Chapter 594 - 278: If You Want to Challenge a Giant Dragon

Philadelphia, Chestnut Hill.

Inside the Saint Claude Family’s private fencing hall, the crisp, harsh clang of metal rang out.

CLANG!

The épée in Leo’s hand was violently flicked away, tracing an arc through the air before crashing to the floor with a CLATTER.

His opponent retracted her sword and gracefully removed her mask, revealing the delicate yet cold face of Evelyn Saint Cloud.

She shook her blonde hair, sweat trickling down her neck and into her white fencing uniform.

"Your footwork is too sloppy, Leo." Evelyn tossed her mask to a nearby butler and took a towel to wipe her face.

Leo rubbed his sore wrist and bent down to pick up his sword.

"I didn’t come here for a fencing lesson, Evelyn." Leo looked her straight in the eye. "I’m here to talk business. About the Citizen Health Mutual Aid Alliance."

Evelyn paused for a moment, then let out a sneer.

She walked over to a sofa in the rest area, sat down, and took a sip of mineral water.

"Business? You call that business?"

Evelyn looked at him as if he were a madman.

"You want to create some kind of communal healthcare? You want to bypass the insurance companies and settle directly with pharmaceutical companies and hospitals? Leo, you’re insane."

She held up three fingers.

"CVS, United Health, and Express Scripts. Have you heard of them? They’re the three giants of the pharmacy benefit management industry. They control 80% of the prescription drug distribution in All of America, deciding which drugs get covered by insurance and which ones have to be paid for out-of-pocket."

Evelyn’s voice grew sharp.

"They’re the Godzillas of the healthcare industry. Their annual lobbying budget is more than Pittsburgh’s entire fiscal revenue for a decade. And you want to bypass them? You’re declaring war on Godzilla with a toothpick."

Leo didn’t back down. He walked over and sat down across from Evelyn.

"It’s precisely because they have a monopoly that they make exorbitant profits. And it’s precisely because of those exorbitant profits that there’s an opening for us."

"Us?" Evelyn cut him off coldly. "Don’t lump me in with you."

"The Saint Claude Family holds a massive amount of pharmaceutical stocks and insurance company bonds. That’s one of the cornerstones of our family’s wealth. And now you want me to help you build a non-profit organization to drive down drug prices and disrupt market rules?"

"Leo, I’m a capitalist, not a philanthropist. I have no intention of paying for your so-called sense of justice."

The conversation seemed to have hit a dead end.

Leo took a deep breath.

He adjusted his posture, relaxing the tense pose he’d held before and adopting a more casual one.

"Evelyn, your calculations are wrong," Leo began.

"You only see that your stocks will fall, but you haven’t seen what you stand to gain."

"What would I gain?" Evelyn scoffed. "A Nobel Peace Prize?"

"You’ll get a massive pool of cash."

Leo held up one finger and drew a circle in the air.

"Pittsburgh has a population of three hundred thousand. Add in the surrounding satellite cities and the cities from the Industrial Revival Alliance that might join in the future, and our Mutual Aid Alliance’s potential membership could reach two million, or even more."

"If every member pays a one-hundred-dollar contribution each month, that’s a cash flow of two hundred million dollars per month."

"You know what that kind of money means."

Leo stared into Evelyn’s eyes.

"Although this money will eventually be used to pay for medical expenses, there’s a holding period before that happens. A month, two months, maybe even longer."

"That money, sitting in the account, is called ’the float’."

"Buffett built his empire on the float from insurance companies. It’s the lowest-cost leveraged capital in the world."

Leo played his first card.

"If you support me, the Saint Claude Family will get exclusive management rights over this pool of funds."

"You can use that money for investments, for mergers and acquisitions, to call the shots in the financial markets. As long as you maintain liquidity, the rest of the profits are all yours."

Evelyn’s pupils contracted slightly.

Of course she understood the value of "the float." It was a gold mine.

But she still didn’t give in.

"The risk is too great. If those three giants retaliate and the stock prices crash, my losses would outweigh these gains."

"Then let them crash," Leo said slowly.

"Which brings me to my second proposal."

"Evelyn, since you already foresee my policies hitting pharmaceutical stocks, and you know the share prices of those three giants will fall because of our reforms, why don’t you start shorting them right now?"

Leo stood up and poured himself a glass of water, his movements as casual as if he were in his own home.

"It’s called policy arbitrage."

"You have inside information. You know when the Mutual Aid Alliance will go live, you know how low we’ll drive down drug prices. You’ll know the outcome far sooner than any analyst on Wall Street."

"You can sell high now, then buy put options."

"The day the Mutual Aid Alliance officially launches will be the day you reap massive profits."

Leo turned around, raised his glass, and toasted Evelyn.

"Destroying the old world is often more profitable than maintaining it."

"This is the game top-tier capitalists should be playing."

"Isn’t it?"

Evelyn sat on the sofa, clutching the towel in her hand.

"Policy arbitrage," Evelyn murmured, mulling over the term. "It sounds tempting. But, Leo, are you sure I won’t be ’invited for coffee’ by the SEC for insider trading?"

"We’re Politicians, not financial criminals."

Leo spread his hands, a look of pure innocence on his face.

"How could this be called insider trading? This is a reasonable expectation based on publicly available information."

"The plan for the Mutual Aid Alliance was something I announced publicly, and my promise to lower drug prices was also made public. Anyone could use that information to short pharmaceutical stocks. We just saw the future a little earlier than everyone else."