Tom Clancy - Debt of Honor

That morning on the Nikkei Dow would long be remembered. It had taken that long for people to grasp what Seiji Nagumo now knew—that they weren't kidding this time. It wasn't rice all over again, it wasn't computer chips all over again, it wasn't automobiles or their parts, not telecommunications gear or construction contracts or cellular phones. It was, in fact, all of the above, twenty years of pent-up resentment and anger, some justified, some not, but all real and exploding to the surface at a single lime. At first the editors in Tokyo just hadn't believed what they'd been told by their people in Washington and New York, and had redrafted the stories to fit their own conclusions until they themselves had thought the information through and come to the stunning realization on their own. The Trade Reform Act, the papers had pontificated only two days earlier, was just one more blip, a joke, an expression of a few misguided people with a long history of antipathy to our country that will soon run its course. It was now something else. Today it was a most unfortunate development whose possibility of enactment into Federal Law cannot now be totally discounted.

The Japanese language conveys information every bit as well as any other, once you break the code. In America the headlines are far more explicit, but that is merely an indelicate directness of expression typical of the gaijin . In Japan one talked more elliptically, but the meaning was there even so, just as clear, just as plain. The millions of Japanese citizens who owned stock read the same papers, saw the same morning news, and reached the same conclusions. On reaching their workplaces, they lifted phones and made their calls.

The Nikkei Dow had once ridden beyond thirty thousand yen of benchmark value. By the early 1990's, it had fallen to half of that, and the aggregate cash cost of the "write-down" was a number larger than the entire U.S. government debt at the time, a fact which had gone virtually unnoticed in the United States—but not by those who had taken their money from banks and placed it in stocks in an attempt to get something more than a 2 percent compounded annualized return. Those people had lost sizable fractions of their life savings and not known whom to blame for it. Not this time, they all thought. It was time to cash in and put the money back into banks—big, safe, financial institutions that knew how to protect their depositors' funds. Even if they were niggardly in paying interest, you didn't lose anything, did you?

Western reporters would use terms like "avalanche" and "meltdown" to describe what began when the trading computers went on-line. The process appeared to be orderly. The large commercial banks, married as they were to the large corporations, sent the same depositors' money that came in the front door right out the back door to protect the value of corporate stocks. There was no choice, really. They had to buy up huge portfolios in what turned out to be a vain stand against a racing tide. The Nikkei Dow lost fully a sixth of its net value in one trading day, and though analysts proclaimed confidently that the market was now grossly undervalued and a huge technical adjustment upward was inevitable, people thought in their own homes that if the American legislation really became law, the market for the goods their country made would vanish like the morning fog. The process would not stop, and though none said it, everyone knew it. This was especially clear to the bankers.

On Wall Street, things were different. Various sages bemoaned the interference of government in the marketplace; then they thought about it a little bit. It was plain to see, after all, that if Japanese automobiles had trouble clearing customs, that if the popular Cresta was now cursed with a visual event that few would soon put behind them, then American cars would sell more, and that was good. It was good for Detroit, where the cars were assembled, and for Pittsburgh, where much of the steel was still forged; it was good for all the cities in America (and Canada, and Mexico), where the thousands of components were made. It was good, further, for all the workers who made the parts and assembled the cars, who would have more money to spend in their communities for other things. How good? Well, the majority of the trade imbalance with Japan was accounted for in automobiles. The sunny side of thirty billion dollars could well be dumped into the American economy in the next twelve months, and that, quite a few market technicians thought after perhaps as much as five seconds' reflection, was just good as hell, wasn't it? Conservatively, thirty billion dollars going into the coffers of various companies, and all of it, one way or another, would show up as profits for American corporations. Even the additional taxes paid would help in lowering the federal deficit, thus lowering demands on the money pool, and lowering the cost of government bonds. The American economy would be twice blessed. Toss in a little schadenfreude for their Japanese colleagues, and even before the Street opened for business, people were primed for a big trading day.

They would not be disappointed. The Columbus Group turned out to be especially well set, having a few days earlier purchased options for a huge quantity of auto-related issues, and thus able to take advantage of a hundred-twelve-point upward jolt in the Dow.

In Washington, at the Federal Reserve, there was concern. They were closer to the seat of government power, and had insider information from the Treasury Department on how the mechanics of the Trade Reform Act would run, and it was clear that there would be a temporary shortage of automobiles until Detroit geared up its lines somewhat. Until the American companies could take up the slack, there would be the classic situation of too much money chasing too few cars. That meant an inflationary blip, and so later in the day the Fed would announce a quarter-point increase in the discount rate—just a temporary one, they told people, off the record and not for attribution. The Board of Governors of the Federal Reserve, however, viewed the entire development as good in the long term. It would too myopic on their part, but then that condition was worldwide at the moment.

Even before that decision was made, other men were discussing the long term as well. It required the largest hot tub in the bathhouse, which was then closed for the evening to its other well-heeled customers. The regular staff was dismissed. The clients would be served by personal assistants who, it turned out, kept their distance as well. In fact, even the normal ablutions were dispensed with. After the most cursory of greetings, the men removed their jackets and ties and sat around on the floor, unwilling to waste time with the usual preliminaries.

"It will be even worse tomorrow," a banker noted. That was all he had to say.

Yamata looked around the room. It was all he could do not to laugh. The signs had been clear as much as five years before, when the first major auto company had quietly discontinued its lifetime-employment policy. The free ride of Japanese business had actually ended then, for those who had the wit to pay attention. The rest of them had thought all the reverses to be merely temporary "irregularities," their favorite term for it, but their myopia had worked entirely in Yamata's favor. The shock value of what was happening now was his best friend. Disappointingly, but not surprisingly, only a handful of those in the room had seen it for what it was. In the main, those were Yamata-san's closest allies.

Which was not to say that he or they had been immune to the adversity that had taken the national unemployment rate to almost 5 percent, merely that they had mitigated their damage by carefully considered measures. Those measures were enough, however, to make their originators appear to be models of perspicacity.