Chapter 5
The Leaked Letter
Meriwether fund ke investors ko letter likhte hain fund ki situation
batate hue lekin kahi se yeh confidential letter bloomberg tk pahuch
jata hai aur akhiri investor ko letter milne se phle hi bloomberg
print kr deta hai, August Long Term ke liye accha nhi gya, Lekin ab
partners soch rhe hai 'log vacations pr the' ab woh wapas ayenge,
Trades Falling Harder
Partners ab ek pattern notice krte hain, unki trades jyada gir rhi
hai auro se, for instance, junk bonds ki prices badhti hai lekin
sirf wahi nhi badhte jo long term ne hold kiye hai, same swap
spreads me bhi, jo england me jyada wide ho rhe hai germany se,
exact opposite jo long term ne bet kr rakha hai, bina koi clear
economic reason ke, Ab unka reason kuch bhi ho wall street ke
traders unn trades se bhaag rhe hai jo long term ne hold kr rkhi
hai, kyoki agr long term ne asset sell kiye toh prices aur girengi
trader uske phle unn trades ko sell kr rhe hai jo long term ne hold
kr rkhi hain,
Failed Capital Search
Partners abhi bhi capital seek kr rhe hain, morgan abhi bhi 200m$
dene ko taiyar hai, Partners Michael Dell, Saudi ke Prince, Tiger
Management, Ziff Brothers , sabko contact krte hai lekin fir bhi koi
invest krne ko ready nhi hota, Jab fund accha perform kr rha tha tab
fresh investment closed thi aur sab invest krna chahte the lekin ab
koi invest nhi kr rha,
Goldman: The Last Hope
Ab meriwether ke pass last hope hai – Goldman, Jiske head Corzine,
Meriwether ke sath MBA me batchmate the, Long Term jitna capital
raise nhi kr pa rha hai usse jyada speed se loose kr rha hai,
meriwether corzine ko batate hai unhe bahut saare capital ki jarurat
hai, aur ab unhe 1B$ nhi 2B$ chaiye survival ke liye, Corzine agree
krte hai capital ke liye, Lekin conditions ke sath, Goldman ko LTCM
ki half management company chaiye, Saari trading stratergies ki
access bhi aur risk pr limit lagane ka right. Return me goldman 1B$
dega aur waki ke 1B$ raise karayega, aur wall street pr trader uske
against trade nhi krenge jab unhe pata chalega goldman support kr
rha hai fund ko,
Goldman's Betrayal
Dono ek tentative deal banate hai , Long Term inspection ke liye
files deta hai, Greenwich me goldman ke employees fund ki files
check kr rhe hai aur same time pr goldman ke traders NY mein same
positions sell kr rhe hain, aur goldman pretend kr rha hai ki woh
long term ki madad kr rha hai, Aur day ke end mein, jab unn trades
ki value aur kam hogyi tab goldman ke kuch traders long term ke
trading desk pr jakr unko buy krne ka offer dete hai, "To John
Meriwether and his Partners Goldman was raping Long Term in front of
their very eyes" Oviously Goldman ke official yeh charegs deny krte
hai.
Wall Street Turns Against LTCM
Wall Street ab Long Term ke against trade kr rhi hai, 'The Game, as
old as wall street itself' Lekin fact yeh hai wall street ke banks
apne bare me jyada soch rhe hai, banks ke pass bahut si same trade
hai jo long term ke pass hai, aur goldman bhi unme se ek hai,
goldman ipo ki planning kr rha hai toh usse apne loss kam hi rkhne
hai, Ab koi fark nhi padta reason kuch bhi ho, impact ek hi tha jo
long term hold kiye hai usse dur rhna, 'If you think a gorilla has
to sell, then you sure want to sell first'
Reputation on the Line
Partners apni fortune hi nhi apni reputation bhi loose kr rhe hai,
merton emotional ho jate hai, Agr koi hai jisko iske liye blame krna
chaiye toh woh hai- meriwether , firm ko control me na rkhne ke
liye, Merill ke risk manager bolte hai hume koi idea nhi tha yeh
itni bada trouble create kr denge, yeh risk management ke liye jane
jate hai, inhone design kiya hai yeh, Morgan 'It was going to be
really ugly'
The Collapse Timeline
Agr Long Term 7000 me se kisi bhi derivative contract pr default
krta hai toh automatically yeh saare contracts pr default trigger
krega, jo kareeb 1.4T$ ki notional value ke hai, Meriwether ke pass
ab ek hafte se bhi kam bacha hai firm ko bachane ke liye, 17th
sep(need check) Goldman se abhi tk koi capital nhi aya aur na hi
raiase karaya, Aur ab long term ko 2B$ nhi 4B$ ki jarurat hai,
Goldman abhi bhi Long Term ke liye last hope bana hua hai,
Buffett's Offer
Long Term ki equity 1.5B$ tk rah gyi hai, Goldman ke ek investment
banker Peter Kraus Warren Buffett se baat krte hai, Lekin problem
yeh hai ki Buffett ko long term ka complicated partnership structure
nhi pasand, Buffett Bill Gates ke sath alska ja rhe hai vacation pr,
woh goldman ko batate hai, woh long term ke portfolio ko buy kr skte
hai lekin, unhe koi meriwether koi partner nhi chaiye,