James Grippando - Money to Burn

Give it a rest, Chuck.

Papa poured me a glass of Chianti Classico. “I haven’t asked about this identity theft, but your grandmother and I are concerned.”

“It’s going to be okay,” I said.

“Maybe it will. And you know I don’t pry into your finances.”

That was true. In my ten-plus years with Saxton Silvers, not once had Papa asked me how much money I was making. But he spent countless hours on the phone talking me through heartbreaks and setbacks-including the loss of Ivy. For Papa, only one thing mattered: whether I was happy or not.

“I’m only going to say this one time,” he said, “so listen to me. If you’re in trouble, if you need anything. I mean anything. Your grandmother and I-…we have savings. So we can…well, you know what I’m saying.”

My eyes welled. Papa’s entire life savings couldn’t have covered my club dues, car payment, and annual debt service, but never had he and Nana asked me for anything-in fact, they’d refused my offers many times. He couldn’t possibly understand the mix of emotions he had unleashed inside me. The love made my heart swell, but the knife in my belly was the shame I felt for working with guys like Kent Frost, who could run up $22 billion in subprime losses-fly the plane into the mountain-and then bang on the president’s door to make damn sure he was going to keep his year-end bonus of $22 million. I suddenly realized that the entire financial world could collapse and there would be nothing to worry about-if only we could still count on the generation for whom the American dream was not just buying a home but actually paying off the mortgage.

“Michael?” I heard a woman say.

It was terrible timing, but Mallory’s friend Andrea was suddenly upon us and apologizing for the intrusion. She introduced herself to my grandparents as “Mallory’s best friend,” then quickly shot me a more serious expression and said, “I really need to talk with you in private.”

“Please,” said Papa, “join us for a glass of wine first.”

“That’s kind of you, but-”

“But what? Life’s not too short? Come on, I danced on these grapes myself.”

I knew Papa’s angle. He smelled trouble in my marriage, and just a minute or two with Mallory’s best friend could surely change the course of history. This was a man who would lock his lotto ticket away in the safe deposit box before they announced the winning numbers. He was that optimistic.

Andrea smiled, unable to refuse Italian hospitality, and pulled up a chair. Papa poured a generous glass of chianti for her, and of course he made her a plate of mostaccioli and meatballs. He had no way of knowing that, as a general rule, Mallory’s friends didn’t eat.

“Thank you so much,” she said. “I’m actually starved.”

This shocked me-a Saxton Silvers wife-to-be feasting on pasta and meatballs. She even asked for extra cheese. Since moving to New York in the winter, Andrea had quickly earned Mallory’s trust, but admittedly, I didn’t know her well. All I could say for certain was the obvious: She was pretty, like most of Mallory’s friends. I had a hunch, however, more substance was there.

“Did you see my grandson on television today?” Papa asked her.

“Yes,” she said, averting her eyes. She seemed embarrassed for me. “I did.”

“People are saying some really mean things about Saxton Silvers, don’t you think?”

“Papa, let’s not go there.”

Andrea said, “My fiancé says it’s the short sellers.”

“Short?” said Papa. “You mean paisans?”

I chuckled. “No, not short in stature, Papa. They’re going short on the stock.”

“What does that mean?” asked Nana.

“You don’t really want to know,” I said.

She grumbled in Italian. Sadly, I’d forgotten most of her dialect since leaving home for college, but she said something to the effect that I was treating my grandparents like a couple of dummies.

“All right,” I said, “here’s Michael Cantella’s crash course in Short Selling 101. Most people go long on stock. That means you buy it, you wait for it to go up in value, and you sell it at a profit. Short selling is the opposite.”

“You sell it at a loss?” asked Nana, confused.

“No. Instead of ‘buy low and sell high,’ you sell high and then buy low.”

“Explain this to me,” said Papa, putting down his fork. “How do you sell something before you own it?”

“Good question,” I said. “You borrow it. And you sell it immediately at the high price with the understanding that at some point in the future you have to give back an equal number of shares to the broker who loaned them to you. If all goes as planned, the stock price goes down, the short seller buys at the low price, and he gives back those cheap shares to his lender. He pockets the difference in price as profit.”

“What happens if the price doesn’t go down?”

“The short gets screwed. He has to cover the price difference in order to return the shares to his lender.”

Papa shook his head, wagging a marinara-soaked breadstick like a professorial finger. “I don’t believe in all this borrowing. You make what you earn, and you spend what you make. Not a penny more.”

“And then there are the naked short sellers,” I said, “who don’t even borrow the stock before they sell it-but we’ll save that lesson for Short Selling 201. Suffice it to say that a lot of smart folks think it was naked shorts that brought down Krispy Kreme.”

“That is a crime,” said Papa.

“Actually, there’s nothing illegal about it, unless you manipulate things by flooding the market with sell orders. Even then, I just read in the Journal that the SEC brought a grand total of zero enforcement actions in response to the last five thousand complaints it got about short sellers, so you do the math on getting caught.”

Papa said, “That’s all just a fancy way of saying a short seller is like some guy in Atlantic City betting that the price of Saxton Silvers stock will go down.”

“That’s pretty much it,” I said. “The farther it goes down, the more money the short seller makes. Which means they laugh all the way to the bank if they can get guys like Chuck Bell to blabber nasty rumors on television.”

Andrea said, “But the question is, who are ‘they’?”

“I wish I knew,” I said.

“You must have a guess,” said Andrea.

“I don’t like to guess.”

“Oh, come on. Who do you think it is?”

“I really don’t know.”

“You must have thought about it,” said Andrea. “Who would be able to borrow enough shares of Saxton Silvers stock to make it worthwhile to spread these rumors? And who would be that devious?”

Andrea’s fixation started to feel a little awkward. “I honestly don’t know,” I told her.

She finished her wine and smiled politely at Papa as she pushed away from the table. “It’s been lovely visiting with you. Thank you so much for the delicious food and wine. But I really do need a moment in private with Michael. It’s kind of personal.”

I looked at Papa, who of course said, “You do what you gotta do.”

Andrea said good night, I excused myself, and the two of us went to the bar, where bottles of Campari and Amaretto Disaronno had prime shelf space on the mirrored backsplash behind a long mahogany bar. We found a couple of chrome stools at the end, away from the crowd. Just then I got another rumor alert from one of my analysts; this one was serious. I asked the bartender to tune the flat screen to FNN while Andrea and I talked. The audio was on mute, but Chuck Bell somehow still managed to be obnoxious even in closed captioning.

Andrea said, “Let me first say that Mallory didn’t ask me to come here.”