used to finance fiscal deficits and ambitious infrastructure projects rather than productive investnts.
Oil Price Dependency: xico relied heavily on oil exports as a primary source of revenue. The discovery of vast oil reserves encouraged further borrowing under the assumption that future oil revenues would repay the debts.
Collapse in Oil Prices: In the early 1980s, global oil prices plumted due to oversupply and a decline in global demand, severely cutting xico's foreign currency earnings.
U.S. Interest Rate Hikes: The U.S. Federal Reserve, under Paul Volcker, raised interest rates sharply to combat inflation. This increased the cost of servicing dollar-denominated debts for countries like xico and caused a surge in capital outflows.
Foreign Exchange Crisis: xico's foreign exchange reserves dwindled as the governnt struggled to maintain the peso's value against the dollar. This ultimately led to a currency devaluation, worsening inflation and economic instability.
[The Moratorium]
On August 12, 1982, xico's Finance Minister, Jesús Silva-Herzog, inford the U.S. governnt, the International Monetary Fund (IMF), and international banks that xico could no longer et its debt obligations. The announcent shocked global financial markets and signaled the beginning of a debt crisis.
Debt Amount: xico had over $80 billion in external debt at the ti.
Moratorium Declaration: xico suspended paynts on both the principal and interest of its debt, effectively defaulting.
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