Chapter 483: Automotive Financial Services

[Chapter 570: Automotive Financial Services]

William White undertook such a large promotional effort out of a personal necessity. In the past year, his investments had been significant. Soon, two mining companies in Australia would also need to spend a lot of money.

Before the successful IPO of Tesla, William White's funds were quite tight.

With the economy in decline, he couldn't claim there was no pressure at all. He still had several money-losing ventures on his hands.

Although oil prices had risen, it did not cover the previous losses. His oil wells were offshore, which increased the costs compared to others.

"Sir, next year's car production will increase by 50%. It's going to be tough to maintain the current situation. Should we expand the transfer warehouse?"

"Not for now, Filson. Take a look at this. Is it feasible?"

Filson examined the documents carefully, almost word for word. What the boss brought out was in finance, his expertise.

All along, what Wall Street bragged about wasn't the number of investment banks or their wealth. The reason they outperformed London was due to Wall Street's financial innovations.

If you were a financial novice, you would definitely want to avoid investing in their funds. These funds could not only fail to guarantee interest, but might not even secure your principal.

Take those mobile carriers as an example. These guys had little collateral, and their bonds were essentially junk bonds. If you tried buying these junk bonds directly, you wouldn't move many of them.

Thus, the fund managers on Wall Street packaged these high-risk bonds together. Of course, they included some safer investments in this bond pool, like government bonds.

Junk bonds were transformed into funds with a measured risk. The guy peddling those funds would certainly tell you that while there was some risk, the interest rates were high, and usually, there wouldn't be any problems.

Of course, there were many details involved. Such as guarantee institutions and short selling entities. A really bad bond, under their various derivatives and packaging, suddenly turned into something much more valuable than those junk bonds.

The so-called subprime mortgage crisis didn't initially involve much capital. The trouble that followed mainly came from those derivative products. Eventually, when the collateral could no longer hold, the insurers collapsed. The amount of money involved far exceeded those subprime loans.

These were just subprime loans. The amounts related to standard mortgages involved even more assets. If the U.S. housing market crashed, my goodness, it would be best to find a hole to hide in.

Today, William White presented a financial derivative scheme specifically for cars. If it could be implemented, he truly wouldn't worry about selling his cars.

Americans usually financed their car purchases; few paid cash upfront. The interest rates on these loans were not low. If William White's plan worked, lower interest rates would almost be a given.

In this setup, banks reduced their risks, car buyers lowered their interest payments, brokers had a new type of bond to sell, and insurance companies got an additional revenue stream.

There was nothing that eroded any party's profits. Most importantly, once banks packaged and sold these loans, they could immediately get their lent money back.

If a few more rounds of this took place, my goodness, it would be a no-cost deal.

"Sir, we can't complete this; it needs cooperation from the investment banks." Filson looked very grave. He regretted not having a boutique investment bank here; that would have been quite a remarkable deal.

"Of course, I feel that if Lehman Brothers and Bear Stearns teamed up, it wouldn't be a difficult task at all. By the way, AIG should be able to handle this insurance."

"I understand, sir, I'll look into the details further. Heh, if this gets off the ground, Goldman Sachs and Morgan Stanley are going to have headaches."

"Let those two bastards get a dose of their own medicine. And keep this under wraps; by the time those two bastards realize what's happening, it won't be easy for them to catch up."

"Yeah, investment banks have a tacit understanding. If they just rush in recklessly, it would be pretty embarrassing. They absolutely won't do it unless it's absolutely necessary."

Filson felt like crying. After years on Wall Street, why hadn't he thought of something like this?

You want to say it's innovative? That's a stretch. This so-called automotive financial plan was really just reheating leftovers. Those selling junk bonds wouldn't be too unfamiliar with this.

Lehman Brothers and Bear Stearns, heh, lucky fellas. If this kept happening, the big investment banks in the U.S. might need a reshuffle.

...

"Chairman, it seems Motorola has abandoned analog phones. Should we continue our research?"

"For crying out loud, have you solved the issue of mobile phones not being mobile?!" Lee Kun-hee said this, his liver quivering. 

Under William White's relentless smear campaign, products from Samsung were nearly buried. 

"Chairman, our technology has made significant progress. We found out that European phones have similar problems. However, they are keeping their solutions under wraps."

"Damn it, I just want to ask what kind of technology the factories from Japan and Taiwan have accumulated. Why can they solve it? If worst comes to worst, we could get them to do our manufacturing."

"Chairman, the RF technology they possess is under confidentiality agreements. According to our investigation, they've set exclusivity clauses. Should we consider antitrust action?"

"Get out."

Lee Kun-hee exploded. Antitrust? Ha, did you think you could compete with the U.S. without being unreasonable?

Rest assured, they could easily tear apart Samsung's agricultural products. Samsung's labor costs were too high; they were no match.

The U.S. had abundant land resources and no issues with barren land. Generally, they cultivated one year and rested the next. Those a little more diligent might even grow some forage.

From planting to harvesting to final packaging, the entire process was automated. Don't even talk about Korea. If a price war erupted, nobody could win against them.

For Samsung to turn things around, they must focus on product quality. Those tricks wouldn't work in America, especially not against William White.

Look at today's memory sticks; aren't they just getting along fine?

Moreover, how could manufacturing technology barriers be addressed with antitrust? The technology director had clearly lost touch with reality.

Lee Kun-hee realized he needed to learn from Japan. Their competition with William White was significant.

From semiconductors to cars, from comics to gaming consoles, William White was keeping them under pressure. Despite that, there were still considerable collaborations between them. The memory technology they treasured had also been transferred to Japan. And that Tesla, Japan was indeed the second-largest shareholder.

*****

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