Kim Robinson - New York 2140

Why’s your IPPI dropping like this?

A Chelsea tower melted just now.

It’s that sensitive?

That’s my index for u.

Braggart. Are u shorting it now?

Got to hedge, right?

You think it will drop more?

A little. At least until Shanghai brings it back up. Catch a wave meanwhile.

Aren’t you long on intertidal?

Not so much.

I thought ownership issues were clarifying.

Intertidal isn’t just ownership uncertain.

Physical?

Right. If ownership solidifies on properties that have melted, so what?

Ah. That’s factored into the index?

Yes. A sensitive instrument.

Just like its inventor.

Thanks. Drinks after work?

Sure.

I’ll come get you in Jesus.

Heavenly.

So I worked on through that afternoon heavily distracted by our evening’s date and my vivid memory of her Oh oh, enough to make me look tumescently at the clock, wondering how this night would go and checking the tide and moon charts, and thinking of the river after dark, the melvillemood of the Narrows at night, mysterious in moonlight.

My IPPI’s New York number had indeed dipped briefly at the news of this building collapse in Chelsea, but now it had stabilized and was even inching back up. A sensitive instrument indeed. The index, and the derivatives we had concocted at WaterPrice to play on it, were all booming in a most gratifying way. Helping our success was the fact that the continuous panicked quantitative easing since the Second Pulse had put more money out there than there was good paper to buy, which in effect meant that investors were, not to put too fine a point on it, too rich . That meant new opportunities to invest needed to be invented, and so they were. Demand gets supplied.

And it wasn’t that hard to invent new derivatives, as we had found out, because the floods had indeed been a case of creative destruction, which of course is capitalism’s middle name. Am I saying that the floods, the worst catastrophe in human history, equivalent or greater to the twentieth century’s wars in their devastation, were actually good for capitalism? Yes, I am.

That said, the intertidal zone was turning out to be harder to deal with than the completely submerged zone, counterintuitive though that might seem to people from Denver, who might presume that the deeper you are drowned the deader you are. Not so. The intertidal, being neither fish nor fowl, alternating twice a day from wet to dry, created health and safety problems that were very often disastrous, even lethal. Worse yet, there were legal issues.

Well-established law, going back to Roman law, to the Justinian Code in fact, turned out to be weirdly clear on the status of the intertidal. It’s crazy to read, like Roman futurology:

The things which are naturally everybody’s are: air, flowing water, the sea, and the sea-shore. So nobody can be stopped from going on to the sea-shore. The sea-shore extends as far as the highest winter tide. The law of all peoples gives the public a right to use the sea-shore, and the sea itself. Anyone is free to put up a hut there to shelter himself. The right view is that ownership of these shores is vested in no one at all. Their legal position is the same as that of the sea and the land or sand under the sea.

Most of Europe and the Americas still followed Roman law in this regard, and some early decisions in the wake of the First Pulse had ruled that the new intertidal zone was now public land. And by public they meant not government land exactly, but land belonging to “the unorganized public,” whatever that meant. As if the public is ever organized, but whatever, redundant or not, the intertidal was ruled to be owned (or un-owned) by the unorganized public. Lawyers immediately set to arguing about that, charging by the hour of course, and this vestige of Roman law in the modern world had ever since been mangling the affairs of everyone interested in working in—by which I mean investing in—the intertidal. Who owns it? No one! Or everyone! It was neither private property nor government property, and therefore, some legal theorists ventured, it was perhaps some kind of return of the commons. About which Roman law also had a lot to say, adding greatly to the hourly burden of legal opinionizing. But ultimately the commons was historically a matter of common law, as seemed appropriate, meaning mainly practice and habit, and that made it very ambiguous legally, so that the analogy of the intertidal to a commons was of little help to anyone interested in clarity, in particular financial clarity.

So how do you build anything in the intertidal, how do you salvage, restore, renew—how do you invest in a mangled ambiguous zone still suffering the slings and arrows of outrageous tide flow? If people claim to own wrecked buildings that they or their legal predecessors used to own, but they don’t own the land the buildings are on, what are those buildings worth?

That’s one of the things the IPPI did. It was a kind of specialized Case-Shiller index for intertidal assets. People loved having its number, which helped gauge investments of all kinds, including bets on the index’s performance itself.

Perhaps most importantly, it helped in calculating how much owners or ex-owners of intertidal properties had lost and could get compensated for, a number which Swiss Re, one of the giant re-insurance companies that insured all the other insurers, estimated to total worldwide at about 1,300 trillion dollars. That’s 1.3 quadrillion dollars, but I think 1,300 trillion sounds bigger. $1,300,000,000,000,000.

Well, but first of many firsts, in fact that’s far too low a valuation, if you are trying to accurately price what the coastlines of the world are truly worth to humankind. If you don’t heavily discount the future, which of course finance always does, the intertidal is worth about a zillion gazillion barillion dollars. Why say that? Because the future of humanity as a global civilization depends completely on its coastline presence, that’s why.

That being the case, the current wrecked zone also therefore represented an equal number of gazillion in losses. And yet no one knew who owned what, or on which side of the ledger any given asset resided. Were you in debt if you owned an asset stuck on a strand no one can own, or were you rich? Who knew?

My index knew.

And that was nice, because if the intertidal has any value at all, even if it’s only a zillion or two, then someone wants to own that. And other people want to leverage that value right out to the usual fifty times whatever it might be. Fifty zillion dollars in leveraged opportunities, if only someone could put a plausible number on it, or (which is really the same thing) allow people to bet on what a plausible number might be, thus creating the value.

That’s what my index did.

It was simple. Well, no, it wasn’t simple, it took all the quants at my disposal to work it up, and all my quantitudicity to comprehend even what I was asking the quants to quant, but the basic idea was simple—and it was mine. I made judgments concerning how the various pieces of the puzzle impacted each other and the total situation, and boiled it all into that single index number, and assured everyone that it was an accurate assessment of the situation. I listed for inspection all the elements that went into the assessment, and the basics of the calculation, which used classic Black-Scholes mechanisms for pricing derivatives, but beyond that, I did not give out the complete recipe of the algorithm, not even to WaterPrice. I did let it be known that for my baseline I began with the same starting point as Case-Shiller, so the two indexes could be better compared, and for sure the spread between them was one of the things people liked to bet on. Case-Shiller had designated an 1890s housing price average as their normative 100, and rated prices since then relative to that baseline. Shiller afterward often pointed out that despite all the ups and downs of history, when adjusted for inflation, housing prices had never strayed far from where they had been in 1890; even the biggest bubbles never took the index much over 140, and crashes seldom had gone below 95.