When interest rates fall, housing prices rise.
When interest rates rise, housing prices fall.
It was a simple formula that everyone knew, but Wall Street chose to ignore it.
Did they ignore it because they didn't know?
More likely, they ignored it precisely because they knew it all too well.
In their frenzy to scoop up money blinded by madness, they themselves beca consud by that very madness.
"If the real estate bubble causes the expected shockwaves, more than half of Wall Street's
investnt firms are likely to go bankrupt. Especially 'Lehman Brothers,' which created and sold the most synthetic bonds—they're the most at risk."
"Lehman Brothers has been one of Wall Street's leading investnt firms for nearly 150 years. Would it really collapse? The U.S. governnt wouldn't let Lehman Brothers fail—not with its symbolic importance."
Even Rajan, who harbored resentnt toward Wall Street, said this.
Anyone who had experienced Wall Street firsthand knew just how massive the influence and
symbolism of Lehman Brothers was. It was hard to think otherwise.
In Korea, they called it "A big horse doesn't die."
In English: TOO BIG TO FAIL.
A massive corporation, tangled in countless vested interests, was bound to create devastating ripple effects—and for that reason, it was believed such giants would never be allowed to go under. That was the term used in Arican economics.
"Soone has to take responsibility for the fraud committed in unison by all of Wall Street's
investnt firms. And because of its symbolic weight, Lehman Brothers will not be able to
escape that responsibility."
"Hmm… It seems we're about to witness a series of events that current economic theories can't fully explain. I'll reset everything and begin a fresh line of research."
Rajan and six other scholars.
The seven of them didn't leave the SAVE Investnt Company's conference room for two
straight days.
Faced with an unprecedented economic crisis, their passion for research and academia burned brighter than ever.
"Research is important, but unless we raise our voices outside, no one will recognize our
findings, don't you think?"
"We've tried to speak out several tis in the past, but every ti, we were blocked by resistance from Wall Street investnt firms. We couldn't get our voices heard properly."
"Then allow to create a proper platform for your voice. To do that, we'll need to establish a separate organization."
An organization was needed to speak on behalf of SAVE Investnt Company.
If SAVE Investnt stepped forward directly, it would inevitably stir up nurous issues.
But if those already branded as outsiders created a group and raised their voices, SAVE could
remain free from the consequences.
One might say they were being used as shields.
But there was no intention of using them as sacrificial pawns—on the contrary, this was a step toward making them into heroes.
"Are you suggesting we create a new organization separate from everything else?"
"Think of it as a special task force affiliated with SAVE Investnt. If we speak out while still within Wall Street, it'll be hard to gain public trust."
"As long as we can continue our research like we have, I don't mind. But have you decided on a na for the organization?"
"I'm planning to na it in connection with the current real estate crisis."
Rajan and the other scholars didn't oppose the idea of forming an organization.
In fact, so preferred the freedom and flexibility of operating through an independent group
over being tied to a Wall Street investnt firm.
"If it's to be connected with the real estate crisis, how about sothing like the 'Subpri
Mortgage Group'? The subpri loans are the main reason for the housing bubble, after all."
"If we're talking about the root cause, wouldn't it be Wall Street's moral hazard?"
"That's true. They knowingly turned a blind eye, manufactured synthetic bonds, and sold them just to profit."
"Exactly. That's why I'm thinking of naming the group Moral Hazard ."
Moral Hazard.
A term describing the act of exploiting legal and institutional loopholes to avoid responsibility and pursue gain.
It was the perfect na for a group aiming to challenge the financial sector, including Wall Street.
"Then let's go with Moral Hazard as the organization's na. We'll gather like-minded
individuals and expand the group."
"If we want the organization to have impact, we'll need to co out strong from the beginning. Why not kick things off by publishing the research we've been working on?"
"We'd like to do that too, but as I ntioned, we don't have a platform to speak from."
"Don't worry about that. While Wall Street may control the traditional dia, we're living in an age where you can have influence without relying on news outlets or newspapers."
In the past, controlling the dia ant controlling the world.
But with the ergence of the internet, that era had co to an end.
The age of dia domination was over.
The founding ceremony of the Moral Hazard organization was held.
It was broadcast live not only on YouTube but also across various internet platforms like Google and Facebook.
Rajan, as the group's representative, gave an unfiltered presentation of the current situation.
He openly criticized Wall Street and the Federal Reserve.
Even without sensational editing, the video was already provocative enough on its own.
Team Leader Han was monitoring the response in real ti and provided updates.
"The Moral Hazard founding ceremony has hit #1 on the trending search rankings on social
dia."
"What about reactions on search portals?"
"Sa there. Google seems to be pushing the content, and it's drawing a lot of attention."
"No movent from the mainstream dia yet?"
"A few internet news outlets have put out so stories, but the major dia houses are still
quiet."
Once the issue grew big enough, the major news outlets would have no choice but to report it.
If the topic gained traction across social dia and portals—enough that Wall Street's influence couldn't suppress it—then even the mainstream press would have to act.
"The major outlets will start moving soon."
"We're closely monitoring dia outlets known to have tense relations with Wall Street."
They weren't just sitting and waiting.
They leveraged social dia algorithms to amplify the founding ceremony's visibility.
They also submitted exposure requests to portals like Google to ensure the event appeared more prominently.
Around three hours later...
The major news outlets finally began flooding in with articles.
"News and opinion pieces are pouring in. But most of the columns are criticizing Moral Hazard."
"That's fine. Whether they support us or oppose us, as long as the issue is dragged into the
spotlight, it's a win."
They weren't aiming for imdiate public support.
In fact, the more heated the opposition, the more dramatic the impact could be.
Just as they were feeling satisfied with the dia storm, David suddenly rushed in.
"Boss! The Fed just announced an ergency press conference. Chairman Bernanke himself is going to speak."
"So the second most powerful man in Arica is stepping up. We can say we've achieved our first objective."
There were many reasons for creating the Moral Hazard organization.
One of them was to provoke a reaction from the U.S. governnt—and with the Fed chairman taking action, Moral Hazard had already proven its worth.
I smiled at how things were unfolding.
But Team Leader Han, wearing a much more serious expression, cautiously spoke up.
"Depending on what the Fed Chair says, we'll get a glimpse into the U.S. governnt's stance. If he criticizes Moral Hazard 's argunts, it would an the governnt doesn't fully grasp the gravity of the current situation."
"Let's wait and see what he has to say."
Not long after, the Federal Reserve's ergency press conference began.
Chair Bernanke didn't seem to have had much ti to prepare, but still, he delivered a speech that lasted over ten minutes.
Team Leader Han sumd up the ten-minute speech in a single sentence.
"The housing market is solid. The Fed Chair has officially declared the stability of the U.S. real estate market."
"So he's confident that the housing system in Arica is functioning properly."
"He even went as far as saying that there's very little chance of the housing market collapsing. At this point, it seems they're not ignoring the warning signs—they truly don't see them."
The Fed Chair's words carried trendous weight.
His remarks reflected the official stance of the U.S. governnt and could be interpreted as a
green light encouraging continued investnt in the housing market.
"David, the White House must know that Moral Hazard is backed by us, right?"
"Since you said there's no need to hide it, we've left enough breadcrumbs for them to easily make the connection."
"Then it won't be long before soone from the White House reaches out. I'd like to et
soone important—ideally a VVIP—but who knows if that'll be possible."
"Would the President of the United States really get involved directly? More likely, soone
from the Treasury Departnt or perhaps soone from Bush's campaign team will be
dispatched."
"It depends on how seriously the U.S. governnt views the current situation. The more critical they consider it, the higher the rank of the person they'll send."
All of this was being done to force the U.S. governnt to co knocking.
In negotiations, the side that makes the first offer usually ends up at a disadvantage.
To gain the upper hand, it was better to wait until the U.S. governnt made the first move.
The final day of my business trip to the United States.
Contrary to my expectations, no one from the U.S. governnt had co to see .
In the end, I had only partially achieved my intended goal as I headed toward the airport.
Just before arriving at the airport—
Screeech!
The driver slamd on the brakes.
Two large SUVs had suddenly blocked the road ahead.
From the vehicles erged n in black suits, clearly security personnel. They quickly
surrounded our car and draped it entirely in black fabric, obscuring it from view.
Knock, knock, knock!
A man in a gray suit, who looked like a governnt official, tapped on the window.
"Mr. Kim, could you please step out for a mont? This is an urgent matter."
It was a situation where my safety could very well be in jeopardy.
Guns were legal in Arica, after all—it could have been an ard robbery.
But then again, what kind of criminal would attempt sothing this reckless?
Only one type of organization could pull off sothing like this. Smiling, I opened the car door.
"If you'd simply told the eting place, I would've found my way there just fine. This is a bit excessive, don't you think?"
"The person you're eting doesn't operate on scheduled appointnts. He's waiting for you
now, sowhere quiet near the airport. Please, join us in our vehicle."
"I never thought I'd get to ride in an official U.S. governnt car. Let's not keep such an
important person waiting."
Feigning nonchalance, I stepped into the SUV.
They were likely putting on this show to intimidate —to make a statent.
Since my actions were going against the official stance of the U.S. governnt, this was probably their way of applying subtle pressure.
"We've arrived. Please wait a mont."
Click.
The door opened, and the security team exited all at once.
They pulled out an enormous sheet and not only covered the entire vehicle again, but also
blocked the entrance to the building.
It was a asure to ensure that no one could see who was entering the premises from outside.
"We'll need to perform a brief body check. We'll be holding on to your phone and any electronic devices."
After going through all the tedious procedures, I was finally allowed inside.
As expected, President Bush was waiting for .
"Welco, my strongest supporter—Mr. Kim!"
With a broad smile, President Bush reached out to shake my hand.
It was hard to believe this was the sa man who had soone practically abduct by blocking the road with SUVs.
Not that it mattered.
After all, eting President Bush had been the main goal of my trip to the U.S.
Right now, he might be playing the role of the one in power.
But how long could he really keep playing that part?
TL/n -
Lower interest rates an cheaper ho loans (mortgages).
Monthly mortgage paynts beco more affordable, so more people can buy hos.
Increased demand leads to higher competition for available hos.
As a result, ho prices go up.
#
Higher interest rates an more expensive ho loans.
Monthly mortgage paynts beco less affordable, so fewer people can buy.
Demand drops, and sellers may have to lower prices to attract buyers.
So, ho prices fall.
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