A bouncy castle in Osaka, lollipops all around
Our president, David Komountainy, has called a Eurobond strategy meeting in Foothills, Virginia, with our biggest shareholder, Warren Peace. He sits perched amid a takeaway order from Doughnuts ‘R’ Us, which Mr Peace say looks a good buy. Yes, I say, but you don’t need to run Berky Anne-Hathaway, the world’s most successful investment fund, to know that 10 for a dollar is great value. Our group-head of everything, Herb Montecarlo, wonders how America wisest investor will take my incisive remark. Mr Peace adjusts his glasses. “I said in 1987 I knew nothing about investment banking and I’m glad you guys have proved me right.” Komountainy senses the gathering storm on the west side of his body and swiftly tosses a half-finished vanilla pastry to one side. “Warren, can I introduce you to the team? You know Herby, of course, but we’ve made some changes. Herby would you like to do the honours … ” “Certainly. On my left is JJ Ingersoll, our head of global focus, to his left is Roderick Daley, our head of global integrity, just across from him is Sanfrancisco Flowers, our head of global teamwork and just to his left is Frank Gimme, our head of intra-regional origination with responsibility for global products. To his left, just outside the door, is Sabrina La Tour, our newly crowned queen of derivatives and swaps. And over there is Komarovsky.” Everyone sits to attention except Sabrina, who is reading Nick Leeson’s novel. “Okay,” says Peace. “How’re you guys gonna make me some money.” JJ Ingersoll goes into the pitch, perhaps the biggest since last week. “These are worrying times,” he notes, inadvertently pulling out a clump of Daley’s hair. “The us institutional bid is flaky, globals are a no go and a whole bunch of commercial banks just keep throwing insane swaps at borrowers who are past caring about good market practice.” Someone in the corner begins playing a violin, but Mr Peace doesn’t look to be a music lover. A slightly hesitant Ingersoll continues: “So a group of us swung our dicks onto the squawkbox and asked ourselves what we lacked. After a global-squawk we came up with the answer? A Japanese retail network.” Even Sabrina nods. “It’s been a source of concern to a firm as large and prestigious as ours, with such global reach and integrity, to see borrowers like the Kingdom of Vikings doing these $2 billion odd deals with Kamikaze Securities and their brethren Nooki, Mascara and Konichiwa.” It smacks of monopoly, I say, just like ours in the yankee market, and we ain’t letting any Japanese in there, no sir, I add. He scowls and continues: “We can’t ignore it any more, it’s just too big. But penetrating the almost criminal hold the big four have over Mrs Watanabe’s coffee-table chit-chat is beyond us. However, we do have an alternative.” At this point Frank Gimme pulls out a rapier and thrusts it through the large stuffed grizzly bear in the corner, and checks one of Komountainy’s Picassos for eyeholes. “We headhunted someone to solve our problem,” says Gimme, withdrawing the blade. “I’d like to open the door and bring him in but unfortunately, since he arrived from Tokyo, we haven’t been able to get him out of the Burberry shop on Regent Street. “However, I had my secretary follow him around for a couple of days to transcribe everything Sakai-san said. I quote: ‘I cannot believe the prices and the range of goods. What please is yen sterling spot]'” “But this was not all,” says JJ going in for the kill, twanging his braces. “Before he joined us he was at the Ministry of Finance where he ran their gaijin-helpline. He says he was often asked the meaning of life and how do you penetrate the yakuza-like hold of the Japanese big four. Until we offered him six figures he was sworn to secrecy. Now he’s told us the one thing the MOF can’t regulate: Japanese children’s savings. As you might know they have the highest savings ratio in the world — some of them even embarrass their mothers and chide them for buying food rather than bonds.” “You give these kids pocket money and they go out and buy all sorts of teiki,” adds Gimme. I helpfully explain this is a savings product manufactured by Nintendo. “So far,” continues JJ, his pool of demand, which our economists estimate at Y9 trillion at an average rate of pocket-money of Y800 per week, has been totally untapped by foreign borrowers. But I’ve already spoken to McDonald’s, Pepsi and Mattel, and we know the kids will go for the names. They’re the most name-conscious children in the world.” Mr Peace looks blissfully guzzled. “I know what you’re thinking, swaggers Ingersoll. “How are we gonna distribute this stuff. Well, let me tell you. We’re gonna leverage the firm’s balance sheet and purchase 400 inflatable bouncy castles, like you see at funfairs. “Overnight we’ve got a sales network. We inflate them and we’ll put screens around the side, showing episodes of the Simpsons — the one with Bart talking about Aussie dollar dual-currency plays — and a screen of prices. Sure, the kids’ll fly around, some will get cut lips as they hurtle into each other’s Reeboks in their fervour to lock in yield pick-up in a historically low interest rate environment, but I’ve seen that happen to Fidelity too.” We all nod agreement. Gimme puts on a red nose and says that our. sales force will consist of a group of travelling clowns who will throw bearer bonds into the castle, along with waterbombs. “If we launch into Tokyo on a Friday evening we can distribute the product over the weekend while the kids aren’t at school.” Done deal. That’s lollipops all round. The great thing, I add, as Sabrina puts her bookmark in the bit where Nick realizes the arbitrage just wasn’t there, is that these kids are totally oblivious to currency risk when they’re bouncing. In fact Sakai-san says he experimented with his own child, and found he could t her to buy an interest rate product linked to the peso’s performance in December 1994 and Boris Yeltsin’s monthly alcohol intake, but only if she had been in the castle for at least five minutes and Bart told her to eat his shorts. “Obviously,” adds Ingersoll. “We’ve got to be responsible. We’ve got our franchise to protect. We’ll even put a disclaimer up on the walls of the bouncy castle stating that the price of financial assets can go up as well as down — but hell, it’s fun anyway, and you can always do an asset swap. You know, something like that. Kids don’t like to be bullshitted. They see right through it straightaway.” Yes. These kids are adults. They know what they’re doing, I say. And since we’ll be printing the prospectus in the form of a manga comic, not even a court in Delaware would hold up their claims. But then I know it’s all going too well, because I look over and Warren Peace is examining a contract for convertible bonds and saying he prefers fixed income.