Darke Mission

Scott Caladon

Copyright © 2014 Scott Caladon

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For Those Who Love Me.

They know who they are.

“Are you satisfied Farzaneh Tehrani?” asked the middle aged woman's political superior and deputy chief of Department 101. Farzaneh stared at the photograph, absorbing every detail, committing it to memory in order that she could recall the image at will, or at least until the next time. It was painful to look at, but joyous to behold.

“I am,” she replied, truthfully in this instant, but lying outright in the bigger picture.

“Good,” responded Ramin Mehregan, a few years Farzaneh's senior, shorter and heavier. “Now you can get back to work. We need those precision detonators. How long before they are complete?”

“Maybe one month, two at most,” Farzaneh replied.

“You are head of our, let us say, private nuclear research programme, Dr Tehrani. This is an outstanding and unique achievement for an Iranian woman. You have done excellent work for many years. Now is not the time for tardiness. Make it one month,” ordered Mehregan.

“I will do my best,” she replied.

“Yes. You will. I am sure of this,” said Mehregan with an even tone.

She knew what he meant, the threat was implicit. Farzaneh left the government building in Tehran escorted, as she had been every month for eight years, by two officers, nay, personal minders of the IRGC's Intelligence Office. She sat in the back seat of an Iran Khodro Samand white saloon car. The drive to Isfahan would take four and a half hours, due south. It was tiring but she needed to make the journey only once every month. She would have done it willingly, enthusiastically even, every day if there was a new photograph to see, but there was not.

Farzaneh adjusted her rusari, placing it a little further forward, to hide her hair, undid the buttons of her rupush and closed her eyes. Iran may be the world's eighteenth largest car manufacturer but this old jalopy she was bouncing around in did not have air conditioning or even properly functioning side windows. It was oppressively hot and the mordant niff of double man sweat did not improve her mood. Farzaneh kept the photograph sharp in her mind's eye for as long as she could. She replayed in her head the meeting with Mehregan. She had indeed done excellent work for years even to the point that her deliberate delays had gone undetected.

Now the end game was upon her. Her invention of breakthrough precision hi-tech detonators for nuclear warheads was about to transform the efficacy and reliability of Iran's new Shahab-7 missiles. Once they were ready, the missiles could be launched and exploded at will. Mehregan had given her one month. She could not delay any longer for fear of the most heinous, heart-breaking reprisal. Mehregan, the purgemeister of the Intelligence Ministry, had no moral code. Farzaneh Tehrani was weeping silently, trembling imperceptibly. Ramin Mehregan had congratulated her on being the head of Iran's secret nuclear research. Just great, she thought to herself in red-raw anger. Several of her peers had been blown up or murdered in their sleep; the suspected handiwork of Mossad or the CIA. She had inherited dead men's shoes.

Her Persian name meant ‘wise one from Tehran'. She was wise alright, too fuckin' wise for her own good and she bitterly regretted it. Her PhD thesis on
Nuclear Fission and Advanced Weaponisation
had attracted the good, the bad, and the pathologically insane. Now she worked for the pick of the pile in the latter looney group.

‘A unique achievement for an Iranian woman' that loathsome slug Mehregan had said. Well, she wasn't from Tehran, she wasn't even Iranian and she wasn't a Shi'a, Sunni or Sufi. Farzaneh Tehrani needed to get out, needed to reclaim her life, get her own name back. Above all, she needed to return to her family. The only problem was that she did not know how to do it.

JJ Darke had no idea why Toby's nickname was Fathead. He had more like a pinhead than a fat head. Maybe it developed from the same school of thought as Little John in Robin Hood stories. He wasn't little; he was big, about 7ft tall according to the early ballads. Historians suggest that the giant merry man's real name was John Little, but what the heck maybe irony was alive and well in the 12
^th
century.

In any event, Fathead was pouring over a mass of data on a spreadsheet and a gaggle of graphs on his fancy dan computer screen.

“A meta-game is a branch of game theory, Toby. The Greeks cannot pay their debts, The European Union, the IMF and the Greeks all know this. To prevent default and ensuing market meltdown they need to conjure up a deal that seems credible. So what you need to do is map out the different scenarios, policy options, points of conflict and finally, a pay-off matrix. If you need some help I'll be free in my office in about an hour,” said JJ.

“Thanks JJ,” said Toby none the much wiser. The only game theoretic example he'd ever heard of, or remembered, was The Prisoner's Dilemma and that was fairly simple and one-dimensional. Meta-games, jings, how analysis had changed since he started working life as a foreign exchange and commodities trader.

“Hey JJ,” called Toby as JJ was moving away. “Are you going to have the FX quiz and limerick this year?”

“Yes, I'm just doing it now, so the winner can get his or her prize before Christmas,” replied JJ.

“What's the question and opening lines?” asked Toby.

“The question is: Which currency would a Scottish dwarf open a door with backwards? The opening two lines of the limerick are:

There was a young man from Ireland

Who liked to eat often at Pieland…
” said JJ.

“I'll do the limerick JJ, but I can never work out the currency question and I'm a bleedin' currency expert. You've a warped mind chief.”

JJ headed off to his office with the hint of a smile on his face. Of course he had a warped mind; he was head of portfolio strategy and investment at one of Europe's most successful asset management firms. His first degree was in Economics and Mathematics from the University of Glasgow, the home of Adam Smith. Not bad for a skinny Scottish lad whose dad was a welder. He then got his Master's degree in International Politics and Finance at Warwick University. After a few other jobs, one or two of which were outside his academic field of expertise, he was headhunted for his current position three years ago.

Momentum Asset Management or MAM was based in London's ‘hedge town' i.e. anywhere within a half mile radius of Piccadilly Circus in London, in MAM's case just off St. James's Square. MAM had around $75 billion under management and a total staff of less than 200. The offices were modern on the inside, all flashing lights, wide screen televisions, open plan offices, but the outside fascia was traditional. It was a nice mix. JJ's office was on the fourth floor of five; it wasn't open plan but it was spacious, with a large desk, two pedestal-mounted computer screens, a Bloomberg keyboard, the latest high tech tablet, and a few phones, landline and mobile. He had his own wall art, mainly photos of cars, football and Roy Lichtenstein prints. In addition to collectable watches, that just about summed up his out of work interests. On the wall facing his desk, he had a huge widescreen flat television which was nigh permanently switched on to
CNBC
or
Sky News
, except when the World Cup or Wimbledon was on live.

To be honest it was a cushy number. He was paid to think, and though he thought well, and there was occasional mental stress, it wasn't a real job. JJ had funded his way through university by taking summer jobs as a street sweeper, a grave digger and a skivvy in a sugar refinery who had to take samples every day from a cockroach infested container. If the gathered masses ever saw the critters you get in a sugar refinery they'd cut it from their diets pronto. JJ's uncles had been shipyard workers, bus drivers, labourers. Real workers and here he was reclining, stretching out his 6ft plus frame in his designer leather chair, feet on desk. Thinking, daydreaming, musing, it was hardly life-threatening and a far cry from his old job. Just as JJ was about to reminisce, Fathead came knocking on the open door.

“JJ, have you got a minute, these numbers are shit scary…” Despite his pin head Toby was a bit on the chunky side, he was looking dishevelled, shirt barely tucked into his pants, tie skew-whiff, glasses wonky.

“C'mon in Toby, sit down and let's get all Greek about it.” The Greek situation was long in the making and short in the unravelling. By mid-2012 total Greek debt was over $400 billion, not too far short of 200% of GDP or $35,000 for every man, woman and child in the Hellenic Republic. Billions of euros in aid from the European Union and the IMF were doled out to Greece to prevent and/or delay a catastrophic default by Athens. In return, Greece enacted a series of fiscal austerity measures, including tax hikes and deep public spending cuts. The Greek economy collapsed, unemployment soared to over 30% of the labour force and protests against the government mounted. The ruling New Democracy party, led by Antonis Samaras, pleaded with the EU and IMF to give Greece a two year breathing space before fully enacting some of the more draconian public sector cuts. This was granted, but now time was running out.

In the midst of all this Greek tragedy JJ had authorised a significant Greek bond buying programme for MAM. The fund had missed the peak yield of over 48% in March 2012, but entered the trade in the summer of that year and had held a substantial part of the bond portfolio into the spring of 2013, when yields fell to around 10%. The capital gain to MAM was massive and enhanced JJ's standing both as a risk-taker and as a manager. The two year breathing space was nearly over. Financial markets are both forward looking and myopic at the same time. The goodwill shown to Greek and other Eurozone assets may well not persist for much longer unless either Greece fully enacts the austerity programme forced on it by supra-national powers and/or a renewed and credible deal forthcoming.

“The key to this game,” started JJ, “is credibility, a ranking of the various outcomes and the ability to bluff convincingly. Ranking the feasible outcomes, Greece would favour a new bailout first, austerity second and, we assume, default third. The main lenders, i.e. the IMF and the EU, would prefer the first two scenarios in reverse order, but still rank default third, due to the catastrophic contagion into the likes of Italy, Spain and possibly even France and the UK if Greece defaulted.”

Fathead nodded as JJ looked at him enquiringly, trying to ascertain whether, so far, the game's procedures were going into his head, fat or pin.

“The other key player is the markets. It's tough to know their collective ranking of feasible outcomes but they're not altruistic. So, we assume that the markets prefer default first – more volatility, more profit – austerity second and bailout third. From our point of view, at MAM, we want austerity and bailout to continue as the two most likely outcomes as they will keep rates down and lock in our profit on the Greek 10 year bonds. But you don't always get what you want, whether you really really want it or not. So we have to outline a game tree of feasible outcomes and then attempt attaching subjective probabilities to these outcomes. This is the payoff. If the subjective odds in our favour ever drop below 65% we are out, sharpish. Got it?” asked JJ.

“I've got it JJ, but I'm not the one who can map out the game tree nor attach the probabilities. I only trade the junk!”

“I know Toby, and you trade it very well. Get that French quant geek we just hired from Imperial College to give it a shot and then I'll look it over.”

“Yves-Jacques?”

“Yes, him. He's supposed to be a maths wizard and his master's thesis is in game theory if I remember right. Give him a deadline, close of business tomorrow.”

Toby sauntered out of JJ's office to seek out the French analyst and give him his orders.

The rest of JJ's day wasn't expected to be eventful. He was scheduled to have a conference call with the head of the New York office, a 2,000sq ft floor of a bright modern office in a Park Avenue skyscraper with a staff of around forty-five, and a meeting with H.R. to discuss leaving terms for one of the junior analysts. He had to follow the markets continuously though. JJ's Bloomberg Launchpad page was permanently up on one of his computer screens, on his tablet and his BlackBerry. On one page he could see the prices of the key exchange rates, interest rates, soft and hard commodities, government bonds, and major equity market indices. These prices were real time, flashing green if they were going up and red if they were going down. He also had Bloomberg instant messenger whereby he could contact dealers and brokers immediately without having to speak to them. He didn't like speaking to humans he didn't know. With
CNBC
or
Sky News
babbling away on his TVs and Bloomberg news on his Launchpad page, JJ was never out of touch with the prices of all MAM's investments or the breaking news which may affect them. He was conscientious. Whether in the gym or at home playing Wii games with his son, his BlackBerry was on, flashing, beeping, transmitting information and emails, useful and useless.

In the great financial crisis of 2008 market commentators and academics appeared bewildered that such chaos could happen. After all we were in the age of instant information, sound-bites, transparency. Everybody knew everything more or less at the same time. The Efficient Markets Hypothesis told us that the markets would disseminate all their information efficiently and lead asset prices to a fair value or equilibrium level. In turn, this would help lead to an efficient allocation of resources among consumers and producers etc. Bubbles and chaos were things of the past.

What a heap of elephant dung, thought JJ. This theory was thought up by closeted academics that either had nothing better to do or had been mesmerised by mathematical beauty over real world human behaviour. People may well receive the same information at more or less the same time but their response to it won't necessarily be the same. If at 4.52pm on the last Sunday of the Premier League season, Arsenal have qualified for the Champions League and Tottenham have not, then Gooners and Lillywhites fans will get the information at more or less the same time, but their reaction to the same information will be markedly different. Reaction functions, animal spirits, the ability to make the information work for you. That's what distinguishes the financial leaders from the followers. Have a read through
Extraordinary Popular Delusions and the Madness of Crowds
by Charles Mackay. Efficient markets, my left butt.

While he was conscientious, JJ also had a conscience. For many years past he had given away most of his annual bonus, once he had set up his own family with a degree of security. He donated substantial sums to charity; children's charities in Scotland and England were the primary beneficiaries, followed by several providing health and well-being for children in Africa. As a youngster, he was so impressed by Bob Geldof's verbal meltdown on live TV and Freddie Mercury's unparalleled Wembley performance at
Live Aid
in the 1980s that he just had to contribute. When he had little money his donations were a pittance but when he became ‘over-rich', as his mum called it, they were often into six figures at a time. In those days, he had never given much thought towards other charities, but his young son was so affected by the plight of the snow leopard that many of his recent donations were channelled to the animal kingdom.

JJ hadn't left himself short. He liked the material things that many successful men of his generation appreciated, fast cars, cool watches and stylish but not trendy suits, shirts and shoes. He lived in a five storey Regency terraced house just off the King's Road in Chelsea. If he drove to work, parked his car, got his breakfast as soon as the EAT or Pret shops opened at 6.45/7am, and sat in his very comfortable chair in the office, then his door-to-door record commute was seventeen minutes. He hadn't been on a bus or a tube for over fifteen years. Not for any snobbish or arrogant reason but because (a) driving his own car was quicker and (b) once on GMTV an elderly Scottish university professor got yanked off the screen because he said that the most dangerous transmission mechanism of transferable disease in the UK was public transport. Oops! The truth will out but you can't go around propagating that one.

Now in his early forties, JJ had calmed down about cars. He owned only two, a Porsche Carrera 4S Tiptronic for his short, daily commute and a prized 1967 AC Cobra 427 garaged at his mum's house in Scotland.

The one material item JJ hadn't calmed down on was watches. Indeed, he was a bit
American Psycho
passionate about them. His collection amounted to around twelve examples. His philosophy on watches was based on the premise that a man should have at least three wristwatches. These didn't need to be expensive but should fall into three categories. The first was for work, if that work entailed wearing a suit or at least a shirt with long sleeves. The second category was casual wear, which encompassed normal weekend attire or beachside cool. For the majority of men of the modern age over thirty years old, categories one and two cover most activities but for a select few there is also category three. Category three is for dangerous living types. For instance, mountain climbing would be one as well as being a member of the armed forces. In this line of work, particularly the latter, you have to assess the need for tools in a fight or a tight spot. In addition to being sturdy, waterproof and visible a watch can be a dangerous weapon, an aid to survival, an instrument to pinpoint your location. In this category a man might have a Breitling Emergency, an MTM Cobra or even an Invicta Subaqua Noma IV Chronograph. The first two could help you out of a difficult situation either by transmitting signals to rescue services if you were stuck up a mountain (the Breitling) or if you needed the aid of a compass or slide rule (the Cobra). The Invicta could not do any of that but if you flicked the quick release deployment bracelet and dropped the watch to cover your fist then you would have one of the most effective knuckle-dusters around. One blow to the head would result in man down, with a few indentations where indentations are not meant to be.