CHAPTER EIGHTBack inNew York, optimism was in increasingly short supply. What do you do if you think you're being set up? One thing, you may have occasion to muse long and hard about the consequences, personal and otherwise. You also may choose to ponder the larger motives of the individual behind it all.So far, what had happened? Matsuo Noda had hired Matt Walton, corporate attorney-at-law, to begin shorting the American Treasury market, then proceeded to make himself a bona fide hero back home, in the process of which he acquired access to the biggest chunk of savings in the world, presumably the "financial arrangements" he once alluded to. Using that money as margin, Noda was ready to shift his play into high gear. My latest telexed instructions indicated he was poised to accelerate dramatically, "borrowing" bonds and selling them for whatever the market would pay. Of course if the price went down anytime soon, he could then replace those borrowed instruments at some fraction of what he'd sold them for. The man was gambling, for godsake. With the "Emperor's" fund.Or was he? Therein, as somebody once said, lies the rub. Short selling has always been a reasonably good definition of gambling, except . . . except you are gambling only if you are wagering money on an event whose outcome is not precisely known. If you do know it, you are not gambling. You are taking prudent steps that will allow you to benefit from prior knowledge of said, etc.Enough airy semantics. The big question: Why me? Now, I've been set up a few times before in my life. Everybody has. I even wonder in darker moments if the reason Joanna demanded a champagne lifestyle wasn't to make sure I spent all my time supporting it, thereby rendering me exactly what she eventually accused me of being—an absentee husband and father. That is a no-win situation.The undertaking at hand, however, could have a very obvious beneficiary. Matsuo Noda. The only problem was that in order for Noda to win,Americahad to lose. Massively. The old zero-sum game: for every winner there has to be an equal and opposite sucker.After that Friday evening withHenderson, I spent the next week mulling over the complexities of the situation. The whole thing boiled down to two very strong presumptions: one, I was indeed being set up, being told one scenario while the truth lay in quite another direction; and two, my employer had something very lethal to America's financial health up his sleeve. Still, these were merely presumptions, nothing more. The only thing I was sure about was that I had a very unpredictable tiger by its posterior handle. Time to find out a little more about my pussycat.I hadn't actually seen Dai Nippon's midtown office, but I talked to the manager almost every day on the phone, and he occasionally shipped materials down to my place in the Village. I knew they'd taken over the building, installed a new security staff, moved into the vacant floor, and were doing something. However, I hadn't been invited up to see what the something was. I concluded the time was at hand.As I understood it, Dai Nippon's purpose in life was to oversee the use of investment capital. Fair and good. As it happens, Japanese business tends to be funded a little differently from our own. Instead of selling off stock to the public, Japanese industry relies much more heavily on bank financing. In fact, less than twenty percent ofJapan's industrial assets are publicly traded. Consequently the rules of the game are changed. If your company is beholden to a financial institution instead of a lot of nervous stockholders and fund managers, you're in partners with somebody less interested in next quarter's profits than in the larger matter of your still being around ten years hence to pay off its paper. That lender naturally rides herd very closely on your long-term planning.As best I could tell, DNI was one of the herd-riders, a sort of hired gun that monitored various companies' operations to make sure they were managing their loans prudently. Again, since the prospectus emphasized they were specialists in overseas investment, I assumed that maybe part of the reason they were coming to theU.S.was to oversee the Japanese companies doing business here with money borrowed from back home.Nobody had actually told me this. In fact nobody had told me anything. That was merely what I considered to be an educated guess. It was the only thing I could think of that made the slightest sense.The following Monday morning I told myself the guesswork was over. It was high time I went up and saw for myself what they were doing. All I needed was an excuse.Then the phone rang. I was in the garden out back, skimming the Times and working on a pot of fresh coffee while waiting for theChicagoexchanges to open. Ben was cruising the fence line, sniffing for cats.When I picked up the receiver, waiting at the other end was Mr. Yasuhiro Tanaka, office manager for theNew Yorkoperation. He chatted a bit about the weather, how nice it was to be working in theU.S., the usual. Finally he mentioned that he needed to meet with me to discuss, among other matters, certain legal questions concerning one of the other leases in their building. Would it be convenient if he came down to my place and we went over the paperwork?Not necessary, I replied. I just happened to be headed for midtown in the next few minutes. I'd throw a copy of the leases into my briefcase and drop by to see him. Then before he could protest, I mumbled something about the doorbell and hung up. The phone rang again immediately, but I didn't answer it. I was already putting on my jacket.I scribbled a few notes for Emma, taped them to her word processor, and headed out the door. Minutes later I was in theirThird Avenuelobby, greeting the new security staff, several of whom, as a favor to Tanaka, I'd interviewed for their jobs.Then I took the elevator up to DNI's offices on the eleventh floor and proceeded to have my argyle socks blown away.First off, top security. The entryway just off the elevator bank had been completely transformed. TV intercom, steel doors—it could have been the vault at Chase. I told the camera's eye who I was and then waited while a computer somewhere gave me a voice-ID check. How they managed to have me in the system already I wasn't exactly sure . . . maybe they'd taken it off the phone?After I'd cleared that, the doors slid open and I entered the first chamber of a two-room security check. An electronic voice ordered me to put my briefcase into the X-ray machine while I proceeded through the metal detector.That cleared, the set of steel panels leading into the next room slid open and I went in . . . to be confronted by two crew-cut guards who could have been retired sumo wrestlers. As the doors clicked behind me, I took one look at DNI's welcoming committee and realized they were packing Uzis, those Israeli automatics that could probably cut down a tree in about two seconds. No candy-ass .38's for Dai Nippon. Without ceremony they commenced a body search. It was all very polite, but it sure as hell wasn't perfunctory. I just stood there in astonishment while this gorilla roughly twice my size felt me up.That indignity completed, I was now in line for the real surprise. Yet another set of steel doors opened, and there awaited the man I'd been dealing with over the phone, Yasuhiro Tanaka. Medium build, late forties, cropped hair, automatic smile—he was Noda's chief of operations forNew York. He didn't say much, just led me onto the floor, heading for his office. But he was clearly the on-site daimyd: lots of heavy bowing from the young, white-shirted Japanese staff as we headed for the corner suite.Which brings us to the real shocker. Dai Nippon's floor operation looked like the flight deck of the Starship Enterprise. Let me attempt a brief description. In the far back was a massive NEC augmented supercomputer—a half dozen off-white octagonal units about head high, one the mainframe and the others storage modules arranged alongside in a neat row. Pure power. The whole thing was encased in a glassed room with (I assumed) critical temperature and humidity control. Then out on the floor were lines and lines of workstations. Computer screens everywhere, printers running, stacks of color hard copy—pie charts, bar graphs, spreads—plus terminals carrying every financial service offered by cable or satellite.This was just the first, five-second glance. Incredible, I thought. There must be a heck of a lot more Japanese investment in theU.S.than anybody realizes.But something had to be wrong here. Why should . . . ? Finally I slowed down—Tanaka was hurrying me along, clearlyannoyed that I'd appeared uninvited. That's when I noticed the rest. Across one wall was a line of projection TVs, on which computer data was being scrolled. As we walked past, I noticed that each screen seemed to be under the scrutiny of a team of analysts, who were intently studying the numbers, comparing notes, running calculations on their individual terminals.What's this all about?I stopped before one screen and studied it a second. Beneath it a small sign said simply "Electronics." The one next to it read "Biotechnology." Then I glanced at a couple of others. Each one covered a different industrial sector. Gee, I thought, you're really out of touch, Walton. Who would have guessedJapanhas so much investment in manufacturing here. I didn't remember much going on besides a few joint ventures. Sure, they've got a few auto assembly plants, that steel plant they'd bought out on the coast, some TV-tube production, chips, VCRs. But mostly it represented entries into sectors where they're trying to get the jump on protectionism, start a token manufacturing operation here before they get shut out."If you have any questions, I'm sure we can discuss them later." Tanaka had taken my arm and was urging me politely toward his office. The whines and hums of laser printers and the beep of computers made conversation all but impossible."Well, I was merely interested . . ." Then I stopped.Know that test psychologists have, the one where you look at a couple of silhouettes and describe what you see? If you think you're supposed to look at the white part in the middle, then you see one thing—I think it's a vase. But if you concentrate on the black instead, you see something else entirely, maybe the profiles of two human faces opposite each other. Thus what you see is largely a product of your prior assumptions concerning what you're supposed to be looking for. Or maybe it measures whether you view the world as a positive or a negative image, something like that. I don't recall exactly. I do remember receiving a B- in Psych 101, which was generous.The point is, what I first thought I saw was actually the inverse of what was really there. I'd told myself what it was, rather than believing my eyes.Dai Nippon was running analyses, bet your ass, but the industries under their silicon microscope weren't Japanese.They'd computerized the financial report of every American company traded publicly and were now in the process of taking those outfits apart.And I can assure you it was cold-eyed in the extreme, strictly hard numbers: quarterly earnings, long-term debt, inventory, stock outstanding, CEO bonuses. As any professional analyst would do, they'd cut right through a company's glossed-over excuses, phrases such as strategic retrenchment, aimed at the dividend-nervous retirees in Cedar Rapids. They were putting together the real story.Same with the financial markets. Screens were scrolling up- to-the-second quotes on everything from three-month T-bills to thirty-year Treasury bonds. Computers were running arbitrage spreads on every issue. They knew exactly where they stood with all their futures contracts. I realized my little telephone boiler room had merely been the tip of some awesome iceberg."Mr. Walton, it is a pleasure to meet you in person." Tanaka was ushering me into the corner office after our pass through the floor. Unlike most executive suites inNew York, its windows were sealed with heavy drapes. Again, total security. "Let me order tea." He waved at somebody out on the floor.I nodded, still chewing over the setup and trying to understand what in good Christ was underway."I'm sure you are a busy man, so perhaps we should proceed directly to my concerns. As you may have guessed, we are almost ready to move into a new phase of our operation.""Oh." I guess it must have sounded dumb, but I honestly couldn't manage a full sentence. Finally I recovered slightly. "I'm a little surprised by the scope of all this. What's the purpose?""Our president, Noda-sama, should be arriving in a few days. I'm sure he will be happy to address your questions in detail." Tanaka paused for the green tea, delivered by a silent girl—the young, smiling, uniformed Japanese "office lady"— who scarcely looked up as she settled the tray on the desk. After she was gone, he continued. "This, of course, is only the financial nerve center for our operation. Our technical staff will begin arriving soon."Technical staff? Then who were those grim-faced minions out there punching computers?"You're bringing in more people?""Correct. Which is why I needed to see you. I understand that the lease on the floor above us is due for renewal at the end of this month. We would like to acquire that space. We will need to convert it as quickly as possible.""What about the current tenants?""There is a rider in their lease, Mr. Walton, that permits the owner of the building to reclaim the space for his own use at the time of a renewal. We fully intend to make use of it. Consequently as our American attorney you are hereby authorized to inform them that their lease will not be automatically extended, that they will be expected to vacate. In accordance with the legal and binding terms of their lease. Advise them also that there can be no grace period. We will require the floor immediately."I looked at him. So much for the current tenants. "What will these new offices be used for?"Tanaka sipped his tea. "That section will have another managing director. Our range of operations here brings other responsibilities.""What section, what range of operations?""I am regrettably not at liberty to discuss the specific extent of DNI's interests.""Well, let me break some news to you. I like to know who I'm working for. So you'd better start discussing specifics and fast."Tanaka seemed to be having trouble meeting my eye. The skull beneath his short-cropped hair glistened under the harsh neon lighting."Mr. Walton, you are now part of the DNI team. That position includes obligations I am sure you would not wish to take lightly.""Hold on." The hell with politeness. "I'm not part of your 'team' or anybody's. I came on board with the explicit understanding that—""Mr. Walton, kindly sit down." He pointed without ceremony to a chair. I just looked at it, then back at him."As you are a scholar ofJapan," he continued, "I'm sure you are aware that an employee's loyalty to his company is considered to be a gauge of his character. A company is a family, and one considers its interests in that spirit.""Maybe you didn't notice, but I'm not Japanese. 'Nihon-jin'as you'd probably put it. I'm agaijin. We usually work for number one.""At the moment, Mr. Walton, you work for Dai Nippon. There is an assigned role for you, one that Noda-san expects you to fulfill.""Maybe I just handed in my resignation.""I do not really think you would wish to do that." Deadpan. The confidence with which he made that statement told me this guy could make a killing at poker. Unless he had a few cards in the hole I didn't know about. "It would hardly be in your best interest. We expect your contribution to be crucial.""What contribution?""That will become plain in due time, Mr. Walton." He was measuring his words as he continued, maybe easing up a bit. "For now, let me merely say we know you to be a man with substantial curiosity. Consequently we believe that what lies ahead will be of considerable interest to you."What was this samurai up to?"Maybe it's time everybody put their cards on the table. And why don't we begin with you." I thumbed at the floor outside. "What the hell's going on out there?""At the moment nothing in this office need concern you. But perhaps I can tell you this. Now that you are serving as our corporate attorney, you are in a position to help us pursue other avenues."I looked him over. Tanaka was beating about the bush. Why? Maybe it was merely the Japanese style, but he also seemed to know exactly what not to say."I'm still waiting to hear what's next.""Very well. As long as you're here . . ." He sipped calmly from his cup. "It is common knowledge that Japanese savers have become the world's largest lenders, with overseas investment that now exceeds, by the way, the greatest rate of lending by OPEC even at its peak. The Japanese people will have over a trillion dollars in overseas assets within the next few years.""I'm familiar with the numbers." I also knew that with several trillion dollars in spare change sloshing around back home, they were sending abroad a mere dribble of what they had."Were you also aware that over four fifths of our overseas investment is currently in dollar-denominated instruments?""No surprise. The dollar's still the name of the game, worldwide.""True enough, but we at Dai Nippon are concerned that so many of our institutions have such heavy exposure in a single currency. Accordingly, in addition to our program with interest- rate futures, we also feel it would be prudent to provide some protection for this currency risk. In the same manner, I might add, that American investors often do.""You mean some downside protection? On the dollar?""That is correct. A devaluation or a sudden drop in exchange rates would jeopardize much Japanese capital. Therefore we feel it would be prudent to enter the currency-futures markets to cover at least some of the dollar exposure of our investors."Jesus! I suddenly needed a Valium. In addition to Treasuries, now Dai Nippon was about to short the dollar, pre-sell it in advance of . . . of what?Had Noda been lying to me right down the line? Setting up a cockamamie cover with interest futures while all along he was setting up an international currency swindle?Or were we about to get down to the real action? He'd scheduled his curtain raiser, whatever it was, then realized he might accidentally pull the plug on the U.S. greenback? So he'd decided to arrange a little currency insurance for everybody back at the ranch, just in case.Don't ask me why, but I was drawn to this pending nightmare like a moth to flame. This was a ringside seat at . . .All right, who am I trying to kid? That was the moment when I finally, finally grasped what our meeting was all about. It was to formally announce the tidal wave that would soon engulfAmerica. And now Matsuo Noda—or maybe I should say Noah—was, in his oblique Japanese way, handing me a pair of tickets good for one round-trip passage on his ark. The only thing missing was the schedule.By then I didn't care whether I was on board or not; I figured I'd just as soon try swimming on my own. But I had one very good reason to play along."Okay, what's the game? Want to sell some dollars for delivery down the road?""We assume you are familiar with the markets.""I stay in touch. How would you like to go? If you wantcurrency futures, there're the exchanges. Or you can buy forwards, which are more or less the same thing, from any number of banks around town. Futures only go out for a year, maximum, but I can probably get you forwards out to three. Come to think of it, Citibank will quote you ten-year forwards.""We would be looking at shorter terms.""No problem. Currency futures are quoted for March, June, September, and December. That's on theChicagoMercantile Exchange's IMM. But if three months are too far out, then you can get options on spot currency contracts down at thePhiladelphiaexchange, which allows early exercise. Or if you want, I think you can get off-exchange bank quotes as short as one month. Citibank has a big FOREX desk. And Bankers Trust, and First Boston, or even Banque Indosuez. Of course, if you really want to get serious, there's the currency trading floor at Barclays Bank inLondon. . . .""We expect to be active in all markets, worldwide. That seems best." Tanaka continued, "However, we are only interested in December futures and one-month contracts in the forwards. After that, we may choose to . . . make other arrangements."Hang on,America."Right. And what are we talking here in terms of amount?"He handed me a sheet of paper.It was like he was ordering up sandwiches from the deli. Corned beef on rye, lean, with extra mustard and a slice of pickle. How many? Let me check. Oh, say a few hundred billion."This is going to take a few days." I passed it back, calmly as I could manage. "Why don't you send a schedule down to my place late this afternoon. My secretary will be there. I'll get started in the morning." I rose. "In the meantime, you'll understand if I take today off and catch up a little on other work.""Of course." Tanaka bowed, head still glistening."Be in touch tomorrow." I nodded farewell."Until then, Mr. Walton." Another bow as I turned to leave.I walked back through the floor, again trying to digest the spectacle. This was undoubtedly the most comprehensive operation I'd ever witnessed. What in hell did all this analysis of industrial sectors have to do with currency hedging?Not a lot of time to reflect on the question, however, since I was summarily being ushered toward the steel security doors by one of Tanaka's flunkies, a young tough who seemed to speak no English, but who could strong-arm very eloquently.In moments I was outside, facing the bank of elevators. That was when I remembered the upstairs tenant, a big public relations outfit. Better take a couple of minutes and give them the word.Rausch, McKinley, and Stein were in the middle of proving conclusively that our mayor knew nothing about contract kickbacks, that he was in fact the closest equivalentNew Yorkhad to driven snow. His Honor, in the meantime, was hastily returning the campaign contributions of all the real estate executives who, flanked by their lawyers, were now being featured on the front page of the Daily News.Since RM&S had their hands full and also had expected an automatic renewal of their lease, there weren't too many politic smiles when I broke the news. Fact is, it was a very unpleasant scene. Finally I called for their lease and showed them the rider. They'd signed the damn thing, not me."Sorry, fellows, all I can do is maybe drag this out a little for you, mislay the paperwork or something. Have one of your attorneys give me a call, off the record. But I'd also advise you to start looking for space."Then I headed downtown, a man with a mission.Dai Nippon had to be getting ready to kick hell out of something or somebody. Trouble was, I had no idea who or what. But I'd had plenty of hints it wasn't going to do great things for the dollar. I briefly toyed with alerting Jack O'Donnell and telling him to leak some anonymous storm signals. But what storm? He wouldn't put his senate reputation on the line to peddle guesswork, and all I had to offer was— what?—circumstantial premonitions.Where to begin?Hendersonwas inLondonand unreachable, meaning there was no chance of getting him and his less reputableWashingtonconnections to start shouting "fire" from the rooftops. That left the press. Right. What I needed was the media. Think. Somebody who, if the whole thing proved to be smoke and mirrors, could shrug it off; but, a comer who would be intrigued by the possible broadcasting coup of the century. It had to be somebody with ready-made exposure, yet a personality with little to lose and a lot to gain. That brought to mind the perfect candidate, a former, well, acquaintance.When I got home, I went straight to the office upstairs, looked up a number I hadn't used in a long time, and dialed it. It felt very familiar."Channel Eight. 'The freshest news inNew York.' May we help you?"I always loved the way they peddled information as though it were Wonder Bread."Donna Austen please.""One moment please." There was a click, then another voice. "Channel Eight news desk.""Donna Austen please.""Who's calling please.""Matthew Walton. Tell her it's business, not personal." Enough please's."Thank you, Mr. Walcan.""Walton.""Thank you." On came the Muzak.Would she do it? She used to complain how fed up she was interviewing witnesses to car crashes. Her career needed a transfusion of hard news so the station management would start taking her seriously. Well, here was her shot. And since she was roughly tenth in line for the "anchor" spot, she had no reputation of noticeable proportions to jeopardize by leaking an anonymous rumor theU.S.was about to be shelled by an offshore battery of financial guns."Ms. Austen said to tell you she's in a meeting and can't be disturbed."Why is it some women can't just let bygones be bygones? Give me a break, Donna. I was ready for anything, except her little bedroom games. "How about advising Ms. Austen I'm sorry I called at such an important time, but I have some information that might just save her and everybody else from total ruin.""I'm very sorry, but—""Just tell her, goddamit.""One moment." No please this time.Another very long pause. Finally I heard Donna's broadcast-neutral diphthongs, those lower-register reverberations she'd worked so long to perfect."Matt, you've got your nerve. This damned well better be quick.""Sorry I yelled at the messenger. I'm sorry about a lot of things, but that's not the reason I called. Donna, how'd you like an exclusive? The world as we know it is about to end. Inside a month.""Matt, have you been drinking?""No, but that's not a bad idea.""Well, what is it you want?""A small favor.""You have got to be kidding.""Not for me. It's the country I'm concerned about. That includes you. How about doing theU.S.a favor and leak a heavy rumor from the world of high finance. The American dollar, dear to us all, may be about to go the way of Confederate mustard plasters. I'll even dictate the statement for you.""Matt, why don't you give this earth-shaking scoop to one of your big-shot connections down at The Wall Street Journal, assuming it's such hot news?"Good question. The answer, sadly, was that nobody inside the system would want to even hear this kind of talk, let alone spread it. Everybody in the financial community was already whistling in the dark, terrified those Latin American debt dominos might start to tumble, taking a few of our flagship banks along with them. And now this? No way."Donna, I need somebody willing to go out on a limb.""You shit." She gave a snort. "I let you mortify me once. And believe me that's the last—""Will youlisten, for chrissake. I know it sounds crazy, but this is dead serious. I've taken on a foreign investment firm as a client. I can't tell you the name, but I'm absolutely sure the guy running it is about to screw this country somehow. He's been shorting the bond market, and now he's going to start dumping dollars. Billions and billions. I want to blow the whistle. Get something on the air that'll cause a few bankers and traders to look up from their computer terminals and—""Matthew, darling, how about your doing me a favor?""Name it.""Simple. Don't ever call me here again. And while you're at it, tell that asshole friend of yours, Bill Henderson, I think he's the biggest—""Look, I'm genuinely contrite about the scene he caused at your place. If—""Good." Click, then the hum of a New York Tel dial tone.Maybe she was right. Maybe I was seeing things. In any case, that aborted Monday's attempted guerrilla war against Matsuo Noda. Now to man my barricades.Which moment coincided with the sound of Emma Epstein's key in the front-door lock. The time, obviously, was exactly one-thirty P.M. Exactly. I waited till she'd settled in before taking the fatal step."Emma, how about bringing me that file in your left-hand desk drawer. The one marked 'Trust Account.'""The blue one?""Right. Amy's. You know it. You updated the thing about a month ago when I switched all her money out of stocks and into money-market funds." That move had been my one small attempt to ride Noda's horse in the direction I suspected it was headed."I remember." She glanced at me disdainfully. "I also remember you predicted interest rates were about to go up."Which, she was tactful enough not to add, they hadn't. She also didn't mention she had greeted my market prognosis with open skepticism. As usual."Well, for what it's worth, I still think rates are headed up soon. And Emma . . .""What?" She was grimly digging through the files."Ever think about some gold stocks for your retirement investments? There're some mining issues I hear look good. Golden Sceptre, Golaith, Vanderbilt . . .""That's Amy's portfolio you wanted, correct?" She didn't miss a beat. "Right?"She doted on Amy and always got very testy whenever I dabbled in the management of my daughter's little nest egg. It's galling to admit Emma's market instincts did at times seem superior to mine. John Maynard Keynes once said there's nothing so disastrous as a rational investment policy in an irrational world. Maybe he was right: could be I was shackled by too much logical introspection. Never a problem for Emma. All I know is, if her daughter-in-law inJerseyphoned in (on my line) that she'd just baked a terrific cherry pie using "New Improved!" Crisco, Emma marched out and loaded up on Procter & Gamble. And the damn thing automatically went up ten points."Here it is." She placed it on my desk with a decidedly disapproving sniff."Thanks."Dear Lord, I thought, stand by us sinners now and at the hour of our death. I went over it quickly with a hand calculator. About ninety-four thousand. Which I figured would pay for roughly a year and a half of college the way those already inflated costs were skyrocketing. But by the time Noda got finished with the dollar, it probably wouldn't cover a weekend seminar.Maybe I couldn't save theU.S., but I was damned well going to get my daughter through school. With fear and trembling I started calling banks. Naturally I spread the action around town, BS'ing a lot of currency traders and bank FOREX (foreign exchange) departments in the process. I'd buy some pounds sterling, then . . . by the way, long as we're on the phone, Mort, I think I might need a few million yen in, oh, say about a month. Why don't we just save time and write some contracts now? Besides, bird in the hand, you know. Then I'd take those pounds I'd just acquired and use them to buy several million deutsche-mark forwards from the next dealer I knew.How much did I go out, total? Remember, currency forwards run around a penny on the dollar, so I effectively "sold" something like ten million greenbacks, deliverable in one month, when I figured they'd be worth . . . it was hard even to imagine. Most likely zilch. Since I was flying blind. Amy's college fund bought everything. You name it, I went long. She ended up owning futures on Swiss francs, German marks, yen, lira, pounds sterling, Canadian dollars, even French francs. I was actually tempted, briefly, by the peso (well, she loved her trip toMexicolast summer), a sentimental gesture I sternly resisted.By the time I'd finished it wasfour forty-five, meaning my new, ninth-grade owner of a United Nations basket of foreign currencies had just arrived home from herWest Sideprivate school. She always charged in at four-thirty. I called Joanna and asked to speak to my daughter. Jo's response to the sound of my voice was only slightly less fulsome than Donna Austen's. Finally Amy appeared at my ear."Dad, how come you're calling on the downstairs phone? You're supposed to always use the one in my room. Mom hates it when—""Sweetie, that line is in constant and uninterrupted engagement between the hours offour thirty-oneand eight- fifteen. It's never possible to reach you there at this time.""Okay, so what's up?""Nothing much. How about if you and I caught up on things a bit? What do you say to dinner tonight? Just the two of us? We might even consider a real grown-up meal for a change, no alfalfa sprouts.""Where?" She was immediately on guard. What if she ended up confronted with a red-tinged steak, sliced off one of the living mammals of the earth?"Anywhere. Someplace you've always wanted to go. My treat.""Wow! Anywhere?""Your pick."Long pause, then, "How about Windows on the World?""Sounds good." I guessed one of her school friends had just been. Meaning prestige was on the line. I was right."Sharon's dad took her there last weekend for her birthday and it sounded really neat. She said you can see everything. It's probably a lot nicer than Top of the Six's."Where, in case you hadn't guessed, I'd taken her onherbirthday."Food's standard, but I think we can piece together a spread that'll meet your guidelines. Will your mother let you go?" Joanna had total weekday custody, and she played it for all it was worth."She's got a big date tonight. That creepy real estate guy I told you about. The one with the new silver Saab he thinks is so hot.""Don't tell me about it. And don't call your mother's friends creeps. I'm sure they're all very nice.""Want to bet? This guy is total weirdness. But she'll let me go. No sweat. What time?"When I was a youth, I don't remember young ladies using phrases such as "no sweat." Probably an imperfection of memory, one of many."Pick you up at seven-thirty sharp. Call me if there's a problem.""Okay.""And Amy . . .""Yeah.""Uh, think about wearing an actual dress. Not one of those experimentalEastVillage—""Daaad. I'm gonna look so straight. You'll see.""Never doubted it for an instant."That night I'd intended to explain that her college fund was currently being hedged via a comparatively unorthodox investment scenario. However, she was too busy marveling over the lights ofManhattana hundred stories down to give me much time to talk.What I really wanted to tell her but somehow didn't was that I'd had this spiritualist vision we'd been reincarnated as a couple of those crazy sheiks at Monte Carlo—when I'm the guy who never ventures past the quarter slots next to the door. It was as though I'd pillaged the hundred grand carefully hoarded for her future and spread it over a giant roulette play, stacking chips on every number on the board. Who knew where Dai Nippon's wheel would stop, but when it did, one of them had to pay off a hundred to one. Noda couldn't touch us. Right?No sweat.
Back inNew York, optimism was in increasingly short supply. What do you do if you think you're being set up? One thing, you may have occasion to muse long and hard about the consequences, personal and otherwise. You also may choose to ponder the larger motives of the individual behind it all.
So far, what had happened? Matsuo Noda had hired Matt Walton, corporate attorney-at-law, to begin shorting the American Treasury market, then proceeded to make himself a bona fide hero back home, in the process of which he acquired access to the biggest chunk of savings in the world, presumably the "financial arrangements" he once alluded to. Using that money as margin, Noda was ready to shift his play into high gear. My latest telexed instructions indicated he was poised to accelerate dramatically, "borrowing" bonds and selling them for whatever the market would pay. Of course if the price went down anytime soon, he could then replace those borrowed instruments at some fraction of what he'd sold them for. The man was gambling, for godsake. With the "Emperor's" fund.
Or was he? Therein, as somebody once said, lies the rub. Short selling has always been a reasonably good definition of gambling, except . . . except you are gambling only if you are wagering money on an event whose outcome is not precisely known. If you do know it, you are not gambling. You are taking prudent steps that will allow you to benefit from prior knowledge of said, etc.
Enough airy semantics. The big question: Why me? Now, I've been set up a few times before in my life. Everybody has. I even wonder in darker moments if the reason Joanna demanded a champagne lifestyle wasn't to make sure I spent all my time supporting it, thereby rendering me exactly what she eventually accused me of being—an absentee husband and father. That is a no-win situation.
The undertaking at hand, however, could have a very obvious beneficiary. Matsuo Noda. The only problem was that in order for Noda to win,Americahad to lose. Massively. The old zero-sum game: for every winner there has to be an equal and opposite sucker.
After that Friday evening withHenderson, I spent the next week mulling over the complexities of the situation. The whole thing boiled down to two very strong presumptions: one, I was indeed being set up, being told one scenario while the truth lay in quite another direction; and two, my employer had something very lethal to America's financial health up his sleeve. Still, these were merely presumptions, nothing more. The only thing I was sure about was that I had a very unpredictable tiger by its posterior handle. Time to find out a little more about my pussycat.
I hadn't actually seen Dai Nippon's midtown office, but I talked to the manager almost every day on the phone, and he occasionally shipped materials down to my place in the Village. I knew they'd taken over the building, installed a new security staff, moved into the vacant floor, and were doing something. However, I hadn't been invited up to see what the something was. I concluded the time was at hand.
As I understood it, Dai Nippon's purpose in life was to oversee the use of investment capital. Fair and good. As it happens, Japanese business tends to be funded a little differently from our own. Instead of selling off stock to the public, Japanese industry relies much more heavily on bank financing. In fact, less than twenty percent ofJapan's industrial assets are publicly traded. Consequently the rules of the game are changed. If your company is beholden to a financial institution instead of a lot of nervous stockholders and fund managers, you're in partners with somebody less interested in next quarter's profits than in the larger matter of your still being around ten years hence to pay off its paper. That lender naturally rides herd very closely on your long-term planning.
As best I could tell, DNI was one of the herd-riders, a sort of hired gun that monitored various companies' operations to make sure they were managing their loans prudently. Again, since the prospectus emphasized they were specialists in overseas investment, I assumed that maybe part of the reason they were coming to theU.S.was to oversee the Japanese companies doing business here with money borrowed from back home.
Nobody had actually told me this. In fact nobody had told me anything. That was merely what I considered to be an educated guess. It was the only thing I could think of that made the slightest sense.
The following Monday morning I told myself the guesswork was over. It was high time I went up and saw for myself what they were doing. All I needed was an excuse.
Then the phone rang. I was in the garden out back, skimming the Times and working on a pot of fresh coffee while waiting for theChicagoexchanges to open. Ben was cruising the fence line, sniffing for cats.
When I picked up the receiver, waiting at the other end was Mr. Yasuhiro Tanaka, office manager for theNew Yorkoperation. He chatted a bit about the weather, how nice it was to be working in theU.S., the usual. Finally he mentioned that he needed to meet with me to discuss, among other matters, certain legal questions concerning one of the other leases in their building. Would it be convenient if he came down to my place and we went over the paperwork?
Not necessary, I replied. I just happened to be headed for midtown in the next few minutes. I'd throw a copy of the leases into my briefcase and drop by to see him. Then before he could protest, I mumbled something about the doorbell and hung up. The phone rang again immediately, but I didn't answer it. I was already putting on my jacket.
I scribbled a few notes for Emma, taped them to her word processor, and headed out the door. Minutes later I was in theirThird Avenuelobby, greeting the new security staff, several of whom, as a favor to Tanaka, I'd interviewed for their jobs.
Then I took the elevator up to DNI's offices on the eleventh floor and proceeded to have my argyle socks blown away.
First off, top security. The entryway just off the elevator bank had been completely transformed. TV intercom, steel doors—it could have been the vault at Chase. I told the camera's eye who I was and then waited while a computer somewhere gave me a voice-ID check. How they managed to have me in the system already I wasn't exactly sure . . . maybe they'd taken it off the phone?
After I'd cleared that, the doors slid open and I entered the first chamber of a two-room security check. An electronic voice ordered me to put my briefcase into the X-ray machine while I proceeded through the metal detector.
That cleared, the set of steel panels leading into the next room slid open and I went in . . . to be confronted by two crew-cut guards who could have been retired sumo wrestlers. As the doors clicked behind me, I took one look at DNI's welcoming committee and realized they were packing Uzis, those Israeli automatics that could probably cut down a tree in about two seconds. No candy-ass .38's for Dai Nippon. Without ceremony they commenced a body search. It was all very polite, but it sure as hell wasn't perfunctory. I just stood there in astonishment while this gorilla roughly twice my size felt me up.
That indignity completed, I was now in line for the real surprise. Yet another set of steel doors opened, and there awaited the man I'd been dealing with over the phone, Yasuhiro Tanaka. Medium build, late forties, cropped hair, automatic smile—he was Noda's chief of operations forNew York. He didn't say much, just led me onto the floor, heading for his office. But he was clearly the on-site daimyd: lots of heavy bowing from the young, white-shirted Japanese staff as we headed for the corner suite.
Which brings us to the real shocker. Dai Nippon's floor operation looked like the flight deck of the Starship Enterprise. Let me attempt a brief description. In the far back was a massive NEC augmented supercomputer—a half dozen off-white octagonal units about head high, one the mainframe and the others storage modules arranged alongside in a neat row. Pure power. The whole thing was encased in a glassed room with (I assumed) critical temperature and humidity control. Then out on the floor were lines and lines of workstations. Computer screens everywhere, printers running, stacks of color hard copy—pie charts, bar graphs, spreads—plus terminals carrying every financial service offered by cable or satellite.
This was just the first, five-second glance. Incredible, I thought. There must be a heck of a lot more Japanese investment in theU.S.than anybody realizes.
But something had to be wrong here. Why should . . . ? Finally I slowed down—Tanaka was hurrying me along, clearly
annoyed that I'd appeared uninvited. That's when I noticed the rest. Across one wall was a line of projection TVs, on which computer data was being scrolled. As we walked past, I noticed that each screen seemed to be under the scrutiny of a team of analysts, who were intently studying the numbers, comparing notes, running calculations on their individual terminals.
What's this all about?
I stopped before one screen and studied it a second. Beneath it a small sign said simply "Electronics." The one next to it read "Biotechnology." Then I glanced at a couple of others. Each one covered a different industrial sector. Gee, I thought, you're really out of touch, Walton. Who would have guessedJapanhas so much investment in manufacturing here. I didn't remember much going on besides a few joint ventures. Sure, they've got a few auto assembly plants, that steel plant they'd bought out on the coast, some TV-tube production, chips, VCRs. But mostly it represented entries into sectors where they're trying to get the jump on protectionism, start a token manufacturing operation here before they get shut out.
"If you have any questions, I'm sure we can discuss them later." Tanaka had taken my arm and was urging me politely toward his office. The whines and hums of laser printers and the beep of computers made conversation all but impossible.
"Well, I was merely interested . . ." Then I stopped.
Know that test psychologists have, the one where you look at a couple of silhouettes and describe what you see? If you think you're supposed to look at the white part in the middle, then you see one thing—I think it's a vase. But if you concentrate on the black instead, you see something else entirely, maybe the profiles of two human faces opposite each other. Thus what you see is largely a product of your prior assumptions concerning what you're supposed to be looking for. Or maybe it measures whether you view the world as a positive or a negative image, something like that. I don't recall exactly. I do remember receiving a B- in Psych 101, which was generous.
The point is, what I first thought I saw was actually the inverse of what was really there. I'd told myself what it was, rather than believing my eyes.
Dai Nippon was running analyses, bet your ass, but the industries under their silicon microscope weren't Japanese.
They'd computerized the financial report of every American company traded publicly and were now in the process of taking those outfits apart.
And I can assure you it was cold-eyed in the extreme, strictly hard numbers: quarterly earnings, long-term debt, inventory, stock outstanding, CEO bonuses. As any professional analyst would do, they'd cut right through a company's glossed-over excuses, phrases such as strategic retrenchment, aimed at the dividend-nervous retirees in Cedar Rapids. They were putting together the real story.
Same with the financial markets. Screens were scrolling up- to-the-second quotes on everything from three-month T-bills to thirty-year Treasury bonds. Computers were running arbitrage spreads on every issue. They knew exactly where they stood with all their futures contracts. I realized my little telephone boiler room had merely been the tip of some awesome iceberg.
"Mr. Walton, it is a pleasure to meet you in person." Tanaka was ushering me into the corner office after our pass through the floor. Unlike most executive suites inNew York, its windows were sealed with heavy drapes. Again, total security. "Let me order tea." He waved at somebody out on the floor.
I nodded, still chewing over the setup and trying to understand what in good Christ was underway.
"I'm sure you are a busy man, so perhaps we should proceed directly to my concerns. As you may have guessed, we are almost ready to move into a new phase of our operation."
"Oh." I guess it must have sounded dumb, but I honestly couldn't manage a full sentence. Finally I recovered slightly. "I'm a little surprised by the scope of all this. What's the purpose?"
"Our president, Noda-sama, should be arriving in a few days. I'm sure he will be happy to address your questions in detail." Tanaka paused for the green tea, delivered by a silent girl—the young, smiling, uniformed Japanese "office lady"— who scarcely looked up as she settled the tray on the desk. After she was gone, he continued. "This, of course, is only the financial nerve center for our operation. Our technical staff will begin arriving soon."
Technical staff? Then who were those grim-faced minions out there punching computers?
"You're bringing in more people?"
"Correct. Which is why I needed to see you. I understand that the lease on the floor above us is due for renewal at the end of this month. We would like to acquire that space. We will need to convert it as quickly as possible."
"What about the current tenants?"
"There is a rider in their lease, Mr. Walton, that permits the owner of the building to reclaim the space for his own use at the time of a renewal. We fully intend to make use of it. Consequently as our American attorney you are hereby authorized to inform them that their lease will not be automatically extended, that they will be expected to vacate. In accordance with the legal and binding terms of their lease. Advise them also that there can be no grace period. We will require the floor immediately."
I looked at him. So much for the current tenants. "What will these new offices be used for?"
Tanaka sipped his tea. "That section will have another managing director. Our range of operations here brings other responsibilities."
"What section, what range of operations?"
"I am regrettably not at liberty to discuss the specific extent of DNI's interests."
"Well, let me break some news to you. I like to know who I'm working for. So you'd better start discussing specifics and fast."
Tanaka seemed to be having trouble meeting my eye. The skull beneath his short-cropped hair glistened under the harsh neon lighting.
"Mr. Walton, you are now part of the DNI team. That position includes obligations I am sure you would not wish to take lightly."
"Hold on." The hell with politeness. "I'm not part of your 'team' or anybody's. I came on board with the explicit understanding that—"
"Mr. Walton, kindly sit down." He pointed without ceremony to a chair. I just looked at it, then back at him.
"As you are a scholar ofJapan," he continued, "I'm sure you are aware that an employee's loyalty to his company is considered to be a gauge of his character. A company is a family, and one considers its interests in that spirit."
"Maybe you didn't notice, but I'm not Japanese. 'Nihon-jin'
as you'd probably put it. I'm agaijin. We usually work for number one."
"At the moment, Mr. Walton, you work for Dai Nippon. There is an assigned role for you, one that Noda-san expects you to fulfill."
"Maybe I just handed in my resignation."
"I do not really think you would wish to do that." Deadpan. The confidence with which he made that statement told me this guy could make a killing at poker. Unless he had a few cards in the hole I didn't know about. "It would hardly be in your best interest. We expect your contribution to be crucial."
"What contribution?"
"That will become plain in due time, Mr. Walton." He was measuring his words as he continued, maybe easing up a bit. "For now, let me merely say we know you to be a man with substantial curiosity. Consequently we believe that what lies ahead will be of considerable interest to you."
What was this samurai up to?
"Maybe it's time everybody put their cards on the table. And why don't we begin with you." I thumbed at the floor outside. "What the hell's going on out there?"
"At the moment nothing in this office need concern you. But perhaps I can tell you this. Now that you are serving as our corporate attorney, you are in a position to help us pursue other avenues."
I looked him over. Tanaka was beating about the bush. Why? Maybe it was merely the Japanese style, but he also seemed to know exactly what not to say.
"I'm still waiting to hear what's next."
"Very well. As long as you're here . . ." He sipped calmly from his cup. "It is common knowledge that Japanese savers have become the world's largest lenders, with overseas investment that now exceeds, by the way, the greatest rate of lending by OPEC even at its peak. The Japanese people will have over a trillion dollars in overseas assets within the next few years."
"I'm familiar with the numbers." I also knew that with several trillion dollars in spare change sloshing around back home, they were sending abroad a mere dribble of what they had.
"Were you also aware that over four fifths of our overseas investment is currently in dollar-denominated instruments?"
"No surprise. The dollar's still the name of the game, worldwide."
"True enough, but we at Dai Nippon are concerned that so many of our institutions have such heavy exposure in a single currency. Accordingly, in addition to our program with interest- rate futures, we also feel it would be prudent to provide some protection for this currency risk. In the same manner, I might add, that American investors often do."
"You mean some downside protection? On the dollar?"
"That is correct. A devaluation or a sudden drop in exchange rates would jeopardize much Japanese capital. Therefore we feel it would be prudent to enter the currency-futures markets to cover at least some of the dollar exposure of our investors."
Jesus! I suddenly needed a Valium. In addition to Treasuries, now Dai Nippon was about to short the dollar, pre-sell it in advance of . . . of what?
Had Noda been lying to me right down the line? Setting up a cockamamie cover with interest futures while all along he was setting up an international currency swindle?
Or were we about to get down to the real action? He'd scheduled his curtain raiser, whatever it was, then realized he might accidentally pull the plug on the U.S. greenback? So he'd decided to arrange a little currency insurance for everybody back at the ranch, just in case.
Don't ask me why, but I was drawn to this pending nightmare like a moth to flame. This was a ringside seat at . . .
All right, who am I trying to kid? That was the moment when I finally, finally grasped what our meeting was all about. It was to formally announce the tidal wave that would soon engulfAmerica. And now Matsuo Noda—or maybe I should say Noah—was, in his oblique Japanese way, handing me a pair of tickets good for one round-trip passage on his ark. The only thing missing was the schedule.
By then I didn't care whether I was on board or not; I figured I'd just as soon try swimming on my own. But I had one very good reason to play along.
"Okay, what's the game? Want to sell some dollars for delivery down the road?"
"We assume you are familiar with the markets."
"I stay in touch. How would you like to go? If you want
currency futures, there're the exchanges. Or you can buy forwards, which are more or less the same thing, from any number of banks around town. Futures only go out for a year, maximum, but I can probably get you forwards out to three. Come to think of it, Citibank will quote you ten-year forwards."
"We would be looking at shorter terms."
"No problem. Currency futures are quoted for March, June, September, and December. That's on theChicagoMercantile Exchange's IMM. But if three months are too far out, then you can get options on spot currency contracts down at thePhiladelphiaexchange, which allows early exercise. Or if you want, I think you can get off-exchange bank quotes as short as one month. Citibank has a big FOREX desk. And Bankers Trust, and First Boston, or even Banque Indosuez. Of course, if you really want to get serious, there's the currency trading floor at Barclays Bank inLondon. . . ."
"We expect to be active in all markets, worldwide. That seems best." Tanaka continued, "However, we are only interested in December futures and one-month contracts in the forwards. After that, we may choose to . . . make other arrangements."
Hang on,America.
"Right. And what are we talking here in terms of amount?"
He handed me a sheet of paper.
It was like he was ordering up sandwiches from the deli. Corned beef on rye, lean, with extra mustard and a slice of pickle. How many? Let me check. Oh, say a few hundred billion.
"This is going to take a few days." I passed it back, calmly as I could manage. "Why don't you send a schedule down to my place late this afternoon. My secretary will be there. I'll get started in the morning." I rose. "In the meantime, you'll understand if I take today off and catch up a little on other work."
"Of course." Tanaka bowed, head still glistening.
"Be in touch tomorrow." I nodded farewell.
"Until then, Mr. Walton." Another bow as I turned to leave.
I walked back through the floor, again trying to digest the spectacle. This was undoubtedly the most comprehensive operation I'd ever witnessed. What in hell did all this analysis of industrial sectors have to do with currency hedging?
Not a lot of time to reflect on the question, however, since I was summarily being ushered toward the steel security doors by one of Tanaka's flunkies, a young tough who seemed to speak no English, but who could strong-arm very eloquently.
In moments I was outside, facing the bank of elevators. That was when I remembered the upstairs tenant, a big public relations outfit. Better take a couple of minutes and give them the word.
Rausch, McKinley, and Stein were in the middle of proving conclusively that our mayor knew nothing about contract kickbacks, that he was in fact the closest equivalentNew Yorkhad to driven snow. His Honor, in the meantime, was hastily returning the campaign contributions of all the real estate executives who, flanked by their lawyers, were now being featured on the front page of the Daily News.
Since RM&S had their hands full and also had expected an automatic renewal of their lease, there weren't too many politic smiles when I broke the news. Fact is, it was a very unpleasant scene. Finally I called for their lease and showed them the rider. They'd signed the damn thing, not me.
"Sorry, fellows, all I can do is maybe drag this out a little for you, mislay the paperwork or something. Have one of your attorneys give me a call, off the record. But I'd also advise you to start looking for space."
Then I headed downtown, a man with a mission.
Dai Nippon had to be getting ready to kick hell out of something or somebody. Trouble was, I had no idea who or what. But I'd had plenty of hints it wasn't going to do great things for the dollar. I briefly toyed with alerting Jack O'Donnell and telling him to leak some anonymous storm signals. But what storm? He wouldn't put his senate reputation on the line to peddle guesswork, and all I had to offer was— what?—circumstantial premonitions.
Where to begin?Hendersonwas inLondonand unreachable, meaning there was no chance of getting him and his less reputableWashingtonconnections to start shouting "fire" from the rooftops. That left the press. Right. What I needed was the media. Think. Somebody who, if the whole thing proved to be smoke and mirrors, could shrug it off; but, a comer who would be intrigued by the possible broadcasting coup of the century. It had to be somebody with ready-made exposure, yet a personality with little to lose and a lot to gain. That brought to mind the perfect candidate, a former, well, acquaintance.
When I got home, I went straight to the office upstairs, looked up a number I hadn't used in a long time, and dialed it. It felt very familiar.
"Channel Eight. 'The freshest news inNew York.' May we help you?"
I always loved the way they peddled information as though it were Wonder Bread.
"Donna Austen please."
"One moment please." There was a click, then another voice. "Channel Eight news desk."
"Donna Austen please."
"Who's calling please."
"Matthew Walton. Tell her it's business, not personal." Enough please's.
"Thank you, Mr. Walcan."
"Walton."
"Thank you." On came the Muzak.
Would she do it? She used to complain how fed up she was interviewing witnesses to car crashes. Her career needed a transfusion of hard news so the station management would start taking her seriously. Well, here was her shot. And since she was roughly tenth in line for the "anchor" spot, she had no reputation of noticeable proportions to jeopardize by leaking an anonymous rumor theU.S.was about to be shelled by an offshore battery of financial guns.
"Ms. Austen said to tell you she's in a meeting and can't be disturbed."
Why is it some women can't just let bygones be bygones? Give me a break, Donna. I was ready for anything, except her little bedroom games. "How about advising Ms. Austen I'm sorry I called at such an important time, but I have some information that might just save her and everybody else from total ruin."
"I'm very sorry, but—"
"Just tell her, goddamit."
"One moment." No please this time.
Another very long pause. Finally I heard Donna's broadcast-neutral diphthongs, those lower-register reverberations she'd worked so long to perfect.
"Matt, you've got your nerve. This damned well better be quick."
"Sorry I yelled at the messenger. I'm sorry about a lot of things, but that's not the reason I called. Donna, how'd you like an exclusive? The world as we know it is about to end. Inside a month."
"Matt, have you been drinking?"
"No, but that's not a bad idea."
"Well, what is it you want?"
"A small favor."
"You have got to be kidding."
"Not for me. It's the country I'm concerned about. That includes you. How about doing theU.S.a favor and leak a heavy rumor from the world of high finance. The American dollar, dear to us all, may be about to go the way of Confederate mustard plasters. I'll even dictate the statement for you."
"Matt, why don't you give this earth-shaking scoop to one of your big-shot connections down at The Wall Street Journal, assuming it's such hot news?"
Good question. The answer, sadly, was that nobody inside the system would want to even hear this kind of talk, let alone spread it. Everybody in the financial community was already whistling in the dark, terrified those Latin American debt dominos might start to tumble, taking a few of our flagship banks along with them. And now this? No way.
"Donna, I need somebody willing to go out on a limb."
"You shit." She gave a snort. "I let you mortify me once. And believe me that's the last—"
"Will youlisten, for chrissake. I know it sounds crazy, but this is dead serious. I've taken on a foreign investment firm as a client. I can't tell you the name, but I'm absolutely sure the guy running it is about to screw this country somehow. He's been shorting the bond market, and now he's going to start dumping dollars. Billions and billions. I want to blow the whistle. Get something on the air that'll cause a few bankers and traders to look up from their computer terminals and—"
"Matthew, darling, how about your doing me a favor?"
"Name it."
"Simple. Don't ever call me here again. And while you're at it, tell that asshole friend of yours, Bill Henderson, I think he's the biggest—"
"Look, I'm genuinely contrite about the scene he caused at your place. If—"
"Good." Click, then the hum of a New York Tel dial tone.
Maybe she was right. Maybe I was seeing things. In any case, that aborted Monday's attempted guerrilla war against Matsuo Noda. Now to man my barricades.
Which moment coincided with the sound of Emma Epstein's key in the front-door lock. The time, obviously, was exactly one-thirty P.M. Exactly. I waited till she'd settled in before taking the fatal step.
"Emma, how about bringing me that file in your left-hand desk drawer. The one marked 'Trust Account.'"
"The blue one?"
"Right. Amy's. You know it. You updated the thing about a month ago when I switched all her money out of stocks and into money-market funds." That move had been my one small attempt to ride Noda's horse in the direction I suspected it was headed.
"I remember." She glanced at me disdainfully. "I also remember you predicted interest rates were about to go up."
Which, she was tactful enough not to add, they hadn't. She also didn't mention she had greeted my market prognosis with open skepticism. As usual.
"Well, for what it's worth, I still think rates are headed up soon. And Emma . . ."
"What?" She was grimly digging through the files.
"Ever think about some gold stocks for your retirement investments? There're some mining issues I hear look good. Golden Sceptre, Golaith, Vanderbilt . . ."
"That's Amy's portfolio you wanted, correct?" She didn't miss a beat. "Right?"
She doted on Amy and always got very testy whenever I dabbled in the management of my daughter's little nest egg. It's galling to admit Emma's market instincts did at times seem superior to mine. John Maynard Keynes once said there's nothing so disastrous as a rational investment policy in an irrational world. Maybe he was right: could be I was shackled by too much logical introspection. Never a problem for Emma. All I know is, if her daughter-in-law inJerseyphoned in (on my line) that she'd just baked a terrific cherry pie using "New Improved!" Crisco, Emma marched out and loaded up on Procter & Gamble. And the damn thing automatically went up ten points.
"Here it is." She placed it on my desk with a decidedly disapproving sniff.
"Thanks."
Dear Lord, I thought, stand by us sinners now and at the hour of our death. I went over it quickly with a hand calculator. About ninety-four thousand. Which I figured would pay for roughly a year and a half of college the way those already inflated costs were skyrocketing. But by the time Noda got finished with the dollar, it probably wouldn't cover a weekend seminar.
Maybe I couldn't save theU.S., but I was damned well going to get my daughter through school. With fear and trembling I started calling banks. Naturally I spread the action around town, BS'ing a lot of currency traders and bank FOREX (foreign exchange) departments in the process. I'd buy some pounds sterling, then . . . by the way, long as we're on the phone, Mort, I think I might need a few million yen in, oh, say about a month. Why don't we just save time and write some contracts now? Besides, bird in the hand, you know. Then I'd take those pounds I'd just acquired and use them to buy several million deutsche-mark forwards from the next dealer I knew.
How much did I go out, total? Remember, currency forwards run around a penny on the dollar, so I effectively "sold" something like ten million greenbacks, deliverable in one month, when I figured they'd be worth . . . it was hard even to imagine. Most likely zilch. Since I was flying blind. Amy's college fund bought everything. You name it, I went long. She ended up owning futures on Swiss francs, German marks, yen, lira, pounds sterling, Canadian dollars, even French francs. I was actually tempted, briefly, by the peso (well, she loved her trip toMexicolast summer), a sentimental gesture I sternly resisted.
By the time I'd finished it wasfour forty-five, meaning my new, ninth-grade owner of a United Nations basket of foreign currencies had just arrived home from herWest Sideprivate school. She always charged in at four-thirty. I called Joanna and asked to speak to my daughter. Jo's response to the sound of my voice was only slightly less fulsome than Donna Austen's. Finally Amy appeared at my ear.
"Dad, how come you're calling on the downstairs phone? You're supposed to always use the one in my room. Mom hates it when—"
"Sweetie, that line is in constant and uninterrupted engagement between the hours offour thirty-oneand eight- fifteen. It's never possible to reach you there at this time."
"Okay, so what's up?"
"Nothing much. How about if you and I caught up on things a bit? What do you say to dinner tonight? Just the two of us? We might even consider a real grown-up meal for a change, no alfalfa sprouts."
"Where?" She was immediately on guard. What if she ended up confronted with a red-tinged steak, sliced off one of the living mammals of the earth?
"Anywhere. Someplace you've always wanted to go. My treat."
"Wow! Anywhere?"
"Your pick."
Long pause, then, "How about Windows on the World?"
"Sounds good." I guessed one of her school friends had just been. Meaning prestige was on the line. I was right.
"Sharon's dad took her there last weekend for her birthday and it sounded really neat. She said you can see everything. It's probably a lot nicer than Top of the Six's."
Where, in case you hadn't guessed, I'd taken her onherbirthday.
"Food's standard, but I think we can piece together a spread that'll meet your guidelines. Will your mother let you go?" Joanna had total weekday custody, and she played it for all it was worth.
"She's got a big date tonight. That creepy real estate guy I told you about. The one with the new silver Saab he thinks is so hot."
"Don't tell me about it. And don't call your mother's friends creeps. I'm sure they're all very nice."
"Want to bet? This guy is total weirdness. But she'll let me go. No sweat. What time?"
When I was a youth, I don't remember young ladies using phrases such as "no sweat." Probably an imperfection of memory, one of many.
"Pick you up at seven-thirty sharp. Call me if there's a problem."
"Okay."
"And Amy . . ."
"Yeah."
"Uh, think about wearing an actual dress. Not one of those experimentalEastVillage—"
"Daaad. I'm gonna look so straight. You'll see."
"Never doubted it for an instant."
That night I'd intended to explain that her college fund was currently being hedged via a comparatively unorthodox investment scenario. However, she was too busy marveling over the lights ofManhattana hundred stories down to give me much time to talk.
What I really wanted to tell her but somehow didn't was that I'd had this spiritualist vision we'd been reincarnated as a couple of those crazy sheiks at Monte Carlo—when I'm the guy who never ventures past the quarter slots next to the door. It was as though I'd pillaged the hundred grand carefully hoarded for her future and spread it over a giant roulette play, stacking chips on every number on the board. Who knew where Dai Nippon's wheel would stop, but when it did, one of them had to pay off a hundred to one. Noda couldn't touch us. Right?
No sweat.