by Paul Murray
‘Evening all.’
‘There’s Kev – whoa, check out Kevin’s watch, everybody!’
‘What – oh, you mean this?’ Diamonds glitter from a panoply of unnecessary dials.
‘Isn’t that the one James Bond wears?’
‘Look out, Russkies! Kevin’s got the James Bond watch!’
‘Aren’t you on a temporary contract?’ Ish says. ‘How could you possibly afford that?’
‘I work for BOT, don’t I? I leveraged my position, that’s all.’
Every evening there is a client presentation or a birthday or a new fat deal to celebrate – and even if there isn’t, I find myself drinking anyway, in Life Bar or somewhere more exclusive. In the past, these outings bored me; now, I am glad to eliminate the danger of a few hours on my own, to avail myself instead of the city’s many avenues of forgetting.
Tonight we are in the penthouse bar of a boutique hotel, one of the few that managed to survive the crash; a debate is in train over whether a boom or a bust is a better time to be rich, with Brent ‘Crude’ Kelleher arguing that during a boom there are more luxury goods available, a ‘better atmosphere generally’, and, although there is a smaller gap between your wealth and that of others, people slightly less rich than you understand exactly how nice your stuff is. Dave Davison, on the other hand, maintains that luxury is debased by being widely available. ‘That was why the boom was such a nightmare. You couldn’t take a business-class flight without being stuck next to some dishwasher salesman telling you about his 7 Series.’
Jurgen takes us aside to pass on a rumour of another acquisition.
‘Another one?’
Jurgen nods. ‘Porter is looking at asset management firms, also at one of the large clearing businesses.’
‘Didn’t he just buy a bank?’ Ish says. ‘Like, don’t we still have a few payments to make on that?’
‘On the face of it, yes.’ Jurgen lifts off his glasses and polishes them with a handkerchief. ‘It comes back to the strategy of counterintuitiveness. As we are all aware, this has been a great success. However, BOT’s competitors have started to act counterintuitively as well, meaning that we need to be even more counterintuitive, perhaps even to the point of being counter-counterintuitive.’
‘Isn’t that the same as being intuitive?’
‘That is the question we need to answer. Porter has a team of quants working on it as we speak. For now, he believes that relentless and indiscriminate expansion remains the best policy for the bank. Soon we will be established across the system to such a degree that our future will be secured, no matter what.’
‘Unless something counterintuitive happens,’ Ish says, but Jurgen has spotted an ex-colleague and bustled away. She turns back to me, laying her hand on my forearm solicitously. ‘How are you doing tonight, Claude? Are you holding up okay?’
‘I think so,’ I say, surprised. ‘I have only had two drinks.’
‘No, I mean, you know, after your waitress.’
‘Oh, that.’ I feel my heart plummet, like a lift with a snapped cable. ‘I have hardly thought about it.’
‘That’s good,’ she says, but she keeps staring at me sympathetically and patting my arm, as if I were a child with a grazed knee. ‘So what’s Paul got planned for the Story of Claude now?’
‘I have dropped all that,’ I say tersely. ‘It was a silly idea.’
‘Oh, right,’ she says. She makes an oar of her finger, scoops it along the inner rim of her cocktail glass, which is frosted with cream. ‘No, because I just thought, I mean in a book, when the guy’s in love with someone out of his league or whatever and it doesn’t work out, what often happens is he realizes he’s had feelings for someone else all along.’
‘Someone else?’
‘Yeah, except, you know, he only realizes now.’
I give this some thought. ‘Does that happen in books?’
‘It does in the ones I read,’ she says, a little defensively.
‘To me the scenario does not sound plausible. How does he only realize now? Love is not like an illness, gestating in your body before you begin to feel sick. In my experience, if you are in love, you know it straight away.’
‘Yeah, that’s true, I suppose,’ Ish says.
‘Attraction is a conscious thing. If you’re attracted to somebody, you are aware of it.’
‘Right, fair point,’ she says.
‘If you have not thought about this person in that way before, it’s because you are not attracted –’
‘Might just pop up to the bar,’ Ish says, jumping to her feet. ‘You want anything?’
Actually, I might fit in another drink – but she has already gone!
I wait for her to come back, but after a few minutes there is still no sign; however, I notice Kevin signalling me furiously from the balcony and go outside to find Howie, Grisha and two of their initiates from the mysterious ninth floor, Tom Cremins and Brian O’Brien. With the exception of Grisha, all of them are smoking Montecristos – Montecristos are like Skittles in BOT these days. Brian O’Brien has something in his hand, and his body is wound back as if poised to hurl it over the balcony.
‘We’re throwing phones!’ Kevin squeaks at me excitedly.
‘Do it! Do it! Do it!’ the others chorus. With a grunt Brian O’Brien whips his arm forward. The little silver oblong flies out of his hand; we watch it twist in and out of the darkness, like a leaf falling from a tree. Then it is gone, into the depths of the river.
‘A new winner!’ Tom Cremins cheers.
‘Let’s do watches,’ Brian O’Brien says. Kevin suddenly looks alarmed. Fortunately for him, at that very moment a dark shape materializes in the doorway: the Bulgarian, features impassive as runes on a stone.
‘About bloody time,’ Howie says. The two of them disappear inside.
With the game suspended, there is a silence. Clouds of cigar smoke swirl around the balcony like the atmosphere of some toxic planet, masking and unmasking the faces of my former colleagues.
‘So how’s it going?’ I ask. ‘The fund?’
‘We can’t talk to you about that,’ Tom Cremins snaps.
‘Of course, of course.’ Although it has almost the same name, Agron Torabundo Credit Management is a separate entity to the bank, and the border between the two is strictly patrolled. A keypad and an iris-scanner have been mounted at the fund’s door; the lift’s operation has been adjusted so that BOT employees can no longer go directly from the sixth to the ninth floor, but must instead go to the ground floor first, or take the stairs. ‘But to speak generally – you are happy? You have found investors?’
Tom Cremins and Brian O’Brien exchange a captured-spy look. Heat beats down from the outdoor lamps. Grisha chomps Bombay mix obliviously in the corner; the crunching from his mouth is the only sound.
‘Fund’s doing great, Crazy Frog.’ Howie’s back, visibly rejuvenated by his meeting with the Bulgarian. He stoops to relight his cigar; smoke seethes from the corners of his mouth, curls back over his head. ‘Thirty million in investment already, client meetings coming out our assholes, all dying to give us two million minimum stake and a commitment to fuck off and leave us alone to make money for them.’
‘Hmm, but it is a hard time to launch a new fund, no?’ I suggest. ‘With the market so volatile, so much risk…’
Howie tokes on his cigar. Behind him Tom and Brian stand tensed, as if waiting for the word to fall on me and beat me senseless. ‘Real risk has nothing to do with volatility,’ Howie says. ‘Real risk is stupid investing decisions. Model we’re using, every time someone does something stupid, we make a profit. So we’re doing pretty well.’
‘What is your model, Howie?’ Kevin asks, wide-eyed. ‘Is it counterintuitive?’
‘Come up with two million euro and we’ll tell you,’ Tom Cremins says, but Howie checks him with a half-lifted hand. He gazes at Kevin a moment; a thousand tiny fires seem to burn in his fragmented irises. Kevin gulps, and hops nervously up and
down, like a flea at a job interview.
‘I suppose you could say that,’ Howie says, going to the little table and pouring a whiskey for me, then another for himself. ‘Your traditional hedge funds exist to make money in poorly performing markets, so as far as that goes, we’re a hedge fund. But we’d be taking more of a radical line. The way we see it, investment, in the conventional sense of the word, is finished. Look at the last ten years. We’ve had a technology crash, a housing crash, not to mention a financial crash that nearly sent the world back to the Stone Age. Oil, gold collapsing, Europe coming apart, even the Swiss franc can’t be trusted. Where does the smart man invest if investment doesn’t work anymore? What’s the one reliable area of growth in the twenty-first century?’
‘Technology?’ Kevin says.
‘Inequality,’ I say.
‘Bingo.’ Howie wags his cigar at me. ‘You know what the Gini coefficient is, Junior?’
‘It’s, ah, what they use to measure the gap,’ Kevin stammers. ‘Between rich and poor.’
‘Right. And it’s going through the roof. From our undead friends over there’ – he tilts his glass at the zombie encampment across the river, where dim lights with coloured halos shine from inside the tents – ‘you’ll know that a tiny number of very rich people, including fat-cat bankers like us, are sucking up a bigger and bigger percentage of the wealth. And that gap will continue to widen, because with all our extra capital we go and buy up all the assets, so that for instance when Chang working down there in Spar needs somewhere to live, he has to rent his house from me, meaning that I’m getting most of his wages too.’ He pauses, puffs on his cigar; the coal glows brazier-bright, everything around it seeming to grow commensurately darker. ‘Now, provided you’re me and not Chang, that’s good news. But if you are Chang, then not only is your slice of the pie shrinking, but there are also more and more Changs trying to get a bite of it. Every year there’s another hundred million people on the planet, and that is making things very fucking volatile. Look at all this trouble in Oran. We’re told it’s Islamic fundamentalists. But the real reason is there’s been a baby boom, followed by a famine. These people haven’t been able to feed their children in six months. No wonder they’re getting cranky. And this is just the start. As populations rise, as resources dwindle, as infrastructure’s destroyed by hostile climates, we’re going to see some really needy folks out there. And that need – not oil, not weapons, not food, even, but need – that right there is the last reliable asset.’
‘Wait,’ I say, as his meaning dawns on me. ‘You’re talking about debt? Subprime lending? That’s what you’re basing your fund on?’
‘There’s not much you can sell to a world full of poor people, Crazy. So instead you make them the product. To be fair, we didn’t invent the idea. The real visionaries were the boys on Wall Street. They’re the ones who first saw this vast, untapped resource out there, these millions of Americans who were shit poor but who nobody trusted enough to loan money to. They saw that if they could get these deadbeats into the debt market – well, it’s like the oil under Alaska, right? Billions and billions of dollars just waiting to be released. I mean, the sheer audacity of it!’
‘But they were wrong,’ I interject, fighting away the whiskey-fingers tickling the base of my brain. ‘Their model didn’t work. They brought down the whole financial system.’
‘Well, sure, of course.’ Howie is unfazed. ‘They were working off the Gaussian copula, which was bullshit. But the instrument we have is tight as a drum.’ He takes a sip from his tumbler and grins at me. ‘Lack is the last great gold rush, Claude. The world is poor and getting poorer. But we can turn that to our advantage. When someone’s got nothing, does he care how much debt he gets into? When he’s walled in, and someone offers him a way out, does he stop to read the small print?’
‘And what happens if he can’t pay you back?’
‘This is what I’m telling you. You work out the correlations and you set it up so the losses don’t register.’
‘How could they not register?’ I’m starting to feel like I’m dreaming. ‘How can a loss not be a loss? That’s impossible.’
‘In conventional terms it’s impossible. In conventional terms, two and two is always four and a triangle always has three sides. But there are fields of mathematics where that is not the case. There are fields, largely unknown except in the maths departments of certain obscure Russian universities, where two and two is never four, where a triangle, a square, a circle have the same number of sides.’
Over in the shadows, Grisha’s head snaps up. ‘Non-Euclidean geometry,’ he says. ‘Topological, differential, affine. Every level give greater symmetry, more and more figures becomes equivalent to each other. Metric spaces no longer exist, values are translated into their opposite, at this moment we apply providential antinomy, then break symmetries again, return to metric space.’
Leaning against the guard rail, Howie takes this in with the mercenary satisfaction of a carnival barker watching his star turn. ‘We’ve tested the model up and down,’ he says, when the Russian has finished. ‘Every investor we’ve presented to has his chequebook out before we get halfway through. This is the new wave. Soon it’ll be the only wave.’
Can it be true? The whiskey is making everything swim – or maybe it’s the cigar smoke, burning my eyes …
‘See, you’re too cautious, Claude.’ Howie’s voice seems to come from a distance. ‘That’s always been your problem. You need to remember they’re numbers. They’re not real. You can make them do what you want.’
‘That’s what they said the last time,’ I rasp.
‘This is different. But for it to work you have to forget everything you know. Such as don’t put all your eggs in one basket. That’s the first thing they teach you about investment, right? The basket falls, everything’s wiped out. The genius of the subprime guys was to realize that if you put in enough eggs, and stack them just right, then even if the basket falls, the number that break will be insignificant.’
‘But they did break,’ I croak, as words, numbers, mathematical functions scroll unreadably before my eyes. ‘They lost trillions. They almost destroyed the whole of civilization.’
‘Yes. They were thinking counterintuitively, only not quite counterintuitively enough. We’re taking it to the next level. We’re saying, instead of minimizing the breakages, get rid of the fall.’
‘The fall?’
Grisha is muttering something – Russian? Geometry? – from the corner. Beside me, Kevin stands utterly motionless, as if his soul’s been charmed out of his body.
‘That’s what our fund does. The maths is complicated but the concept’s very simple. We use non-linear methods so that numerical losses are automatically self-cancelling.’ Howie holds up his whiskey glass, as if he is about to toast me. ‘Gravity, so to speak, is annulled. Meaning that even if you drop the basket, it never hits the ground.’
He lets go of the glass. For one bewitched instant it seems to hang twinkling in the air – even to float infinitesimally upwards. Then it hits the floor and shatters into pieces.
‘Get someone to clean that up,’ Howie says to Kevin, and goes back into the bar.
I have had enough. Before leaving, I do one last sweep of the bar for Ish; at my side, Kevin chatters on excitably about how groundbreaking Howie’s fund is, how it will revolutionize capitalism, and so on, until I lose my temper and tell him that counterintuitiveness has clearly got out of hand if actual nonsense is now being taken for holy writ.
Kevin looks surprised, even a little hurt. ‘It’s not nonsense, Claude. It’s non-linear.’
‘Come on. Losses that magically disappear? Risk without risk? This makes sense to you?’
‘I’m not a mathematician, am I? It’s already paying out at 16 per cent! That’s one of the highest returns in the whole industry. And they’ve got like thirty million in investment – shit, that means Howie’s already made…’ He disappears into a little reveri
e of calculation. Hedge funds have a different pay structure from banks, a ‘two and twenty’ model: from the money invested with them they take 2 per cent straight off as their management fee, and then 20 per cent of any profits. Therefore, even if his fund doesn’t make a cent, Howie could still walk away with millions.
‘It seems to me that he’s investing a bit too much with his Bulgarian friend,’ I say.
Kevin shrugs. I am the old guard; what I think is not important.
Ish arrives at work late the next day, in what appears to be an even worse mood than me.
‘You disappeared last night,’ I say.
‘Ran into somebody,’ she says curtly.
‘Somebody, eh?’ I say, arching an eyebrow.
‘Fuck off,’ she says.
I throw my hands up in surrender.
‘Sorry,’ she says. ‘Sometimes going out in this place’s worse than bloody work.’
‘You think?’
‘It’s all right for you, you’re a bloke. You’re not spending a small fortune to keep your hair blonde and your pits waxed, for the benefit of some fucking drunk who can’t remember your name when he wakes up.’ She shakes her head. ‘I swear, if I hadn’t bought that sodding apartment I’d be so out of here.’
‘You could still go if you wanted to,’ I say.
‘How would I do that, Claude? I’m up to my neck in fucking debt.’
‘You could get a transfer. To HQ, for example.’
‘New York?’
‘No, Torabundo. Then you would be able to visit Kokomoko at weekends. See your old friends.’
She gives me a look that I can’t quite decipher. ‘Is that what you want?’
‘Me? I am talking about what you want. If you are not happy here.’
‘Oh, I’m just having a moan,’ she sighs, dismissing her own words with a wave of the hand. ‘Here, get out the Carambars and tell us a joke.’
I open my drawer, unwrap a couple of toffees and scan the jokes – hit by a flashback from my childhood as I do so, my father chasing me around the kitchen and tickling me – If it’s not funny, why are you laughing? Claude? If it’s not funny …