B00DSDUWIQ EBOK (12 page)

An
ad for
Glad Plug-Ins
soon followed, with a great new feature! The new sleek
design would not block your electrical outlets. Now he could have a summer
fresh home all day and never have to worry about getting something plugged in
again!
Gerber
was next, with fat, happy babies getting their doughy
cheeks stuffed fatter yet with the processed puree of plenitude in a convenient
new package that you could take with you anywhere you went.

Herbal
Essence
quickly demonstrated
how easy it would be to apply sun-golden streaks to any hair style.
Oil of
Olay
wanted everyone to know how complicated and confusing skin care was,
and that loss of firmness was as bad as wrinkles for spoiling that smooth,
youthful complexion we all strive for. Thankfully, they now had an automated
computer program standing ready to make expert recommendations on which Olay
products he needed to buy. Then a white garbed chef was taking the perfect
boccacia bread from the oven—just what you needed for a scrumptious chicken
sandwich. As if taking a cue, the next ad showed mounds of steaming crab legs
on special for the
Lobster House Cajun Week
. A happy black couple was
beaming as they stuffed the succulent crab meat into their smiling mouths,
wiping a dribble of thick, rich butter away with a wink and a nod. Half the
world was starving, but not in the good old USA.

The
images of endless food on colorfully prepared serving platters made him very hungry,
but Robert didn’t need to worry. Whenever he wanted to come up with a quick
snack, or cook an easy satisfying breakfast, all he had to do was turn on his
Express
Cooker
, a Teflon coated appliance that streamlined his meal preparation by
providing even heating from both above and below. Instead of frying or baking,
he could fully enclose his fresh cracked eggs in the
Express Cooker
,
with two convenient cooking bays that whipped up breakfast for two in no time
at all.

He
wandered in to the kitchen, and did exactly that. His
Easy Chopper
quickly
consumed a few slices of onion and green pepper, and he threw the whole lot
into the
Express Cooker
for a perfect omelet in just three minutes. Other
people might be out rushing to breakfast, waiting in line, struggling with
confusing menus, and paying exorbitant prices, but not Robert. He had 101 convenient
recipes in a little booklet that came with his cooker, and he had picked the
whole thing up at the “As Seen on TV store” at the mall. A few moments later he
had his delicious breakfast in hand and was off to the den to check his e-mail
before heading to work in his SUV Explorer.

The
iPad was waiting patiently in the nook by the kitchen. He settled into the chair
and tapped the icon to activate his blazing fast cable modem Internet account.
A moment later his only concern was the rush of unwanted SPAM messages littering
his inbox.

As
if timed by fate itself, the TV ad in the next room was showing a spot where another
young man was settling in to read his e-mail, just as Robert was. An errant fly
alighted impudently on the screen. Just as it was flicked away, three more
arrived, then a dozen more, until the screen was darkened by flies as if it
were a reenactment of some black evil from the exorcist.

“Bugged
by junk e-mail and pop-up ads?”
The TV announcer asked. Robert swiveled to pay attention, in full agreement. Thankfully,
the solution was close at hand.
“Why not try our fast new Internet service,
with free pop-up blocker, SPAM filter and virus checker, so you never have to
wait to read your e-mail again.”

Those
damn flies were now all over the house in the TV ad, chased frantically by the lovely
couple on the screen, their arms flailing about with frustration and annoyance.
Robert pivoted back to his own screen, inwardly flicking at the litany of junk
messages there… Advertisements claiming he could increase the size of his penis
and keep it constantly erect with
Viagra
. He could unleash the power of
his digital cable, fulfill all his pharmacy needs, visit with college co-eds as
they stripped for the cameras, and so much more. Flies, he thought, damn little
annoying flies buzzing about his screen.

But
on second thought, he decided to click on the link to those teenage strippers. His
wife would never have to know.

It
was what he didn’t know that would soon bring an end to the sumptuous pixel driven
life of luxury he had been enjoying. The markets didn’t like the news cycle,
and that was just the beginning. The Chinese were dumping more than missiles on
Taiwan. It was going to get much, much worse.

Chapter 12

There
was much more than war and
oil on the news that morning. Other dark matter was being discussed that was
going to cut close to the bone for Robert. The Treasury Secretary was huddling
with bankers again, only days after another massive fund infusion supporting
the banking industry. This time it was Wall Street investment house Goldman
Sachs on the rocks, the maestros of the market who had heretofore navigated the
roiling waters of the financial tempest with uncanny skill. They had made a
killing in 2008-2009, selling investors bogusly rated AAA securities at one
desk while aggressively hedging this with a raft of shorts on those same securities
at another desk. When other houses like Lehman failed and AIG was on the ropes,
they were able to extract 100 cents on the dollar for their swap deals. Then
they deftly morphed into a “bank” in a few days time and went merrily on with
yet more government bailout money that almost directly equaled their enormous
bonus payouts that year.

But
it wasn’t the news from the troubled Caspian superfields or the outbreak of fighting
in the Black Sea that was vexing the bankers now. This time something had
happened in the wine dark sea of derivatives, where Goldman’s exposure was astronomical.
Word was that the Chinese were backing out of derivatives contracts,
en
masse,
simply ordering their people to default and describing the whole
scheme in the clearest possible terms—fraud. It was deemed part of their ‘war
effort’ but the fact remained that it was now going to have a tremendous effect
on the financial markets.

One
by one other counterparties to the extensive web of derivatives agreements began
to follow suit, emboldened by the statements emanating from Beijing. For years
these trades had been accomplished in “dark pools” where pricing, transparency
and reporting requirements were virtually nonexistent. As long as the right
hand did not know what the left hand was doing, the Goldman magic act could
continue unabated. But now someone had called them on the sham they had made of
securities trading, and the game was over.

Goldman
was in trouble. Puts became calls, and razor thin margins melted away. They needed
cash to offset their leverage and staunch the gaping wounds in their trading
schemes. The firm was teetering at the edge of the abyss and desperately
seeking a financial support. And since they basically ran the U.S. government
as it was, Uncle Sam was being called in once more as the patsy buyer of last
resort.

A
run on other independent broker dealers like Morgan Stanley or even majors like
Citigroup was now a distinct possibility as the shadow banking system, the other
dark energy supply driving the nation, was also effectively ‘shut in’ just like
the oil, with a paralysis gripping the derivatives trading desks. The dark pools
had gone cold and stagnant. The financial system had relied on these unregulated
trades to keep the wheels turning. Many investment houses were leveraged at
impossible ratios, some as high as 80 or 100 to 1, but Goldman’s position was
far worse. As these positions became more and more untenable, the unwinding was
ravaging the meager real capital base that supported the shadow trades.

So
as Houston sat in the dark, the Gulf of Mexico bled oil, and the Russians moved
on the Kashagan superfields, the Fed once again convened emergency meetings with
the heads of all major Wall Street firms trying to find a way to prevent the
avalanche of default that threatened to tear the system apart. The counterparties
had to be persuaded to keep their stakes in the game at all cost, but that cost
would soon be seen to be beyond the means of all of Wall Street’s most
venerable names, beyond even the power of the government itself to forestall
the inevitable collapse. The whole system shuddered, like financial pipelines
shutting down, one after another.

The
dark matter of derivatives comprising the shadow banking system amounted to over
$680
trillion
dollars, a sum exceeding the gross domestic product of the
entire nation for the next 60 years. The energy flows had come to a near complete
halt, with nervous investors unwilling to risk capital. Banks stopped lending
to other banks. Loans became almost impossible to arrange. It was a freezing
deflationary scenario, potentially much worse than the Great Depression, but no
one really knew what the consequences would be, and with war looming as a real
event now, no one cared either.

The
massive derivatives market opened in a rare weekend session to allow investors to
try and limit their exposure to damage should Goldman fall into bankruptcy the
following Monday. Good money was scrambling after bad money, in a desperate effort
to stop the losses.

The
average person on the street knew little of the real danger. They were lined up
behind the cash registers at Wal-Mart with shopping carts full of the last shipments
of junk that would arrive from China for the foreseeable future. Robert read
the news intently that morning, wondering if he should act immediately to protect
his own meager investment portfolio. He had a substantial slice of Goldman, and
sent in a sell order to an old pit buddy, hoping to get out the back door in
cash just before the building collapsed.

Somehow,
images of those few survivors coming down the stairwells in the World Trade Center
just before the first tower fell played on a haunting canvass in the back of
his mind. He wanted to be one of them. What a metaphor, carved in reality now,
he thought. But Jimmy, his contact in the trading pits this morning, wouldn’t
let him down.

When
the call came in from the trading desk, he answered his cell phone quickly.

“Jimmy,
my main man! I hope you’ve got some good news.”

“Hey,
Robert. Things are really dicey down here, brother. I’ve got sell orders stacked
up from here to Cleveland, and no buyers in sight.”

“But
you got me out, right? You sell it all?”

“That’s
just it,”
there was a harried
edge to the other man’s voice.
“I can’t move shit right now. Fat cats are
three rungs ahead of me on the trading ladder, front running like crazy. I’ve
got banks, insurance companies and fund managers hogging the wire. Every time I
key something I get a bounce. These buggers have the whole system damn near
locked up. And this is just a two hour special trading session. The big Boyz
have the inside track.”

“What
do you mean locked up? Come on Jimmy, I‘ve got too much riding on this. I need to
unwind this shit right now!”

“Hey,
man. I’ll do whatever I can, but this is some serious fuckin’ shit going down here
this afternoon. Never seen anything like it, not even when Lehman got thrown to
the wolves. Gotta go, man. Somethin’s up!”

Robert
heard a chorus of pit shouting just before the line went dead. He sat there staring
at the screen on his cell phone, stunned. If he couldn’t unwind this position
he was definitely going to crash and burn. He’d lose everything!.

He
awoke that morning, safely cocooned in his
Quantum Sleeper
, but the bad
news was still filtering through the stereo speakers, through the endless commercials
interlaced with the constant flow of advertising that never seemed to stop, and
it had finally hit home.

His
pit trader friend never called him back. Jimmy let him down. The news that Goldman
had failed spread like a toxin, and fund after fund had taken staggering
losses, some losing 90% of their nominal value in a matter of hours. The near
two thousand point drop in the markets that followed further decimated Robert’s
meager stock positions. As the radio announcer yammered on about one special
offer or another, he found himself simply losing himself in the media stream,
the commercials washing over his weary mind one after another like old familiar
friends…

Still
ahead! The biggest little sale of the year… Final clearance! No payments and interest
until February. Free delivery, usually in 4 hours or less! Don’t wait call now!
And now this…Aqua Fresh whitening power is even better! Use every day for
whitening teeth… Then...Tonight--A distillation of the very best, the weirdest,
the wildest on NBC…

 The
commercials piled one on top of another, with one presenting a saccharine pastoral
scene of a grandfather playing with a toddler and dog while a voiceover intoned
a litany of horrific drug side effects for the latest concoction being foisted
on the public. What happened to the simple, direct interrogation of the dairy
industry commercial, he thought. It was just two words—Got Milk? A quiet tone
interrupted the commercial stream, and the volume lowered 30%. The digital
messaging system in the
Quantum Sleeper
had a message for him from the
other room.

“Good
morning,”
the voice intoned
in the smooth, soft tones of a fresh young co-ed, and quietly announced that
there was a fault reading on the central AC unit in the basement.
“A quick
service call should take care of it today!”
the voice concluded. The Sleeper
was hard wired to a device that checked on all his major appliances, letting him
know when anything needed attention.

“What
would you like to do?”
The
girl asked with sweet exuberance.
“Press one to initiate a service call… Press
zero to cancel.”

Robert
didn’t want to think about it. He just wanted to forget the AC unit, the advertising,
and the fact that he was now basically bankrupt, with every nickel of his
retirement flushed down the toilet of Wall Street.

“What
would you like to do?”
The
girl persisted in the same voice.
“Press one to initiate a service call… Press
zero to cancel.”

Harried
and angry, stormed into the bedroom and reached in to press the zero button on the
overhead input panel.

“Thank
you,”
said the girl.
“I’ll
be sure to remind you about this situation tomorrow. Until then, have a wonderful
day!”

Up
yours, thought Robert, though that was a real push-pull for him. The girl’s voice
was so sweetly compelling that if he awakened that morning to find her next to
him in the Sleeper instead of Liz he would have taken out his frustration by
other means. But she was only a digital recording, one he had chosen from a
panel of six different voice options, all for just $4.95 extra on his Sleeper
monthly service package.

The
radio came back up to volume, and the inevitably conservative slant on the show
featured a commentator selling the new government bailout of AIG as good for business.
“These assets will recover in time,”
he pronounced.
“The government
may even stand to make money on this deal. Let me be clear—this time AIG will
not be obligated to Goldman Sachs for any and all insurance swaps written to
protect the derivatives the Chinese and others have repudiated. We should be
turning the corner on this situation in a matter of weeks, and things will be
improving soon.”

Robert
couldn’t agree. The crisis might be over for AIG, defaulting on its swap obligation
just as the Chinese had defaulted on the trash Goldman sold them, he thought,
but it’s not over for the rest of us, by any measure you could find. People
were going to see virtually every last nickel of “equity” evaporate from their
home, phantom wealth that was used as collateral for home consumer loans to buy
new appliances, granite counter tops, plasma TVs, cars, vacations—now nothing
more than a massive debt liability. So much for the dream and the false perception
of benefit from home ownership, he thought. He suddenly realized that he never
really owned anything but the debt related to the things he bought! The bank
owned their home from the day he and his wife moved in, and then passed on the
lien to some investor in Asia. Robert bought a place to live, and a massive
debt. They could have rented a similar place to live at half the rate of home
ownership, avoiding property taxes, maintenance, and all that interest!

What
was happening to the world he had taken for granted for so very long? He knew there
were millions of people like him waking up to the same bad news, the same despair,
as the realization that all they had now was a paycheck if they were lucky
enough to still be employed, a meager checking balance, and a little open space
on a few credit cards finally sunk in.

Then
something odd occurred to him…So what? The friggin’ Chinese were going to war in
the Pacific, the Russian were going to war everywhere else, the Iranians were
blasting the Persian Gulf with missile after missile. What did his mortgage
payment matter? Did he actually think there would be a bank waiting for it in
30 days or a pointy headed banker pouring over his account as he contemplated
foreclosure? Hell no!

Now
it was coming down to just three things, he realized—food, fuel and security. That
was it. He’d be swiping the cards at Ralph’s Market and putting all the gasoline
on his Mobile card he could find—that is, if the banks didn’t decapitate the
credit lines before he got to the front of the line at the pumps.

“Christ
almighty,” he breathed. Depression chased the optimism he had started the day with.
He had no idea what to do, and hung on the news channel, thinking about that
food and gasoline. Tonight he would join his wife in the
Quantum Sleeper
,
he thought. Safer there with shit like this going on.