In Midtown Manhattan, between Park Avenue and 8th Avenue, lay 17 densely packed blocks filled with countless hedge funds, big and small.
Among them stood a nine-story building on Park Avenue, entirely occupied by small and medium-sized hedge funds. Traders referred to it as the "Hedge Fund Hotel."
Bruno Karl, a former JP Morgan employee, had partnered with his former colleague David Iverson to launch a small hedge fund called Goliath. They were renting a modest office in that very building, managing about 50 million dollars collected from clients.
The office walls were plastered with various graphs and data sheets, and the space was so sparsely furnished — just phones, a fax machine, and a few computers — that it looked borderline shabby.
Their entire team consisted of just the two of them. But both Bruno and David dreamt of one day hitting it big — of becoming a Wall Street legend like Quantum Fund or Eldorado Fund, handling tens or even hundreds of billions of dollars.
For over two weeks now, they had barely left the office, living and working there. The same was true for many other hedge funds in the building.
It was just past midnight, yet the entire building remained brightly lit.
A massive high-stakes opportunity to make big money had opened up in Asia.
Alongside the major hedge funds, small and mid-sized funds like Goliath had also rushed in like swarms of ants, chasing that elusive jackpot, trading round the clock.
Bruno Karl, his beard now rough and unkempt after days without shaving, stared intently at the screen where the peso exchange rate was changing by the second. He reached out blindly for his mug on the desk.
He'd been drinking from the same mug, refilling it with coffee over and over, so much that a thick, black stain had dried into the bottom. It looked grimy.
But he didn't have the luxury of taking time to wash it — not when every second could be worth thousands of dollars.
Having shorted the Thai baht and now the peso, he had already exceeded his yearly profit goal. So his obsession was understandable.
He raised the mug to his lips, only to find it empty. He clicked his tongue.
"Tsk."
He set it down, eyes suddenly gleaming. Then he began typing again, placing an additional sell order on the peso.
Despite the bloodshot eyes from lack of sleep, Bruno's expression was bright — he'd already made over $100,000 just today.
"Heh heh heh."
He chuckled ominously at the screen, then realized the Asian market was about to close and roll over to the London forex session.
To keep trading through the night, he was definitely going to need more caffeine. He stood up, deciding to make another cup of coffee.
"David, I'm heading to make coffee. Want some?"
Across the desk, David — wearing jeans and a long-sleeved shirt — didn't even look up as he waved a hand over his head.
"Yeah. Get me one too."
"Okay."
Bruno had just started to rise from his chair when David suddenly gasped, his eyes widening.
"What the hell is going on?!"
"What is it?" Bruno asked.
David frowned as he stared at his monitor and replied,
"Someone's liquidating a massive short position on the peso in the futures market."
"What?"
Bruno sat back down and checked his own monitor — sure enough, someone was buying up pesos in large volumes, closing out their positions.
The peso, which had been plummeting non-stop, had suddenly stabilized and was now moving sideways.
"They've already bought over a billion dollars' worth… Who the hell is this?"
Only the big players could move this kind of volume, and Bruno's mind started racing.
If the peso started to rebound from here, they could get caught in a bad position and take a serious hit — the thought made him tense up.
"Hold on."
The idea of coffee now completely forgotten, Bruno quickly picked up the phone and dialed a number.
After a short ring, someone answered.
[Hello?]
"Michael, it's me."
Michael was a former colleague from JP Morgan — someone Bruno occasionally contacted to get insider info that wasn't yet public among market participants.
[Sorry, I'm busy. Can we talk later?]
"Wait! This'll only take a second."
As Michael hurried to end the call, Bruno quickly tried to stop him.
With a sigh from the other end of the line, Michael finally gave in.
[Fine. I really don't have time, so make it quick.]
"Who's liquidating all those short positions on the peso right now?"
[… I don't know.]
But Bruno could tell there was a hesitation before he answered. He adjusted his grip on the receiver, sure now that Michael did know something.
"Come on, man. It's just between us. I won't say a word. Just give me a hint."
Bruno pressed persistently, almost pleading.
Michael let out a groan of frustration.
[Ugh…]
"Michael. Please."
Michael hesitated for a moment, then reluctantly lowered his voice and replied.
[It's the Eldorado Fund.]
Bruno's eyes widened in shock, and he let out a sharp gasp.
"What? Are you serious?"
[Yeah, I don't know the details either, so I'm hanging up now.]
It seemed Michael was genuinely busy — he hung up right after.
Bruno frowned slightly as he put the receiver down. David, eyes still locked on his monitor, asked,
"Who was it?"
"They say it's the Eldorado Fund."
"What?!"
David, clearly startled, leaned over his monitor, his face tense.
"Are you serious?"
"Yeah," Bruno nodded.
David muttered, now with a grim expression,
"If the Eldorado Fund is pulling out of pesos, this doesn't feel good."
Their performance over the past few years had been impressive, but especially in this round — with the most precise, razor-sharp trades — the Eldorado Fund had emerged as one of the top players, easily outshining the swarm of hedge funds crowding the field. Naturally, this caught their attention.
"What about the other funds? How are they moving?"
Bruno asked, and David checked his monitor before replying,
"So far, nothing significant. The peso's stopped falling and is just moving sideways — looks like everyone's watching, same as us."
By now, word was probably spreading fast on Wall Street that it was the Eldorado Fund pulling out. No one would want to act prematurely — all the players were likely holding their breath, watching each other.
"What do you think we should do?"
Bruno looked at the visibly concerned David and asked again.
"What do you want to do?"
"I just can't shake the feeling… If it's the Eldorado Fund pulling out, that says a lot."
"Yeah, it's unsettling."
"We've already made around 10% profit on the peso. Maybe we should call it here and not get greedy."
It was a bit disappointing, but Bruno was just as uneasy.
He hesitated for a moment, then finally nodded.
"If you get a bad feeling, it's not a bad idea to pull back. Let's close it out here."
"Good call."
Once the decision was made, the two didn't hesitate. They got to work and began closing out their positions immediately.
About an hour later, as the last order was executed, Bruno leaned back and let out a sigh of relief.
"Whew… That's it."
Then he happened to glance at the empty mug sitting on his desk.
"Right. I was about to make coffee before all this chaos started."
With the caffeine from earlier wearing off, fatigue started to settle in.
"You still want coffee?"
David, now also done with his trades, straightened up and answered,
"Yeah. Make it strong. No sugar."
"Got it."
Just as Bruno stood up, his eyes caught a breaking news alert on the Bloomberg terminal in the corner of the room — and he froze.
"…Huh?"
[Philippine government requests emergency financial aid from IMF to stabilize peso!]
"What's wrong?"
David looked over, puzzled.
"A breaking news alert just came in. The Philippines has requested emergency financial aid from the IMF."
"You're serious?!"
"Yeah. This is what Eldorado Fund knew — that's why they dumped their positions."
David, who had now come around Bruno's desk, checked the Bloomberg terminal and let out a relieved sigh.
"Damn. That was close. We almost got burned."
As soon as the Bloomberg alert hit, hedge funds holding short positions scrambled to close them, and the peso — which had been moving sideways — hit bottom and sharply rebounded.
***
As of the end of last year, Korea's total external debt stands at $104.5 billion.
According to the Bank of Korea, the country's total foreign debt increased by $26.1 billion compared to $78.4 billion the year before, reaching $104.5 billion.
Meanwhile, Korea had $69.8 billion in external assets, meaning its net external debt was recorded at $34.7 billion.
A Bank of Korea official stated, "There are some concerns about the possibility of a foreign exchange crisis like the one that happened in Mexico a few years ago, due to a growing current account deficit and recent instability in Southeast Asian currencies. However, considering Korea's economic fundamentals and total external debt levels, the likelihood of a crisis similar to what Thailand and the Philippines are experiencing is extremely low."
In the meantime, the government is addressing issues like bond market aversion caused by the Hansae Group's default and the resulting liquidity shortage by...
Seok-won, sitting alone in a spacious seat aboard a private jet, slightly furrowed his brows as he read the article in a Korean newspaper and muttered to himself:
"Saying Korea's economic fundamentals are solid and that the chances of a currency crisis are low… that's just wishful thinking."
Just days earlier, the same paper had published an article expressing concern that Korea's foreign exchange reserves had dropped to $29.2 billion — a 21-month low.
Now, despite declining exports and an increasing current account deficit, they were insisting Korea's economy was strong enough to avoid a currency crisis. It didn't add up.
"Even at a glance, the country's net external debt is much larger than its forex reserves. If that's not risky, then what is?"
It wasn't a complex calculation — even a child could do the math. The experts at the Bank of Korea definitely knew this, yet instead of swiftly crafting a response plan, they seemed more focused on calming the public with hollow reassurances.
Compared to the other so-called Asian Tigers — Hong Kong, Taiwan, and Singapore — Korea's forex reserves were clearly lagging behind.
"Taiwan has $85 billion. Singapore has $72 billion. And Korea expects to avoid a crisis with less than half of that? That's what's truly unbelievable."
Considering all this, it was a mystery how Korea wasn't the first to be targeted by hedge funds.
As Seok-won mulled this over with a bitter expression, Bella — dressed in her uniform slacks — approached and spoke.
"We'll be taking off shortly. Please fasten your seatbelt."
He gave a small nod and reached for the seatbelt beside him. As he clicked it in place, Bella smiled and walked down the aisle, repeating the same announcement to Choi Ho-geun and the rest of the team.
Folding the newspaper and placing it to the side, Seok-won leaned back into the plush seat. Outside the round window, the airport terminal slowly faded into the distance as the engines mounted on the rear of the jet roared to life and the aircraft began taxiing toward the runway.
Watching the terminal shrink in the distance, Seok-won couldn't help but think of the looming dark clouds gathering over Korea.
"It's going to be a painful and brutal time, but trees that endure hardship grow deeper roots and spread stronger branches."
TL/n -
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