The Samurai Strategy Part 18

Dai Nippon was running a.n.a.lyses, bet your a.s.s, but the industries under their silicon microscope weren't j.a.panese.

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 a.s.sure you it was cold-eyed in the extreme, strictly hard numbers: quarterly earnings, long-term debt, inventory, stock outstanding, CEO bonuses. As any professional a.n.a.lyst 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 pa.s.s through the floor.

Unlike most executive suites in New 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 j.a.panese "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 s.p.a.ce. 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 s.p.a.ce 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 h.e.l.l 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 of j.a.pan," 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 j.a.panese. '_Nihon-jin'_

as you'd probably put it. I'm a _gaijin_. We usually work for number one."

"At the moment, Mr. Walton, you work for Dai Nippon. There is an a.s.signed 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 h.e.l.l'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 j.a.panese 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 j.a.panese 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 j.a.panese people will have over a trillion dollars in overseas a.s.sets 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 inst.i.tutions 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 j.a.panese 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 c.o.c.kamamie 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 . . .