by Bobby Akart
“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.”
“John, will you be in contact with these four?” asked Lowell.
“Most definitely, Lawrence,” said Morgan. “We have several weeks before we host the conference at The Liberty Hotel. I will have all possible contingencies addressed prior to then. Our resources, under the umbrella of Morgan Global, will become the lender of first and last resort for Europe. It is time to come out of the shadows, gentlemen—pardon the pun.”
Morgan toasted his fellow Brahmin, who laughed. Shadow banking, as the term was first used, referred to nontraditional, nonbank methods of lending. The term received a derogatory connotation after the 2008 banking crisis. The use of hedge funds and credit derivatives to finance the growth of America’s real estate market was not illegal. There would not have been a problem if people had simply paid their loans as they were contractually obligated to do. Morgan considered the insinuation of malfeasance unfair. He preferred to refer to his methods as the facilitation of credit.
“The collapse of the euro will have a profound effect on the markets and our own currency,” said Bradlee. “I have no confidence in this administration’s ability to handle the fallout.”
Morgan had considered this as well. This was also an opportunity to gain favor with the President and reap financial gain.
“I have thought of this, my friends,” said Morgan. “This administration’s appetite for quantitative easing—the printing of money to buy up our own debt—has to cease. At this point, the Fed now owns nearly one hundred percent of all ten-year Treasury Bonds. When this tool was initiated in 2009, the administration’s goal was to divest its bond holdings and normalize its balance sheet once the economy fully recovered. The recovery never happened. Now, inflation is forcing rates higher, which in turn are creating a staggering debt. Gentlemen, our nation is not that far behind the Eurozone. As one of our protégés likes to say—all empires collapse eventually.” Morgan allowed reality to settle in for a moment. All of these men were descendants of the Founding Fathers. They were freedom-loving, patriotic Americans who would spend their fortunes to protect America from failure. They knew tough decisions had to be made.
Morgan continued. “Gentlemen, our Founding Fathers worked just as tirelessly building our fledgling nation as they did in their fight for our independence from Great Britain. As fighters for the freedoms we enjoy, their causes for seeking independence followed a common theme—ensuring the freedoms and the rights of its citizens. Why should our fight for the protection of American freedoms be any different today?
“We are a nation in decline, politically, economically and socially. I, along with many of you, believe drastic measures are necessary to put America back on sound footing. I don’t think our country’s best days are behind her. But I do believe a reset is in order. Some of you have discussed this concept with me in the past. I do not know what a reset entails, but I do know it will be painful for some. As our forefathers knew, revolutions are nasty business, but necessary at times.”
Chapter 13
May 16, 2016
The Boston Herald Editorial Board
Conference Room
Boston, Massachusetts
Julia Hawthorne reluctantly accepted the praise being heaped upon her by Joe Sciacca, the chief editor of the Boston Herald. Julia just received another nomination for a prestigious award. Earlier in the year, Julia was awarded the Marconi Radio Award for the paper’s newly launched Boston Herald Radio—a first for an Internet radio station.
Now, the Society of American Business Editors and Writers granted Julia the Distinguished Achievement Award. Established in 1993, the SABEW singled out individuals who made a significant impact on the field of business journalism. It was another honor bestowed upon Julia that was sure to vault her to the top of every journalism headhunter in the county. For now, she was happy in her job, and her relationship with Sarge.
After their dinner together in December, she and Sarge became inseparable. Trips to the West Coast and getaways to Martha’s Vineyard gave them the opportunity to step away from their lives and focus on each other. Julia wanted to marry Sarge and she was certain he felt the same way. The time didn’t seem right yet.
“Julia, would you like to say a few words before we get started?” asked Sciacca.
Julia composed herself. Today was a busy day at the paper. The news of the day could fill a morning and evening edition.
“Thanks, Joe,” replied Julia. “It would be cliché to say this was a team effort, but I’ll say it anyway. Everyone in this room contributes to the publication of our paper. For one hundred and seventy years, journalists have taken great pride in producing the news and excellent editorial content for our fellow Bostonians. Our work on Herald Radio got us noticed again and I believe the SABEW award is just the beginning for this group. I say we step it up and show those guys at The Globe they better watch their backs.”
The other members of the editorial board provided Julia a brief moment of applause, but the serious looks on their faces indicated the accolades were short lived.
“Thank you, Julia, and despite your humble nature, the praise is well deserved,” said Sciacca. “Now, where the hell do we start?” Sciacca paused and then he answered his own query.
“I’ve been in the newspaper business my entire adult life. This is my thirty-third year at the Herald, covering everything from the crime beat, to Massachusetts politics and now as editor-in-chief. I will be honest with you. I’ve never been more concerned about the stability of the world from an economic or societal standpoint than right now. As journalists, it is our duty to convey the news to our readers without bias or hyperbole. The reader shouldn’t have to discern between reporting and editorializing. I am proud of this group for your ability to keep the two separate. Most news organizations fail at this task—often intentionally. We are now presented with a number of news stories across the globe, all of which could be front-page headlines. This is now the norm, rather than the exception. Our challenge is to bring the news to our readership, and listenership, in a way that doesn’t diminish the importance of the story.”
Julia became a little emotional listening to this iconic journalist pour his heart out. These were troubling times and her associates in the room were responsible for informing the public of every crisis. The media’s reputation had been tarnished and she hoped to do her part to restore integrity to the journalistic process.
“Okay, enough already. Let’s start with the European situation,” said Sciacca. �
��Sandra, what’s the latest?”
Sandra Gottlieb was the highly respected business editor of the Herald and was providing excellent reporting on the continuous increase in interest rates by the Federal Reserve. She had warned the other editors of the Herald about a potential exit by Greece from the Eurozone.
I bet she didn’t expect this.
“In a word—chaos,” said Gottlieb. “We’ve discussed the potential default by Greece for some time, but as I pointed out in December, the attack by Ukrainian Special Forces on the Russian convoy at Mariupol seemed to accelerate the demise of the Eurozone. The relationship between European governments and Moscow was tenuous at best. After the attack, which smacked of CIA involvement, by the way, the delicate balance has fractured. The countries with the least to lose by the Eurozone collapse are Spain, Portugal, Italy and Greece. They have planned for the default and orchestrated the pullout over the weekend.”
“How have these four countries prepared?” asked Sciacca.
“First, they have all adopted their pre-Eurozone currencies,” replied Gottlieb. “Second, as a condition of their banks reopening, the governments have uniformly instituted capital controls. The anticipated reaction of depositors is to make a run on the banks. Closing them for several days was a good decision. This will allow the heads of state to issue appeals for calm.”
“Julia, from a political perspective, how do you anticipate the various governments responding?” asked Sciacca.
Julia wasn’t prepared to jump into the Eurozone collapse situation, but she and Sarge had discussed this subject over dinner the night before.
“Governments and their politicians have a common goal—remain in power,” said Julia. “I’d expect them to strike a nationalistic tone and separate their particular country from the others in the Eurozone. I foresee large political demonstrations orchestrated by the predominantly left-leaning governments of these four southern European nations. They will portray the wealthier nations of France and Germany as the bad guys. If they are successful, the people will rally around the decision and the new currencies.”