The world was on the precipice of an abyss and no one knew what was down there. All through the day announcements came out of the world’s central banks. It didn’t matter. No one cared what the central bankers were saying, how much capital they were pumping into the system, what guarantees they were offering. If the Chinese government was going to dump its holdings of US bonds, there wasn’t a single financial instrument in the world that would hold its value.
His people would be scarred by this, Grey knew. He had seen the effect last time around. No matter how tough they think they are, traders who have grown up in good times are never ready for their first big crash. Some would be no good for the business after this. Boris Malevsky sat silent, almost catatonic, barely responding to anything around him. Ed tried to keep up morale, the most important commodity at a DIV when the markets were tanking. Demoralized traders made bad decisions. He walked around the trading desk, put his hand on shoulders, pulled up a chair. ‘At least you’ll be able to tell your grandkids you lived through it,’ he told them. He even forced a smile. ‘The eye of the storm. We should get T shirts.’
There didn’t seem to be many takers.
When they left, they drifted out like ghosts into the night. Sell orders were in place in the unlikely event that a buyer turned up somewhere in the east. A couple of the portfolio managers were staying back with the night analysts to monitor the Asian and then European markets as trading moved west overnight.
Ed went back to his office. Tony Evangelou followed him in. They didn’t know what to expect the next day. All they knew was that they were going to keep bleeding, and the best they could hope was to staunch the flow wherever they saw it.
Red River was gone. Unless a miracle happened, Ed would have to sell anything he could just to pay the cash the banks would demand, wiping out not only what was left of six years’ accumulated profits of his clients but the principal they had put in as well. And his own. And even that wouldn’t be enough. When he had sold everything he could and the cash ran out, Red River would be bust.
Tony went. Ed stayed on, feet up on the desk in his office. Six years. Six years of tireless work to build Red River into what it was – and about six weeks to watch it disappear. It made him think of the stories you heard about the Great Crash, of people jumping out of windows. He glanced at his own window with a bitter smile. He went over things in his mind. Not just today, but the past weeks, the past couple of months. He didn’t know if it was exactly guilt that he was feeling. No, not guilt. The markets were the markets. Everything he had done was legal, or almost legal. One piece of insider information, surely, shouldn’t lead to this. The markets were in free fall, a stampede of utterly panicked beasts, and it seemed to have gone beyond them now. There was belligerent talk coming out of the White House, and the tone of the speech made by Liang – obviously deputed by President Zhang to deliver the message – had been equally hostile. During the day, a Chinese government spokesman was reported to have refused the opportunity to provide a less aggressive interpretation of the premier’s words.
Whatever Grey had done, whatever he had started, the markets had overwhelmed him and swept him away. But something had had to set them off. He wondered – not for the first time – whether it really could have been him, whether the plot he plotted in this very office with Boris Malevsky and Tony Evangelou could have been responsible for events of this magnitude, whether, had he not plotted that plot, none of this would ever have happened.
He thought about it, staring at the darkness outside his window. Then he picked up the phone.
THE SECRETARY DIDN’T get back to him until after midnight. Ed was in his apartment. He had said to call any time she had the chance, it didn’t matter how late.
‘Ed, I’ve got a note-taker on the line,’ said Opitz. ‘And I don’t have a lot of time. I’m sorry. You said you had something important to tell me. I assume this isn’t some kind of attempt to find out about anything we might have under consideration.’
‘Of course not,’ he said. ‘I know you wouldn’t tell me.’
‘Okay. It’s been a long day.’ Opitz paused and took a deep breath. ‘What is it?’
‘Susan, this is confidential, okay? I’m telling you this because I think as a good citizen I need to.’
‘What is it?’
‘It’s confidential.’
‘Alright, it’s confidential. As long as it doesn’t go against my legal duty as Treasury secretary to divulge what you tell me. What is it?’
Grey hesitated. ‘I started it.’
‘What?’
‘This. Everything. The collapse.’
There was silence for a moment, then Opitz laughed. ‘Ed, it’s very kind of you to offer to take the blame, but I’m not sure–’
‘Susan, we’re the ones who started shorting Fidelian. And a bunch of other banks.’
Opitz’s laughter had stopped. ‘Why did you do that?’
‘We had a hunch.’
‘Were you passed any inside information?’
‘Absolutely not.’
‘Be honest with me.’
‘We only knew what was publicly available.’
‘Were you acting alone?’
‘Of course.’
‘You couldn’t have had such a big effect by yourself.’
‘It was a big position, Susan. The more they went down, the bigger I made it.’
‘That’s still not enough.’
‘A bunch of other Divvies probably figured out what we were doing and joined in.’
‘Was this a coordinated raid? Is that what you’re telling me?’
‘Absolutely not.’
‘Did you start any rumors? Is that what you did?’
‘No! Susan, I did nothing illegal. We just had a hunch. Call it a lucky hunch.’
‘Then why are you telling me this? I’m not interested in your hunches.’
‘Because the way the president’s talking,’ said Grey, ‘the way you’re talking when I see you on TV, it’s like you think the Chinese started it. You think they had some kind of political plan. That’s not what happened. I had a hunch and I shorted Fidelian.’
‘Did you know it was on the brink of twenty-three billion in writedowns?’
‘No.’
‘Then what was the hunch, Ed?’
‘It was … it was a hunch, Susan. We did some analysis. We had a hunch there were a bunch of banks that probably weren’t as strong as they looked and were overpriced. I didn’t expect any of them to go bankrupt.’
‘Not even Fidelian?’
‘No.’
‘Do you know anything about the process by which Bill Custler decided not to take the rescue offer?’
‘No. I’ve never spoken to Bill Custler in my life.’
‘From some other source?’
‘No.’
‘So what you called to tell me,’ said Opitz, ‘is that the origin of this crisis doesn’t lie with the PIC or the Chinese government, but with you. With a hunch you had that you could make some money by shorting Fidelian? Is that it, Ed?’
‘That’s right.’
‘That’s a hell of a story, Ed. Maybe one day you could write a book about it.’
‘Susan, it’s true.’
‘I’m not saying it isn’t. What does intrigue me, Ed, is why you thought you should tell me.’
‘Because it shows it’s not a political crisis. There isn’t any big political conspiracy here. That’s not how it started. It started with someone – me – taking a bet. It’s what happens every day. It’s the markets.’
There was silence for a moment, then Opitz started to laugh.
‘What? You don’t believe me?’
‘No, I do, Ed. I do.’
‘Then what’s funny?’
‘You are. Calling to tell me. Where have you been, Ed? Don’t you know what happened today?’
‘Of course I know what happened today! Hell, Susan, my fund’s falling apart in front of my eyes.’
‘I’m sorry, but–’
‘Suspend mark to market! For Christ’s sake, Susan, suspend mark to market and let some of us survive.’
‘Is that what you rang to tell me?’ demanded Opitz angrily.
‘No! I rang to tell you that I started it. I rang to tell you it isn’t political.’
‘It is now. Ed, it doesn’t matter how it started. Don’t you get it? That doesn’t matter any more.’
‘Then what are you going to do?’
‘Wait and see.’
‘For God’s sake, Susan, I’m telling you what to do. Suspend mark to market! Suspend it now!’
Grey was desperate. He was down on his knees. Literally, in his apartment, the phone shaking in his hand. This wasn’t what he had rung to say but it burst out of him. It was his only chance of survival. ‘Suspend it, Susan! Suspend mark to market!’
Opitz listened to him in distaste. Grey was sobbing.
‘Suspend it. Please! Please! For God’s sake–’
‘We’ll do what we have to do,’ said Opitz, and she put down the phone.
45
LIU’S VOICE WAS agitated. There was no small talk or introduction. The first words out of his mouth after Ellman picked up the phone were an abrupt, direct question.
‘Marion, why are you doing this?’
Ellman closed her eyes for a moment before replying. ‘The US government believes this is the right thing to do.’
‘The resolution won’t pass.’
‘Simon, that’s up to you.’
‘Not only us. There are others.’
That wasn’t quite right. Marion knew that the UK had the votes to pass its South Africa resolution on the numbers. It was only a veto that would stop it.
The agitation in the Chinese ambassador’s voice became greater. ‘Marion, I don’t understand what your president thinks he is doing. Do you understand? Can you explain to me?’
Ellman didn’t respond.
‘You need our help. You need our help on your economy. You need our help on your soldiers in Sudan. But all we get are demands. Is this the way one asks for help?’
There was no point telling him that she didn’t think it was much of a way to ask for help either. The president wasn’t going to change his approach.
‘Simon, we see these issues as so clear cut. I don’t think we see these as demands. We see these as what any member of the international community ought to do for the sake of any member it regards as a friend. Help get its soldiers who are being held illegally. Help restore confidence in its economy. Why wouldn’t you do these things if you’re our friend?’
‘Do we not regard you as a friend? Show me what we have done that says we are not a friend.’
‘These are the things. These things we’ve been asking about.’
‘No, you are not a friend. A friend does not make demands in public without even giving the other the chance to act first. A friend waits. A friend trusts that the other one will act and lets him act without speaking in public.’
‘Simon, come on. We asked privately. Secretary Opitz spoke to Minister Bai weeks ago. That wasn’t public. That was private. Like friends. And nothing happened.’
Liu was silent for a moment. She could hear him draw a deep breath.
‘Marion, I’m speaking personally. I shouldn’t do this, but I will. This is not for your government now, this is for you. All we see are demands coming from your president. One demand after the other, in private, in public, everywhere. No one on your side seems to understand this. I’m telling you so you can understand. No one in Beijing can understand how another power can want for help and issue such demands.’
Ellman resisted the temptation to retort that these things only turned into demands because the Chinese government failed to act without being pushed. ‘Simon,’ she said, ‘there’s a simple way to deal with that, and that’s to do what you should do, what any friendly country should do. Instead you threaten to dump our bonds.’
‘Because you threaten to make restrictions. Who made the first threat?’
‘It wasn’t a threat, it’s reality. What choice do we have?’
‘And what choice do we have? If you say to someone who owns your assets, we will restrict you, he will sell them! He will sell them while he can!’ Liu’s voice had risen. ‘And now this! This resolution. It will not pass. You know that. If you are in any doubt of it, let me assure you now. It will not pass. What do you think you will achieve?’
‘Simon, it’s a matter of principle. For the United States, democracy is a matter of principle.’
‘And the principle for the United States seems to be, hit China whenever you can.’
‘That’s not what it is.’
‘That’s what it looks like. Marion, I am speaking to you out of friendship. I am not authorized to tell you this, but I am telling you. Do you understand, in Beijing, that’s what it looks like? After such a speech from your president! We must lose face everywhere. With other countries. In our own party. With our army. President Zhang cannot lose face like this.’
Marion narrowed her eyes. ‘Simon, what’s going on?’
Liu was silent for a moment. ‘I don’t understand how your president doesn’t see what he is doing. Does no one tell him? Does Secretary Livingstone not tell him?’
‘Simon, if your government would just do the couple of things it needs to do … If it would help get our men out, if it would just say it didn’t manipulate Fidelian … That’s all you need to do. Things of simple decency. Your president could get our guys out of Sudan tomorrow.’
‘Do you think so?’ demanded Liu. ‘Is it so simple?’
Marion was stumped at that, wondering if it was possible that the Sudanese government wouldn’t respond to a demand from Zhang. They were almost entirely dependent on the Chinese for their foreign income.
‘Why does he care about your men who you sent in without consultation?’
‘Simon, come on, we passed a resolution–’
‘Only because we let you!’
‘He could get up and make a speech about Fidelian tonight. Just two minutes, that’s all it would take.’
‘Why should he do it?’ There was incredulity in Liu’s voice. ‘Why should he? Marion, it is not so simple.’
‘Simon, you keep saying that. What do you mean?’
‘Why does he care about your bank if you can’t manage your own system? Why should he help someone who makes such demands? And now someone who brings this vote.’
‘We’re not bringing it. The United Kingdom is bringing it.’
‘You could have stopped them.’
‘They’re determined to bring it.’
‘Then don’t support it!’
Marion was silent for a moment. ‘Simon, I still don’t understand why you keep saying this isn’t simple. Sure, it’s complicated, but it can be done. What’s going on?’
There was silence. Marion waited, frowning, to hear what the Chinese ambassador would reply.
‘Where is this ending?’ demanded Liu suddenly. ‘Does your president know that? Tell me, Marion, before he began to escalate like this, does he know where the exit is?’
‘There’s no escalation intended.’
‘No? Well, there is escalation. Let me say to you, the United States is not in the strong position. It is not China’s men who are captured in Sudan. It is not China’s economy that is in such trouble.’
‘If it’s our economy, it’s yours. There’s no separating them. You know that. If we suffer, you’ll suffer.’
‘Yes, but who will last the longer? Who will suffer the more? Is that what President Knowles wants to find out?’
‘Simon, this is not the way we should be talking. No one wants any suffering. This is not the way the president’s thinking.’
‘Good. Then do not support this resolution.’
‘Liu, there’s only so much I can do.’
‘You still have time. Speak to your president.’
‘Simon, I
can’t–’
‘Marion, do not do this. Do not do it.’
‘Simon, is that you speaking, or your government?’
‘Listen to me,’ said Liu. ‘I have rung you to tell you this. Just listen to what I have said to you.’
There was silence for a moment, then the phone went dead.
Marion put it down slowly.
She sat back in her chair, a frown on her face. She brought her hands together under her chin. The frown deepened.
Liu could have been trying to manipulate her. When a diplomat said he was speaking personally, or confidentially, or on his own initiative, you always had to be wary. When he said he was speaking out of friendship, you had to be even warier.
It was possible that China didn’t want to be seen vetoing the South Africa resolution that the UK was about to bring to the Security Council. This could have been a last attempt on his part to prevent it reaching the chamber. And it had struck her the way Liu’s voice rose a notch when he talked about his government having no choice but to sell their assets once the US government talked about restricting ownership. Maybe that was what they were really worried about, having to sell assets that were plummeting in value. Maybe, if they got the US to back down on the South Africa vote, they could claim it as a victory and magnanimously – condescendingly – agree not to sell their assets as a favor to the US.
Or maybe he wasn’t manipulating her. Maybe he was genuine. Marion didn’t know him well enough to tell. And the part about Zhang losing face with the army and the party, and things not being simple … He must have been referring to internal tensions. Marion ran the words again in her mind, trying to be sure she had really heard Liu say what she thought she had heard. What was going on inside the regime that the US didn’t know about? A conflict like this would always be likely to bring tensions out. But was there anything new? Was Zhang in trouble?
Marion feared for the effect this vote would have. Liu could have been trying to manipulate her or not – it didn’t really matter. What mattered was that she agreed with him.
The first thing she would do would be to send an urgent report of this conversation to Bob Livingstone, Gary Rose, Director of National Intelligence Ryan Ferris and the president, highlighting Liu’s hints that Zhang was under pressure and her belief that the US position on the resolution should be reconsidered before the vote on the following day. Yet she knew there were no ears in the White House for that message or pretty much anything else that came from the State Department.
End Game Page 32
