Thomas Hoover - The samurai strategy

Anyway, we settled into the leather chairs of the back room while he ordered a medicinal Scotch, double. After his nerves stabilized a bit, I suggested he let me give him an informal rundown of what little I knew.

"High goddam time." He grimly extracted a notebook.

"Jack, here's the mea culpa. I now confess before God and you that I've been a very uneasy point man for an outfit that calls itself Dai Nippon, International. They have been playing a little game with interest-rate futures and currency forwards in quantities that stagger the mind. Thus far, however, their activity has been strictly legal and right out there for everybody to watch. I also tried to warn anybody who would listen. Consequently any of our financial analysts who didn't see this brouhaha coming a mile away has been suffering a severe rectal-cranial inversion."

He snorted and pulled at his drink. "Okay, since you seem to know so much about this Dai Nippon outfit, care to clue me in on what's down the road?"

"Jack, I think the answer is one nobody's figured." Then I delivered my brand-new theory.

He stared at me skeptically, sipping at his drink. "Good God, you've gone off the deep end, Walton. I always assumed it would happen someday."

"Jack, from what I hear, none of the big Japanese securities dealers here will even pick up their phone. What does that tell you? They're softening us up using the weapon the market dreads the most. Uncertainty. What better way to terrify the Street? Christ, let somebody start a rumor the President has a toothache, and they practically have to shut down trading."

"Matt, nobody's going to believe your crazy scenario. Matter of fact, I don't either. It's too wild. I'll tell you what most people are saying. All the news shows tonight hauled out our doomsday economists, Lester Thurow and his ilk, to declare we had this one coming. The consensus going around is the Japanese are finally fed up hearing us bellyache about trade barriers; so they've decided to treat us to a pointed demonstration concerning exactly who needs who. That's all. Japan now controls America's destiny. But since a few people here still have the idea we won the last war, Tokyo just wants to make sure we get our history straightened out."

Could be, I answered. But I still thought everybody was missing the forest for the trees. Then I went on to describe Noda's building, his high-security computer setup. Nobody would install an elaborate headquarters like that merely to get your attention.

He listened in uncharacteristic silence, beginning to appear a little more convinced. "Well, let's run with your cockamamie theory a second." He rattled his ice cubes, a habit of his I always found distracting. "Say something bigger is coming up, and this is just the pre-game warm-up. What can we do?"

My suggestion, that the President close down all our financial markets immediately to keep Noda's hands off them, was not received enthusiastically.

"You want me to stand up in the Senate and propose that?" His already ruddy cheeks were beginning to redden even more as he glared around the paneled room. "Matt, I'd be tarred and feathered by every stockholder in the country."

Maybe so, I said. But what about Noda's vast Third Avenue nerve center? His supercomputer? The Uzis? It had ominous portent. "Tell you the truth, Jack, I'm not even sure I should be talking to you. After what happened today, that guy scares hell out of me."

We ran through the known facts a couple of times more, not getting any closer to agreeing on the big picture. Finally he summed up his own fears: "In my view, we weathered the October '87 crash because the Fed still had some control over liquidity. When money started disappearing out of the market, they just printed more. They countered deflation with inflation, kept the dollar in balance. This time, though, we've lost all three pillars under our financial house-stocks, bonds, and the dollar. There's nothing the government can do to stop this one."

At that moment there was a tap on my shoulder, and I looked up to see Eduardo, the club's recent attempt at Hispanic affirmative action, handing me a cordless phone. Then I remembered I'd set up things downtown to forward calls to the bar. The next sounds in my ear were the mellifluous profanities of Dr. William Henderson.

Bill had just gotten off a plane after spending a few days loosening up at the Sandy Lane in Barbados, assaulting its reserves of Sugar Cane Brandy, and he was mad as hell. His "Georgia Mafia" had been caught flat-footed. Why hadn't I warned him that the Japs had scheduled this move? Surely I must have had an inkling. He would have shorted the market and scored a pile.

I suggested he calm down, that nobody, me included, had seen it coming. What's more, I had a strong feeling it was all-

"What the hell's next?" Bill continued, oblivious. "What's Noda saying?"

"Nothing here but speculation. He's probably getting his beauty sleep at the moment. But take some of your own advice, friend, and stand clear. I've got a feeling there's less here, and more, than meets the eye. Don't, repeat, don't get the idea you can outguess Matsuo Noda. I think he's pulling a number, but-" "

Bill interjected something brief and unrepeatable and rang off, undoubtedly headed for consolation.

"Was that Henderson?" Jack asked, then watched me nod. Bill had pitched in to help Jack out of a few tight spots on the money front, in appreciation of which O'Donnell had proposed him for the Council of Economic Advisers-and shortly thereafter forfeited all credibility with the administration. These days he couldn't have gotten into the White House on a VFW tour. "Well, the man's got no idea when to keep his mouth shut with the press, but he's nobody's idea of a fool. What does he think this is all about?"

"Sounds like he's just studying the tea leaves like everybody else."

Jack sighed, then rattled his cubes some more. "Well, if Henderson can't figure out what's going on, then nobody can. That in itself ought to tell us there's a patch of slippery ice down the road. My own guess is the Japanese have decided to play a little poker with the American markets without having the damnedest idea of the consequences."

"Jack, what if they do?"

After we sat there gazing at the gilded plasterwork ceiling for a while, we started getting caught up on old times. He inquired what I thought the press would do to him if he married one of his staffers. My guess was that a photo of Washington's most eligible divorce veteran at the altar once more would probably make the cover of People. Everybody loves a lover. That possibility seemed to cheer him up a bit.

It was round about then, probably close to ten-thirty P.M., that another call came through. This time I already had a feeling who it was, and I momentarily considered not taking it. But then, why not let O'Donnell have the story straight from the source.

The caller was, of course, Matsuo Noda. It must have been late morning, Japan time, after a very long night.

What, he inquired, was my on-the-spot reading of the scene?

"I don't know." The phone had that same funny whine I remembered, as though he had a private phone system worldwide. "Maybe you should be telling me."

Noda-san, no surprise, didn't seem particularly unsettled by the developments.

"I assure you there is no cause for alarm, Mr. Walton. The situation may seem temporarily unfortunate, but I have long believed all things turn out for the best."

"Could have fooled me. But while we're all waiting for the silver lining to this cloud, you could do everybody a favor and get your goddam securities dealers here to issue a statement clarifying their intentions."

"Mr. Walton"-he chuckled-"you ascribe far too much influence to me. I am merely a banker, one of many in Japan. I have no control over what our institutions choose to do or not do."