On November 5, the 1996 U.S. presidential election officially began. With Clinton's poll numbers consistently crushing Dole's for months, the entire process seemed uneventful, even dampening voter enthusiasm.
When the votes were tallied that day, Bill Clinton easily secured victory with 49% of the popular vote and a whopping 379 electoral votes.
As for the other two contenders, Republican Bob Dole garnered only 41% of the popular vote and 159 electoral votes. Meanwhile, Ross Perot, the third-party candidate who had once been a disruptive force, saw his influence wane dramatically, capturing a mere 8% of the vote and, unsurprisingly, earning no electoral votes at all.
The predictability of the outcome led to a historic low in voter turnout, setting a record for the lowest participation since 1924. Only 49% of Americans cast their votes, marking the first time in over half a century that voter turnout dipped below 50%.
On the other hand, Clinton's win secured him a second term and broke the Democratic Party's streak of failing to re-elect a president since Franklin D. Roosevelt.
As with every presidential election year, the spotlight on the presidential race overshadowed the congressional midterms and gubernatorial elections.
However, within the American elite circles, these other races were not dismissed lightly.
While the presidential race saw a decisive victory for the Democrats, the Republicans maintained their dominance in Congress and gubernatorial contests. This mirrored the "pendulum effect" seen in the midterm elections two years earlier. This time, the Democrats failed to achieve similar success at the congressional and state levels, largely because a significant portion of voters intentionally split their tickets.
Since Clinton's first term, the U.S. economy had seen a robust recovery. Over four years, more than 10 million jobs were added, and the unemployment rate dropped from nearly 8% under George H.W. Bush to 5%, the best in a decade. However, the numerous scandals surrounding the Clintons during their first term left voters conflicted. While they acknowledged Clinton's effective governance, they instinctively cast votes in Congress and gubernatorial races to check his power.
Statistics from polling stations across the country revealed that over 13% of Clinton supporters deliberately voted for Republicans in Congress or gubernatorial races. Thirteen percent may not seem like much, but in many districts, it was enough to fundamentally alter the outcome.
In summary, the United States was set to face another four years of division between the White House and Congress.
This political dynamic also emboldened Republicans to dig deeper into Clinton's personal scandals, which had historically led to the infamous Lewinsky scandal and the impeachment trial, a spectacle rarely seen in U.S. history. Later, during the 2000 presidential election, Al Gore, keen to avoid being implicated, deliberately distanced himself from Clinton, despite their outwardly cooperative relationship over eight years, refusing Clinton's help in his campaign.
The day after the election results, the financial markets delivered their own immediate response.
Clinton's re-election signaled continuity for the economic policies of the past few years, which was seen as a major positive. On November 6, the Dow Jones Industrial Average surged by 1.5%. The Nasdaq Composite, even more striking, jumped 2.1%, skyrocketing from 5315 to 5426 points in a single day.
The two flagship stocks of the New York Stock Exchange and Nasdaq—Daniels Entertainment and Egret Corporation—both saw their market values reach new highs as a result.
Daniels Entertainment, whose market cap had surpassed $500 billion in mid-October only to fluctuate back into the $400 billion range, rebounded with a 1.8% gain on November 6, closing the day with a valuation of $526.3 billion.
Egret Corporation was even more dazzling.
On the same day, Egret's stock rose by 1.6%. Though its increase lagged slightly behind Daniels Entertainment, its total market cap at the close reached $579.6 billion, leaving it just $20.4 billion shy of the $600 billion milestone. A mere 3.5% rise would be enough to push it over the threshold.
The U.S. stock market appeared as exuberant as ever. However, with the conclusion of the 1996 election, the atmosphere quickly grew more complicated.
Following the election, many began covertly maneuvering around the U.S. stock market, particularly targeting the Nasdaq's technology sector.
New York.
In a mansion located in Lattingtown, an affluent neighborhood on Long Island's north shore, roughly 30 kilometers from Manhattan and across the sound from Greenwich, a celebration was underway on the evening of Friday, November 8. The event was in honor of a Republican senator-elect from New York State.
Richard Mellon Scaife, who had recently become more active in East Coast political and business circles, arrived early. He adeptly mingled with predetermined guests, his conversations tinged with both overtures and subtle probing. Before long, he had ushered tonight's most important target, Julian Robertson, into a study that the host had set aside for private discussions.
For over a month, Scaife—accustomed to a lifetime of smooth sailing and arrogance—had been reeling from his failed attempt to discredit a certain young tycoon. Following the ensuing threat from his target, he experienced, for the first time in his life, an extended period of fear and anxiety. However, in the end, the storm passed with little consequence.
After receiving a severe warning at a family council meeting chaired by one of his uncles, Scaife refrained from releasing the scandalous information he had intended to publicize. Yet, he also defied family pressure by refusing to shut down the Pittsburgh Tribune-Review. After all, how could he possibly close a $50 million newspaper on a whim? Even when the family offered him compensation, he held firm.
The Mellon family, with its 200-year legacy, was not about to bow down so easily.
Despite his tough stance—even declining to make a simple apology phone call as his uncle had requested—Scaife ultimately saw the situation resolve favorably, which he believed was only logical.
Two years earlier, Simon Westeros had clashed with the Hearst family, leaving them significantly weakened. This had already raised alarms among many of America's old-money families. If this young man were to confront the Mellons over a minor dispute, it could lead the traditional capital powers across the federation to unite in opposition, ensuring they wouldn't allow this audacious newcomer to continue trampling over them.
Even so, while Scaife had survived the immediate crisis, the experience left him increasingly indignant. As a scion of one of the nation's most prestigious families, he had spent millions of dollars in past years attacking Clinton with little personal consequence. And yet now, the idea of being intimidated by Simon Westeros infuriated him. Over the past month, he had been actively rallying support among East Coast conservative circles. After all, even though the Westeros system's meteoric rise seemed almost miraculous, the core of America's political and economic system remained firmly in the hands of traditional capital.
Scaife recounted his recent experience—carefully rephrased—within these circles as a cautionary tale. Under no circumstances, he argued, could they allow the Westeros system to continue expanding unchecked.
After studying the situation in detail, Scaife decided to focus his efforts on the Nasdaq market.
Bursting the technology bubble, he believed, would strike at the heart of the Westeros system, whose value was deeply tied to its high-tech giants. This, in turn, would significantly reduce Simon Westeros's personal wealth.
In the study.
After brief pleasantries, Scaife handed a document to Julian Robertson, the head of Tiger Management, saying, "Julian, this is an article written by a financial journalist in Boston that was suppressed some time ago. I know Tiger Management has been bearish on tech stocks, and I think this article could be a good starting point."
Julian Robertson took the document, opened it, and after reading just the title, his brow furrowed slightly.
—"A Shocking Conspiracy: The Ponzi Scheme of the Internet Industry!"
As a seasoned Wall Street fund manager, Robertson instinctively scoffed at such sensationalist headlines. However, since it came from Scaife, he patiently read through it, his expression growing increasingly serious as he progressed.
A Ponzi scheme, in simple terms, involves enticing investors with promises of high returns, using funds from newer investors to pay returns to earlier ones, all while skimming profits until the scheme inevitably collapses.
The article framed the booming internet industry as an elaborate and massive Ponzi scheme.
The piece had clearly been meticulously crafted, with detailed examples and data. Its primary target was the Westeros system's three tech giants. It argued that the severe bubble in the tech sector was entirely engineered by Cisco, AOL, and Egret through coordinated media hype and a Ponzi-like chain of interests that trapped countless investors and ordinary users in a seemingly prosperous but ultimately hollow internet industry.
The article further claimed that these companies were extracting exorbitant revenues through monopolistic practices in internet tools, cloud computing, and online advertising, all while deceptively portraying their platforms—email, social networks, and video sites—as free services that consumed users' time.
To sustain this false prosperity, the companies allegedly employed tactics like subsidized platforms and revenue-sharing schemes for user-generated content, which created the illusion of new economic opportunities while actually exploiting users for profit.
The result, it argued, was a façade of prosperity in which the three Westeros giants accounted for 20% of Nasdaq's market cap.
The broader conclusion was that the internet industry, in its current form, was worthless and bound to collapse.
After carefully reading the article, Julian Robertson exhaled deeply.
If
not for his own in-depth understanding of the internet industry, Robertson admitted he might have been swayed by the article's meticulously constructed arguments and emotionally charged tone. It was clear that, if published, the article could serve as a massive destabilizing force in an already overheated tech market.
Once Robertson finished reading, Scaife, who had been waiting, asked, "So, Julian, what do you think?"
"It can incite the public, but it won't fool the smart ones."
For any emerging industry, the key question is whether it creates real value.
The core of a Ponzi scheme is that it's a zero-sum game—what one person gains, another loses.
The internet is clearly different. Take Egret Corporation, for example. Its suite of internet tools, cloud computing services, and platforms like email and social media are all genuine products of labor and innovation, creating wealth in the form of intellectual property and digital assets.
In the developed world, these are recognized as legitimate assets, even if some emerging markets might not value them the same way.
So, while there may indeed be a bubble, the internet is undeniably a platform that is transforming lives and creating jobs.
Scaife countered, "Julian, all we need is to incite the public. That's the result we're after, isn't it? With retail investors making up a record proportion of the market, a panic sparked by this article could trigger a stampede, and the Nasdaq would inevitably collapse. Tiger Management, with the right positioning, could make a fortune."
Robertson, who had overheard rumors about Scaife's recent activities during the evening's gathering, didn't push back on the point. Instead, after some thought, he replied, "Not enough. It's still not enough."
"Of course. I know this alone isn't sufficient," Scaife said. "That's why I hope we can collaborate, pooling our resources to ensure this succeeds. For instance, we could pressure the Fed to raise interest rates or leverage the Justice Department. While it's true the White House is closely aligned with the Westeros system, there's still room for maneuvering. If we could push for Egret to be broken up, that would add to the negative sentiment. Combined, these measures could crash the Nasdaq."
After a moment of consideration, Robertson asked, "So, what exactly do you want me to do?"
Scaife replied, "Use your network. Let's work together and avoid acting independently. That way, we can all profit in the end."
Robertson tapped the papers lightly on his knee, saying, "Egret's antitrust case is still under investigation, and with the White House's stance, there won't be any resolution in the near term."
Scaife thought for a moment before responding, "Then let's leak some strategic information—something like the discovery of critical evidence proving Egret's monopolistic practices, making its breakup inevitable. That should be relatively easy."
Robertson nodded.
The two continued discussing the finer points of their plan before exchanging contact information and preparing to leave the study. As they were about to exit, Scaife seemed to remember something. He turned to Robertson and asked, "Julian, I know you're close to Soros, and Soros has a good relationship with Simon Westeros, doesn't he?"
Robertson waved a hand dismissively. "Don't worry. This is business. I won't say anything I shouldn't. Besides, George has his sights set elsewhere these days."
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