Chapter 168

New York, lower Manhattan. Charles Capet was sitting alone in front of the fireplace in his villa, adding more logs to the fire.

Dona Williams walked in and said, "Mrs. Capet's about to arrive!"

"Oh, my mom is here in New York too," Charles responded as he tossed two more logs into the fireplace.

"How are things over in Nashville?"

"All settled. Scott Borchetta doesn't seem to have any major objections to selling Big Machine Records," Dona Williams quickly answered, understanding what Charles was asking about.

Charles smiled and said, "Everyone's an adult here, who'd turn down money? Go prepare for my mother's reception this evening."

Evelyn Capet arrived at her son's place in New York around 3 PM.

"You've bought quite a few houses now, haven't you?" Evelyn glanced around without much enthusiasm.

"How many properties do I own?" Charles shook his head and handed his mother a glass of red wine.

"But the real estate market has cooled down now. It might be a good time to invest. Since I'm frequently in New York, I could buy a few properties in the Upper East Side and Long Island."

Evelyn smiled and said, "You're concerned about property prices now? I heard you're planning to buy a yacht and a private jet!"

Charles rubbed his chin and smiled awkwardly, "It's just for convenience and for vacationing!"

"It's fine, Mom isn't against it. These are pretty normal things. Plenty of Hollywood stars live way more extravagantly than you do," Evelyn said as she sat down next to her son.

"I've heard you're planning to sign Britney to Capet Records?"

Charles nodded, "Probably a three to four album deal, around sixty to seventy million dollars should be about right."

"That's quite high. Britney has already released five studio albums and is pretty popular. Collaborating with you shouldn't be a problem," Evelyn, not wanting to delve into her son's relationship with Britney, assumed it was just typical twenty-somethings being young.

"This trip to New York, is it because something changed at ETA again?" Charles asked.

Evelyn shook her head, "No. I now own a 5% stake. This time, I'm here to discuss a collaboration with an investment fund."

"That's good. We should move into the sports industry, start by acquiring small sports management companies, then slowly expand the business," Charles had also been learning about modeling agencies, noting that the artist management market was quite large.

"It's not that simple," Evelyn laughed, "But because of Capet Entertainment, I'm quite popular in the entertainment circle. ETA likely took your influence into account when they gave me these shares. But since you're not in Los Angeles, there's been a lot of news about DreamWorks being acquired. Paramount seems very interested in DreamWorks."

Hearing Evelyn mention DreamWorks, Charles responded calmly, "You've seen Paramount's performance over the past few years. They desperately need a capable film production company to inject some life."

"Charles, if DreamWorks gets acquired, the only remaining independent film companies in Hollywood will be your Capet Entertainment and Lionsgate," Evelyn sighed, "Lionsgate is at least a publicly traded company. Your Capet Entertainment is too similar to the original DreamWorks."

"Hah, not at all. Capet Entertainment is solely owned by me. The shareholders of DreamWorks always wanted to line their own pockets. Spielberg directed movies are like Tom Cruise movies, they take so much from the initial film revenue. How could cooperating with them be profitable for any film company?" Charles pouted, genuinely determined to grow Capet Entertainment.

"True, DreamWorks' current debt is surprisingly more than 800 million," Evelyn admired those three Jewish men for treating DreamWorks like a cash cow.

"Forget about them. Viacom won't shell out that much money themselves. It would be like Sony's leveraged buyout of MGM back then. There's plenty of hot money on Wall Street now," Charles had been keeping an eye on the real estate market, which had been booming for several years.

"By the way, is it true that you think the U.S. real estate market is in trouble?" Evelyn was still a bit skeptical.

"It's getting there. The last quarter of this year didn't see a price increase in real estate, and some banks have already started auctioning off houses from those who can't pay their loans," Charles said, standing up.

"A writer for one of my company's scripts, Juno, used to be a stripper in Chicago and I heard she bought five houses. She had been leveraging properties, each rising property price easing her pressure. Now, with prices not rising, given her loan interest rates, she couldn't afford the mortgage payments anymore."

"Oh, what's your point?" Evelyn was a bit confused.

"My point is, there were too many subprime loans these past few years. Banks packaged these subprime loans into CDSs for sale. As long as prices were rising, it was fine since the value was increasing.

Now that prices aren't rising, and the Federal Reserve has started a rate hike cycle, what about those subprime borrowers who can't repay their loans? Banks reclaim the houses, but their value doesn't even cover the interest, resulting in bad debts!"

Charles explained, cupping his hands and then spreading them apart, "It collapses like this. Banks, investment banks, insurance companies, homeowners, and CDS investors all facing a massive crash!"

"You're making it sound too serious," Evelyn thought Charles was exaggerating.

"Don't believe those Wall Street brokers. The big profiteers are shifting malignant assets, using complex economic data to deceive investors. They're just looking for a last person to hold these bad debts!

Even if those Wall Street investment banks go bankrupt and liquidate, it's the common people who suffer," Charles gazed at the fire in the fireplace, his eyes shining, "Wealth, immense wealth. You'll find that many middle and lower class people realize that the value of the houses they mortgaged isn't enough to cover the bank's interest!"

"Ah, that's really a beautiful view!"

"Snap," Evelyn slapped her son awake from his reverie, "There you go again. When did you start studying finance?"

"Forget about any real estate collapse. Mom just wants you to focus on your career and quit mingling with strippers."

"When did I ever mingle with strippers?"

"Didn't you just say that writer used to be a stripper?"

"Gosh, that was just in her bio stating she worked as a stripper after college... it was quick money..."

*****

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