Reborn in Tokyo: From Heiress to Global Tycoon

Chapter 275 The Burning Base

New York City, USA. Lower Manhattan.

A powerful convective storm forming over the Atlantic Ocean is sweeping across this financial island. Gale-force winds, accompanied by torrential rain, are pounding against the bulletproof glass facade of the SA Investment headquarters building.

Inside the trading hall, the central air conditioning vents continuously spewed out cold air.

Twelve large parallel server racks, custom-made by IBM, stand deep inside the server room, emitting a steady hum of cooling.

A giant red LED scrolling screen hanging above the wall is rapidly updating the latest order book data from the New York Mercantile Exchange (NYMEX).

WTI Crude Oil (Light Sweet, Low Sulfur) - September 1990 Contract: $23.45/barrel ▲

The first shot fired in the Persian Gulf ignited panic in the global energy spot market. West Texas Intermediate (WTI) crude oil futures prices have exhibited a steep upward curve over the past 72 hours, completely defying resistance level models.

On the auxiliary screen of the main control panel, several lines of green code are automatically executing the liquidation process.

Even before the escalation of border tensions in the Middle East, SA Investment, through its offshore legal team, signed total return swap (TRS) contracts with the over-the-counter (OTC) desks of major investment banks.

At this moment, with each upward jump in WTI crude oil prices, market makers such as Goldman Sachs and Morgan Stanley, as counterparties, are facing severe losses from their one-sided exposure. In order to maintain their Delta Neutral positions on paper, investment banks' proprietary trading desks are forced to buy large amounts of crude oil futures contracts on the open market of the New York Mercantile Exchange.

The massive spot purchases made by industry giants to protect themselves, in turn, further fueled the surge in crude oil prices.

In the over-the-counter market, the automatic settlement clause of the International Swaps and Derivatives Association (ISDA) master agreement was triggered.

The huge margin shortfall was forcibly withdrawn through the underlying channels of the New York clearing center. These funds, representing the enormous profits of the war, were precisely divided into hundreds of shares and continuously transferred into offshore trust accounts located in the Cayman Islands.

Three blocks away. Broadway, Morgan Stanley headquarters.

Forty-second floor, compliance department senior conference room.

A senior investigator from the U.S. Commodity Futures Trading Commission (CFTC) sat on the right side of the long walnut conference table.

In the center of the table, a settlement data flow document spanning hundreds of pages was spread out.

"Manager David, excuse me."

The investigator's tone carried a hint of fatigue from working overtime continuously, but he maintained a humble yet assertive demeanor.

"You probably know better than I how crazy the market is right now. In just 72 hours, the price of WTI crude oil has been driven up by 25%."

He paused, his gaze falling on the investment banking executive across from him.

"To be honest, price increases caused by geopolitical conflicts are a normal phenomenon, and the committee originally did not want to intervene too much. But the problem is... the total return swap contracts signed by your company at the over-the-counter derivatives counter are just too conspicuous."

The investigator extended his right hand, pointing his index finger at the densely packed settlement figures on the document.

"According to our data, there is a staggering amount of margin shortfall flowing from the New York clearinghouse into trust accounts in the Cayman Islands. Even worse, to cover these one-sided exposures, your proprietary trading desks are forced to buy large amounts of physical positions on the open market to hedge."

The investigator pushed the document forward half an inch and looked David straight in the eye.

"This behavior has objectively become an accomplice in driving up oil prices. There is a lot of pressure from Washington. So... according to the 'anti-manipulation review' clause in the Federal Commodity Exchange Oversight Regulations, I must obtain the complete look-through list of the beneficial owners of these over-the-counter options today. Please do us a favor and cooperate with our work."

Sitting on the other side of the table was David, the legal director of Morgan Stanley's compliance department.

After listening to the investigator's request, he turned around and slightly raised his chin at the senior assistant behind him.

“Investigator, Morgan Stanley has always followed the rules and is naturally willing to cooperate with any federal investigations.” David’s tone was very calm, pausing slightly. “However… the situation regarding the actual beneficiaries of these options is indeed somewhat complicated. This is probably beyond our authority to simply ‘do you a favor’.”

The assistant stepped forward and took a heavy document from a metal briefcase. Holding the document by the bottom with both hands, he placed it flat in front of the investigator.

"This document is a diagram of the multi-layered Blind Trust structure for this funding," David said, picking up his coffee cup and taking a sip. "You can take a look at the top-level agreement first."

The investigator turned to the first page of the document.

On paper, an extremely complex web of cross-shareholdings and offshore trust layers comes into view. Dozens of special purpose entities registered in the Virgin Islands and Luxembourg form a legal labyrinth that cannot be untangled in a short time.

He flipped through the pages one by one, his eyes searching for clues in the corporate nominee structures.

He flipped to the top of the architecture diagram and stopped.

That was a subscription agreement for the Washington Carlyle Group's military private equity limited partners (LPs) signed several months ago.

In the supplementary terms, the investor voluntarily relinquished all voting rights and the right to audit the underlying projects.

In the joint signature section of the agreement's transferee, the signatures of former key White House staff members and two retired Army generals with influence in the Pentagon were prominently displayed.

"The Carlyle Group?" The investigator's voice lowered. "The underlying returns on this funding have already been transferred to the Pentagon's overseas reserve fund for defense contractors?"

"Yes. Everyone has seen the situation in the Persian Gulf on the news. The Ministry of Defense is mobilizing logistical resources at full speed." David slowly put down his coffee cup. "Currently, this income transferred into the offshore account has been legally recognized as the Carlyle Group's underlying investment return."

David leaned back in his leather chair, his gaze fixed on the investigator's face.

"If the Commodity Futures Trading Commission were to demand a forced look into the underlying data of these accounts to investigate the cash flow of a defense-related private equity firm, Mr. Investigator, you would likely need to apply for a special pass from the Senate Armed Services Committee."

"This process...do I need to contact the legal department on your behalf and prepare the relevant defense materials in advance?"

The investigator stared at the cursive signatures of the former White House staff and retired generals. His chest rose and fell slowly.

If you were to examine the books of a private defense company, any attempt to freeze the reserve funds of military contractors would provoke a joint backlash from Capitol Hill and the defense conglomerate.

He didn't want retired generals and politicians to use their administrative power to pin charges of obstructing national security on the investigation team.

Some things, if kept out of the open, are just a flimsy agreement; but once they're brought to the forefront, at best, his entire investigation team will be dismissed; at worst, nothing is surprising...

He's been doing this job for so long, he naturally knows how to behave appropriately.

"...No need."

The investigator closed the subscription agreement and pushed it back to the center of the table.

I picked up the black pen beside me. I opened the interrogation record I had brought, and my gaze lingered on the options at the bottom of the record for two seconds.

The pen tip touched the paper. A checkmark was drawn in the "Complies with the confidentiality law exemption clause" option box.

"Excuse me, Manager David."

"The inquiry process will be archived, and we will not pursue this matter further."

……

Tokyo, Nihonbashimoto-ishi-cho.

Bank of Japan (BOJ) headquarters building. President's office.

The slats of the solid wood blinds were adjusted to an angle that blocks reflections.

The electronic screen on the wall displayed several sets of constantly fluctuating red data. The import settlement price curves for Indonesian Minas crude oil and North Sea Brent crude oil were climbing at a chillingly steep angle.

Sixty-five-year-old Yasushi Mieno sat upright behind a large cherry wood desk.

The desktop direct line phone rang urgently.

"President Mieno"

On the other end of the phone, the voice of the core director of Keidanren (Japan Business Federation) sounded extremely anxious, even accompanied by heavy breathing.

"The Middle East crisis has erupted. Shipping rates and raw material procurement costs have doubled in the past week. Three large shipyards in the Kanto region, as well as more than forty chemical plants... have already hit rock bottom in terms of cash on hand."

The director swallowed hard, his voice trembling slightly as it came through the radio waves.

"The Ministry of Finance's credit freeze has already made life extremely difficult for the real economy. If the standard interest rate isn't lowered to release liquidity into the market, there will be widespread defaults and production stoppages in the Kanto heavy industry by the settlement date early next month. Tens of thousands of skilled workers will then lose their jobs… Can the Bank of Japan bear this responsibility?"

Mieno Yasushi opened the thick price index forecast report in front of him.

The paper is filled with formulas for extrapolating imported inflation from various commodities.

"Your Excellency, Director."

Mieno Yasushi's voice was steady.

"The surge in energy costs caused by the Middle East crisis is an objective fact. But please take a look at the current broad money supply in the country."

"If the Bank of Japan chooses to ease monetary policy at this point, the surge in liquidity coupled with soaring imported energy prices will immediately trigger hyperinflation on the consumer side."

He closed the report.

"The purchasing power of the yen will be severely damaged. At that time, the runaway import costs will further drag down the entire country's manufacturing base. The Bank of Japan's responsibility is to maintain the long-term stability of the macroeconomy. It will never compromise for short-term cash flow difficulties."

"You—! Do you even understand what the factories at the bottom are going through?!" The director was momentarily speechless on the other end of the phone, his voice suddenly rising.

Mieno Yasushi, however, had no intention of listening to the other person's complaints any longer and put the receiver back on the base.

"Click".

The other party's roar was cut off.

Mieno Yasushi quietly watched the telephone indicator light gradually dim.

The conflict in the Persian Gulf is an unavoidable external shock.

This is both a crisis and an opportunity.

Before the outbreak of war, he had raised interest rates four times in a row, but Japan's real estate bubble remained extremely stubborn, and there were even rumors in society that "the central bank dares not take real action."

In that case, let the Japanese people see the central bank's resolve.

The soaring cost of raw materials due to surging crude oil prices has truly come close to threatening the health of Japan's macroeconomy.

If, at this juncture, the government chooses to back down and loosen monetary policy, attempting to fill the cash flow gaps in heavy industry with excessive credit, the surge in liquidity coupled with expensive energy will immediately trigger uncontrollable hyperinflation on the consumer side.

The purchasing power of the yen will be severely damaged. The credit of the national currency will become a casualty of the already rotten real estate bubble and inefficient production capacity.

The current growing pains are a necessary stage in squeezing out the excess liquidity in the economy. The only way to preserve the country's long-term foundation is to forcibly suppress inflation expectations with higher interest rates and completely dispel any remaining illusions about loose monetary policy.

He raised his right hand and pressed the brass call bell on the edge of his desk.

Two seconds later, the secretary of the policy committee pushed open the door and walked quickly to the table.

"President."

Mieno Yasushi took out a blank resolution letter.

"Initiate a new round of internal interest rate assessment procedures."

Mieno Yasushi's gaze fell on the fluctuating crude oil prices on the electronic screen.

"Prepare a memorandum for drafting a resolution."

"The standard step ratio will be increased to 6.0 percent."

The secretary was slightly taken aback, her pupils instantly contracting.

"President, this..."

"Go and prepare."

"……yes."

The secretary bowed deeply, turned and quickly left the office.

……

Eastern Saudi Arabia. Dhahran Airbase.

A dry, hot air current, reaching 50 degrees Celsius, carrying a cloud of yellow sand, pounded wildly against the barbed wire fence surrounding the base.

At the end of the runway, a dark gray U.S. military C-5 Galaxy heavy transport plane stood with its massive tail hatch wide open. Beneath the wings, four General Electric TF39 turbofan engines were running at full speed. The powerful thrust reverse airflow splattered across the scorching asphalt, whipping up the surrounding yellow sand into a murky sandstorm.

Inside a separate hangar on the edge of the base.

SA Security Department's Special Operations Team has completed its area deployment. Rows of black Perricone resin protective cases are neatly stacked on the concrete floor. Several communications technicians are adjusting satellite communication equipment with high-power antennas, and green signal lights flash alternately in the dimly lit hangar.

Dojima Iwao, wearing a dark-colored waterproof softshell tactical jacket, stood in front of a folding table.

A military survey map of the area surrounding Dharan was laid out on the table.

The head of the intelligence department strode over and handed over a radio briefing that had just been intercepted.

"Minister. The situation at that joint venture oil refinery with Japan Petrochemical in the north is completely out of control."

The intelligence chief pointed to a coordinate point on the map.

"The Iraqi advance troops are less than 50 kilometers away from them. All the foreign workers employed in the factory have fled after hearing the news, and the machines are now all sitting in the workshop eating sand."

Dojima Iwao stared at the red coordinate point.

"Where is the Japanese management? Didn't they withdraw as well?"

"We wanted to leave, but we're stuck."

"They contacted local Saudi transport convoys to try and get to Riyadh. But those local bullies took advantage of the situation, demanding exorbitant escort fees and insisting on accepting only US dollars in cash, refusing to budge an inch."

The intelligence chief lowered his voice, a hint of helplessness in his tone.

"You know the situation in China right now. The Ministry of Finance has sealed off the loan channels, and the foreign exchange settlement channels are frozen. Even if the Tokyo headquarters is frantic, they simply can't transfer this life-saving cash right now. Those executives are trapped in the unsuspecting factory area, frantically calling for help with their satellite phones."

Dojima returned the briefing to the desktop.

He turned his head to look at the legal staff standing to the side. The legal staff were wearing Kevlar bulletproof vests and carrying waterproof briefcases.

"Draft an asset acquisition agreement," Dojima Yan said calmly. "The target should be their core equity in the oil refinery. As for the price... fill in 10% of the book net assets."

The legal staff opened their briefcase and took out a stack of pre-printed blank contract texts.

Dojima Yan extended his finger and tapped twice in the annex area of ​​the contract.

"Put that attachment at the very end."

It was an evacuation boarding list stamped by the U.S. Military Airlift Command. Several blank name fields were left open.

"The brigade will remain in place to rest."

Dojima Iwao turned around, his gaze passing over the half-open hangar door to the gray-yellow sky shrouded in sand and dust.

"Waiting for the first air raid siren to sound in Dharan city."

"Waiting for external survival pressures to break down their psychological defenses."

"Let's take this agreement with us and go to the factory to make contact."