Ava's Crucible- The Complete series Box Set

by Mark Goodwin

  Ava turned to Charity. “What do you think?”

  “I don’t know what to think. But he said not to get upset.” Charity went back to her work on the computer.

  “Yeah, but you were supposed to get a new car this weekend. Are you still gonna?”

  Charity huffed. “I’m not sure. The insurance check just barely covers the loan on my car that got torched. I was already considering getting a used car so I could pay for it in cash. I guess what Dr. Hodge said kinda tips the scales toward a used car. Besides, we’re spending enough for the wedding. We really shouldn’t be taking on any debt. We want to buy a house next year.”

  Linda, the receptionist, was in her mid-forties. She commented on Charity’s situation. “If I were in your shoes, I’d get married at the courthouse, send everyone a picture, and use the money you save for the house.”

  “Well, I’m not doing that!” Charity exclaimed.

  Raquel stood up and made herself a cup of coffee from the single-serve machine in the corner of the front office. “I think he’s blowing the whole thing out of proportion.”

  “Yeah, well, you could do with some of that advice anyway,” Charity said. “Dr. Hodge is right. You should be able to put a little something aside with the amount of money you make.”

  “Not on my lifestyle.” Raquel sipped her coffee.

  Linda added, “Life slips up on you from behind. You have to watch out or middle age will hit you and you’ll never see it coming. I just started planning for retirement last year. If I’d started thinking about it when I was your age, things wouldn’t be so tight for me now.”

  “Live fast, die young, and you don’t have to worry about retirement.” Raquel left the room with her coffee in her hand.

  “I hope that works out for ya,” Linda said casually as she checked the appointments on the computer.

  Ava looked at Charity and Linda. “I think I’ll hang around after work and see what else Dr. Hodge has to say.”

  “James is picking me up after work. We’re going out tonight, then to look at cars in the morning. He has to work all day Sunday again. Call me later and fill me in on what Dr. Hodge says.”

  Ava crossed her arms. “James is the general manager. Why doesn’t he make one of the associate managers work Sundays?”

  “They rotate, which I guess is fair. Everyone wants off on Sunday. Besides, it’s big-box-retail culture. Corporate always wants store managers to lead by example, work the crummy shifts.”

  “Yeah, right. I’m sure all the CEOs, CFOs, and COOs work on Sundays.” Ava turned to Linda. “What about you? Are you going to stay after work?”

  Linda nodded. “I was about your age when the housing bubble popped. I got laid off, was out of work for a year and a half. I had a real tough time getting back on my feet after that one. I wish I’d had a heads-up back then. So any advice Dr. Hodge wants to give me, I’ll take it. A little cushion would’ve made things a lot easier.”

  Linda worked quietly for a few seconds, then glanced up at Ava. “Of course, if it comes down to laying people off, between the two dental hygienists in the office, you won’t be the one going.”

  “I hope it doesn’t come down to that, but thanks.” Ava made her way back to the exam room to get ready for her first patient.

  Ava took lunch at 1:00. She had exactly one hour for her break. She was never late, but now that the thought of keeping her job weighed on her subconscious, she would make an extra effort to make sure she was back to the office five minutes early. Her commute back to the apartment was seven to ten minutes. Walking Buckley took ten to fifteen minutes. Cumulatively, that left her roughly twenty minutes to get something to eat; a little longer if she hit no red lights and Buckley was especially expedient about his personal business.

  On this particular Friday, Ava rushed through traffic and hurried Buckley to do what he needed to do. Once back in her apartment, Ava turned on the financial network to try and get a sense of what Dr. Hodge was talking about. She made herself a sandwich and ate it at the kitchen counter while she listened.

  Buckley whined and nuzzled his nose against her leg.

  She looked down. “Oh, you understood the part about getting some of my sandwich, did you?” She broke off a corner of her sandwich and fed it to him. “And you even remembered. Funny how when I need you to get a move on with doing your thing outside, you suddenly don’t know what I’m talking about.”

  Ava continued watching the program and feeding the majority of her sandwich to Buckley. She quickly realized she’d need to make another sandwich or spend the second half of the day still hungry.

  The financial news reporter spoke of the carnage on Wall Street. He gave his spiel from the floor of the New York Stock Exchange where traders could be seen in the background wringing their hands and holding their foreheads in their palms. “Tech was hit hardest today, but the board is a sea of red. The first circuit breaker was triggered within seconds of the market opening this morning. When trading resumed, we saw a slight uptick, but equities quickly turned south and plummeted. The second circuit breaker popped just before eleven, halting trading for another fifteen minutes. The S&P is currently down by nineteen percent, leaving us precariously close to the third circuit breaker. If the S&P hits the twenty percent mark, that’s it. The markets will be closed for the remainder of the day.

  “One of the biggest problems, once again, is the derivatives trade. Derivatives encompass financial instruments like options, CDOs, CDSs, or ETFs designed to mimic the market behavior or inverse behavior of a particular equity, class of stock, bond, commodity, or industry.

  In theory, options, leveraged ETFs, and particularly Credit Default Swaps can function like insurance policies to limit losses, but like insurance policies, the risks associated with those and other derivatives are calculated using historical data. An insurance company sets the price on premiums in a flood-prone area based on the likelihood of a disaster in that region. So, let’s say insurance company X sells policies in a particular residential valley based on their data that suggest the valley only floods once every hundred years. Now suppose the valley floods five years in a row. Well, you don’t have to be an actuary to know that insurance company probably went out of business after the third consecutive year of floods.

  “Now relate that to what’s happening in the market today. A twenty-percent-down day is like five floods, an earthquake, and a meteor the size of New Hampshire striking that valley in one day. Nobody prices for this type of volatility. So, instead of limiting losses, in this case, the derivatives market has added a layer of instability akin to a case of nitroglycerin in the back of a pickup truck which is going off-roading. Not good, to say the least.

  “The big question now is what will the Fed and Treasury do over the weekend. They were able to put a tourniquet on the patient and stop the bleeding last time, but many of the experts we’ve spoken to throughout the day fear we are in uncharted territory and there is no amount of monetary creation or rate cuts that can instill confidence in this market.

  “If that’s true, hang on to your seats folks, because we are about to be in for a rocky ride. Straight over the cliff, with a truck full of nitroglycerin.”

  The screen split to show a young woman sitting behind a news desk on the left and the man at the NYSE on the right. The young woman said, “That’s a pretty dreadful prognosis, especially this early in the game. We could just as easily see buyers take stock over the weekend and come back in Monday morning looking for value.”

  “Anything is possible, Vicky, but I’ve covered the floor of the NYSE for two decades, and I’ve never felt the energy like this before. Raw fear and panic are oozing from the pores of these traders. This isn’t something that’s going to rectify itself. The only thing that will stem the tide is severe action by the administration, Fed, Treasury, and Congress. They’ll have one shot to charge up the defibrillator, stick it to the patient’s chest and restart his heart. Otherwise, come Monday morning, this market will fla
tline.”

  Ava checked the time on her phone. “Time to make the donuts.” She clicked off the television and gave Buckley the remainder of her sandwich. “No parties while I’m gone!”

  Buckley wagged his tail and looked at her innocently as if she’d just figured out his mischievous plan. Ava giggled and gave him a rough scratch on the head as she walked out the door. “Finally! A male I can trust.”

  She encountered no traffic and was on schedule to be back to the office more than ten minutes early. Ava slowed down as she passed by the bank and the grocery store. She noticed no signs of panic. “People at the gun store had a higher sense of urgency than anything I’m seeing here. Maybe Raquel is right. Maybe Dr. Hodge is overreacting. Still, that guy on television seems pretty convinced that the sky is falling. I’ll hang around and listen to what Dr. Hodge has to say.”

  Ava pulled into her parking spot and returned to finish out the day.

  She completed her last cleaning at 4:35. “We’ll see you in six months, Mrs. Andrews.”

  “Thanks again, Ava. You have a wonderful weekend.” Her final patient waved as she left the exam room.

  “You, too. Charity will settle up with you, and Linda will get you scheduled for your next cleaning.”

  Sue, Dr. Hodge’s assistant, walked into Ava’s exam room once Mrs. Andrews was gone. “Are you coming to the meeting?”

  “Yeah. I watched the financial news network during my lunch break. Maybe this thing is serious.” Ava tidied up her workspace so it would be ready to go on Monday.

  “See you there.” Sue was young—well, younger than Dr. Hodge. Pretty, with a nice figure. She’d had trouble with her marriage a year earlier. Ava had just assumed that Dr. Hodge would try to parlay their professional relationship into a more personal one while Sue’s marital bliss was absent. But, if he had, Ava never found evidence of it. On the contrary, every time Sue was in Dr. Hodge’s office, he always left the door open. In fact, he never closed his door when a woman was in his office, unless it was his wife. He’d taken Sue out to lunch on three occasions that Ava knew of, but each time, he’d invited his wife. She supposed it was possible that Dr. Hodge was a faithful man, but she could never be sure.

  Charity handed Ava her paycheck. “Better cash it quick! Banks might not open on Monday.”

  “I wouldn’t joke about that.”

  “Oh, come on. The FDIC takes care of all that. They plan for these things.”

  Ava lifted her shoulders. “According to what the guy on TV said, they don’t plan for things to go this far off the rails. You should have seen him. He was pretty shaken up.”

  “You don’t have to frighten me into action. I took the CHL class with you, and I put my paperwork in the mail the next morning. James already bought me a gun.”

  “That’s fantastic! What did you get?”

  “Yeah, yea for me!” Charity twirled her finger in the air in a show of false enthusiasm. “A .38 snub nose, like his.”

  “I’m not trying to scare you, but this is different. I think we might be in real trouble.”

  “Okay, take notes and fill me in on Sunday. I gotta go.”

  “Have fun!” Ava waved.

  Charity put her hand in the air. “I’m sure I will, with the second great depression hanging over my head all weekend.”

  CHAPTER 9

  There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up.

  Proverbs 21:20

  At five-thirty Ava, Sue, and Linda talked amongst themselves while they waited for Dr. Hodge.

  Finally, he arrived in the front office. “Ladies, thanks for staying. I promise I’ll try to make it worth your while.”

  “You said you follow this stuff fairly closely. What happened? Why is the market tanking?” Linda asked.

  “I’ll have to rely on a good amount of conjecture for that answer. So take everything I say with the caveat of it’s complicated and has a lot of moving parts. The world’s best and brightest spend their lives prognosticating and trying to anticipate what the market will do and when it will do it. But no one I’ve ever talked to has been able to do that with any degree of accuracy. With that said, a handful of men have been calling for just such an event like this.

  “They’re smarter men than me, at least when it comes to economics, so I’ll try to give you the CliffsNotes version of why they think things are melting down.

  “The last few financial crises have been caused primarily by mal-investment. All triggered by a bubble in one market or another. These bubbles are always fueled by excess liquidity, created by the Fed or some other country’s central bank. Every time we get a bubble and the bubble pops, massive amounts of wealth are wiped out overnight.

  “But, rather than letting the people who invested in the bubble take their licks, the central banks come running to the rescue. Instead of letting investors learn their lesson the hard way, the Fed bails them out. This creates what economists call moral hazard.

  “Think of an ill-behaved child. Every time he plays in the road, something bad happens. The first time, perhaps the paperboy accidentally wallops him in the head with a newspaper. Ava, you’ll have to excuse the dated analogy.”

  “I’ve seen black and white movies. I know what a paperboy is.” She leaned back in her chair and continued to listen.

  “Paperboys were around long after the invention of color television, but never mind that.

  “Back to my metaphor. The parent, rather than disciplining the child for playing in the road, buys him an ice cream. So, the child returns to the street to play. The next time, let’s say he gets bitten by a stray dog. This is worse than the paper upside the head. But again, the parent buys the child ice cream.

  “At this point, the child begins to think that playing in the street is rewardable behavior, so what do you expect the child to do?”

  “Play in the road,” Sue replied.

  “Exactly,” the doctor nodded. “Only next time, the child is struck by a truck. And now the ice cream doesn’t help.

  “The Fed has been buying ice cream for these investors, encouraging them to keep playing in the street rather than let them learn their lesson. The lesson may indeed be learned this time, but it may be too late.

  “With each subsequent bubble, rates have been cut and money has been printed; monetary ice cream. Rather than letting the negative energy clear from one bubble to the next, it has been passed on to each subsequent bubble. Every succeeding bubble has grown orders of magnitude worse than its predecessor. Rates are already near zero, so they can’t be cut by much. And to create enough money to bail us out this time, the Fed would destroy the waning confidence in the dollar.”

  Ava quickly caught on to what Dr. Hodge was saying. “The man on television said the government could stop this if they act decisively.”

  “Maybe.” Dr. Hodge leaned against Charity’s desk. “It would take an unprecedented amount of stimulus. The only place the government can get that much money is by printing it.”

  “Like what they did last time? Quantitative easing?” Linda asked.

  “Exactly. But during the previous crisis, they doubled the money supply. Which is why we’ve seen such unparalleled inflation rates lately. What’s worse, is that via the fractional reserve banking system, each new dollar created has the potential to become approximately ten dollars once it makes its way into the economy.

  “Then we have much more money competing for the same amount of goods and services. Prices can get out of control in a very short period of time. That’s what happened in the Weimar Republic after World War I, in Argentina in the early 2000’s, and Russia in the 1990’s.

  “I recommend stocking up with six months of essentials, food, toiletries, that sort of thing. You should have at least a week’s worth of drinking water. And be prepared to shelter in place.”

  “Wait a minute!” Ava protested. “You’re talking about a stock market crash. I can understand keeping some extra mone
y around the house, but why would we need to stockpile food and water?”

  “Money makes the world go ‘round,” Hodge answered. “No currency, no credit, how are grocery stores going to purchase products? How will logistics companies pay drivers or buy fuel?

  “When Venezuela’s economy collapsed in 2016, supply chains broke down. Looters hijacked trucks and robbed stores until there was nothing left to steal. By 2017, the average Venezuelan had lost 19 pounds. I’m not talking about a room full of people like me that could do without an extra twenty pounds. That’s an average. We’re talking about an average of men, women, children, infants. People were giving away their kids to anyone who could feed them. People stood in lines for hours in hopes of getting enough food to stay alive for one more day.

  “And Venezuela isn’t an anomaly. It’s what always happens. When Greece’s economy collapsed after 2008, the wage of the average sex worker decreased to $5 an hour. The sex trade essentially closed to drug addicts and the typical women who would provide such services. Impoverished former college students flooded the market and forced less-desirable women out of business.

  “In tough times, people do what they have to do to survive. It’s far more prudent to put a little something aside and avoid getting in such desperate circumstances in the first place.

  “Besides all of that,” Hodge added, “Our country is teetering on the brink of civil war. Mark my words, this crash is going to be like pouring gasoline on a campfire. You saw what happened in Oakland last week. Protestors lit fires on the highways. I-580 was shut down all weekend. Grocery stores only keep a stock of about three days’ worth of food on hand at any given time. By Sunday evening, the shelves in Oakland were empty. Delivery trucks couldn’t get in all weekend, and many drivers are refusing to go into the city at this point. I don’t blame them. I wouldn’t put my life on the line to bring groceries into a city which has essentially fallen to Antifa.