Steven Gore - Absolute Risk

“I’ll tell you what changed,” Lasker said. “We finally have a chairman who has refused to play politics with the economy by pursuing policies that brought a series of booms and busts because of the central bank’s unwillingness to control the expansion of credit.”

Lasker held up a copy of the society’s latest journal. Everyone in the room knew the single topic to which it was devoted: the coming collapse.

“The question is whether it’s too late.” Lasker paused, and then said, “I believe that it isn’t. If… if… we’re tough-minded enough.”

Easy for him to say, Abrams thought-for all of them to say. He knew that to the tenured academics in the room, “tough-minded” meant nothing more than standing firm in their demand for a new photocopier for the economics department or for an extra teaching assistant to whom they could shift more of their work. And to the corporate executives, it meant nothing more than holding their ground with the homeowners’ association design review board or two-putting a par three, or fighting with the company’s compensation committee over an additional million dollars in salary or an additional ten million in stock options.

None of them, Abrams knew, possessed the kind of toughness required to bring the financial life of the country to a standstill in order to break the cycles of inflation and deflation that were eroding the foundation of the economy.

And Abrams wondered whether he himself possessed it. Even the fact of his presidential appointment to be Fed chairman hadn’t done much to dampen his self-doubt.

“And the first place to draw the line is with China.”

Abrams’s jaw tightened. He felt like grabbing Lasker’s jacket collar and tossing him backward off the dais.

Lasker had promised not to raise the issue of China’s currency policies-and the whole world was watching. Even worse, Lasker had just criticized the previous chairmen’s testing of the political winds, only to throw Abrams into the storm.

Abrams knew that as far as the international financial community was concerned, a nonresponse to Lasker’s claim by the chairman of the Federal Reserve would be viewed as a response and would move the markets. Abrams therefore put on what he called the Bernanke Face, the dull-eyed expression of a goat oblivious to the slaughterhouse into which it was being led.

Staring ahead, Abrams noticed motion at the back of the ballroom. A CNBC producer he recognized was walking out to the foyer, and he grasped what she was doing: alerting the studio that a story was about to break.

Abrams glanced at his watch. The markets would close in forty minutes. He decided that he would find a way to stretch his speech and wait until question time to respond to the China issue, and let the mass of overnight news dissipate the impact of his reaction.

“China’s currency policies,” Lasker continued, “have destabilized the capital flows throughout the world.”

Idiot. Abrams thought. Id-i-ot. The esteemed president of the society was one of those who’d demanded for decades that the Chinese let their currency float instead of keeping it fixed unreasonably low against the dollar. Finally they did, and as predicted by its advocates, the price of their products on the international market increased, costing them some of their competitive advantage.

But as Lasker and others hadn’t predicted, it also sucked into China a trillion dollars a year of foreign investment. Investors, who’d once received only seven hundred thousand Chinese yuan for a million dollars, now received one point four million yuan.

If it had made economic sense ten years earlier to invest a billion dollars in China, it was insanity not to invest two billion today, for the dollars now bought fifty percent more of the country.

“The PRC’s dual exchange rate policy,” Lasker said, “one for domestic transactions and one for foreign investment, creates exactly the kind of unfair subsidy prohibited by the WTO.”

Id-i-ot. What pisses you off is that they outsmarted you. Did you really think they’d follow your advice like it was a doctor’s prescription: Drink liquids, get lots of rest, take one of these tablets twice a day?

Lasker and his followers had learned the lesson too late: Chinese economics was like Chinese medicine: counterintuitive and impossible to swallow.

Lasker paused, and then sniffed the air. Seconds later, members of the audience were coughing and wiping their eyes. Those at the back of the room ran toward the exits, the ones in front bunched up behind them.

Abrams clasped his hands together under the table.

Thank God for tear gas.

How does your wife feel about the work you do? “ Elaine asked Gage. She stood with her back to the fireplace in the den, warming her hands. Observing her from the couch, Gage wondered whether the chill she was fighting was internal or external.

“Those news articles made it seem like you never sleep in your own bed.”

Gage glanced at his watch. It was mid-morning in Asia.

She caught the motion, and asked with an edge in her voice, “You need to be somewhere?” “

No. I’m worried about my wife. She’s in China.

” Elaine’s eyes widened. “Not near the earthquake, I hope.”

“Too near, but she’s okay.”

“Why is she there?” She stiffened and cocked her head as if there was another question concealed behind the one she’d asked.

“She’s an anthropologist. She teaches at UC Berkeley.”

“Oh, I see.” Elaine’s body relaxed again. “I wondered whether she was working on this, too. Michael thought Ibrahim’s wife might be living over there. Not in the earthquake area. In an autonomous zone called Xinjiang.”

Gage now understood Hennessy’s call from China to Abrams. He must’ve been thinking that he could get to Ibrahim through his wife. The fact that he’d kept traveling suggested that he hadn’t.

“She’s a Muslim, too,” Elaine said. “They met in Boston when he was in graduate school.”

“How did you…”

She pointed upstairs. “I said I didn’t find anything that exonerated Ibrahim, but I once found some bits and pieces about her.” She smiled. “I spent a lunch hour or two at work trying to fit shredded pieces of paper back together.”

She lowered her voice as though not wanting Vicky to overhear.

“That’s the reason I let him keep using the bedroom as his office even after he moved out. So I could spy on him. I felt a little guilty about it because the kids thought I did it so he could spend more time with them.”

“Do you know whether he found her?” Gage asked.

“I don’t think so, but that part of the story didn’t make it into the shredder.”

“Did you save the material you rescued?”

Elaine smiled and said, “Like a squirrel preparing for winter, I folded them up and tucked them away.”

She walked over to the entertainment center, selected a DVD from the shelf, and handed it to Gage.

He flipped it open and turned it toward her. Her mouth gaped. It was empty. No papers inside. She grabbed a second one from the stack and opened it. Then a third.

She ran to the doorway and yelled toward the stairs, “Vicky. Come down here.”

Her daughter entered half a minute later and Elaine displayed an empty case toward her.

“Did you or your friends-“

“Chitty Chitty Bang Bang?” Vicky smirked as she looked at the title. “You’ve got to be kidding, Mother. I haven’t watched that since I was ten years old.”

Elaine bit her bottom lip and lowered her hands, then said to herself, “I was in here when the FBI searched. I would’ve noticed. I’m sure I would’ve.”

“Not the whole time,” Vicky said, looking at her mother as though she was a grandparent edging toward Alzheimer’s. “Remember, they took us into the garage to point out which boxes were Daddy’s.”