72
Wednesday
S
O MANY OF THE things Colin told me last night I just couldn’t draw together,” Jackie was saying. “Hayek is one of the world’s most successful currency traders. He lives and breathes controlled risk. The only way to manage risk is through calculated logic. But there wasn’t a logical explanation I could attach to so much of what Colin uncovered.”
Wynn switched his gaze back and forth between Jackie and Bowers. The Fed board member’s demeanor had undergone a drastic change. Bowers now watched Jackie with something akin to awe. “Give me a for instance.”
She was seated in the Fed’s basement command center. The walls of the windowless chamber were lined floor to ceiling with monitors, television screens, computer towers, cables, keyboards, dials, servers, and the hum of collective tension. The room was packed. Two local techies remained, both now operating under Jackie’s instruction. Colin sat beside her. Arrayed on the long bench before them were four LCD monitors and two keyboards. Colin looked fairly comfortable for the first time since their arrival at National. He kept his attention fastened on the incoming data, leaving Jackie to deal with the suits.
Bowers was seated to Jackie’s other side. Wynn stood with the rest of the team, an amalgamation of senior staffers from both Treasury and the Fed. Kay Trilling and Carter stood across from him. The two Fed techies squatted between the bench and the walled array, watching and adjusting. With the sound muted to bare murmurs, the screens showed all the morning talk shows, plus MSNBC, BBC World News, and CNN. The Reuters Board and Bloomberg streamed their constant flows of data. Colin’s monitors scrolled with fast-breaking news. The wall clock read eleven minutes to nine.
“According to Colin, Hayek was reportedly sitting on a story so big it would rock the markets worldwide when it was released. But there were two problems with this. First, nothing that big could be sat on for weeks. Minutes, maybe. If he was lucky perhaps a whole day. But weeks?”
“It happens,” Bowers said. “Not often. And not likely. But it could.”
“Maybe,” she said doubtfully. “But then there’s the other factor.”
“Which is?”
“Timing. How could he control the exact moment when the news broke? This isn’t something Hayek is
hoping
would happen when he wants. He is
certain
. He’s committed
everything
.”
Bowers shifted nervously. Hating to have to ask, “So what conclusion did you draw?”
“Hayek,” Jackie replied, “is going to plant a false lead.”
The crew around Wynn shifted and murmured. Wynn was relieved when Kay saved him from having to ask, “Explain that to me, please.”
“High-stakes trading has bred a number of parasitical offspring. One is real-time journalism. Before, the wire services ran to a very few feeder organizations, most of them news groups in themselves—television, newspapers, weekly journals, the financial trade press. Which meant anything major received off the wires was rechecked and usually redrafted before going out. But all this changed with the explosive growth of Forex and derivative trading.”
Wynn observed a few of the team between him and Kay turn and ask one another who this woman was, seated there in her sleeveless high-neck cotton top and form-fitted black jeans. Jackie was the only one wearing anything other than standard bureaucratic gray. He saw the shrugs and astonished faces, caught sight of Kay giving the back of Jackie’s head a look of pure approval. He wanted to reach down, sweep her up, hold her for days.
“Bloomberg is the leader in real-time journalism,” Bowers agreed, directing his words to Kay. “They’ve seen their subscribers expand by two thousand percent in just ten years. Nowadays they employ nine hundred and fifty people in seventy-nine bureaus. They compete head-on with the more established wires of Dow Jones, Reuters, AP, Bridge News.”
“They all sell the one thing that has value in the trading world, speed.” Jackie seemed unaware of how fatigue was beginning to slur her words, or how the strain on her features was spreading to her voice. “The race is constant, twenty-four hours a day, sprinting around the globe in time to continental trading hours.”
“Financial wire services generally receive news releases fifteen minutes prior to general distribution. To a trader armed with fresh data, these fifteen minutes are an eternity,” Bowers agreed. “Senator, wouldn’t you prefer to sit down?”
“I’m fine where I am, thanks.” She asked Jackie, “So what does this have to do with Hayek?”
“The problem with real-time journalism is the crush of data. News flashes can’t always be checked prior to initial release. The time it would take for a wire service to call and confirm a breaking story means that someone else might carry the scoop. Too many lost scoops, and the wire service would be draining customers and income like a sieve.”
Bowers moaned one word, “Emulex.”
Jackie nodded agreement. “Last year, a news flash was released over the wires claiming that Emulex’s CEO had been forced to resign and the company would be restating its earnings. The story was later proven to be a total fabrication, brought on by a hacker who had sold the stock short. Even so, Emulex stock fell through the floor.”
Wynn watched the shock register around the room, the sudden heightened tension, the newfound reason to watch the screens. Bowers leaned forward and said, “Young lady, would you possibly be interested in a job with our organization?”
Jackie’s mouth opened, but no words came. She glanced back at Wynn, her gaze fawnlike with fear. He could do nothing but smile, urging her to move forward and accept what was already unfolding. Hoping only there would still be room in her life for him.
Colin saved her the need to respond by saying, “Heads up, everyone.”
Jackie swiveled back around. “Who is it?”
“Harris. New kid on the block. Lower level of coverage, which means lower salaries. Perfect.” Colin leaned forward and asked one of the Fed’s techies, “Can you set a trolling signal for the word
Cisco
?”
“No problem.”
Bowers exploded from his chair. “What are you telling me?”
“Harris has a flash release,” Colin started, but was cut off by the MSNBC announcer’s voice suddenly shouting at full volume, “This just in. We have an unconfirmed report that Cisco Systems’ chairman is expected to announce this morning that their quarterly earnings were grossly overstated, and in fact the company is now facing a loss greater than its year-to-date profits.”
“There goes the Nasdaq,” the woman beside Wynn exclaimed. She caught sight of Wynn’s confusion and explained, “Ever since Microsoft went head-to-head with Justice, Cisco has been the Nasdaq bellwether.”
Bowers was already on the phone. “Get me the Nasdaq chairman.” Then, “I don’t care what time it is, and I don’t care what you have to do to get him. Find him
now
.” He stabbed the connection shut, looked back to where the Treasury guru stood, and asked, “Are we in agreement on this?”
“Unless we can get official confirmation that this news is for real, absolutely.”
Bowers pointed at his people among the crew. He had aged a decade in the previous few minutes. “Check this out.”
Colin pointed at one of his screens. “We’re receiving another flash.”
“What now?”
“Harris again.” Colin spoke to the techie poised in front of him. “Chase Manhattan.”
The woman beside Wynn muttered, “There goes the Dow.”
It was CNN this time, announcing in grave tones, “We have just received a wire report that Chase Manhattan’s Japanese arm, the recently acquired Bank of Sapporo, has admitted to previously undisclosed Forex losses amounting to . . .” The announcer squinted over the paper in his hand. “In excess of six billion dollars. Which is more than twice the entire bank’s last-year profits.”
The woman beside Wynn added, “The dollar is going to bomb.”
Bowers said to an aide, “Get your team to work. Place calls out to the entire Interbank network. Neither Hayek nor First Florida are to receive credit. None. Any purchase they want to make requires a hundred percent up-front payment. Then inform Hayek that we are sending in the inspectors.”
The aide fled. Bowers said to the room at large, “We can’t close down the foreign exchange markets. They are too big and too global. If the gamblers can’t place their bets in New York, they’ll send them to London. So we have to hope that cutting off his Interbank credit will at least slow him down.”
He lifted the phone. “I need you to connect me with the President. Yes, now. Tell him we are facing a potential crisis.”
“Jackie.” Wynn leaned over. Asked softly, “Tell me what’s happening here.”
She turned only slightly, her attention held by the monitors. “What is reality in economic terms is less important than what the market
thinks
is real. Or, even more important, what the market thinks will be real
tomorrow
.”
“So?”
“Most economic pundits think a downturn is under way. The most likely scenario is what the economists call a soft landing. Economic growth declines slightly, remains relatively stagnant for a time, then gradually picks back up. Such contractions are all part of a normal economy. Okay so far?”
“Yes.”
Up close she bore stains deep as bruises beneath her eyes, at the edges of her mouth, upon her temples. She reached for her cup, grimaced at the taste of more cold coffee, drank it anyway. “But if pressure is precisely applied, the soft landing could be turned into a suicide leap. A twenty percent decline in the Dow would be enough to make the international investors panic and start dumping—the same scenario that brought about the Black Monday surge at the beginning of the Great Depression. These same pundits predict anything over a fifteen percent slide in the value of the dollar would have the fund managers racing for the safety of international waters, spurring a panic-driven spree of diving stock and bond prices and an uncontrolled fall of the dollar. Whoever bet against the lemmings would make a killing.”
An aide raced back into the room shouting, “Cisco denies the whole thing. Chase too.”
Bowers had straightened as much as his paunch and bowed shoulders would permit. “Mr. President, I am calling to inform you that we are shutting down the markets. Yes, sir. All of them.”
73
Wednesday
B
OWERS INSISTED THAT the press gather in the Dirksen committee room. Kay then placed Wynn next to her own chair, the place of honor normally reserved for the committee’s senior congressman. But the other members made no objection to being moved down a rung. Not after Bowers began with an announcement that every financial and commodities market in the United States had been shut down temporarily, that warrants had been issued for the arrest of Pavel Hayek, and that all assets under Hayek’s management had been frozen.
The television lights were hard on them all, exposing every line, every fear. Jackie leaned on the back wall beside Carter. The two of them looked like walking wounded. Wynn felt no better. As Bowers started his wind-down, Wynn quietly confessed to Kay, “I can’t do this.”
“Too late for withdrawal symptoms,” Kay’s mouth scarcely moved. “Get ready to go sing your song.”
“You’d be much better—”
“It’s your baby, Wynn. You named it. You rock it.” The edges of her mouth rose slightly. “Just think of it as probably the most important moment in your entire life. That ought to help.”
Bowers turned to the committee chairman and took his cue from how Kay raised her gavel and pointed it at Wynn. “I am now going to turn these proceedings over to Congressman Bryant, who will endeavor to tie this unfolding crisis into the legislation presently under consideration before this committee.”
As he rose, Kay reached over and tugged the hastily scrawled pages from his hand. “I’ll take those.”
“What are you doing?”
“Saving you from coming across like you’re reading somebody else’s letter.” She glared away his objections. “You know this stuff, Wynn. Now get up there and give it to them.”
Wynn stumbled and would have gone down, sprawled flat in front of all the world, had not a pair of hands been there to steady him. He arrived at the podium, stared at the bare polished wood, gave a tight shrug of resignation. Given his current state of mind, the notes probably wouldn’t have helped.
He looked up, confronting a sea of faces and camera flashes and the glare of television lights. He did his best to meet them all head-on. “In the period just after the Second World War, officials from Britain and the United States developed what is today known as the Bretton Woods Accord. This was an international effort, advanced by two key Western powers, intended to ensure that the Great Depression’s devastation would not ever recur.
“This accord gave governments the primary responsibility of managing their own financial systems, and stripped from the banks the power to regulate themselves and print their own money—two principal reasons why the Depression happened in the first place. Naturally, the banks and the other financial powers of that day were vehemently opposed. But the officials responsible for drawing up this plan managed to convince their respective governments. They explained that without such restraints, the financial institutions would hold the power to sway public policy toward increasing their own profits, even when it damaged the public good. Not only that, but there was a very real threat that the banks would grow in size and influence until governments were held accountable to them, rather than the other way around.”
Perhaps it was a trick of the glare, or maybe just the effect of strain and fatigue. But the cluster of lights seemed to gather into one flashing illumination. A single brilliance that dominated his vision, blotting out all else, giving him the chance to hear himself and know what needed to be said. “Over the previous two decades, financial institutions have led a two-pronged attack against these laws, seeking to destroy the regulations that were set in place to protect us. They have beggared the laws themselves, until the loopholes are so great they can act with impunity. And they have replaced the printing of money with something just as lethal—a collection of high-risk notes that go under the collective heading of derivatives. Banks have exceeded the ability of any one government to control them, and they call this progress. They wreak havoc with the economies of nations and call it globalization.
“The Hutchings Amendment intends to meet this threat on two fronts at once. In a concerted action similar to the original Bretton Woods Accord, a group of some two dozen nations are together enacting new laws. A global body will oversee international currency transactions, instituting a level of sanity to these activities. Any nation that does not enter into this agreement will find its financial institutions unable to do business with the member countries. Furthermore, a tax will be levied on every currency and derivatives trade, not so large as to halt the flow of genuine business but enough to stifle this wild tidal flow of risk. And the proceeds of this tax will go toward ending the stifling burden of debt carried by the world’s poorest nations.”
Only when Wynn paused for breath did he realize he had said enough. A more experienced politician would have found a way of ending on a stronger note. But when he blinked the lights separated, the faces all stared up at him, and the only thing he wanted was to be away.
By the time he had returned to his seat, he was certain he had blown the whole thing. But before he could apologize, Kay reached over, gripped his hand, and squeezed hard. With her free hand she raised the gavel, rapped the table and announced, “This committee is hereby called to order. The chair is open to motions to proceed on a vote on the appropriations bill.”
Wynn drew strength from the hand upon his own, and said, “So moved.”
“Second.”
“Moved and seconded.” She raised Wynn’s arm with her own, so that the cameras and the photographers’ flashes caught the senator and the congressman seated there in grim satisfaction, their hands raised above their heads, as Kay declared, “All those in favor of the bill’s passage out of committee, including most especially the provision known as the Hutchings Amendment, say Aye!”