Cyber Attack (6 page)

“Several scenarios have been advanced regarding the departure of Greece from the Eurozone,” said Secretary Lew. “It was our opinion that the biggest threat to the continuance of the euro is not that Greece might leave, but that it might exit and then thrive with a clean financial slate. The Italians would question whether it made sense for them to continue its financial pain when it could simply bring back the lira. I don’t want to get into the weeds here, but Italy is running a government surplus that is constantly strained by the low growth and deflation caused by the euro. The Grexit is simply an excuse for Italy to advance their already laid plans.”

Katie’s mind raced as she thought about the national-security issues surrounding this train wreck. This would cause substantial unrest throughout Europe and could potentially spill over into the United States. Terrorists never sleep and typically took advantage of distractions to conduct their attacks. NSA Giles was studying her.
Has the NSA developed a mind-reading app—which is implanted in Susan Giles brain? Wouldn’t surprise me.

“What happens next?” asked the President’s Chief of Staff.

“The government did not put up a default notice, but it did advise several key officials in the Greek trade unions and a run on the banks began,” said Secretary Lew. “As word spread and the lines at the banks grew, the decision was made over the weekend to close the banks indefinitely. The IMF has requested national banking supervisors to ensure all subsidiaries of Greek banks throughout the Eurozone have enough assets to allow exchanges of emergency financing at their own central banks in case financing from the Greek parent institutions is suddenly cut off.”

“We expect President Pavlopoulos to address the Greek people and ask for calm,” said NSA Giles. “As President, he is a figurehead, but he is respected. Prime Minister Tsipras is the driving force behind the default—together with his allies, Prime Minister Rajoy in Spain and Italian Prime Minister Renzi.”

“We expect Portugal to join their Southern Europe neighbors by the end of today,” added Secretary Lew.

“Europe is America’s largest trading partner,” said McDill. “The most common currency for transactions between the United States and European businesses is the dollar. But the euro is a close second, which will leave American businesses that deal with Europe exposed to devastating losses.”

“The value of the euro had already dropped below the one-to-one ratio with the dollar,” added Secretary Lew. “Many of our businesses began writing their contracts with European companies in dollars, but a few of the larger institutions hedged and used forward contracts—betting on the additional loss of value.”

Katie absorbed as much of this information as possible because she would have to relay these details to Morgan. However, she was hesitant to take notes. Valerie Jarrett continued to study the faces seated around the table in the Situation Room.
What is she looking for? Does the White House suspect a leak?

“How does all of this affect our national security?” asked McDill.

“There are a lot of possible scenarios, none of them are very good,” said NSA Rice.

“Give us the best-case scenario, Jack,” said McDill.

“We expect the breakup to destroy twenty-five percent to sixty percent of the gross domestic product in the stronger countries who choose to remain with the euro—namely France and Germany,” said Lew. “Banks throughout Europe and to some extent elsewhere will suffer catastrophic losses and need to be nationalized. There will be massive wealth destruction in the private sector. European export markets will practically disappear because devaluation will make those products expensive and uncompetitive. On a societal level, unemployment, uncertainty and shortages of basic necessities will result in large-scale unrest across Europe.”

“I asked for the best-case scenario.”

“That is the best-case scenario, Dave,” replied Lew. “The worst-case scenario is a total collapse. Such a collapse would lead to a multiyear depression in Europe and several years of recession here. The collapse of the euro would have a more damaging impact on the American economy than the events of ’07 and ’08.”

“What do you mean?” asked McDill.

“A rush of financial assets out of the Eurozone would wreak havoc with currencies and the price of oil, for starters,” replied Secretary Lew. “Even worse, interbank lending will be destroyed worldwide. Should there be a run on banks worldwide as a result of the Eurozone collapse, credit markets will freeze, making it near impossible to borrow money.”

“We pulled ourselves out of the ’08 debacle through Federal Reserve activity,” said McDill. “Can’t you coordinate with the Fed and the IMF to formulate stopgap measures?”

“Ordinarily, the answer is yes,” replied Secretary Lew. “The crisis in 2008 originated in the United States and was manageable by the Fed. There is no single global entity that wields as much power internationally as the Federal Reserve. The Fed has its hands full with the rapid rise in inflation in the United States. A reduction in rates for the purposes of bailing out Europe would make our inflation look like Zimbabwe of ten years ago.”

In 1998, the President of Zimbabwe, Robert Mugabe, instituted a series of government programs to elevate his country’s poor population. The programs included land grabs from multinational corporations who allegedly took the properties from the poor during the early years of colonialization. Because the lands were primarily used for farming and food production, the economy of Zimbabwe was devastated. Exports came to a halt, tax revenues dried up, and the government’s operating expenses skyrocketed. The Reserve Bank of Zimbabwe produced more currency in higher denominations. Hyperinflation destroyed the value of the currency. Inflation rose to an unprecedented six hundred percent in 2004. By 2008, hyperinflation rose to two million percent. Katie knew Zimbabwe was not an isolated occurrence, although it was considered the worst example. In the last one hundred years, major countries, including Germany, Mexico, Argentina, Iraq and Romania, had experienced hyperinflationary periods.

Secretary Lew paused and a tense silence filled the room. Jarrett broke the silence, speaking for the first time.

“The President is very concerned about the impact all of this will have on the American people,” said Jarrett. “Whatever one might think of the euro, the possibility of its total collapse, or even rampant speculation about its collapse, is going to devastate economic growth in Europe and will negatively impact our own economy. If this news creates market volatility with no feasible solutions, then U.S. consumers will be hesitant to spend money in the face of the economic uncertainty.”

“Each of you has a unique role and contribution to the President’s Intelligence Advisory Board,” added NSA Rice. “I want a full assessment of these events from your perspective to be presented in tomorrow morning’s briefing. Ordinarily, I believe there is little that time and money can’t solve. We are short on both, people.”

Chapter 11

May 15, 2016

John Morgan Residence

39 Sears Road

Brookline, Massachusetts

“Sir, this is Katie O’Shea. I have just left the Situation Room at the White House.” Morgan gestured for Lowe to leave the billiards room and close the door behind him. He looked at Abigail before responding.

“Yes, Miss O’Shea,” said Morgan. “What do you have for me?”

“I was called to an emergency meeting in the Situation Room conducted by Secretary Lew,” said Katie. “The Eurozone will collapse tomorrow. Greece, Spain and Italy are all intentionally defaulting on their payments to the IMF. Portugal is expected to follow suit. Banks across Europe will be closed indefinitely as the Germans and French sort things out.”

“Anything else?” asked Morgan. He looked at Abigail to assess her mood.

“Yes, sir,” said Katie. “Valerie Jarrett was also present throughout the meeting. Her primary concern was market volatility and the lack of a feasible solution.”

“Interesting. Who will be running point on behalf of the administration with the media?”

“Secretary Lew,” responded Katie.

“Thank you, Miss O’Shea. Keep me informed.” Morgan ended the call. He turned his attention to Abigail.

“Is everything okay?” she asked.

“Tomorrow the house of cards formerly known as the Eurozone will come to an end,” said Morgan. “Greece, Spain and Italy are willfully defaulting on their obligations to the International Monetary Fund. All banks across Europe will be closed until further notice. This will have global repercussions on the markets.” Morgan saw Abigail look at him with skepticism.

“Did you know this was going to happen?”

“I did.”

“For how long?” she asked.

“I’ve known for several weeks, Abigail,” replied Morgan, who was growing weary of his daughter’s tone.
There is work to be done
.

“So you knew the compromise on the NDAA reached Friday night would be buried by the financial catastrophe in Europe?”

“Yes, I did—for several weeks now,” replied Morgan. Both of them stood silently for a long moment.

“I understand, Father. Thank you.” Perhaps his daughter was beginning to understand the burdens he carried. She came to hug him—a rare, brief moment of affection between them.

“You’re welcome, Abigail,” said Morgan. Morgan opened the doors and spoke to Lowe, who was dutifully waiting outside.

“Malcolm, discreetly advise the others to meet me in the study to discuss a serious matter.” He walked across the hallway towards his study. He turned to Abigail, who followed him.

“It is best that you are not present in this meeting, Abigail,” said Morgan. He noticed the look of hurt on her face. “You do understand the reasons?”

“Of course, Father, plausible deniability.”

***

Morgan walked to the bar and poured himself a Macallan. Not bad, but certainly not his beloved Scotch whisky—Glengoyne, which was in short supply. As he took a moment to gather his thoughts, he admired the renovations to his study. Intricate walnut carvings adorned the walls, filling the room with the colors of chocolate brown and smoky swirls of honey. This was a man’s room, and the gold-leaf ceiling capped off its opulence. Morgan studied his original painting of John Adams—his most prized possession and one of only three known to be in existence. Silently, he toasted his glass to his ancestor.

Paul Winthrop, a descendant of Massachusetts’ first governor, and Samuel Bradlee, a direct descendant of Nathaniel Bradlee, one of the organizers of the Boston Tea Party, entered the room first.

“Is everything all right, John?” asked Winthrop.

“Is this about Secretary Kerry?” asked Bradlee as he approached the bar.

“What about Kerry?” asked Morgan, pouring his friend a Scotch.

“Damn fool broke his leg falling off his bicycle.” Winthrop laughed.

“This is very true, John,” added Bradlee. “He bounced off a curb and crashed, breaking his leg. His helmet and knee pads couldn’t save him.” Despite the seriousness of the circumstances, Morgan couldn’t resist a little humor of his own.

“Let me guess, all the king’s horses and all the king’s men couldn’t put the flip-flopper back together again.” Morgan laughed.

“Cheers to that!” announced Henry Endicott as he entered the study. Endicott, whose grandfather was one of the first Secretaries of War, despised John Kerry for what he deemed traitorous statements in front of Congress during the Vietnam War.

Morgan greeted Cabot and Lowell as they entered the room and closed the door behind them.

“Gentlemen, refresh your drinks and get comfortable. There is much to discuss.”

Chapter 12

May 15, 2016

John Morgan Residence

39 Sears Road

Brookline, Massachusetts

“I have received information regarding the Eurozone,” started Morgan. The idle chat amongst the executive committee of the Boston Brahmin died down as he spoke. Morgan was the titular head of the committee and was granted the utmost respect as a result. Over the years, no member had questioned his authority or judgment. During that time, he had increased their wealth and power exponentially.

“As expected, the countries of Spain, Italy, Greece and now Portugal will officially declare themselves in default on their debts to the Troika—the Eurozone Central Bank, the IMF, and the Eurozone countries that helped bail them out.”

“John, I assume this has not made the news,” asked Winthrop.

“That’s correct, although a formal announcement is expected within hours,” replied Morgan. “This should be a lesson learned by all governments in the world. High structural deficits and unsustainable debt-to-GDP levels will ultimately lead to a sovereign debt crisis. If this leads to a crisis in confidence in the markets, both Europe and the United States could face a 1929 scenario.” Morgan watched as expressions of concern came over the faces of his fellow Brahmin.

“Do not be concerned, gentlemen. As always, I have our finances in order.” Morgan had met with each of the men over the last several weeks to prepare them for the inevitable collapse of the Eurozone. They were all heartily invested in physical gold and precious metals. Soon, he would disclose his plan for profiting from the inevitable economic collapse.

“To quote our friends in the White House,” started Morgan, “
One must never let a good crisis go to waste
. The primary repercussion of this failed experiment will be the tightening of credit. Business in Europe will be looking for willing lenders outside the European banking system. I have spoken with K. V. Kamath, president of the BRICS bank. They have no interest in lending to European concerns. They are singularly focused on advancing the economies of their member states. That leaves only one group other than us capable of filling the lending void.”

“The Bilderbergs,” offered Cabot.

“Yes, Walter, but more specifically, the leading financial members of the Steering Committee representing the largest European banking houses—Credit Suisse, BNP Paribas and Deutsche Bank. I have identified four individuals who have opposed our activities in Europe’s finances in the past. Some are persuadable, others are not.”