The Samurai Strategy Part 4

"Don't bulls.h.i.t 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 n.o.body 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 f.u.c.k 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 p.i.s.s 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 mothb.a.l.l.s. We're going back on-line."

As anybody who knew Bill was aware, he'd installed a ma.s.sive 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 fireb.a.l.l.s, 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, "b.u.t.terfly 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 s.h.i.t-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, s.h.i.ts 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 ma.s.sive 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 h.e.l.l of a risk." He swirled the cubes in his gla.s.s. "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 gla.s.s. 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 s.h.i.t-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 f.u.c.k itself."

"n.o.body would possibly let it go that far, right?" I toyed with my Scotch. "Particularly j.a.pan. 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 j.a.panese 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."

"d.a.m.ned 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 a.s.s over elbow in hock. Everybody starts gettin' nervous the same day, and the bankers on this planet could be back to swapping sh.e.l.ls and colored beads."

"Offhand I'd say that's pretty implausible."

"And I agree. The system got a pretty good shakeout in the October Ma.s.sacre of '87 and things held together, if just barely. Stocks crashed but the dollar and the debt markets weathered the storm. n.o.body dumped. j.a.pan doesn't want its prime customer to go belly up. Who else is gonna buy all that shiny c.r.a.p?"

I studied my gla.s.s again. If Henderson, who had pulse- feelers around the globe, wasn't worried, then maybe Matsuo Noda was just a nervous, s.p.a.ced-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.

"Well, by the time all this happened, I was off studying engineering at the University of Texas. But when I graduated, I decided to do something else. I headed for Yale Law."

"If you can't lick 'em, join 'em? Something like that, Mr. Walton?"

"Not exactly, Ms. Austen. I wanted to find out if the Bible's right: that guys who live by the sword better be ready to die by the sword.

After the sheepskin, I shopped around and found the Manhattan law firm that handled the biggest oil-field-service outfit in the country, then applied to that firm's corporate department. A couple of years and a lot of memos later, our oil-field client somehow got the idea they ought to go vertical, acquire their own source of equipment. Next I ran some numbers and showed them how profitable it would be to acquire a certain tool company that now owned the patent on a terrific drill bit.

Of course, it would require a hostile buyout, but with a little restructuring they could swing it financially."

"And?"

"I worked nights and weekends for six months and personally devised the takeover. By oddest coincidence, when we were through we decided to strip all that company's overpaid executives of their 'golden parachutes' and dump them on the street. My graduation present to the old man."

She rolled her eyes and waved at her sound man to shut off the mike.

"Mr. Walton, I think our viewers would be more interested in personal stories."

What did she want, I wondered. This was the most "personal" story I had.

"What do you mean? What I eat for breakfast?"

"I do personalities." She looked around the living room. "Are you married?"

"I was."

On came the tape. But she didn't get what she wanted. Joanna wouldn't appreciate being critiqued on Channel Eight's evening news. And Amy would have killed me. So I just plunged ahead and finished off the other saga.

"There's a bit more to this intimate bio. Guess I'd seen enough quick money in the oil business that I'd forgotten you were supposed to be impressed by it. Or maybe I'd just never mastered the art of kissing my elders' a.s.ses convincingly. You'll find, Ms. Austen, that those are two att.i.tudes whose rewards are largely intangible; Wall Street compatibility definitely not being on the list. After five years the Management Committee offered a partnership, but by then I'd decided to go out and try making it on my own. Be my own man."

She waved the sound man off again. "You mean you quit?"

"Couldn't have said it better. I hung up a shingle . . . and started playing the other side of the scrimmage line."