The Unusual Suspect

by Ben Machell

  As he sat on his flight to Singapore and then on to Perth, he churned this over and over in his mind. He wanted to make a difference. But the problem was money. A whole system of international finance, banking, and mutual corporate interests locked this all in place. What could he do when faced with that? He stared out the window of the jetliner and thought.

  * * *

  —

  At almost exactly the same time that Stephen was alone and shivering in the jungle, something happened in America that would affect the lives of billions. The Federal Reserve raised interest rates to 5.35 percent, the latest in a series of hikes that had seen rates rise by 4 percent over two years in an ongoing attempt to slow inflation. This final rise caused an existing slowdown in the United States housing market past the point of no return. People who could afford their mortgages only when interest rates were low now started to default on their debt. And the millions of Americans who had been sold subprime mortgages—high-interest loans sold by banks to those with low incomes and little or no credit history—started defaulting in droves.

  This had not been the banks’ plan. The logic of making subprime loans available in the first place had been straightforward. By making home ownership more accessible, banks had hoped that they would increase demand for housing. This increase in demand would, in turn, cause house prices to rise. As prices rose, it would grant the lending banks greater security because the value of the real estate on their books would rise accordingly.

  For a while this is exactly what happened, with banks encouraging millions of low-income Americans to take out subprime loans in exchange for their own little slices of the property market. But when interest rates began to rise, the cost of repaying those loans became impossible for many, and the defaults began. Houses poured back onto the American market, increasing supply and driving down prices. The U.S. housing bubble, inflated by banks, finally went “pop.”

  This not only was a tragedy for the families who were left homeless and ruined, but it also had huge consequences for the global financial system as a whole. Banks buy and sell debts. There is an international, intra-bank debt market worth trillions of dollars. In a process known as “securitization,” the bank who sold you your mortgage could decide to take a tiny slice of your debt and combine it with other slices of many other customers’ debts until they had a big bundle of these fine slivers. They could then sell these bundles to other banks as a complex financial product called a collateralized debt obligation. Selling CDOs in exchange for cash allowed the bank to clear these debts from their books and raise capital. Buying CDOs earned patient investors a huge, slow-burning return as the debts were repaid with interest.

  And because CDOs were made from so many different tiny slices of debt, they felt safe. This was their primary appeal. Banks could slip slices of risky subprime debt in among slices of more stable debt without devaluing the overall product. It’s like being attached to a hot-air balloon by a thousand small strings. If one or two or even a hundred people defaulted on their debts, thus snapping their strings, it’s not a huge deal. You would still be held safe by the perfectly healthy debts of the thousands of other people who were still able to service their mortgages. These strings remained strong.

  Banks and their shareholders, however, do not like taking risks. Or at least, they don’t like facing the consequences of it. Which is why CDOs and similar products are a thing. You encourage ordinary people to put themselves at risk by taking on a debt to you and, in the case of subprime mortgages, a debt that you know perfectly well may ultimately exceed the real value of the home they are buying. And while this ordinary person may have their life ruined when they cannot repay this debt, you, the bank, have inoculated yourself against any such outcome. Thanks to CDOs, the actual consequences of a few customers going broke were diluted to almost nothing. It was expected and allowed for. It was clever. Individuals took the risks; the banks reaped the rewards. They kept floating serenely upward, on warm swells of interest, far removed from the occasional repossession or bankruptcy back on Earth.

  But as more and more Americans began to default on their debts, more and more strings began to snap, and the CDOs began to look less and less safe. As a result, they lost their value. Not just because they were no longer the sure bet they once were, but because even calculating their value became very difficult. How much of each CDO was rotten, made up of bad subprime mortgage debt? Because they were such complex products, it was very difficult to know.

  This meant that as 2006 continued, banks found themselves increasingly unwilling to lend money to other banks. Why? Because if you’re a bank and you lend money to another bank whose books are balanced with ever more worthless CDOs, how can you be confident they are going to be able to repay you? Suspicion and doubt spread from New York to London to Singapore. Banks began to nervously draw whatever liquid cash they held close to their bosoms. The money market—literally, the international market for the buying and selling of money—began to stall. The financial institutions were now feeling the same anxiety about money that ordinary people around the world felt every single day. They felt nervous and exposed and uncertain. Having set this chain of events in motion, though, they did nothing to ease it. In fact, they simply made it worse. By refusing to issue credit to businesses, the specter of job losses loomed. Bankruptcies. Repossessions. Recession.

  There was a crunch coming. A global economic crisis that would define politics, culture, and society for a generation. As the full scale and scope of what was unfolding became apparent, popular anger toward banks and the elites who willingly enabled them intensified. The idea of “the 1 percent”—callous, reckless elites—became widespread and accepted across the political spectrum. Countless numbers of people watched the news or looked at the world around them and demanded that these institutions be punished. That somebody do something.

  And before long, somebody did.

  Chapter Nine

  Stephen landed in Perth in February 2006, and joined the tens of thousands of young Westerners moving around the Australian backpacking trail. As he traveled, he paid for his accommodations, bus tickets, and occasional excursions by taking on a succession of different cash-in-hand jobs. He worked as a fruit picker. He packed melons on a farm (“surprisingly heavy,” he noted in his diary). He worked as a cleaner and receptionist at some of the hostels he stayed in. He worked as a laborer on building sites. In the evening, he often wrote down very clear to-do lists for the following day. He told himself that, tomorrow, he would first shower and have breakfast. Then he would buy razors and acne cream. Then he would take some rolls of camera film to be developed. Then he would take a bus to a nearby beach. Then he would return to the hostel. Then he would have dinner. And so on.

  He stayed in hostels, keeping to himself amid the noise and chatter of the cramped dormitories. If greeted, he nodded and perhaps said “hello,” instinctively moving his eyes down and away from whoever happened to be addressing him. Casual attempts to include him in card games or the communal watching of DVDs on a laptop sent a cold bolt of panic from his stomach to his chest. He would mutter an excuse and exit the room, leaving everyone with nothing more than the sound of his flip-flops quickly slapping down the corridor and away.

  In addition to his to-do lists, he filled page after page of his diary with reviews of each day. Sometimes he rhapsodized about sights he had seen; sometimes he complained about life as a backpacker (“Last night got under three hours sleep due to the snoring of an idiot”). He wrote about how he felt lonely and out of place, but also about how he could only get better at navigating the world by exposing himself to it. As the weeks passed, he developed a private mantra he fell back on whenever things seemed too overwhelming.

  Through independence comes skills

  Through adversity comes strength

  Through skills and strength

  We can create a better world

  Read
ing through his diaries from this period, what strikes you more than anything is the wide-eyed earnestness that runs through every page. Disembarking a ferry after a trip to an island, an Australian couple offered him a lift back to town in their car. “I’ve never met such genuine consideration and kindness,” he wrote later that night. “I must send them a postcard.”

  Later, in Sydney, he paid for a cheap seat to see a performance at the Opera House.

  Tonight I listened to Bach’s (pronounced “Barks”) composition of ‘Passion’. So mighty and deep. It instilled peace and calm thoughts….When I got back to the hostel, a German girl clearly wanted to go for a date. But I’m useless in social situations! Plus my appearance wasn’t excellent.

  The poverty he saw in Cambodia and parts of Thailand still ran on loop in his head every day, and his interest in Buddhism intensified. He became fixated on a particular quote attributed to the Buddha—“It is your mind that creates this world”—so much so that he wrote it on the front of one of his travel diaries. His notebooks are scattered with poems to the sea, to nature, to mountains and forests. And while Stephen’s mind still grappled with the old, comforting, and unsolvable questions of space-time, relativity, and astrophysics, new ideas and possibilities were starting to form. The more time he spent in the world, the less time he spent asking abstract questions about the universe and the more he asked questions about the individual. He started looking inward rather than outward. Having spent years striving to find some kind of objective truth about existence—a Theory of Everything—it began to dawn on him that “truth” may, in fact, be subjective.

  I cannot deny that my philosophy has become more anthropocentric…and questions such as “who am I?” and “what am I?” concern me. I am undergoing, or have already undergone, a schema change. The mind has a greater part in “creating the world” than I previously thought.

  Everything is an interpretation.

  Every psychological anticipation, expectation and prediction is based upon past experiences.

  Should one say there exists a world that shapes us—our bodies and minds, while shaping everything else? Or should we say that our mind shapes the world, that every form is a projection of our thoughts?

  I think it is neither of these…that we are the world; the world is us. Reality. That when reality changes, we change. If our minds change, so does reality.

  * * *

  —

  In March 2006, Stephen arrived in the small village of Goshen on the island of Tasmania. He had signed up for a popular program among backpackers known as WWOOF, which stands for Willing Workers on Organic Farms. The idea was simple. In exchange for half a day’s work, travelers could enjoy room and board on participating farms. He stayed on a small homestead owned by Billie Astley, a fifty-year-old woman with bright green eyes, shoulder-length auburn hair, and a kind, gently weathered face. Billie lived alone. Her daughters were grown, and as well as operating her small farm, she worked as a potter and ceramic artist. She often took on WWOOF participants—“woofers”—to help tend her vegetables, maintain the farm’s boundaries, and generally do odd jobs. She liked having young people around and even had a comfortable log cabin on her property where they could stay. Almost immediately, though, she sensed that Stephen was different from the usual carefree young backpackers who had passed through her life.

  “He was a lost soul,” she says. “It seemed like he was looking for something. Most woofers are just on holiday and loving life. But with Stephen, he was definitely looking for something. Looking for more. But he didn’t seem to know what.”

  Stephen was delighted with his new surroundings. Everywhere he looked were hills and green forests. The sea was only a short hitchhike away. He had the cabin to himself and fell asleep every night to the sound of a stream babbling nearby. Aside from Billie and a goat named Carlos, he was alone. Billie cooked him dinner. Talked to him. Asked him questions about his life. Terse and uncommunicative to begin with, Stephen gradually opened up. Something about Billie, her comfortable, homely farmhouse, and the remote, natural setting made him relax. He discovered that she traveled regularly to Indonesia, was horrified by the poverty there, and shared his views about capitalism and global income inequality.

  She didn’t reprimand Stephen when she discovered him smoking marijuana outside the cabin. Very quickly, she became something like an inverse Julian: his opposite in every way in terms of personality and outlook and yet, to Stephen, just as important a guiding figure. “Few people I have met have been as kind and genuine as Billie,” he reflected in his diary one evening. “She is someone who could teach me much.”

  A few days after he arrived in Goshen, Stephen turned twenty. To celebrate, Billie made him a big birthday roast dinner. Here, he felt as though his whole body was unwinding itself. Anxieties melted away. “I have overcome my fear of bees,” he wrote proudly. “My curiosity and adventurous spirit triumphed.” He threw himself into working around her property, finding jobs for himself—physical jobs that often involved cutting, painting, digging, and sawing.

  “I can’t remember if he told me exactly what it was with his mother, but I knew that there were things happening between them and that he didn’t feel close to her,” she says. “I didn’t delve into it or anything. But I felt that he took me on as a kind of mother figure. Somebody who he saw as a nurturer, who was looking after him. Even after a few days I had friends who would be round at my house and see how he would act and they’d say, ‘He thinks you’re his mum.’ A couple of them were a little bit concerned, saying that he was going to find it difficult moving on.”

  After a couple of weeks of Stephen staying there, however, Billie started to notice something strange. Her farmstead had always been a popular stop for woofers. But for some time, there had been no inquiries. “I started wondering, why aren’t I getting any phone calls?” she says, frowning. Then one day, she returned from some errands and overheard Stephen speaking on her landline. “I caught him! He was on the phone to other woofers telling them that there was no space. ‘No, sorry, there’s no room, we can’t take any other woofers on.’ ”

  She confronted him. “Steve, how long have you been doing this for? And he said, ‘Oh, I’ve only told a couple of people that you’ve only got room for me. That no one else can stay here.’ ”

  Billie calmly explained to Stephen that she wanted other people to come and stay with her. That she enjoyed it. He tried to convince her that she really didn’t need anybody else. That he could do all the work that needed doing. If other people started arriving, he explained with increasing desperation, then everything would be ruined. Billie stood firm. And when Stephen learned that he would soon be expected to share the cabin with Nina and Lena, a pair of teenage German girls, he was distraught.

  “No more conversations of laughter and free thought, or partnership and friendship,” he wrote after the blond interlopers arrived. “I am no longer free here, my privacy and sense of open peace is somehow crushed by the presence of other human beings. Yesterday she brought her two German friends, showering the place with convention and falsity.”

  The arrival of others finally prompted Stephen to move on, though his admiration for Billie was undimmed and they parted on good terms.

  * * *

  —

  After leaving Tasmania, Stephen managed to find temporary work selling green energy door to door. “Can I become a door to door salesman?” he asked his journal. “Hahahaha! Surely not.”

  He passed an interview and completed a training day. He was given a polo shirt and an ID badge and joined a team of other young backpackers who were transported by minibus around New South Wales, knocking on doors and trying to convince people to switch their energy supplier. He filled his diary with notes on how to present himself. Seventy percent of a successful sale, he scribbled, is on account of “Body Language.” This included “slouching, drawled speech, crossed arms, fidg
eting.” During the initial introduction and greeting it was important to ensure “good eye contact, straight back, smiling every time.” Standing side by side with the customer demonstrated that you were on the “same team” rather than having a “confrontation.” Tone of voice, he wrote, accounts for 23 percent of a successful sale (“enthusiasm, louder, energetic”), while the content of the pitch itself accounts for only 7 percent.

  The other salespeople on the team were boisterous (“crude and bloody obscene!”), but they took Stephen under their wing. The team spent the evenings together in pubs or smoking marijuana in local parks, and Stephen always came along.

  After a few weeks of knocking on doors, he had enough money to push on. He spent two months in New Zealand, traveling, working, picking fruit, and spending the evenings on his own, writing increasingly complex notes about dark matter, string theory, antiparticles, and supersymmetry. Against a backdrop of white mountain peaks, rolling forests, and wide, sandy bays, Stephen fixated on the nature of reality, prizing and pulling at the fabric of it in his mind. At the same time, in May, he read about how a mobile telephone number—“666-6666”—had been bought at auction for £1.5 million. The wanton, unashamed extravagance of this seemed specifically conceived to goad him. One and a half million pounds! On a phone number! Think of the good that money could do if distributed to places that needed it. Think of the good it could do in Billie’s hands. Think of the good it could do in his.