Chapter 393: Top-notch Operation
Jenny Hearst?
Such an old name.
So old that Old John Morgan even had to search his memory for a long time to recall which character she was.
“You mean the eldest daughter of the fourth generation of the Hearst family?” Old John Morgan asked.
In Lin Ran’s office, this Special Advisor for East Asian Affairs narrowed his eyes in recollection.
He was a bit confused about the situation; weren’t we here to discuss a earth-shattering conspiracy?
Lin Ran felt quite emotional; he vaguely remembered the scene when he and Old John Morgan attended the Elephant Party’s special fundraising dinner for Nixon.
In the blink of an eye, so many years had passed.
Sixty years had passed in the real world, and the other had gone from his early twenties to over eighty today.
“Yes.”
“I don’t know; it’s been too long, too long since I’ve seen her. Many years ago, I vaguely heard she had some accident, but Professor, sorry, it’s really been too long, so long that I’ve forgotten the specific reason.
If you really want to know, I’ll ask around when I get back.” Old John Morgan was very curious in his heart about why Lin Ran was asking about Jenny Hearst, but he restrained his curiosity.
Young John Morgan has to call the professor; his dad comes and has to call the professor too.
Lin Ran nodded: “Okay.”
Old John Morgan’s curiosity grew even stronger; he thought that after he said that, the other would say forget it, but the other insisted on getting an answer.
“Alright, Morgan, I know why you’re here, and I know that this kind of cooperation can’t leave any written agreement.
I want to ask if the White House is willing to cooperate with us?”
Old John Morgan said: “Professor, I think Mr. President is willing, but the whole thing can only be done quietly, not publicized loudly.
What you proposed is a very bold idea full of Machiavellian power play, but in actual operation, once known to the outside world, it will trigger tsunami-like reactions from America domestically to internationally.
Publicly pushing the surface responsibility for economic collapse onto China, while America hides behind pure financial behavior—this is Mr. President’s favorite extreme pressure and public opinion manipulation.
America gains the full high-end semiconductor industrial chain, Wall Street gains huge financial revenue, Silicon Valley gains the semiconductor industry, and Mr. President gains huge prestige.
But the underwater operations can’t be hidden; hollowing out a top-20 world economy requires astronomical capital flows and market operations, which can’t be done by a few hedge funds; it requires comprehensive, systematic participation from top financial institutions like Goldman Sachs, Big and Small Morgan, Merrill Lynch, etc.
Coordinated short selling on this scale can’t be hidden under global regulatory institutions; the evidence chain will be very clear.
At the same time, the industrial chain transfer is even more public; orders from companies like Apple, Nvidia, Qualcomm shifting from TSMC to Samsung and Rapidus—this is public business decision-making, which itself is the most solid evidence.
Especially Rapidus, this is a US-Japan cooperation product; the outside world will inevitably see America’s shadow behind it.
When the 4v economy collapses and TSMC is forced to relocate to Arizona, the whole world will ask the simplest question: Cui bono? Who benefits?
The answer is self-evident.
At that time, no matter how powerful our media machine is, it won’t be able to completely shift the blame to you in the face of solid evidence.
In this case, they won’t turn into porcupines, because they clearly know America destroyed their economy and future for its own interests—so why should they fight for us?
Betrayed by us, and still fight for us? Is that reasonable?”
Lin Ran thought after hearing this that Old John Morgan wasn’t completely useless; knowing Machiavelli was one thing, but he could articulate China’s considerations so clearly.
From beginning to end, Old John Morgan never mentioned Japanese semiconductor technology, because that’s just a bonus, not the core of the deal.
“So the White House side is refusing?” Lin Ran asked, thinking, you’re not going to tell me to pay more, are you?
“So we have to go slowly, step by step; in China’s words, we need to boil the frog in warm water.” Old John Morgan said, “If you splash a pot of boiling water on the frog, it will jump away immediately and make a mess of the kitchen, but if we slowly heat the pot, it will die unknowingly; what we do is heat it, and what you do is ensure it doesn’t jump out early due to panic.”
However, in the following six months.
Lin Ran indeed saw what boiling the frog in warm water meant and how America, as a veteran player, strategized at this card table.
Throughout the process, Old John Morgan shuttled between Tokyo and Shanghai.
At the end of January, an internal research report from the Chinese Academy of Social Sciences titled “Reassessment of the Economic Effectiveness and Risks of the Economic Cooperation Framework Agreement Framework in the Current Political Environment” was inadvertently leaked to several internationally renowned financial media outlets.
This report used academic language and detailed data.
It ultimately concluded that the political foundation of this trade framework was shaking, and industries dependent on it faced unpredictable policy risks.
Networks from America began operating.
Analyst teams from Goldman Sachs and Morgan Stanley almost simultaneously released outlook reports on the 4v market, uniformly citing that leaked report, and for the first time included geopolitical risk as a new evaluation weight in the report, implicitly pointing out that over 90% of the world’s cutting-edge chip manufacturing was concentrated in a geopolitical hotspot region, posing unacceptable risks to global tech stability.
This laid the groundwork for later guiding public opinion to attack TSMC’s monopoly status.
At the same time, it downgraded its stock rating from “overweight” to “neutral.”
This appeared to be completely independent, rational market analysis behavior.
A batch of leading hedge funds began establishing small-scale, probing New Taiwan Dollar short positions.
In February, customs suddenly announced a suspension of imports of pineapples from some southern agricultural counties on the grounds of “detecting harmful organisms.”
This was a routine trade tactic commonly used by China, generally to precisely target southern agricultural counties without causing full economic panic.
In the 48 hours before China announced the import suspension, several large hedge funds coordinated by Morgan used leverage to conduct a brief but fierce short selling of the New Taiwan Dollar to US Dollar exchange rate.
After the news was released, market panic ensued, and the New Taiwan Dollar fell accordingly.
The funds then closed positions for profit; the entire process lasted only a few days.
Subsequently, Wall Street commentators all said: “See, even a small agricultural products issue can cause such huge market fluctuations, proving how fragile their economy is.”
Reinforcing public expectations on this once again.
Then came tsunami-like waves, lobbying waves from the lobbying deity, sweeping the globe, and 4v was inevitably affected.
Mainstream tech media in Silicon Valley almost simultaneously broke insider news:
From Samsung: Apple is in deep negotiations with Samsung, planning to assign 15%-20% of the next-generation iPhone processor (A19 Bionic) orders to Samsung’s 3 nanometer process production line for the first time.
From Rapidus: Nvidia and Amazon AWS have signed a “long-term strategic cooperation memorandum” with Japan’s Rapidus to jointly develop next-generation 2 nanometer chip architecture for AI data centers.
From TSMC: Required to place over 30% of its 2 nanometer advanced production capacity in America’s latest factory in Arizona Phoenix within the next three years.
These news items were like heavy bombs; Wall Street’s fund alliance used them as reasons to launch a fierce attack on TSMC’s stock price.
“TSMC’s industry monopoly status and technology moat are being eroded; its valuation needs re-evaluation.”
The Taiwan Stock Weighted Index plunged accordingly.
Wu Jianzhong pushed open the compartment door, took off his dark trench coat wet from the early typhoon season rain; he looked five years older than at the class reunion half a year ago.
“Xiaoxian, I’ve looked at hundreds of financial reports and briefings,” he sat down as the server poured him warm Otokoyama Nigori Sanbun, “I want to hear your trading log.”
Wu Jianzhong was the deputy director of the Financial Supervisory Commission’s Securities and Futures Bureau, a typical technocrat under huge pressure from Congress due to the massive Taiwan Stock fluctuations, often getting sprayed by congressmen.
The Xiaoxian he referred to sat opposite him, named Chen Xiaoxian.
Chen Xiaoxian was the fund manager of Fubon Investment Trust’s “Greater China Strategy Value Fund” in Taipei’s Xinyi District, graduated from National Taiwan University’s Finance department, worked eight years at Deutsche Bank’s Wall Street, expert in quantitative analysis and derivatives trading.
Five years ago, poached back to Taipei by Fubon Investment Trust with high salary, seen as a mid-generation new star in the local investment trust circle; the fund he managed scaled 800 billion New Taiwan Dollars.
Chen Xiaoxian let out a long sigh and began reviewing these painful four months:
“Early January, the market was very healthy; TAIEX index around 21,150 points.
After that Mainland Chinese Academy of Social Sciences report came out, the market treated it as noise, dropping only 48 points that day.
But our internal AI monitoring system issued low-intensity coordinated attack orange alerts for three consecutive days from January 22 to 24.
Data showed high correlation in buy orders for the ‘Yuanta TW50 Inverse 1’ leveraged ETF on several trading seats in Lion City and Hong Kong.
Total inflow about 2.8 billion US Dollars, not large scale, but timing and rhythm perfectly synchronized.
In my recent review, I believe this was testing the market’s short selling cost and reaction speed.
From February onward, it turned into precise strikes like surgical operations.
The partial region pineapple ban was a smoke screen.
The real attack happened on the afternoon of February 20; starting at 2:37 pm, in the spot market for US Dollar to New Taiwan Dollar exchange rate, concentrated sell orders totaling 1.26 billion US Dollars surged in over four and a half minutes.
The exchange rate instantly smashed from 30.48 to 30.65.
Our internal system immediately judged it as high-intensity coordinated attack, red alert.
This attack triggered chain reactions, causing over 3 billion US Dollars in panic selling.
And the attackers, in our review, we found they had built positions via complex swap contracts well before the attack, profiting at least over 80 million US Dollars.
They perfectly utilized the rules for precise strikes, sweeping profits and exiting.”
Chen Xiaoxian’s expression was equally exhausted, full of fatigue: “And it was from this time that I adjusted all my positions to defensive ones.”
Wu Jianzhong sighed: “We also realized the anomaly starting in March; at that time, many financial industry practitioners reported market abnormalities to us through various channels.”
Chen Xiaoxian asked puzzled: “So why didn’t the official side intervene?”
Wu Jianzhong said nothing, downing the sake in his cup.
Seeing he didn’t want to speak, Chen Xiaoxian continued: “But by March, it had formed a systematic perfect storm, massacring local financial capital.
On March 11, after rumors of Apple evaluating Samsung 3nm orders emerged, attacks on TSMC began.”
Chen Xiaoxian pulled out a tablet computer from his briefcase, tuned to the corresponding image, and pushed it in front of Wu Jianzhong.
“Look here, March 11 to 14, four trading days.
TSMC ADR listed on NYSE, its put option open interest surged by 120,000 contracts, nominal value over 2 billion US Dollars.
Simultaneously, in the Taiwan Stock spot market, via QFII channel, TSMC net sell exceeded 88 billion New Taiwan Dollars.
Most deadly, they weren’t smashing the market but using algorithms for continuous, oppressive selling, pinning the stock price firmly below the moving average.
TAIEX index fell from 20,500 points all the way below 19,000.
Our fund and other local entities net bought over 100 billion during this period, but it was completely useless.
Our money is limited, while their ammunition seems endless.
The market’s retail investors and other investors had clearly fully accepted the short sellers’ narrative logic in the prior preparation process.”
Seeing Wu Jianzhong still silent, Chen Xiaoxian’s anger was overflowing:
“March! Old Wu, during the March perfect storm! TSMC’s stock price was pinned down and beaten by algorithms for four consecutive days; option anomaly data stuffed our servers like snowflakes!
Our system’s red alerts never stopped every day! Your Financial Supervisory Commission couldn’t possibly not see it!
Why didn’t the official funds intervene then? Why not take even temporary short selling restriction measures? What were you waiting for?”
His fist slammed the table hard; the freshly refilled sake in the cup rippled from the table vibration.
Wu Jianzhong closed his eyes, as if unwilling to recall, then downed the sake in his cup.
“Of course we saw it,” he began, voice hoarse. “Xiaoxian, do you think we’re all blind? On the afternoon of March 12, when TSMC stock fell the worst, the Financial Supervisory Commission urgently held a closed-door meeting; we had drafted temporary stabilization measures to restrict malicious short selling and raise securities lending margins, originally planned to announce before the next day’s open.”
“Then why wasn’t it executed?!” Chen Xiaoxian pressed.
“Because that morning,” Wu Jianzhong looked at him, eyes full of helplessness and humiliation, “the White House Special Assistant for East Asian Affairs visited Taipei from Narita International Airport in Tokyo, also bringing advisors from the Treasury and Securities Commission; we had an informal breakfast meeting with him and his team at the Hyatt Hotel.”
He paused, as if savoring every detail from then.
“He didn’t mention Taiwan Stock, not a word.
He spent the whole time praising us as a model of global free markets.
He said our ability to attract global capital, especially American capital, was precisely because we have a ‘transparent, open, and free from non-market factor interference’ financial environment.”
Wu Jianzhong gave a self-mocking laugh.
“Then, he casually mentioned something.
He said some emerging markets, due to brief fluctuations, took some, um, rather strict capital control measures; of course, we understand their difficulties, but international capital is the most timid—once doubt arises about market freedom, restoring investor confidence takes a very, very long time.”
The memory echoed and swirled in his mind; Chen Xiaoxian remembered; local media had extensively reported it then, because that Special Assistant for East Asian Affairs had a very special name, extremely special: John Adams Morgan.
Whether Adams or Morgan, both were existences they couldn’t afford to provoke.
Media at the time hyped it heavily, saying big shots came; news anchors crazily touted our relations with America as historically the best.
“He was warning us,” Wu Jianzhong said word by word. “He told us in the most polite, well-intentioned way: you can stabilize the market, but if you dare break the ‘free market’ rules, Wall Street will immediately downgrade our credit rating to junk and pull all funds.”
“Three hours after that breakfast meeting ended,” Wu Jianzhong continued, “China began condemning; their coordination was seamless. One playing good cop, one bad cop.
One locks our hands with free market rules, the other smashes our heads with a wolf tooth club.
What could we do? Did we dare do anything?!”
The air in the compartment seemed drained.
No wonder, no wonder, Chen Xiaoxian thought; this was naked open scheme.
“April 9, international rating agency Moody’s released a special report titled ‘Geopolitical Risks in East Asia Semiconductor Industry and Sovereign Credit Correlation Analysis.’
The report didn’t downgrade our rating but for the first time listed supply chain military blockade possibility as a negative watch item for future ratings.
This report was like a precise bomb, detonating the international bond market; local companies’ US Dollar bond credit default swap prices surged 25% in one day.
And this was just the beginning.
April 15, America Department of Commerce and Japanese Ministry of Economy, Trade and Industry jointly held a global technology supply chain security summit in Washington.
Invitees were Samsung, Intel, Rapidus, ASML—almost all industry giants, but no TSMC, nor any from our enterprises.
This was a political exile, declaring to the world: in the future secure supply chain landscape, we will be excluded.
The most fatal blow came on the morning of April 22 at 10:32 am.” Chen Xiaoxian looked at Wu Jianzhong, “That day, our securities exchange trading system suffered the strongest DDoS attack in history; though our engineers held it off in 15 minutes, the system had 3 minutes of trading latency.
You surely know what that means for a modern market.”
Wu Jianzhong’s face turned pale.
“In those 3 minutes of chaos, TAIEX stock index futures short positions instantly increased by 60,000 contracts.
In our later review, the attack IPs came from zombie networks worldwide, untraceable.”
Chen Xiaoxian turned off the tablet; the compartment fell into dead silence.
“So, Jianzhong,” I summarized finally, “they, through Wall Street rating agencies, government industry summits, and an untraceable cyber attack,
accomplished three things: defined our sovereign credit risk, declared our exit from future supply chains, and demonstrated their technical ability to paralyze our financial system at any time.
They put the noose around our necks but didn’t tighten it.
By my calculations, from January to now, this ghost—maybe Morgan, maybe others—has profited over 15 billion US Dollars across our various financial markets.
And this is just the beginning.
Now the scariest part isn’t this, but whether 15 billion US Dollars can fill their appetite, and if not, how much will it take?
What Wall Street wants, what the White House wants, all unknowns.
And China—what role does China really play in this.”
Chen Xiaoxian’s words trailed off, but said everything.
On the room’s television screen, a certain bald famous mouth on TVBS was talking animatedly:
“Hey, today we won’t talk nonsense; let’s talk money.
Talk about how over these four months, our stock market and forex market got wrecked.
Look, from January to now, how much has our stock market evaporated? Over a trillion New Taiwan Dollars!
Official funds intervened to defend, result? Like nothing happened, market kept falling.
Financial Supervisory Commission chair speaks, saying investors should have confidence; finance experts analyze it’s a short-term technical correction.
I tell you, all that’s bullshit! If you really believe it, you’re leeks.
You must see this isn’t simple market fluctuation; there’s a very big game behind it.”
To those who dislike him, the bald guy’s talk is all trash; conspiracy theory of America and China joining to hollow out—someone believes that? Isn’t that hilarious; too many shows have made him lose touch with reality.
But from Chen Xiaoxian and Wu Jianzhong’s perspective, this is the most likely reality; the real world has become exceptionally treacherous, and such unthinkable things from the past just happened.
