I suggested he calm down, that nobody, me included, had seen it coming. What's more, I had a strong feeling it was all--
"What the hell's next?" Bill continued, oblivious. "What's Noda saying?"
"Nothing here but speculation. He's probably getting his beauty sleep at the moment. But take some of your own advice, friend, and stand clear. I've got a feeling there's less here, and more, than meets the eye. Don't, repeat, don't get the idea you can outguess Matsuo Noda. I think he's pulling a number, but--" "
Bill interjected something brief and unrepeatable and rang off, undoubtedly headed for consolation.
"Was that Henderson?" Jack asked, then watched me nod. Bill had pitched in to help Jack out of a few tight spots on the money front, in appreciation of which O'Donnell had proposed him for the Council of Economic Advisers--and shortly thereafter forfeited all credibility with the administration. These days he couldn't have gotten into the White House on a VFW tour. "Well, the man's got no idea when to keep his mouth shut with the press, but he's nobody's idea of a fool. What does he think this is all about?"
"Sounds like he's just studying the tea leaves like everybody else."
Jack sighed, then rattled his cubes some more. "Well, if Henderson can't figure out what's going on, then nobody can. That in itself ought to tell us there's a patch of slippery ice down the road. My own guess is the Japanese have decided to play a little poker with the American markets without having the damnedest idea of the consequences."
"Jack, what if they _do_?"
After we sat there gazing at the gilded plasterwork ceiling for a while, we started getting caught up on old times. He inquired what I thought the press would do to him if he married one of his staffers. My guess was that a photo of Washington's most eligible divorce veteran at the altar once more would probably make the cover of People. Everybody loves a lover. That possibility seemed to cheer him up a bit.
It was round about then, probably close to ten-thirty P.M., that another call came through. This time I already had a feeling who it was, and I momentarily considered not taking it. But then, why not let O'Donnell have the story straight from the source.
The caller was, of course, Matsuo Noda. It must have been late morning, Japan time, after a very long night.
What, he inquired, was my on-the-spot reading of the scene?
"I don't know." The phone had that same funny whine I remembered, as though he had a private phone system worldwide. "Maybe you should be telling me."
Noda-san, no surprise, didn't seem particularly unsettled by the developments.
"I assure you there is no cause for alarm, Mr. Walton. The situation may seem temporarily unfortunate, but I have long believed all things turn out for the best."
"Could have fooled me. But while we're all waiting for the silver lining to this cloud, you could do everybody a favor and get your goddam securities dealers here to issue a statement clarifying their intentions."
"Mr. Walton"---he chuckled--"you ascribe far too much influence to me. I am merely a banker, one of many in Japan. I have no control over what our institutions choose to do or not do."
"I wish I could believe that."
"Well, I suppose there are many things about Dai Nippon that need to be explained more fully. I look forward to seeing you next week. We can talk then."
Upon which he advised me just to sit tight. All further communications would be routed through their office uptown. And with that dictum in place, he suddenly had better things to do and said thanks for all my help. There was the sound of some satellite bleeps, then silence.
Welcome to the Brave New World, I thought. Again I had this definite feeling the DNI rodeo had just begun.
By then Jack was nearing terminal exhaustion. I passed along Noda's cryptic refusal to lift a hand, advised him to make a statement tomorrow that the U.S. financial markets could be dangerous to everybody's health, and helped him into a cab for his aide's place uptown. The evening was fizzling out with nobody left at the bar but regulars. Thus I went home alone to check in with Amy and then drift off into a very unsettling dream.
My nightmare was over by morning. America's was just beginning.
CHAPTER THIRTEEN
Funny thing about investor confidence: often as not it relies more on faith than facts. Give it a little unsettling heat, and it can just melt away. Belief turns to fear, then blind panic.
Insight number two: the bigger you are, the more scared you tend to get. So what appeared to be a sudden Japanese loss of conviction regarding the U.S. Treasury's ability to meet its standing obligations received close attention from the world's bankers, from Zurich to Hong Kong. The Japanese securities outfits just kept dumping, and nervous phone inquirers from locales as diverse as the White House and Red Square were all advised that everybody was "in a meeting and will get back to you." As a natural consequence the world's major financial players succumbed to a terminal case of nerves.
When the bond markets finally reopened on Wednesday, Treasury's thirty- year issue had scooted up four full interest points. There was still a market for Uncle Sam's IOUs--everything on this planet will move for a price--but buyers were wary. They wanted their newly perceived risk sweetened considerably.
Predictably rates on corporate and municipal bonds did a similar tango north, leaving America's conservative investors wondering what hit them. In fact, a lot of scheduled corporate debt offerings were scuttled to await more settled times and lower rates.
The dollar also stayed on the critical list. Everybody was worried the U.S. Treasury might just rev up the printing presses to produce enough greenbacks to pay off all the foreigners who wanted their money back. Since Paul "tight money" Volcker--who probably would have thrown his robust torso onto the ink to prevent that from happening--was now gone, there was nobody at the Fed with a real commitment to holding back the flood.
And the stock market. People weren't starting to call this Black November for nothing. A lot of players feared that the higher rates would hobble the economy, a perfect excuse to head for the exits while the getting was good. As Henderson liked to observe: psychology is a fundamental too. The next day the Dow sank another two hundred points; the day after that a hundred more. (Where had those sellers been two days before?) The fourth and fifth days it slowed, heaved an audible sigh of exhaustion, and sort of peered up out of the bunker to see if the bombing runs had let up. The downward pressure was still evident, but it was finally losing some of its steam.
Yours truly did a lot of thinking as the week wore on, while the country appeared to wobble on the brink of unprecedented disaster. I also conferred now and then with Jack O'Donnell and with Henderson in between their appearances on TV chat shows. Although Bill's bearish reading of the nation's estate had been vindicated well beyond what even he had envisioned, I can report he took small pleasure in his newfound celebrity; he was increasingly miserable over his own missed opportunities in the financial casino. Jack, for his part, had gained a profound appreciation of the helplessness of government to intervene when fear and greed seize the marketplace.
My personal ruminations on the situation turned out to be too Machiavellian for anybody to entertain seriously. Question: If you wanted to pull all your money out of the U.S., is this how you'd do it? Answer: No way. Instead you'd go about it gradually, a little at a time, in order not to stampede the markets and cause exactly what was happening now.
Ergo, I concluded, this isn't real. Noda just wants every
investor in the world to assume there's a Japanese pullout underway.
But why the grandstand play? Sure, he'd made a pile, but he didn't seem like a guy who had to sweat his mortgage payments. Nor did this kind of market manipulation require a building in midtown Manhattan and a computer setup to rival NORAD headquarters. Something more had to be coming. And the only thing I could think of was that Noda's something had a lot to do with my profession.
This was not a welcome piece of prognostication to loose upon the world. Since the financial markets already had plenty of problems on their plate, there wasn't all that much interest in speculating about the next course. Consequently nobody made the slightest attempt to man the ramparts for what was ahead. Our financial battleship had been stopped dead in the water and its engines disabled, but nobody was even bothering to prime the guns. This couldn't be an all-out attack. Right?
Wrong. The stage was now set for Noda's real move. The following Saturday I was summoned to Dai Nippon's midtown fortress where I watched my crazy theory become reality. Before anybody in our shell- shocked financial centers had time to digest what had happened, Matsuo Noda--his Dai Nippon Eight-Hundred-Year funds underwritten through a syndicate of Japanese banks and insurance companies led by the Dai-Ichi Credit Corporation, Ltd. of Tokyo--hit the beach.