The Samurai Strategy

by Thomas Hoover

  CHAPTER TWENTY-SEVEN

  "It's the worst of times, buddy, and the best of times. Whatever dudeonce said that didn't know the half of it. He oughta be around now tocheck out the Street."

  That was Henderson's Georgia Mafia co-conspirator, an irritatingly smugyoung man with red hair and acne who dressed entirely in white, rightdown to his skinny Italian tie. We were told he went by the handle ofJim Bob. As he meditated upon Wall Street's macroeconomicincongruities, he punched a Willie Nelson tape into his boom box andpopped a Coors, pregame warm-up for programming a full-scale assault onthe U.S. securities markets.

  Jim Bob allowed as how he'd arrived in the Big Apple four years earlierwith a cardboard suitcase, a finance degree from Georgia Tech, and alarger than regulation endowment of natural cunning. After a couple ofyears' toil in Henderson's quasi-legal vineyards, he'd gone out on hisown, whereupon he'd parlayed his winnings with Bill and the remnants ofa baseball scholarship into what was now a high six-figure "haircut,"the name options players use for their grubstake. The way he figuredit, he was just hitting his stride.

  How, I inquired at one point during that long weekend, had he managedit?

  "Chum, it's idiot simple. You buy into fear, sell into greed, and fuckfundamentals. Main thing is, if something makes sense, don't do it.America's in the all-time shit, and Wall Street's oblivious. It's likeeverybody's bidding up standing room on the Tttanic. But who cares? Youplay options like I do and all you have to worry about is not gettingstupider than the herd. Which ain't necessarily much of a trick."

  Stock options, he went on to assert, were like having a credit card ina whorehouse--a ton of action for what amounted to tip money up front.No wonder Las Vegas was in trouble, when Wall Street was beckoning ourhigh rollers to take odds on the direction of the market. Only widowsand orphans, he observed, bought actual securities anymore. That actionwas reserved for the halt and lame.

  While country singers twanged beer hall soliloquies on the generalincrease in faithless women, Jim Bob coded in the brokerage houses andoffshore banks we'd be using, the catalog of stocks in the DNIportfolio, and our sequence of transactions.

  As noted earlier, the financial setup had been handled by Henderson andfriends. Using his connections, he'd opened accounts for hundreds ofdummy corporations in about two dozen offshore banks. He stuck to theusual no-questions-asked operations like Banca della Svizzera Italianaand Bank Leu in the Bahamas--the latter a Swiss-owned Nassau laundrythat had, in years past, reportedly destroyed records and lied to theSecurities and Exchange Commission as a favor to certain of America'smore inventive inside traders.

  Since the volume of money to be moved was staggering, it would all behandled by sophisticated telecommunications networks. We would pass itthrough the anonymous accounts we'd established, accessed both ways bycomputer, and it would never be touched by human hands. DNI's cashwould flash in and out with total cover. Added to that, anybody whotried to trace us would first have to break through a traditional Swissstone wall.

  To dump the stock we were planning to exploit fully the new"globalization" of the financial scene. Now that the NationalAssociation of Securities Dealers had struck a deal with the London andTokyo stock exchanges to swap price quotes, worldwide market makerswere buying and selling American securities around the clock. Plenty ofactive market-making was happening off the exchange floors as well, atplaces like Jeffries out on the coast, which had recently handled amassive Canadian takeover of an American company overnight, entirelyoff-exchange. With all the avenues available it was almost impossibleto track the movement in a given issue. DNI's computers would berouting sell orders to brokerage firms around the globe, a block here,a block there, none of them in quantities that would raise eyebrows.

  Maybe I also should add that none of the "corporations" Henderson hadset up would be allowed to show a profit, which would simplify TreasuryDepartment reporting requirements. As a matter of fact, before we werethrough, DNI was going to lose billions. But it would all be donelegally, in accordance with SEC regs. It would also lead to a worldfinancial flap of notable proportions. Nobody would ever take Noda'smoney for granted again.

  While Tam went over her new program with Jim Bob, pointing out herspecial features, Henderson and I found ourselves at reasonably looseends. We sat around drinking green tea (God, how I came to hate thatstuff) and puzzling how we'd all managed to get into such a mess. Themajor plus, however, was that we finally had Matsuo Noda by the shortand curlies.

  Or so we hoped. The problem was, he'd been a player longer than any ofus, and he'd already demonstrated plenty of stamina. How would hecounterattack? The question wasn't if, it was when. For the moment,though, we seemed to be on our way with clear sailing; in fact, thecommunications link with Kyoto was entirely empty. Tanaka also hadclammed up, refusing to talk--beyond a rather firm prediction that ourwholesale divestiture of DNI's assets was an insane act doomed tofailure. I might also add he didn't appear nearly as concerned as thecircumstances would seem to merit. In fact, he was so complacent Istarted getting a little uneasy. Finally Bill and I ran his predictionpast young Jim Bob. Could somebody get through to Tam's program anddevise a way to shut us down?

  Henderson's increasingly glassy-eyed protege took out enough time frompopping "uppers" and swilling Coors to assure us to the contrary.

  "Hell, no way you could stop what we're settin' up here. We gotourselves what you call a closed system. Everything's

  going to be handled by that green-eyed monster over there in thecorner. We got these numbered brokerage accounts all over the place.Zip, in go the sell orders; zap, out go confirmations. And since noneof the cash sits around, our bank accounts are all just gonna churn.We'll have billions of buckaroos rollin' at the speed of light. Ain'tnobody gonna be able to get a bead on the action, take my word for it."

  Our computer-generated buying and selling, he went on to declare, wasconveniently similar in appearance to the "program" trading of the biginstitutional investors, the arbitrage players who routinely soldmillions of dollars of securities in minutes using computers. Thanks tothem, the market these days had been conditioned to accept huge,unaccountable trades as part of the territory. If somebody dumpedmassive blocks of stock unexpectedly, it could mean anything--such as,the spread between those stocks' prices and some "index future" hadgotten momentarily out of sync. Shuffling securities like poker chipswas the name of the game on the Street these days, so nobody wouldreally notice or care. The turnover we'd be generating would merelysuggest to the market that various investment-house arbitrage deskswere unwinding positions.

  What the heck, I said to Tam, maybe we could unload the better part ofDNI's holdings before Noda struck back. The real key to our attack onDai Nippon, however, depended on what happened to that cash after weturned it around. When I mentioned that, she just crossed her fingers.

  By late Sunday night the DNI offices were a clutter of empty Chinesetake-out containers, Kentucky Fried Chicken boxes, and computerprintouts. However, Jim Bob claimed the system looked like a go. He'dcompleted a long sequence of test runs, and he was predicting he couldprobably swing at least four billion the first day, something in thenature of a warm-up for grander things to come.

  Jim Bob, I should say, was fully as efficient as advertised byHenderson. Even if he was now flying higher than a moon shot, thanks toall the pills. He worked methodically, carefully analyzing the programat every step, double-checking the codes, poring over his verificationprintouts for obscure glitches. Mainly, though, he kept one unfocusedeye on the clock, saying he always delivered on time. Point of honor.

  Thus it was that, when Monday morning rolled around, we

  were primed to move on Wall Street. Tam's program was poised inside themainframe like some lurking id, ready to be unleashed. We decided tostart modestly, sticking to the exchanges in New York, and only laterin the day expanding outward as we gained firmer footing.

  At the stroke of nine-thirty A.M. Jim Bob inaugurated our maiden runwith yet another
beer. Henderson and I poured ourselves a bourbon. Tameven joined us, accepting a respectable shot.

  "Fasten your seat belts, boys and girls." Jim Bob shakily peeled backthe tab on his Coors. The screen in front of him focused our attentiondown to one small flashing green dot.

  "Ignition."

  He hit a key on the terminal, and Merrill Lynch got a computerized"sell" order for ten thousand shares of Texas Instruments. The time wasexactly 9:31.

  It was a textbook lift-off. Rows of green numbers began to scroll upthe screen, only to blink and disappear. By God, the thing seemed to beworking. We had just pulled the plug on DNI. All that was left now wasto sit back and watch it sink.

  As the morning wore on, Tam fielded phone calls from staffers, alwaysclaiming that Tanaka was not available just then. Of course, we weren'tsure how long we could get away with that excuse, but for now none ofus wanted to set the man free to start jabbering in Japanese on thephone. On the other hand, we were loosening up a bit on security.Partly, I guess, because we were all increasingly wrecked, but alsobecause it seemed to fit the situation. By Monday, Tanaka and his tworetired sumo bone-crushers appeared to have grown resigned, one mighteven say philosophical, and I don't mind admitting it bothered me alot. Tanaka was watching us destroy Noda's grand design right beforehis very eyes, yet he just sat there as though none of it mattered. Howcould this be? All he did was busy around brewing tea for everybody.(Except, of course, for Jim Bob, who stuck to Coors.) However, I wastoo tired by then to think much about it.

  Around two-thirty Henderson began complaining of a splitting headacheand declared he had to go home and get some rest. I started to protest,but the man looked half dead. Tam and I weren't much better off, so weflipped a coin to see who would take the first watch. She won, whichwas great by me, since the long hours without sleep were reallystarting to unravel my concentration.

  To understand what happened next, you have to try and envision thescene. It was three P.M. and things were going letter perfectly. Thedollars were sailing through the accounts we'd set up and along aboutnoon we'd even kicked in our buy program.

  Yes, buy. That's not a typo. You see, we had to lose billions, notnecessarily a trivial task. Think about it. If you merely want to dropa few million, all you have to do is just invest in some high-flyingstart-up and then sit there till the venture craters. But billions?

  That's the part where Tam really showed her mettle (no pun intended).Look, she said, the Brothers Hunt managed to blow millions by trying tocorner silver, bidding up the price and then seeing it collapse. Butwe've got to get rid of some serious money, so why don't we do the samething, only with a commodity worth something?

  Platinum.

  All life's great ideas have an inevitable simplicity. That's right, wewere programmed to sell DNI's stock and buy platinum. From anybody,anywhere, at any price. We were planning to just swallow the worldwidecommodity markets in the stuff, starting at the NY Merc and ending atCapetown. Of course, what we were also doing was boosting its priceinto the stratosphere--we were even bidding against ourselves throughdifferent brokerage houses. Anything to drive it up. I mean we had alot of money to get rid of. We figured that by the time we werefinished, DNI would be the proud owner of a couple of hundred billionin platinum metal, platinum futures, platinum mining stocks, platinumstorage companies, platinum dealerships, platinum reserves, platinuminvestment coins. All of it at a price as high as we could push. I wasbetting on two thousand dollars an ounce by Friday.

  The nice part was, what central bank was going to step in? Platinum wasstrategic, sure, but it wasn't a monetary metal. And if we had to bidagainst governments, so much the better. We were playing a drunkenspeculator's dream, going all out for the most volatile of all theworld's commodities. After we'd squeezed that scam for every ounce itwas worth, we would deliberately puncture the bubble and let the pricenosedive. We were going to destroy the cancer of Dai Nippon by gorgingNoda's takeover machine with financial poison. The eventual collapseshould wipe out Matsuo Noda totally.

  Platinum. I asked Jim Bob to check the waning moments of Monday's spotmarket, the latest prices down at the NY Merc, and he reported it hadscooted up about twenty dollars an ounce. A little slow maybe, but thenwe were just starting out. I figured it would probably double in acouple of days.

  Such was my fond hope as I drifted off for a nap on my desk. Tam was inTanaka's office, half-nodding in her chair, while Jim Bob was sittingbefore his monitor, still nourishing himself with beer and coloredpills. I gave him the Uzi and told him to help Tam out by keeping aneye on Tanaka and the two guards, all now sleeping like a baby. My lastvision was of Jim Bob sitting there, the Uzi draped over his wrinkledwhite lap, clicking away at the keyboard.

  I slept right through Emma's four-o'clock phone call from my officedowntown. When I awoke around nine P.M. Jim Bob mentioned she'd rung.No message, he said. Then don't worry about it, I mumbled to myself;get back to her in the morning.

  Tam didn't seem to remember the call, which momentarily troubled me.Had we both been dozing at the helm? Well, who could blame her? Inspite of my own nap I still felt like hell, so I dragged myself up,stretched, wandered around the office, drank some more green tea, andinquired of Jim Bob how things seemed to be proceeding.

  "Looking good." He grinned. He was now working Hong Kong and the Asianexchanges, limbering up the satellites as he flashed our (DNI's) moneyaround the globe. Anybody heard from Henderson? Not a word, he said ina tone that seemed disconcertingly pat.

  I briefly toyed with heading down to the street and trying to locate anearly "bulldog" Times to see what kind of a splash we were making inthe press, but since Tam was now sound asleep, I figured I'd betterstick to duty.

  I vaguely recall stumbling into my office to rummage for an old box ofNoDoz stashed somewhere there in the desk, and thinking how nice itwould be just to lean back in the chair. . . .

  A phone was jangling in my ear. As I pulled erect, the clock on my deskwas reading ten-thirty--My God, A.M.--and I felt as if I'd been run overby an eighteen-wheeler. What the hell was in that green tea Tanaka hadbeen brewing?

  Inside the receiver at my ear was Emma, and what she had to say broughtme awake like an ice-cold shower. In a voice

  brimming with triumph, she announced she'd just resigned and I couldconsider this official notice thereof. In fact, she was price-shoppingFlorida condos this very minute--what did I think of Coral Gables?--and Iwas lucky she'd bothered to take out time to inform me of her intendedplans. By Wednesday she expected to be able to loan money to theRockefellers, in case they should need a little liquidity on shortnotice.

  How'd you come by this sudden fortune? I asked. Where, she snappedback, have you been? The Dow Jones average was about to double, if ithadn't already. Funny, but the rest of the market was going nowhere.Oddest thing she'd ever seen. However, it only went to show what she'dalways told me, and if I'd listened to her instead of those smarty-pants uptown brokers, I'd be rich now too. Stick with the blue chips.IBM was up thirty percent since yesterday, AT&T was flying, GM wasselling for a price that would make you think they were back in the carbusiness.

  What the hell was she talking about! That's when I noticed a copy ofTuesday's New York Times lying there on my desk, right next to thephone. Only at first it didn't seem like the Times. Or maybe PunchSulzberger had just been swallowed whole by Rupert Murdoch, because Ihadn't seen a headline that arresting since the Posts immortal "CoedJogger Slain in Bed." It was banner, right across the top; the Times'headline writer was practically orgasmic. But whereas the Post gets offon mere sex, the good gray Times reserves its libidinous juices forthat ageless aphrodisiac, money.

  _New York Stock Exchange Prices Explode

  NEW YORK--Volume skyrocketed on the floor of the New York Stock Exchangeyesterday, as buyers for Big Board issues responded worldwide to arenewed confidence in American industry. Analysts are calling this thefirst leg of the Great Bull Market of the 1990s, saying this surge hasbeen overdue for a decade. Lead
ing the phenomenal rally were a numberof America's foremost corporations. . . .