Terror on Wall Street, a Financial Metafiction Novel (4 page)

CHAPTER SEVEN

THE LONGEST RIDE

Carlos picked up his iPhone, but he had no signal.  It looked like his Wi-Fi was still working, so he sent a “WhatsApp” text to Bob.

    
Dude, are you safe?

    
Carlos could see that the message had been received right away.  Bob texted back:
Barely.  Almost got caught in a bank war.

     You still downtown?

     Yes.

     Meet me outside your office in an hour.  We’ve got to get to the airport.

     Carlos finished packing.  He packed as if he didn’t know whether or not he would ever come back to his apartment.  His carry-on bag contained his laptop, a stash of dollars and euros, gold coins, his passport, and a folder with important papers.  Once the packing was done, he sat on the couch to think and make sure he hadn’t forgotten anything. He looked around as if to say good-bye to the apartment and then, satisfied that nothing was forgotten, he called the driver, who indicated that he was waiting downstairs in the parking garage.  Carlos pulled up the handles on his suitcase and carry-on and took a last look around.

    
I’ll be back.  I hope.

     He turned, opened the door, and walked out, rolling the bags behind him.

     Down in the parking garage, Henry the driver exited the black Lincoln and greeted Carlos with a warm smile and handshake.  He put his luggage in the trunk of the car.

     “Looks like you’re leaving for a vacation.  I thought it was just a short trip.”

     “Under these circumstances, you never know.”

     The car pulled out of the parking lot and it was a slow crawl to the I90.  Once they hit the on ramp, it seemed even slower.

     “I think we should get off and take South Clark Street.  Might be better.”

     “You’re the pro, man.”

     As they crept down Clark Street, they saw nothing but chaos.  The local Target store had been besieged by a large mob of looters, some of whom were running down the street pushing shopping carts full of food and merchandise.  News crews were running around catching everything on video.  The police seemed to be letting the looters go.  They were more concerned with protecting the firemen, who were responding to a blazing fire in the parking garage. 

     “Look at that.  The police aren’t doing nuthin’.”

     “They’re too busy arresting protesters at the Federal Reserve to worry about Target.”

     “It’s a damn shame.”

     “It sure is, Henry.  And it’s going to get worse.  This is just the beginning.”

***

Bob waited outside his office building, his bags packed, nervously puffing on a cigarette.  A beggar came by, holding out his hand.

     “Got some spare change for a guy hard on his luck?”

     “Dude, everyone’s hard on their luck.  You probably have more change in your pocket than me!  Here, have a cigarette.” 

     Bob held out a cigarette and the man grumbled, took it, and walked away without so much as a thank you.

     Carlos and Henry pulled up and Carlos rolled down the rear window and waved to Bob.

     “Man, I didn’t know you smoke!”

     “I quit about two years ago.  Just took it up again today.”

     “Well, toss it out.  Henry doesn’t allow smoking in his car.”

     Bob threw his cigarette down, crushed it under his foot, put his bags in the trunk, and slid in the back seat next to Carlos.

     “Ready for the longest 15-minute ride of your life?”

     They drove through the smoking streets, dodging fire trucks and police cars.  Outside a Walgreen’s store, a group of cops confronted a band of looters who had just exited with their spoils.  As the thieves crunched through the glass snow (which had once been the shop's windows) on the sidewalk, the police alerted them to stop. 

     They ran in all directions, and the cops pursued on foot.  Another band of looters, seeing the police car left unattended, got together and started pushing the police car.  More and more rioters joined them, rocking the car back and forth until they finally pushed it completely over.  Then they lit it on fire. 

     “Teamwork.”

     “Yeah, Bob.  That’s the power of the people.  Too bad they didn’t use it the way they should have before it was too late.”

CHAPTER EIGHT

APOCALYPSE? NOW?

The students looked up at Harry in surprise, as if they could not believe what they had heard.

     “I’ll bet you didn’t think a handful of economists could save the world, did you?  You thought the world would end with nuclear war or something?  No, it’s much more basic than that.  It’s more likely going to be from a disruption in the water supply, power, and from lack of food due to an economic collapse.  Either that or a financial war.”

     “Financial war?”

     “Yes.  Our automated trading and banking systems are just as susceptible to cyberattack as our buildings are to a physical terrorist attack.”

     Harry paused a while for his whiz kids to get a handle on the problem.

     “That’s why your participation in this class is important, not only for your own purposes, but the benevolent task for which I have indentured you all.”

     “What is the task?” asked Snookie.

     “We’re going to help the Congress to help the people by giving them the tools they need to save the world economy from collapse.”

     Harry regarded the students seriously so that they could see that this was no joke.

     “What makes you so sure that we’re on the verge of a collapse?” asked Carlos.

     “Well now, I don’t have to tell you that I’ve been around a little longer than you.”

     Harry smiled, and the group collectively chuckled.

     “I had a front row seat in 1998 when Wall Street bailed out the failing hedge funds.  We missed the bullet back then, but we never learned; because ten years later, as a result of the burst of the housing bubble, the big banks were on the verge of failure. But we just printed more dollars and bailed them out.

     “We won’t be able to print ourselves out of the next crisis, I’m afraid.”

     “Why not?” asked Ike.

     “Can anyone answer Mr. Pendleton’s question?”

     Snookie stood up.  “Because the U.S. dollar is a liability on the Fed’s balance sheet.  It’s only money if we believe it’s money.”

     “That’s right, Ms. Baxter.  You’re almost there.  And why is it only money if we believe it’s money?”

     “Because everything is digital.  The banks control your money.  The dollar is actually nothing more than a liability: a promise to pay.”

     “It’s a fiat currency,” said Harry.  “Does anyone know what that means?  Yes, Mr. Rodriguez?”

     “We know it only too well in Mexico.  A fiat currency is one that the state identifies as a particular form of money to serve as legal currency.”

     “That is correct.  It’s money because the state says it’s money.”

     “It’s a contract, isn’t it?”

     “Yes, Mr. Thompson.  And, for our fiat dollar, who are the parties to that contract?”

     “The Federal Reserve, which issues the money, and the U.S. Treasury, which provides the collateral for the notes by issuing treasury securities.”

     “That’s right, Mr. Thompson.  They’ve been printing about $80 billion per month to avoid a collapse of the U.S. financial system."

     “But, professor, you’re talking about the dollar as a world reserve currency.  If the dollar loses its value, then the U.S. Treasury won’t be able to pay its debts, isn’t that right?”

     “Yes, and in fact, any catastrophic event (such as the near bank failures of 2008) could cause the collapse of the dollar, which would also collapse the euro, because the dollar is its reserve currency.  And once the world stops using the dollar as its reserve currency, all the functioning economies in the western world will collapse.

     “What that means is that prices for everything will go up 300-400% as foreign exporters reject the dollar for trade.  Since those exports can only be bought in another currency, it will take massive amounts of dollars to buy that currency.  People who had enough money to live on before will realize that their money’s buying power has been eliminated, and they won’t be able to buy food.  The food supply itself, which operates on very small profit margins and survives only as a result of prompt payment of invoices, will come to a screeching halt because the huge chains like Walmart will fail.”

     “What about the government?  Can’t they stop a crisis like this?”

     “That’s a legitimate question, Mr. Rodriguez.  The Federal Reserve will try to make the dollar attractive to foreign investors by raising interest rates.  But this will only lead to the destabilization of the stock markets and the failure of “too big to fail banks” that’ve relied on no-interest loans from the Fed to gamble on risky investments to earn a profit.  All this, in turn, will lead to the biggest real estate market crash in history as the deflation the Fed has been staving off eliminates the value of almost all assets, which will be followed by a tidal wave of inflation.

      “As people struggle to purchase the necessities of life, which will become more and more scarce, this will drive prices even higher.  The government will be unable to collect enough dollars to keep rolling over its massive debt, and will simply be unable to pay for anything.  That’s why printing more money won’t get us out of the next crisis.”

     “So what do we do?” asked Bob.  “Bend over and kiss our butts good-bye?”

     Harry smiled as the entire class, except for Snookie, erupted in laughter.

     “Of course not.  We have to act now while we still have a functioning economy to save.  We’ve known for over fifty years that the financial industry has been methodically cheating the public by charging them for services that are worthless, as demonstrated by countless peer-reviewed studies by academia and their students. And we’ve known for at least 12 years that the banks are trading in almost unregulated and risky derivatives with notional values larger than the world economy. 

     “I believe that the banks and the financial services industry take more than their fair share of our profits by using unfair business tactics. It now appears that our entire financial system has taken far more risk than is warranted by its capital structure and that this will lead to a market crash affecting economies worldwide.  As for ‘what do we do,’ that part is up to you.”

     “Us?” asked Carlos.

     “Yes,” said Harry.  “And there’s no time to lose.”

CHAPTER NINE

SHAKEN

Ike charged at the two men.  The second one ran, but the first held his ground, dropped the slim-jim, and flipped out a knife.  Ike stopped short of his reach.

     “Gimme the keys or I’ll kill you.” He hissed like a snake, through a set of mangled teeth, as he shook the knife at Ike.

     “Try it!”

     The man lunged at Ike with the blade and Snookie screamed.  Ike moved to the right, out of his way, hopping lightly on his feet.

     “Dancing won’t help you,” said the man as he ran at Ike, swinging the knife wildly back and forth in front of him.  Ike threw back his hips at the man’s forward thrust, grabbed his knife-wielding wrist with his left hand, and struck the wrist hard with his right, and the knife clattered to the ground.  The man turned and ran away.  Snookie ran to Ike and embraced him, then suddenly backed off.

     “Ike, are you okay?”

     “I’m fine, just a little shaken.  Let’s get out of here!”

     Ike opened the door and ushered Snookie into the car, throwing the suitcases into the trunk.

     “Do you have cash?” Ike asked as he accelerated out of the parking lot.  “Anything we can trade for gas?”

     “I’ve got some, and some gold as well, in case nobody wants to take cash.”

    “Good.  But I’m afraid the guy with the knife is not the only desperate person we’re going to run across.”

     “Let’s hope the next one is less deadly.”

     Ike navigated their way out of O’Hare, wasting precious gas in the stop-and-go traffic until finally they were on the road.  They inched along what should have been a relatively quick route (even in rush hour) until they reached the I80, which was still open but creeping along at about 5 miles per hour.

     “It’s like the world’s gone crazy, Ike.”

     “Yeah.  Harry was right.”