Author's Notes: The events of this episode take place over several months from February 3017-September 3017
Brainiac 5 played the drums at his desk for a good moment while interviewing a young man for an internship at City Hall. Dirk Morgna patiently waited for Brainiac 5 to finish. Dirk had red hair, human, and came from a business family. For a human, he was particularly bright. "The housing market collapsed in the 1930s nationwide by eight percent, half of all mortgage debt was in default. There were extremely recognizable identifiers. The complexities of mania and fraud are going up. Did you know that?"
"I did not," Dirk admitted.
"I've always been more comfortable alone. I believe my unique nature...separates me from people. Social interactions are awkward for me. Even when I compliment, it somehow comes out wrong. For example, you have a very nice haircut. Did you do it yourself?" Brainiac 5 asked.
"What? No," Dirk said weirded out by him.
"I'm going on and on. Kara told me I need to share more," Brainiac 5 said thoughtfully.
"Sounds healthy," Dirk allowed. "So...do I get the job?"
"Yeah...sure," Brainiac 5 agreed.
"So, I guess I'll go find a desk. Is there anything you want me to work on for starters?" Dirk asked.
I want you to get me the top-20 selling mortgage bonds," Brainiac 5 ordered already knowing the answer.
"So, you want to know what the top-20 selling mortgage bonds are?" Dirk asked confused.
No, I want to know what mortgages are in each one," Brainiac 5 clarified.
"What? Wait, aren't those bonds made up of thousands and thousands of mortgages?" Dirk asked incredulously.
"Yeah," Brainiac 5 confirmed and then dismissed him away.
Kara arrived fashionably late to her own group therapy session over her grief for Alex. As per usual, she decided to rant and rave about random things that had nothing to do with Alex to avoid the pain of discussing her. "Sorry, I'm late. Lost track of time. So, get this...I met with this retail banker a thousand years ago as a Catco reporter. I'm supposed to be getting him to invest in Catco magazine, instead, I start drilling him about overdraft analysis and how his bank will let customers write ten...twelve checks before telling them they're overdrawing. And this creep is making billions off screwing over people this way. And I'm getting madder and madder, and I ask him. I look him in the face and I say: 'How can you sleep at night, knowing that you're ripping off working people?' And know what he did? He left! He just walks out of the lunch, doesn't say a word. What the fuck is that? Who's fucked up in that scenario? Am I? Or is this douche-bag? Who leaves me hanging...is he the fucked up one? Trying to make me feel bad about myself!" Kara raged.
"We have talked about this numerous times. You can't come in late and hijack the entire session," the shrink informed her.
"What do you mean, I didn't hijack the meeting. Did I hijack this session?" Kara asked the group with mock outrage.
"Yeah," everyone in the circle agreed.
"I know you've suffered a terrible loss, do you want to talk about that?" the shrink asked gently.
"I don't talk about that," Kara refused. "Hold on, shit," she realized as she looked at her phone and realized she had something to do. She immediately took off. "Goodbye, everyone."
Kara held a meeting with Brainiac 5 at City Hall. "Barney, how's it going?" Kara asked entering the room.
"I found something interesting. I want to short the housing market," Brainiac 5 said.
"Housing is rock solid," Kara analyzed.
"Well, you're wrong," Brainiac 5 said simply.
"Look, I don't think you mean to do this, but sometimes you sound very dismissive and superior," Kara said annoyed. "Why don't you stick with stocks?"
"I find value wherever it can be found. The fact is...if we follow my plan, the whole bond market will become worthless. We have to act now," Brainiac 5 insisted.
"Fine, fuck it. Do whatever you want to do," Kara permitted.
There was a long awkward silence between them. "This plan actually involves your participation," Brainiac 5 told her.
"Fine," Kara relented.
"You were late to therapy," Brainiac 5 said accusingly.
"At least I went," Kara said defensively.
"You're running around like you have to right every wrong in the world," Brainiac 5 noticed.
"You know what, I'm a mean girl and I'm pissed off! But... it is a shitstorm out there, Barney. And everybody is walking around without hope or purpose. They're all getting screwed, you know," Kara said passionately.
"I think you should try medication," Brainiac 5 advised.
"No, it interferes with my work," Kara objected.
"You hate your job," Brainiac 5 pointed out.
"I love my job," Kara corrected.
"I know how close you were to your sister. You should talk about it. Perhaps, you should make a change," Brainiac 5 advised.
"I will consider it, but, honestly, I'm okay. I really am," Kara assured him.
Brainiac 5 conducted a meeting with Goldmen, an international bank headquartered in Metropolis. "I want to buy swaps on mortgage bonds, credit default swap, that will pay off if the underlying bond fails."
"You want to bet against the housing market? Why? Those bonds only fail if millions don't pay their mortgages. That's never happened in history. If you'll excuse me, Mr. Dox, that seems like a foolish investment," Goldmen executives told him.
"Perhaps," Brainiac 5 allowed.
"If you offer us free money, we're going to take it," the Goldmen executives said confidently.
"I know you will," Brainiac 5 said confidently.
"Mr. Dox, we could work out a pay-as-we-go structure that would payout if the bonds fail. It would also apply to your payments if the value of the mortgage fund goes up you'd have to pay us monthly premiums. Is that acceptable, Mr. Dox?" the Gold executives asked.
"Yes," Brainiac 5 allowed.
"How many credit default swaps do you want to buy?" the Goldmen executives asked.
"As many as you are willing to sell," Brainiac 5 replied.
Brainiac 5 proceeded to buy credit default swaps at all the major banks eager to sell to him.
Afterward, Kara stormed into Brainiac 5's office at City Hall to chew him out. "You're betting against the international housing market, forcing us to pay absurdly high premiums, and using the government infrastructure I sacked as collateral. I no longer have confidence in your ability to predict macroeconomic trends. I'm not comfortable with this scheme. Am I being clear?"
"You flew here to tell me that?" Brainiac 5 asked.
"Don't be an ass," Kara narrowed her eyes.
"I have full autonomy when it comes to investment strategy. You can read our agreement," Brainiac 5 shut her down.
"We had an underlying understanding you wouldn't act like a goddamn crazy man!" Kara raged.
"It's all very logical," Brainiac 5 said condescendingly.
"So now we pay up premiums on these swaps against the housing market until the mortgages fail? In other words, we lose a shit-ton until something that has never happened before in centuries happens?" Kara asked incredulously.
"I may be early but I'm not wrong," Brainiac 5 said confidently.
"In six years, we'll run out of money," Kara said distressed.
"In the second quarter of this year, the defaults will skyrocket," Brainiac 5 predicted.
"What if we pull out of this?" Kara asked panicking.
"The contracts are voided and the banks get everything," Brainiac 5 replied.
"Holy shit. Barney, give me back my money back," Kara said freaking out.
"No," Brainiac 5 refused her.
"Mother-fucker, you give me back my money back," Kara ordered.
"No," Brainiac 5 shook his head.
At Goldmen, a particularly bright young lad, Dr. Peter Sullivan, discovered an issue with his firm while working on his computer. He then contacted his superior and colleague, Will Emerson and Seth Bregman to look at the problem taking them away from their partying. "Look who's burning both ends of the candle tonight. Why didn't you come out with us?" Will asked.
"I'm sorry I had to bring you guys back. Look at this," Peter said to the others. "This is not good, Will."
"What is this?" Will asked as he saw all sorts of graphs on the screen.
"This is basically everything on the Metropolis books at any given time. Metropolis City Hall has been buying up credit default swaps at an astounding rate. They're using the British Dominion to fund their premiums which are enormously high," Peter pointed out.
"So? Fuck'em," Will said dismissively. "The housing market is only going to go up."
"I believe this is the beginning of a financial attack by Supergirl," Peter said seriously.
"If this starts going in the wrong direction, this would be huge," Seth said as he saw the numbers.
"How huge?" Will asked suddenly alarmed.
"If the housing market were to collapse, the losses would be more than the current value of the company," Seth said.
"How would Supergirl be able to attack the housing market specifically? If she wanted to, she could burn the world clean," Will asked thoughtfully.
"It must be a form of economic warfare," Peter said.
"How? Is she going to light houses on fire worldwide? Burn every mortgage payer?" Will wondered. "I'm going to call Sam."
Sam Rogers came into the office disgruntled as it was midnight. "Take a look," Will said to him. Sam glanced at the computer showing complicated graphs. "Sweet science, just tell me what this is about?" he asked impatiently.
"This kid, Peter, nailed it and it's not good, Sam. These are the credit default swaps Metropolis has been up to recently. Right now, they're paying heavy premiums but should the housing market collapse, they will become incredibly rich and our entire financial sector will go bankrupt," Will said.
"Where's the kid that found this out?" Sam asked.
"I sent him and Seth to a strip club for a job well done," Will said.
"Get them back," Sam ordered.
Within the hour, Peter and Seth were back. The four went to the highest floor and met up with Jared Cohen, one of the vice presidents. Also present were Sarah Robertson and Ramesh Shah from risk management and David Horn, the firm's counsel. Jared look over company numbers and saw nothing out of the ordinary, everything was positive. "So, what's the problem?" he asked confused.
"Metropolis City Hall has been buying like crazy credit default swaps. They're betting against the housing market, against us. This could be a prelude to a financial attack on the markets," Sam said.
"Fuck me," Jared realized. "Sam, how long would it normally take to clear everything we have from our books?"
"What?" Sam thought he misheard. "All of it?"
"Yes," Jared confirmed.
"I don't know. Weeks," Sam figured. "But our business is selling and buying. Doesn't work very long without both components. If we stop buying, word will get out and then this whole thing comes to an end."
"How many traders we got on this floor?" Jared asked.
"Sixty," Sam replied.
"What is the value of our total assets?" Jared asked Sarah.
"It would take weeks to get an accurate value on them," she punted.
"Jared, our business model is sound. We don't even know what Supergirl is up to," Sam pointed out.
"I'm bringing John in," Jared said referring to their CEO.
John Tuld came in via a helicopter and met with senior management. "From what I have been told, this matter must be dealt with urgently. So, what the fuck is going on? Who put this together?" he asked the group assembled.
"That would be Dr. Sullivan," Jared pointed out.
"Speak to me as if I were a child or a golden retriever. It wasn't my brains that got me here but my balls," John told him.
"The problem, which is why we are all here tonight, is that Metropolis is betting against the housing market and using government accounts to do it. There is nothing to indicate the housing market is going to collapse and I assume whoever is running City Hall isn't stupid. That leads me to conclude that there will be a sudden attack on the financial markets," Peter said.
"So, what you're telling me is that the music is about to stop and we're going to be left holding the biggest bag of shit ever assembled in the history of capitalism?" John asked looking out the window.
"Should the housing market suddenly collapse, we would be fucked. Yes, Sir," Peter confirmed.
"I'm here for one reason and one reason alone. I'm here to guess what the music might do, a week, a month, a year from now. Ever since Supergirl's arrival to this time, I'm afraid I don't hear...a thing," John said worriedly. "Just silence."
"So, what can we do about it?" John asked his people. "We can either be first, be smart, or cheat."
"Sell it all today," Jared advised.
"Is that even possible, Sam?" John wondered.
"Yes, but at what cost?" Sam asked.
"I'll have to pay," John figured. "How would we do it?"
"We bring in our traders for a meeting, throw them a bone, and then sell everything. By lunchtime, word is going to be out, our assets will be sixty-five cents on the dollar if we're lucky, and the feds will be up our ass trying to slow us down," Sam said. "The question is, who are we selling this to?"
"The same people we've been selling to for the last two years," John said obviously.
"John, if we do this, it's suicide. We don't even know what Supergirl is up to," Sam argued. "And even if we are right, everyone in the market is going to think we had insider information. They're not going to trust us ever again."
"We must survive. This is it!" John said freaked out. "Meet back here in an hour. Jared, get me a plan."
A few hours later, Goldmen began selling their assets to anyone and everyone. With the assets being in good shape, buyers were easy to come by until the market realized what Goldmen was doing and started to panic. Brainiac 5 eyed Goldmen's actions from his computer at City Hall and gave Kara a call. The two met up in his office to discuss the situation.
"One firm has already discovered my plan intuitively," Brainiac 5 said slightly irked.
"Interesting...cuz I don't even know what the plan is," Kara said confused.
"You will address the entire world in a speech," he said, handing her the datapad.
Kara looked over the rather dry speech and considered how she would edit it. "Barney, if we go through with this, countless firms will go bankrupt, jobs will be lost, pensions gone, stock portfolios erased. The capitalist system will be destroyed."
"Yes," Brainiac 5 nodded. "In its place will be a meritocracy run by me. I can make market decisions and calculations faster and more accurately than all of mankind combined. I am free of corruption and crime. I will be fair and impartial with no hint of discrimination. Promotions and demotions will be entirely based on results and facts. The price of products and services will be determined by me in a rational order. We will eliminate hunger, homelessness, and joblessness. Regardless of rank, everyone will receive universal health care, education, the sciences, and the arts."
"I believe you but the transition between this financial collapse and our utopia may be hard for a lot of people. And their misery will be on my hands," Kara said.
"If you don't go through with this, your dominion will go bankrupt. The decision has been made for you. Either we go down or everyone else goes down," Brainiac 5 told her.
Kara addressed hundreds of thousands of people in the Metropolis stadium after market closing. She was wearing a black Supergirl uniform as per usual. Her speech to the people of Metropolis would be heard around the world via social media and television. "Here, in this city, the average income of the one percent is 113 times that of the lower 99 percent. One-fifth of city residents are currently in poverty and many are struggling to pay their mortgage with interest rates and terms and conditions determined by the powerful at your expense. To all that, I say it's high time we fucked the banks," Kara said.
The crowd cheered ecstatically that Kara was on their side. "And by that, I mean to say that starting now, none of you will pay your mortgages. You're to go on strike. Don't worry about foreclosure and repossessions. So long as I am around, no one will touch you or your house. Don't worry about credit either, because all of these credit agencies will be gone in due time. And don't worry about the police or the courts either. I am on your side and no one will ever oppress you again," Kara promised.
The executives at the major banks realized with horror the situation they were now in.
As Kara recruited workers into her system, the free-market system in Metropolis freaked out. Banks started to fail immediately as the common people refused to pay their mortgages, took their money out of the banks, and quit their jobs at Kara's direction. Brainiac 5 and Kara had a meeting on the Metropolis economy.
"Liam Brothers passed? They're dropping to nothing. What the fuck are they thinking?" Kara asked amused.
"They're not thinking. They're delusional," Brainiac 5 said.
"So, what are they going to do?" Kara asked curiously.
"There's a housing supply issue. They're thinking to find all the vacant homes and burn them," Brainiac 5 said seriously.
"The other banks will buy out Liam," Kara predicted.
"A Korean company is interested," Brainiac 5 said.
"Kill it," Kara ordered.
"We don't have jurisdiction over Korea yet," Brainiac 5 reminded her.
"Find a way," Kara said simply
Beijing
Brainiac 5 put pressure on the Korean bankers and immediately they backed out. In Beijing, Brainiac 5 had talks with the Chinese leadership. "You are sabotaging the markets in Metropolis and elsewhere. We are facing significant losses. If this continues, we may form an alliance with Russia and stop lending money to your dominion," the Chinese ambassador said to Brainiac 5.
"We don't require your money. Soon, this planet will no longer operate by money," Brainiac 5 said dismissively.
"Your dominion is a cancer spreading to every corner of the globe but you will not take China," the Chinese ambassador told him off.
"China may be the last to fall but it will fall," Brainiac 5 said confidently.
Metropolis
Brainiac 5 and Kara met for another weekly talk. "Only Bank of America and Bank of London are interested in buying out Liam. I put a stop to London easy enough. Bank of America is only interested if New York gives them a loan which they likely will not do. However, they will buy out Lynn today."
"Keep up the pressure and continue to tear talent away from them," Kara ordered.
At the New York Federal Reserve outside of Metropolis, the major bankers met with the New York Treasury Secretary. They included the CEOs of JP, Gold, Stanley, Lynn, Shiti, Fargo, Bank of America, and others.
"Thank you for coming. Tomorrow morning, Liam will not be able to meet its financial obligations. We had two potential buyers but the British regulators fucked us. So, that leaves Bank of America. The government is not in a position to step in. We need to find a way to contain the damage if Liam files for bankruptcy," Treasury Secretary, Paul Harrison, said to the table.
"I saw this coming once Supergirl made herself known to us. I don't think I have anything to worry about," Goldmen said smugly having been the first to dump their assets before the crash.
"You fucking serious?" Paul asked incredulously.
"You're asking us to save a competitor. Why the fuck would we do that?" JP wondered.
"Gentlemen, you are great New Yorkers. You are taking a patriotic duty. This will earn you the love and gratitude of your country," Paul told them.
"That sounds like bullshit," they all said at once.
"We can all argue about how we got here, Supergirl being an economically illiterate bitch being led around by nihilist asshole robot, but we're all responsible. It is a catastrophic mess. The government has done all it can do. It's on you now," Paul lectured. "Let me be clear, history will remember all those who are not helpful."
"So long as Supergirl is out there telling people not to pay their mortgages and emptying their accounts, the risks are too high. You have to stop that bitch," Stanely told Paul.
"I know the risk is high but if you stay in the game, we will find a private-sector solution," Paul said confidently.
"AIG is fucked," Paul's assistant said, handing him a datapad.
"Well...shit," Paul realized.
Albany
At the New York capitol building in Albany, Paul took questions from the press corps. "How should we read into Liam falling?" one reporter asked.
"Read it as I think it's important to maintain the stability and orderliness of our financial system," Paul said vaguely.
"Mr. Secretary, sir. How do you see the health of the banking system today?" another reporter asked.
"The way the markets are performing today, it's a testament to how the financial industry has come together in an extraordinary set of circumstances. New Yorkers can remain confident in the soundness and resilience of the financial system. Thank you all," Paul said and then left.
Immediately, the stock market crashed with all the major banks in trouble. Paul took a call from the French Finance Minister, Christine. "How could you let this happen with Liam? What the fuck were you thinking?" she asked accusingly.
"We did everything we could, Christine," Paul said defensively.
"You allowed it to fail. It was a horrifying mistake. It is having catastrophic consequences all over Europe. And AIG would be even worse. The European banks have tremendous exposure to AIG. We need assurance you will not fail to act, as you did with Liam. It is not just an American problem," she lectured.
That evening, Paul had a meeting with the New York president, John Hancock. "We need to do something big with AIG. The Fed can lend to non-banks under unusual and exigent circumstances. We're thinking of taking over 80% of the company," Paul said.
"We can't. I just lectured the American people on the role of government," John protested.
"AIG has collateral. They have assets. Liam didn't. We couldn't lend into a hole. It's not the same story," Paul insisted.
"Nobody's going to give a shit. It's a bailout with legislation," John pointed out. "The Senate will go crazy. The country will go crazy."
"The plane that you fly on comes from AIG. Construction downtown, AIG. Life insurance, millions of policies, teachers' pensions, it's everywhere. You want too big to fail? Here it is. You got a better idea? The suggestion box is wide open," Paul said passionately.
"How do I explain this to the American people?" John asked.
"Okay, okay, here's how you explain it. Wall Street started bundling home loans together, mortgage-backed securities and selling slices of those bundles to investors. And they were making big money. Then, Metropolis begins buying up credit default swaps all over the banking industry with the intent to throw the housing market into chaos by lying to the American people that they'd be better off if they stopped paying their mortgages, pulling their cash out of banks, and quitting their jobs," Paul said. "The regular guy on the street thinks Supergirl knows what she's talking about. He's saying to himself, 'Fuck the banks.'"
"This money-less socialist meritocracy going on in British Dominion is not the American Dream. AIG has to pay off the swaps, all of them, all over the world, at the same time. AIG can't pay. AIG goes under. Every bank they insure, books massive losses on the same day. And then they all go under. It all comes down," Paul said grimly.
"The whole financial system?" John asked stunned.
"Yeah," Paul confirmed.
"I have to talk to the other presidents. This is an act of war," John declared.
"Before you wage war against Supergirl...let's see if there is a financial solution to this mess," Paul suggested.
Soon thereafter, the New York Federal Reserve gave a loan to AIG to rescue it from imminent collapse. Naturally, the people at Liam were pissed. Paul began working to merge banks together to strengthen them. Bank of American and Lynn merged, facilitated by the government. Other banks refused to merge for various selfish reasons. Investors pulled their money out due to the crisis and on the urging of Supergirl who was still attacking the financial markets via propaganda. With the New York Federal Reserve out of options, Paul went to the New York Senate for a bailout.
"With this legislation, the government will become a non-voting stockholder in these banks. We give them cash injections to keep going and over time, they will pay us back with interest. If we do not act now, our economy will collapse," Paul pitched to them.
The NY Senate ended up voting no on the emergency economic stabilization act causing the stock market to crash even more and investors to flee. Gold prices increased dramatically. The public, partially influenced by Supergirl, was completely against the bill.
"The Senate must act. Our economy is depending on decisive action from the government. The sooner we address the problem, the sooner we can get back on the path of growth and job creation," President Hancock said to New Yorkers on television. His poll numbers dropped considerably as a result of his speech.
Upon seeing the collapse of the American economy, Kara made a declaration to the British Dominion. "I hereby claim that all lands in North America north of the 45th parallel for the British Dominion, the city of Metropolis, Belize, Jamaica, Bahamas, Leeward Islands, and the Windward Islands. I now claim all North American lands to the east of the Mississippi River. All residents of these lands are free to join my Dominion...or not. In any case, the land, resources, infrastructure, ports, and so forth belong to me. Terms and conditions apply, contact your nearest British embassy for details," Kara said and then signed off.
"Holy shit," Paul realized.
Philadelphia
Noticeably outraged, the legislative leaders of several nation-states came together in Philadelphia to protest Kara's announcement. Georgia, at the moment, sided with Kara and did not participate. This Continental Congress voted to boycott British imports and then to ban any exports to Britain. The American economy shifted from its financial crisis to that of a military economy readying itself for war. The American government tried to borrow from foreign governments only to be turned down and were forced to borrow domestically.
In Metropolis, Brainiac 5 handed Kara a datapad on the Continental Congress' resolution. "They called me coercive and intolerable...what the fuck?" Kara said outraged.
"I thought it was relatively respectful," Brainiac 5 remarked.
"You know what you do with bullies, you single one of them out and you spank their ass. That's how I did it in Midvale. That's what I'll do here," Kara said as she activated a hologram map of North America. "Which one is going to get fucked first...Massachusetts," she determined.
"Boston is actually one of our colonies," Brainiac 5 reminded her.
"Yeah, but the rest of the province is highly rebellious of me. Have you seen these poll numbers? I have the highest unfavorable numbers in Massachusetts," Kara pointed out. "We shall prevent any rebel shipping coming out of that port with a blockade."
"The fleet is still deployed to India," Brainiac 5 reminded her.
"Damn it," Kara cursed. "We shall recall the fleet then."
"I suppose we could. I've destabilized India for the moment with critical assassinations. The blockade will be mostly ineffectual. Massachusetts will simply ship their goods by land to other ports in other colonies," Brainiac 5 said.
"It's the principle of the matter. I now own America and these rebels are living in my country rent-free," Kara said pissed off.
Nura then came into the office. "Sup?" Kara asked her.
"We're looking at war," she said seriously.
"Where?" Kara asked concernedly.
"Everywhere," Nura replied.
Author's Notes: This episode was the merging of three different Wall-Street movies I recommend: The Big Short, Margin Call, and Too Big To Fail. Let me just say, I have no idea what I'm talking about on finances and how this would actually work out hypothetically if a superhero were to do this. Also, this is in a future dystopian world which makes things even more confusing. Typically, you wouldn't have all of these guest characters in an episode and then have them never come back but...fuck it.
*Sunboy has a cameo in this episode as one of B5's analysts.