Debt of Honor jr-6

by Tom Clancy

  "Whoa!" the Major observed when a hundred pounds of Composition-Four went off. The noise was impressive, even from half a mile, and there followed the tower of flame from the ignition of the solid-fuel rocket motor.

  That part of the ceremony had been tricky. They'd had to make sure that the thing would burn from the top only. Otherwise the missile might have tried to fly out of the silo, and that would just not have done at all. In fact the whole exercise was unnecessarily complicated and dangerous. The cold wind drove the toxic exhaust smoke to the east, and by the time it got to anything important, it would just be a bad smell, which was pretty much what you could say about the political conditions that had occasioned the existence of the burning rocket motor, wasn't it? There was a certain awe to it, though. The world's largest firework, burning backwards for about three minutes before there was nothing left but smoke. A sergeant activated the silo fire-suppression system, which actually worked, rather to the Major's surprise.

  "You know, we had a drawing to see who'd get to do this. I won," the officer said, getting to his feet.

  "I was just ordered to come. I am glad I did. Is it safe now?"

  "I think so. Come on, Valentin. We have one more job to do, don't we?"

  Both men got into an HMMWV, the current incarnation of the Army jeep, and the Major started it up, heading for the silo from upwind. Now it was just a hole in the ground, generating steam. A CNN crew followed, still giving a live feed as the vehicle bumped across the uneven prairie. Their vehicle stopped two hundred yards away, somewhat to their annoyance, while the two officers dismounted their vehicle, carrying gas masks against the possibility that there was still enough smoke to be a health concern. There wasn't. Just the nasty smell. The American officer waved the TV crew in and waited for them to get ready. That took two minutes.

  "Ready!" the unit director said.

  "Are we in agreement that the silo and missile are destroyed?"

  "Yes, we are," the Russian replied with a salute. Then he reached behind his back and pulled two crystal glasses from his pockets. "Would you hold these please, Comrade Major?"

  Next came a bottle of Georgian champagne. The Russian popped the cork with a wide grin and filled both glasses.

  "I teach you Russian tradition now. First you drink," he said. The TV crew loved it.

  "I think I know that part." The American downed the champagne. "And now?"

  "The glasses may never be used for a lesser purpose. Now you must do as I do." With that the Russian turned and poised himself to hurl his glass into the empty hole. The American laughed and did the same.

  "Now!" With that, both glasses disappeared into the last American Minuteman silo. They disappeared in the steam, but both could hear them shatter against the scorched concrete walls.

  "Fortunately, I have two more glasses," Valentin said, producing them.

  "Son of a bitch," Ryan breathed. It turned out that the American at the Russian silo had had a similar idea, and was now explaining what "Miller time!" meant. Unfortunately, aluminum cans didn't break when thrown.

  "Overly theatrical," his wife thought.

  "It isn't exactly Shakespeare, but if t'were done when t'were done, then at least it's done, honey." Then they heard the corks popping off amid the sounds of applause.

  "Is the five-billion-dollars part true?"

  "Yep."

  "So, Ivan Emmetovich, we can be truly friends now?" Golovko asked, bringing glasses. "We finally meet, Caroline," he said graciously to Cathy.

  "Sergey and I go way back," Jack explained, taking the glass and toasting his host.

  "To the time I had a gun to your head," the Russian observed. Ryan wondered if it were an historical reference…or a toast to the event?

  "What?" Cathy asked, almost choking on her drink.

  "You never told her?"

  "Jesus, Sergey!"

  "What are you two talking about?"

  "Dr. Ryan, once upon a time your husband and I had a…professional disagreement that ended up with myself holding a pistol in his face. I never told you, Jack, that the gun wasn't loaded."

  "Well, I wasn't going anywhere anyway, was I?"

  "What are you two talking about? Is this some inside joke?" Cathy demanded.

  "Yeah, honey, that's about right. How is Andrey Il'ich doing?"

  "He is well. In fact, if you would like to see him, it can be arranged."

  Jack nodded. "I'd like that."

  "Excuse me, but who exactly are you?"

  "Honey," Jack said. "This is Sergey Nikolayevich Golovko, Chairman of the Russian Foreign Intelligence Service."

  "KGB? You know each other?"

  "Not KGB, madam. We are much smaller now. Your husband and I have been…competitors for years now."

  "Okay, and who won?" she asked.

  Both men had the same thought, but Golovko said it first: "Both of us, of course. Now, if you will permit, let me introduce you to my wife, Yelena. She is a pediatrician." That was something CIA had never bothered to find out, Jack realized.

  He turned to look at the two presidents, enjoying the moment despite being surrounded by newsies. It was the first time he'd actually been to an event like this, but he was sure they weren't always this chummy. Perhaps it was the final release of all that tension, the realization that, yes, Virginia, it really was over. He saw people bringing in yet more champagne. It was pretty good stuff, and he fully intended to have his share of it. CNN would soon tire of the party, but these people would not. All the uniforms, and politicians, and spies, and diplomats. Hell, maybe they would all really be friends.

  19—Strike Two

  Though the overall timing was fortuitous, the plan for exploiting the chance was exquisite, the product of years of study and modeling and simulation. In fact the operation had already begun when six major commercial banks in Hong Kong started going short on U.S. Treasury bonds. These had been bought a few weeks earlier, part of a complex exchange for yen holdings done as a classic hedge against monetary fluctuations. The banks themselves were about to undergo a trauma—a change in ownership of the very ground upon which they stood—and the two factors made their massive purchases seem an entirely ordinary move to maximize their liquidity and flexibility at the same time. In liquidating the bonds, they were just cashing in, albeit in a large way, on the relative change in values of dollar and yen. They would realize a 17 percent profit from the move, in fact, then buy yen, which, currency experts all over the world were now saying, had reached a hard floor and would soon rebound. Still, two hundred ninety billion dollars of U.S. bonds were on the market briefly, and undervalued at that. They were soon snapped up by European banks. The Hong Kong bankers made the proper electronic entries, and the transaction was concluded. Next they wired the fact to Beijing, uneasily happy to show that they had followed orders and demonstrated obeisance to their soon-to-be political masters. So much the better, all thought, that they had taken a profit on the deal.

  In Japan the transaction was noted. Fourteen hours off the local time of New York City, still the world's foremost trading center, it was not terribly unusual for Tokyo traders to work hours usually associated with night watchmen, and in any case the wire services that communicated financial information never ceased transmitting data. It would have surprised some people to learn that the people in the trading offices were very senior indeed, and that a special room had been established on the top floor of a major office building during the last week. Called the War Room by its current occupants, it had telephone lines leading to every city in the world with major trading activities and computer displays to show what was happening in all of them.

  Other Asian banks went next, repeating the same procedure as in Hong Kong, and the people in the War Room watched their machines. Just after noon, New York time, Friday, which was 2:03 A.M. on Saturday in Tokyo, they saw another three hundred million dollars of U.S. bonds dumped into the market, these at a price even more attractive than that just offered in Hong Kong, and these, al
so, were rapidly bought by other European bankers for whom the working day and week were just coming to an end. As yet nothing grossly unusual had happened. Only then did the Japanese banks make their move, well covered by the activity of others. The Tokyo banks as well started selling off their U.S. Treasuries, clearly taking action to firm up the yen, it appeared. In the process, however, the entire world's ready surplus-dollar capacity had been used up in a period of minutes. It could be written off as a mere coincidence, but the currency traders—at least those not at lunch in New York—were now alerted to the fact that any further trading on those notes would be unsettling, however unlikely that might be, what with the known strength of the dollar.

  The state dinner was reflective of traditional Russian hospitality, made all the more intense by the fact that it celebrated the end of two generations of nuclear terror. The Metropolitan of the Russian Orthodox Church intoned a long and dignified invocation. Himself twice the victim of political imprisonment, his invitation to rejoice was heartfelt, moving a few to tears, which were soon banished by the start of the feast. There was soup, and caviar, and fowl, and fine beef; and huge quantities of alcohol which, for just this once, everyone felt free to imbibe. The real work of the trip was done. There really were no secrets left to hide. Tomorrow was Saturday, and everyone would have the chance to sleep late.

  "You, too, Cathy?" Jack asked. His wife was not normally a heavy drinker, but tonight she was knocking it back.

  "This champagne is wonderful." It was her first state dinner overseas. She'd had a good day of her own with local ophthalmic surgeons, and had invited two of the best, full professors both, to come to the Wilmer Institute and acquaint themselves with her specialty area. Cathy was in the running for a Lasker Award for her work with laser surgery, the product of eleven years of clinical research, and the reason she had not accepted a department chairmanship twice offered by University of Virginia. Her big paper announcing the breakthrough would soon be published in NEJM, and for her as well, this night and this trip were the culmination of many things.

  "You're going to pay for it tomorrow," her husband warned. Jack was going easier on all the drinks, though he had already exceeded his normal nightly limit, which was one. It was the toasts that would do everyone in, he knew, having been through Russian banquets before. It was just a cultural thing. The Russians could drink most Irishmen under any table, something he'd once learned the hard way, but most of the American party either hadn't learned that lesson or simply didn't care this night. The National Security Advisor shook his head. They'd sure as hell learn it tomorrow morning. The main course arrived just then, and deep red wine filled the glasses.

  "Oh, God, my dress is going to split wide open!"

  "That should add to the official entertainment," her husband observed, earning a glare from across the table.

  "You are far too skinny," Golovko observed, sitting next to her and giving voice to another Russian prejudice.

  "So how old are your children?" Yelena Golovko asked. Also thin by Russian standards, she was a professor of pediatrics, and a very pleasant dinner companion.

  "An American custom," Jack replied, pulling out his wallet and showing the pictures. "Olivia—I call her Sally. This is little Jack, and this is our newest."

  "Your son favors you, but the girls are the image of their mother."

  Jack grinned. "A good thing, too."

  The great trading firms are just that, but it's a mystery to the average stockholder just how they trade. Wall Street was a vast collection of misnomers, beginning with the street itself, which is the approximate width of a back alley in most American residential areas, and even the sidewalks seem overly narrow for the degree of traffic they serve. When purchase orders came in to a major house, like the largest of them, Merrill Lynch, the traders did not go looking, physically or electronically, for someone willing to sell that particular issue. Rather, every day the company itself bought measured holdings of issues deemed likely to trade, and then awaited consumer interest in them. Buying in fairly large blocks made for some degree of volume discounting, and the sales, generally, were at a somewhat higher price. In this way the trading houses made money on what bookies called a "middle" position, typically about one eighth of a point. A point was a dollar, and thus an eighth of a point was twelve and a half cents. Seemingly a tiny margin of profit for a stock whose share value could be anything up to hundreds of dollars in the case of some blue chips, it was a margin repeated on many issues on a daily basis, compounded over time to a huge potential profit if things went well. But they didn't always go well, and it was also possible for the houses to lose vast sums in a market that fell more rapidly than their estimates. There were many aphorisms warning of this. On the Hong Kong market, a large and active one, it was said that the market "went up like an escalator and down like an elevator," but the most basic saying was hammered into the mind of every new "rocket scientist" on the huge computertrading floor of Merrill Lynch headquarters on the Lower West Side: "Never assume that there is a buyer for what you want to sell." But everyone did assume that, of course, because there always was, at least as far back as the collective memory of the firm went, and that was pretty far.

  Most of the trading was not to individual investors, however. Since the 1960's, mutual funds had gradually assumed control of the market. Called "institutions" and grouped under that title with banks, insurance companies, and pension-fund managers, there were actually far more such "institutions" than there were stock issues on the New York Stock Exchange, rather like having hunters outnumbering the game, and the institutions controlled pools of money so vast as to defy comprehension. They were so powerful that to a large extent their policies could actually have a large effect on individual issues and even, briefly, the entire market, and in many cases the "institutions" were controlled by a small number of people—in many cases, just one.

  The third and largest wave of Treasury-note sales came as a surprise to everyone, but most of all to the Federal Reserve Bank headquarters in Washington, whose staff had noted the Hong Kong and Tokyo transactions, the first with interest, the second with a small degree of alarm. The Eurodollar market had made things right, but that market was now mainly closed. These were more Asian banks, institutions that set their benchmarks not in America, but in Japan, and whose technicians had also noted the dumping and done some phoning around the region. Those calls had ended up in a single room atop an office tower, where very senior banking officials said that they'd been called in from a night's sleep to see a situation that looked quite serious to them, occasioning the second wave of sales, and that they recommended a careful, orderly, but rapid movement of position away from the dollar.

  U. S. Treasury notes were the debt instruments of the United States government and also the principal retaining wall for the value of American currency. Regarded for fifty years as the safest investment on the planet, T-Bills gave both American citizens and everyone else the ability to put their capital in a commodity that represented the world's most powerful economy, protected in turn by the world's most powerful military establishment and regulated by a political system that enshrined rights and opportunities through a Constitution that all admired even though they didn't always quite understand it. Whatever the faults and failings of America—none of them mysteries to sophisticated international investors—since 1945 the United States had been the one place in all the world where money was relatively safe. There was an inherent vitality to America from which all strong things grew. Imperfect as they were, Americans were also the world's most optimistic people, still a young country by the standards of the rest of the world, with all the attributes of vigorous youth. And so, when people had wealth to protect, mixed with uncertainty on how to protect it, most often they bought U.S. Treasury notes. The return wasn't always inviting, but the security was.

  But not today. Bankers worldwide saw that Hong Kong and Tokyo had bailed out hard and fast, and the excuse over the trading wires that they were
moving their positions from the dollar to the yen just didn't explain it all, especially after a few phone calls were made to inquire why the move had been made. Then the word arrived that more Japanese banks were moving out their bond holdings in a careful, orderly, and rapid movement. With that, bankers throughout Asia started doing the same. The third wave of selling was close to six hundred billion dollars, almost all short-term notes with which the current U.S. administration had chosen to finance its spending deficit.

  The dollar was already falling, and with the start of the third wave of selling, all in a period of less than ninety minutes, the drop grew steeper still. In Europe, traders on their way home heard their cellular phones start beeping to call them back. Something unexpected was afoot. Analysts wondered if it had anything to do with the developing sex scandal within the American government. Europeans always wondered at the American fixation with the sexual dalliances of politicians. It was foolish, puritanical, and irrational, but it was also real to the American political scene, and that made it a relevant factor in how they handled American securities. The value of three-month U.S. Treasury notes was already down 19/32 of a point-bond values were expressed in such fractions—and as a result of that the dollar had fallen four cents against the British pound, even more against the Deutschmark, and more still again against the yen.

  "What the hell is going on?" one of the Fed's board members asked. The whole board, technically known as the Open Market Committee, was grouped around a single computer screen, watching the trend in a collective mood of disbelief. There was no reason for this chaos that any of them could identify. Okay, sure, there was the flap over Vice President Kealty, but he was the Vice President. The stock market had been wavering up and down for some time due to the lingering confusion over the effects of the Trade Reform Act. But what kind of evil synergy was this? The problem, they knew without discussing, was that they might never really know what was happening. Sometimes there was no real explanation. Sometimes things just happened, like a herd of cattle deciding to stampede for no reason that the drovers ever understood. When the dollar was down a full hundred basis points-meaning one percent of value-they all walked into the sanctity of their boardroom and sat down. The discussion was rapid and decisive. There was a run on the dollar. They had to stop it. Instead of the half-point rise in the Discount Rate they had planned to announce at the end of the working day, they would go to a full point. A strong minority actually proposed more than that, but agreed to the compromise. The announcement would be made immediately. The head of the Fed's public-relations department drafted a statement for the Chairman to read for whatever news cameras would answer the summons, and the statement would go out simultaneously on every wire service.