On December 1st, on the other side of the Pacific, Japan, after another interest rate hike by the Bank of Japan in November, the Nikkei 225 index continued to rise amidst volatility, breaking through the 40,000-point mark in the afternoon of that day.
By the close of local time in the afternoon, the Nikkei 225 index finally settled at 40,039 points.
As various sectors in Japan cheered this record-breaking moment, a rumour from Wall Street quickly began to spread.
It was said that, according to very reliable sources, Cersei Capital, which had been closely watched by the financial community in recent months, had actually secretly withdrawn from the Japanese market.
All financial securities portfolios related to the Japanese market held by Cersei Capital's Sub-Funds No. 1 to 5 were packaged and sold by Simon Westeros to a Japanese consortium. Therefore, many hedge funds that had been following Cersei Capital's operations in the Japanese market during this period were not actually following Simon Westeros, but rather the Japanese government!
In recent months, at least tens of billions of dollars in the entire financial market had been following Cersei Capital, chasing the rise in the Japanese stock market. Everyone understood what it would mean if the rumours were true.
The news was released after the close of the Japanese stock market on Friday, and due to the time difference, it was still Friday morning in North America.
The Lehman Brothers team had originally planned for the rumours to ferment over the weekend to create a sufficient panic effect before the market opened next Monday.
However, the speed of this news spreading far exceeded Lehman Brothers' imagination. In just one day, not only Wall Street, but more accurately, everyone who should know and shouldn't know, knew.
North American local media, upon hearing the news, immediately thought of contacting relevant individuals at Cersei Capital to verify the authenticity of the information.
Subsequently, many media outlets discovered that Simon Westeros was not in North America, and even Westeros Company President James Raybould was far away in Europe. Janette Johnston, another important figure at Cersei Capital, also could not be reached. Attempts to contact senior executives at Daenerys Entertainment on the West Coast also failed to yield any useful response.
Compared to the media, some investment bank executives and even government officials tried to contact Simon Westeros, but also failed to reach Simon himself. James Raybould, who could be reached, offered only vague platitudes, which was undoubtedly a very clear tacit admission.
Therefore, although the speed of the news spreading exceeded the Lehman Brothers team's expectations, there was one thing they did not misjudge.
Panic began to spread!
Cersei Capital's objectives were too obvious, and too many people were in the know. With various undeniable connections throughout, Simon never believed this matter could be kept secret forever. The Japanese obviously didn't hope for that either. The most important clause in the agreement between the two parties was actually that Simon would no longer participate in short-selling the Japanese stock market after it turned.
Athens, Greece.
Because London was too cold at this time of year, Simon and Janette only stayed there for three days before she couldn't take it anymore. The two flew together to Athens, the capital of Greece, on the Mediterranean coast.
When they received news from North America about the leak of internal information regarding Cersei Capital's Sub-Funds No. 1 to 5, Simon and Janette had just returned from the Johnston family's private island in the Aegean Sea. They were resting in a luxurious mansion in the wealthy mountain area north of Athens, planning to go to Finland next Monday.
Westeros Company's acquisition team had already finalized the contract details with Nokia, and both parties would sign next Monday.
Simon was not surprised, as he had anticipated this day would come.
He had originally planned to remain silent as per the plan, but then, at noon on Sunday, Athens time, a sudden visit from Haruo Maekawa, the former president of the Bank of Japan whom he had met in Melbourne at the end of June, interrupted Simon's leisurely detachment.
Haruo Maekawa's party consisted of four people. Besides himself, Yoko Kosugi, the 'gift' Simon had consistently refused, was still accompanying them, introduced as the translator for Maekawa and the others. The other two were Haruo Maekawa's assistants.
After a brief exchange of greetings, Simon led Maekawa and his entourage to the terrace in the mansion's backyard.
This six-acre mansion was also built into the mountain. The specially constructed viewing terrace overlooked the entire city of Athens, but due to its distance from the sea, the horizon was not visible. However, since the surrounding area was a wealthy district, the view was naturally excellent.
Haruo Maekawa, however, had no interest in admiring the scenery. Simon, Janette, Haruo Maekawa, and Yoko Kosugi sat around a round table. After the servant served coffee, Haruo Maekawa, clearly showing signs of fatigue, perked up and smiled, "I must congratulate you first, Simon. That 'Teenage Mutant Ninja Turtles' game seems to have sold quite well recently".
Simon took a sip of coffee and nodded with a smile, "Thank you".
"I looked into it before I came. Yamauchi's royalty system for Nintendo all these years has been a bit excessive. Since Daenerys Entertainment intends to enter the video game field and has already achieved such excellent results, I think it's only right for Nintendo to grant Blizzard Entertainment a special preferential slot overseas, in addition to companies like Capcom and Konami".
Nintendo's royalty system, simply put, involves reviewing game developers' content and extracting royalties, equivalent to licensing fees, from each game cartridge.
Furthermore, Nintendo monopolized the production of game cartridges, which further compressed the profit margins of game developers.
Because Capcom, Konami, and six other game companies were the first to become Nintendo's game content suppliers, after Nintendo's rise, it granted these six companies a preferential policy.
Companies like Capcom could produce game cartridges themselves, and the royalties they had to pay were far lower than those of ordinary game developers who did not enjoy the preferential treatment.
The 'Teenage Mutant Ninja Turtles' video game released by Daenerys Entertainment last month, with cartridges priced at $60, after factoring in cartridge production costs and royalties, Nintendo would take $20. After deducting profits for distributors and other parties, Daenerys Entertainment could only obtain about 30% of the gross profit from each cartridge.
In comparison, companies like Capcom and Konami, due to the preferential policy, could achieve a gross profit of 50% per game cartridge.
Nancy had previously estimated that the first 'Teenage Mutant Ninja Turtles' game could generate $100 million in profit for the company within the next year. If they obtained Nintendo's preferential policy, this figure could increase by at least 50%.
Haruo Maekawa offered such generous terms with almost no preamble, which somewhat surprised Simon. He didn't doubt that Haruo Maekawa was making an empty promise. Although Nintendo's president, Hiroshi Yamauchi, was strong, Japanese companies were basically under the control of various conglomerates, and Nintendo would be no exception.
If the top executives of the Japanese conglomerates exerted pressure, Hiroshi Yamauchi, no matter how strong, would have no choice but to comply.
Nintendo could maintain its peak for at least another five years. Such a preferential slot could mean hundreds of millions of dollars in profit for Daenerys Entertainment.
However, Simon's face didn't show much emotion, nor did he immediately accept Haruo Maekawa's promise. Instead, he said, "Actually, I still highly approve of Nintendo's royalty system".
Haruo Maekawa, hearing Simon say this, realized he had appeared too eager, and following the young man's tone, said, "That surprises me a bit, Simon. In recent years, people have been criticizing Yamauchi's decisions. Last year, two preferential manufacturers even broke with Nintendo over this".
Simon said, "Without constraints, many commercial sectors will rapidly boom and then rapidly decline, just like the Atari crash. Nintendo's system is a constraint on the market; it can lead the video game sector towards a sustainable and healthy development. So, Nintendo's system is not wrong. If those manufacturers who broke with Nintendo had the chance to become rule-makers, they would actually do the same".
Haruo Maekawa nodded and asked with a smile, "Simon, what about you?"
"I'm the same, of course", Simon said. "Actually, everyone has the ambition to become a rule-maker, but most people don't have the strength".
Haruo Maekawa suddenly asked, "Simon, do you want to defeat Nintendo?"
Simon shook his head and said, "Daenerys Entertainment does not intend to venture into the console market; we will only focus on game content development. However, Atari and Nintendo have both proven the huge profits in the game console market, and this industry is destined to welcome many new players. Moreover, Nintendo's sluggishness in new-generation game consoles is well-known. The Sega Genesis console has been out for almost a year, while Nintendo's SNES is still continuously delayed. Therefore, it is destined to decline. This decline is only due to its own lack of progress, not because of the royalty system".
As Simon said this, he thought of Apple.
In his previous life, Apple's commission on app software sales was actually imitating Nintendo's royalty system. On the other hand, compared to Nintendo's lack of progress, Apple always managed to stay ahead of the Android field, which also destined the Android camp to struggle against Apple.
"I will convey your words to Yamauchi", Haruo Maekawa took a sip of the coffee in front of him and began to address the main topic, "Simon, I came here this time hoping you could make some public statements".
Simon nodded, waiting for Haruo Maekawa to continue.
Haruo Maekawa said, "We have already found out that the news came from Lehman Brothers, a subsidiary of American Express. The situation in North America and Asia has been very bad for the past two days, and we hope you can publicly express optimistic views on the Japanese economy in some media outlets."
Simon said, "What about the matter of Cersei Capital's Sub-Funds No. 1 to 5?"
"That's also a key point. We hope you tell the media that you already transferred the investment portfolios of Cersei Capital's Sub-Funds No. 1 to 5 in June, but the Japanese stock market has not shown any weakness in the subsequent six months. This is enough to show that the Japanese economy is more vibrant than many people predicted".
Simon did not quibble over Haruo Maekawa inadvertently moving the transfer date of Cersei Capital's Sub-Funds No. 1 to 5 forward to June. Strictly speaking, this was not wrong, as the two parties had indeed finalized the transaction at the end of June: "Actually, Maekawa, you should understand that my statement now has little significance. Since Lehman Brothers released the news, they must have already established a large number of short positions. Perhaps many other financial institutions have also done so in advance".
"But there are still more long-term capitals that haven't left the market", Haruo Maekawa interjected. "Simon, as long as you make a statement, those funds that are still maintaining long positions will definitely exert their strength. We will also do our best to maintain market stability".
Simon said, "Maekawa, you should know that the Japanese economy does have a serious bubble, and a turnaround in the Japanese stock market is inevitable".
"I understand, Simon. We just hope that this shift can be gentler, giving us more time to ease into it".
Simon rubbed the coffee cup still in his hand, weighing his options.
The Japanese stock market breaking 40,000 points clearly indicated it had peaked; it couldn't continue to rise, and a decline was inevitable.
In his memory, it took four full months for the Japanese stock market to fall from a high of over 38,000 points to 28,000 points. This was indeed quite gentle and showed that the Japanese government's rescue measures at the time were very effective.
Now, if he did nothing, given the panic accumulated in the market over the past two days, even if the Japanese stock market had circuit breakers and wouldn't experience a Black Monday like North America in 1987, it would likely be a continuous, collapsing decline after the market opened next week.
Once this situation occurred, some hedge funds that had been misled by Cersei Capital in the early stages could suffer heavy losses, and they would inevitably blame Simon.
Conversely, if Simon now showed some inclination to favour the Japanese market, slowing down the decline of the Japanese stock market and giving those hedge funds time to escape, this would actually be a way to mitigate the targeting he might face. Since the Japanese stock market was already determined to decline, his doing so would only make those short sellers earn money a little later, which was not inappropriate.
Having made up his mind, Simon looked up at Haruo Maekawa again and said, "So, what should I do?"
Haruo Maekawa beckoned to the two assistants waiting nearby, took out a document from their briefcases, and handed it over, saying, "We have already prepared some materials, you can take a look first. In addition, we have also contacted various media outlets in Japan and North America. As long as the draft is confirmed, it can appear on the front page of many newspapers tomorrow morning. Also, if you are willing to accept a television interview, that would be even better".
Simon picked up the documents, flipped through them, and shook his head, saying, "No interviews, thank you. I don't really like appearing on television".
"Then, just making a statement in the newspapers will suffice", Haruo Maekawa did not insist, and even proactively added, "Furthermore, all news releases we complete will be provided to you in advance to ensure there are no unexpected disagreements between our two sides".
Simon nodded.
He was very satisfied with the Japanese's arrangement.
He certainly didn't want to see opinions in the newspapers that he was completely unaware of.
At the same time, he also understood that the Japanese were so cautious not out of great respect for him, but more likely because they were worried that he might suddenly go back on his word and not acknowledge the agreement.