Assuming enough players could be found worldwide to take his action,

he was planning to advance-sell U.S. Treasury IOUs in the amount of

five hundred billion dollars. A full quarter of our national debt.
His bet: something or somebody was about to push America over
the brink.

CHAPTER TWO

"Yo, counselor. Get thy butt over here and buy me a drink."
I was standing in the smoky entry of Martell’s, on the way back
downtown from Sotheby's, when I heard the voice, a Georgia drawl
known from Wall Street to Washington. And sure enough, leaning
against the long mahogany bar, the usual Glenfiddich on the rocks in
hand, was none other than Bill Henderson.
Long time, no see. I'd actually stopped by for a little ninety proof
nerve medicine myself, not to pass the time with America's foremost
cowboy market-player. But the idea of bringing in a Wall Street pro was
most welcome. If anybody could dissect Noda's game, Bill was the man.
What was I going to do? I'd stalled on giving Matsuo Noda a final
answer, telling him I needed time to think. Then just to make sure the
whole thing hadn't been some sort of macabre hoax, I'd checked at a
Chase bank machine on Lex. He hadn't been kidding. A retainer had
been deposited all right, presumably by certified check, since it had
already cleared. I was on the payroll, ready or not.
Noda was right about one thing. What he planned to do had grave
international consequences. The problem was, his game had just one
payoff. The way I figured it, he won if, and only if, the U.S. suddenly
went broke. As international consequences go, that seemed reasonably
grave.
Henderson was the perfect guru to take apart the scenario.
Assuming he was sober. Tell the truth, at first glance I wasn't entirely
sure. The guy looked a mess. I assumed he was holding some sort of
private celebration, or maybe it was a wake. What was the occasion?
"William H., welcome back to town. Thought you'd decamped
permanently down to D.C."
"Packed it in. Back to start making a living again. Could be I've just
set some kind of new world record for the briefest tenure ever seen on
the Council." He eased over to make room, while the jukebox began
some Bobby Short standard about incomparable NY. "So where's your
TV star tonight? Sure love that gal." He toasted Donna's memory. "If tits
were brains, she'd be a genius."
Sexist? Tasteless? That was merely Henderson warming up.
I hadn't actually set eyes on Bill since an ill-fated birthday dinner
Donna had thrown for him in midsummer, a favor to a producer friend
of hers at the station who'd wanted to try vamping a real live millionaire.
That evening he'd arrived with a serious head start on the whiskey, his
meditation on the concept of birthdays, and then proceeded to regale
those assembled with his encyclopedic repertoire of farmer's-daughter
and traveling-salesman vignettes. In the aftermath, Donna swore she'd
kill him if he ever set foot in her place again. When I made the mistake
of speaking in his defense, she critiqued a few of my character defects as
well, then added me to the list.
"Friend, no small thanks to you and that sordid evening, I haven't
seen Donna since."
"That was a dark moment in my history. After listening half the
night to that air-head producer she put next to me, I was in mourning
for the hearts and minds of America." He revolved back to the bar.
"What're you drinking?"
"Something serious." I pointed toward the single malt. Laphroaig
neat.
Just then Bill paused to watch as two women in bulky raincoats
brushed past. They receded toward the other end of the bar, settled their
coats across an empty stool, and ordered drinks. One was a youngish
blonde, a bit nervous, having some tall, colored potion that looked as if
it could use a cut of pineapple and a plastic monkey on the glass. But
the other one, brunette, was a different story. Pained eyes, with a
psychic armor that could only be called battle-weary New York. Joanna,
all over again. Tanqueray martini. Straight up.
"Hot damn, sure is good to be back in this town." He was trying,
without conspicuous success, to catch the younger woman's eye.
"Henderson, you're standing next to a man with some news that
could well alarm you considerably."
"Like maybe this dump might run low on booze?"
"Not likely." I reached for my new drink. "I've got to make a
decision, fast. So try to keep a clear head and see if you can help me
out."
In my estimation Henderson was a phenomenon—sober or loaded.
He'd emerged from the red clay hills somewhere in north Georgia,
former football All-State ("I only did it for the pussy"), and ended up at
Yale Law—where we shared an apartment for three whole years. By the
time we'd finished our degrees, I figured I was ready to tackle real life,
but Bill had hung in and gone for a Ph.D. in economics. Although his
athlete's physique hadn't survived Yale—an early casualty of the single
malt and the Dunhills—Henderson still had the delusion he was twenty-
five. Easter before last he'd arrived at my place down in the islands with
some leggy print model half his age and a case of Jack Daniel's Black.
Did the redneck routine bamboozle the cautious hearts of his admiring
ladies? Probably. Right under the radar.
All that notwithstanding, it was a commonly accepted fact that Bill
was the sharpest private currency-trader on the East Coast. If tomorrow
the dollar was about to dive, the guy who'd already sold it short tonight
from Hong Kong to Zurich was invariably Henderson. That part of his
life had been all over the papers the previous spring, after he got tapped
for the President's Council of Economic Advisers. I guess some genius
on the White House staff—urged on by that wily senator from New
York, our mutual friend Jack O'Donnell—concluded the Council needed
a pet "contrarian" on board for appearances, and Henderson looked to
be a sufficiently pro-business prospect. Wrong. After a couple of
interviews he was forbidden to make any more public statements. He'd
failed to grasp that the national interest required fantasy forecasts just
before elections. Bill may have been a master of subtlety when he was
trading, but otherwise he tended to call a spade a spade, or worse.
"What's up?" He was about to punt with the blonde after one last
try.
"Maybe you'd better go first." I took a sip, savoring the peaty aroma.
Let Henderson decompress in his own good time, then sound him out
on Noda's chilling proposition. "What are you doing here?"
"Call it modesty and discretion." He turned back.
These were not, as you might infer, the first descriptors that leapt to
mind whenever I thought of Bill.
"Care to expand?"
He slid his hand across the bar, extracted another Dunhill from its
red pack, and launched a disjointed monologue starting with the
goddam traffic in D.C., then proceeding to ditto coming in from
LaGuardia.
All this time his cigarette had been poised in readiness. Finally he
flicked a sterling silver lighter, the old-fashioned kind, and watched the
orange flame glisten off the mirror at our right. "So, old buddy, that's it.
All the news that's fit to print. History will record this as the moment
yours truly bailed out. I figure it like this. If I can't read the signals
myself these days, what in hell am I doing giving advice? Time to hit the
silk. Get back to making a living. Don't know how long this circus is
going to last, but I figure we'd all better be saddled up and ready to ride,
just in case."
As it happens, self-proclaimed ignorance was a crucial ingredient in
Henderson's deliberate "country boy" camouflage, designed to disarm
the city slickers. I estimated the professional dirt farmer next to me,
Armani double-breasted and gold Piaget timepiece, was now worth
about forty million, including a chunk of an offshore bank. Yet for it all,
he still liked to come across as though he'd just moseyed in and wished
somebody would help him through all this fine print.
"Don't bullshit me, Bill." I toyed with my drink. "What you're really
saying is you couldn't get anybody else to agree with you."
"Have to admit there were a few trifling differences of opinion about
the direction things are headed." He positioned his Dunhill in the
ashtray and washed his throat with more Scotch. "You can't cover up the
fundamentals with cosmetics. Things like a megabillion trade shortfall, a
debt nobody can even count, and a dollar that don't know whether to
fish or cut bait. Worst of all, we're still selling the suckers of the world
more funny-colored paper than czarist Russia did. There ain't no quick
fix for this one." He took another sip, then turned back. "But fuck it.
Remember that old saying I used to have about being a lover, not a
fighter. I always know when it's time to call in the huntin' dogs and piss
on the fire. I'm back in town to stay. I got hold of my boys and they're
coming in tomorrow to start getting everything out of mothballs. We're
going back on-line."
As anybody who knew Bill was aware, he'd installed a massive
computer bank in the converted "maid's quarters" of his Fifth Avenue
apartment, hooked to the major futures exchanges and financial markets
around the world. Running his operation on a moment-to-moment basis
were a couple of young fireballs, his "Georgia Mafia," who did nothing
but watch green numbers blink on a CRT screen and buy and sell all
day. He and his boys talked a language that had very little to do with
English—jargon about comparing the "implied volatility" of options on
this currency against the "theoretical volatility" for that one, etc. On any
given day they were placing "straddles" on yen options, "butterfly
spreads" on pound sterling futures, "reverse option hedges" on deutsche
marks, and on and on. Half the time, Einstein couldn't have tracked
what they were doing. Add to that, they leveraged the whole thing with
breathtaking margins. To stay alive in Henderson's game, you had to be
part oracle, part Jimmy the Greek. You also had to have ice water in
your veins. It wasn't money to him, it was a video game where the
points just happened to have dollar signs in front. The day I dropped in
to watch, he was down two million by lunch, after which we casually
strolled over to some shit-kicker place on Third Avenue for barbecued
ribs and a beer, came back at three, and by happy-hour time he was
ahead half a million. In the trade Henderson was part of the breed
known as a shooter. Up a million here, down a million there—just your
typical day in the salt mines. A week of that and I'd have had an ulcer
the size of the San Andreas fault.
He liked to characterize his little trading operation as "a sideline to
cover the rent." I happened to know what it really paid was the
incidental costs of a lot of expensive ladies. Could be Bill's entertainment
fund was in need of a transfusion.
"Back to business?" I asked. "Like the good old days?"
"Bright and early Monday morning. Got a strong hunch the
Ruskies'll be in the market buying dollars to cover their September
shorts on Australian wheat futures. Might as well bid up the greenback
and make the comrades work for their daily bread. Then round about
eleven, I figure to unwind that and go long sterling, just before London
central figures out what's happening, shits a brick, and has to hit the
market for a few hundred million pounds to steady the boat."
Well, I thought, Henderson the Fearless hasn't lost his touch.
"Bill, I want to run a small scenario by you." I sipped at my drink.
"Say somebody'd just told you he was taking a massive position in
interest-rate futures? What would that suggest?"
"Tells me the man's getting nervous. If he was holding a lot of
Treasury paper, for instance, he'd probably figured rates were about to
head up and he didn't want to get creamed. See, if you're holding a
bond that pays, say, eight percent, and all of a sudden interest rates
scoot up to ten, the resale value of that instrument is gonna go down the
sewer. But if you've already 'sold' it using a futures contract, whoever
bought that contract is the one who's got to eat the loss. You're covered."
"I'm not talking about standard hedging." I was wondering how to
approach the specifics. "Say somebody started selling a load of bond
futures naked. Nothing underlying."
"Well, thing about that is, the man'd be taking one hell of a risk."
He swirled the cubes in his glass. "Anybody does that's bettin' big on
something we don't even want to think about. Some kind of panic that'd
cause folks to start dumping American debt paper."
I just stood there in silence, examining my glass. That was precisely
my reading of Matsuo Noda's move. "But I can't think of any reason why
anything like that's in the cards, can you?"
"You tell me. It's hard to imagine. The economy's like a supertanker.
Takes it a long time to turn around. But if you want a special Henderson
shit-hits-the-fan scenario, then I can give it a shot. Say, for instance,
some Monday morning a bunch of those hardworking folks around the
world who've been emptying their piggy banks to finance our deficit
suddenly up and decided they'd like their money shipped back home.
That'd create what's known as a liquidity crisis, which is a fancy way of
saying you don't have enough loose quarters in the cookie jar that
morning to pay the milkman and the paperboy both. The Federal
Reserve would have to jack up interest rates fast to attract some cash.
Else roll the printing presses. Or of course"—he grinned—"we could
just default, declare bankruptcy, and tell the world to go fuck itself."
"Nobody would possibly let it go that far, right?" I toyed with my
Scotch. "Particularly Japan. We owe them more money than anybody."
"Wouldn't look for it to happen. Remember though, right now the
U.S. Treasury's out there with a tin cup begging the money to cover its
interest payments. If the national debt was on MasterCharge, they'd take
back our card. So let some of those Japanese pension funds who're
shoveling in money start getting edgy, or the dollar all of a sudden look
weak, and you could have a run on the greenback that'd make the bank
lines in '29 look like Christmas Club week."
"That's thinking the unthinkable."
"Damned well better be. But don't ever forget, paper money is an
act of faith, and we're in uncharted territory here. Never before has the
world's reserve currency, the one everybody uses to buy oil and grain
and what have you, belonged to its biggest debtor nation. We're bankers
for the world and we're ass over elbow in hock. Everybody starts gettin'
nervous the same day, and the bankers on this planet could be back to
swapping shells and colored beads."
"Offhand I'd say that's pretty implausible."
"And I agree. The system got a pretty good shakeout in the October
Massacre of '87 and things held together, if just barely. Stocks crashed
but the dollar and the debt markets weathered the storm. Nobody
dumped. Japan doesn't want its prime customer to go belly up. Who
else is gonna buy all that shiny crap?"
I studied my glass again. If Henderson, who had pulse- feelers
around the globe, wasn't worried, then maybe Matsuo Noda was just a
nervous, spaced-out old guy. A loony-tune with an itch to gamble.
Funny, though, he appeared the very essence of a coolheaded banker.
About then, the two women across the bar waved for their check
and began rummaging their purses. Sadly enough, the brunette had
done everything but send over an engraved invitation for us to join
them. She and I had looked each other over, and we both knew what we
saw. The walking wounded.
 It made me pensive. More and more lately I'd begun to wonder
about the roads not taken, the options that never were. What if all our
lives had started out differently? Where would you be? Where would I
be—playing lawyer now, or maybe driving a cab? It was the kind of
woolgathering that drove Donna Austen insane.
It was on my mind that first afternoon I met her, when she brought
her sound guy down to record some "voice-overs" to use with shots of
the house. She made the mistake of asking for a little background, so I
decided to go way back and give her the big picture. It turned out to be
a little kinky for the six- o'clock news.
I suited the tale by telling her about my father, once a rig foreman
in the oil patch out around Midland, Texas. I was still a kid when he
started tinkering around weekends with drill bits out in his shop, and I
was no more than about ten when he came up with a new kind of tip.
Turned out it could double the life expectancy of a bit, not to mention
the life expectancy of a lot of roughnecks who had to change them every
few hours. He patented the thing, and next thing you knew, he was
"president" of Permian Basin Petroleum.
"Your father was a successful inventor?" She'd set her Tab down on
the living room table and perked up. Here was some "color" for her
profile.
"More than that. The man was a believing capitalist." Was she really
going to understand the significance of what happened? "You see, since
no banker would risk loaning out venture capital back in those days, he
had to take PBP public. He needed money so badly he sold off sixty
percent of the company."
"Like those entrepreneurs who created home computers in their
garage?" She brushed at her carefully groomed auburn hair. Maybe here
was her hook, the grabber.
"Close. He took the money, several million, and started production.
And guess what? The bit he'd invented was too good. Next thing you
know, another outfit that will remain nameless here came along and
infringed on the patent, saying 'sue us'—which he began trying to do.
But since they were already tooled up to manufacture, they undercut his
prices and drove PBP's stock down to zip. Then came the kill. They
staged a hostile takeover and—since PBP now owned the patents, not
him—axed the lawsuit. Bye, bye, company."
"How does this story relate to what you do today?" She was
checking her watch, no longer overly engaged.