Currency War

by Lawrence B. Lindsey

  “I like it.”

  The boss had spoken, and no one wanted to challenge him. Besides, President Turner had been right. They did have to put a speech together before they went to bed tonight in order for it to be circulated tomorrow morning. Then in the afternoon would come the background stories. The press secretary would call carefully selected journalists and leak some of the contents of the speech. In return for the scoop, the coverage would be generally fair and balanced. But more important for the White House, the stuff that was leaked would be the main message the President wanted to send. It was a way of massaging the media to shape the story the way the President wanted.

  On and on it went. Six hours of constant back and forth. Finally the President said, “Lombardi, I think it’s yours. Put it together and ship a copy up to the residence to read over. I’m headed there for a drink.”

  Everyone stood as the President rose. He turned to his secretary of state.

  “Dianne, I know you didn’t get everything you wanted. But the speech is far short of a declaration of war, don’t you think? I know that’s what you were afraid of.”

  “Yes, Mr. President.” An effective member of the president’s team knew when to stop the argument. She could push her view as far as possible, but when the give and take was over, you fell in line. That way you could fight as hard the next time and everyone knew that in the end, you would be a team player.

  “You’re carrying the ball tomorrow on the talk shows. I’m counting on you.”

  “You can count on me, Mr. President.”

  “I know I can.” The President had completed the ritual. Dianne would play for the team and would be rewarded for it with a permanent place at the President’s ear. In the unspoken world of signals at the top, Turner had reiterated the implicit terms of the contract. To drive home the point that a deal had been struck, the President shook her hand as she moved to the door.

  “George, Dianne says war won’t break out. Can markets handle it? I’d rather not have Wall Street give me a Bronx cheer for what I’m going to say.”

  “Sir, markets will do what markets will do. You signaled resolve and hinted at good ideas to come. After the initial shock, the markets are due for a bounce. They just need a reason. I think you’ll give it to them.”

  “That was pretty one-handed for a two-handed economist.”

  “Remember, I’m not really an economist.” George smiled, the President chuckled, and they shook hands.

  “And Roger. When you’re done could you also messenger a copy out to Coleman at his residence and Lopez at his?”

  “Will do, Mr. President,” Lombardi said, and turned to his task.

  * * *

  Roger Lombardi left the Oval into Alice’s office. He was muttering to himself. As chief of staff, he had to keep a lot of personalities appeased. He and Alice were the two who managed the President the most—at least officially.

  “I think the First Lady will want a lot of changes, so this is going to be a long day.”

  Alice was nonplussed. “We won’t know until she talks to Bernadette Coleman. The President told me to send one copy to their residence. I put two in the package to make things a bit more efficient.”

  Lombardi chuckled. “That piece on Drudge sure made the rounds, didn’t it? And you want to know the best part? That leak came straight out of the First Lady’s office. Had the menu and everything.”

  Alice laughed. “Nothing like a little color to establish the strength of an article. I think the word they taught me back in college was verisimilitude.”

  “Wonder what she’s up to.” Lombardi shook his head. “Won’t tell me, of course. Views me as a rival. She and I are the only ones who have absolute claim to the President’s ear.”

  “You better add Bernadette Coleman to that list,” Alice reminded him. “Talk about the ultimate Washington power couple. Chairman of the Fed and the new BFF of the First Lady. This is a hot story. It’ll make the mainstream for sure.”

  “You think? How long?”

  “My money’s on Sunday. Time for the President’s speech to cool. Perfect follow-up, perfect Sunday news show fodder for that matter. Perhaps even The Washington Post magazine section. A little too inside baseball for The New York Times, although they might like the financial angle.”

  “Alice, there’s more, believe it or not. But at the moment it’s classified.”

  “I hate it when you do that.”

  “You know the drill. Can you keep a secret?”

  “Yes. Of course.”

  “Well so can I. Besides, I would probably have to shoot you if I told you or the President would skin me alive.”

  “Then,” Alice said, “we’d both be in hell. You for shooting me and me for having conspired with you for so long.”

  “You know,” Lombardi said, “you and I make a great team. Too bad we didn’t meet in a less stressful life.”

  “You wish,” Alice said.

  With a chuckle, Lombardi gave her a respectful nod and headed down to his office.

  * * *

  The car pulled up at the Coleman’s at 9:37 p.m. The Secret Service agent brought the package to the door. “For you, sir. The chief of staff ordered me to get it here ASAP.”

  “Thank you.” Ben took the package with both hands and closed the door. He then ripped it open. “Hey, sweetie,” he yelled into the living room, “they sent two copies.”

  “That was thoughtful. That way there’s one for you.” Bernadette was going to use her new volunteer work at the agency for maximum leverage at home, at least in the teasing department. “It was very thoughtful of the First Lady to make sure you were included.”

  She’s in rare form tonight, Ben thought. Guess I would be if I were in her shoes.

  “Actually, you were the thoughtful one for suggesting that I be included. It is a pleasure to be on your team, madam.” He gave her a kiss on the back of her neck as he handed her one of the copies.

  “How might I return the favor? Would you care for some espresso? Decaf perhaps?”

  “Given the hour and the kind of week it’s been I think a bottle of Margaux makes more sense. This is a task best approached while a little more relaxed.”

  Ben gave her another kiss on the back of the neck, and then slowly began moving his lips forward, giving her small pecks. When he reached her cheekbone, he knew that he had sent the signal that some extended relaxation would be in order later tonight. “Your wish is my command, my lady. Is there anything else you might require?”

  “I am sure there will be. But work before pleasure.” That was the deal that made a two-career relationship possible, just so long as the pleasure followed.

  Ben moved toward her with two glasses in hand. “Lombardi was sending us a signal by giving us two copies. It was his way of saying, ‘We’re on to you.’ It was an acknowledgment of our power, but one saying, ‘Don’t push that power too far, please.’ ”

  “This came out at nine-thirty tonight. The President and his senior staff have been working on it all day. Lots of really delicate compromises involved. Dianne Reynolds was there. So was Lombardi. So the doves and the hawks came together on something they could both agree on. Perhaps it is best not to rock the boat too much. Unless it really needs to be rocked.”

  Bernadette took one of the glasses and gave him a kiss on the cheek. “You are so smart. Have you ever considered a second career in intelligence? I am sure CIA could use someone of your qualifications and insight.” Back to teasing. Then switching back, “Thank you, partner. I didn’t think of it that way. Should have perhaps. But it is all so overwhelming. Never quite done it at this level.” She held up her glass to his and gently clinked it. “Cheers, love.”

  They settled in and read the document, each on one end of their living room couch. When they had finished, they exchanged a knowing glance.

  “Well, the world is safe,” said Bernadette. “So is the West Wing. You were right, of course. This really was a compromise document. Work�
�s over.”

  “Almost,” Ben said. “I am going to give Roger a one-minute heads up. The guy deserves a good night’s sleep. And maybe a little thank you. If Mrs. Turner is going to get involved tomorrow, he will want to know we didn’t put her up to it.”

  “Yes, Cynthia will call in the morning, I am sure,” Bernadette said. “She really doesn’t like Roger very much. I think it’s the competition. I pity him. I really do.”

  “Pity? The guy is secure in his job. Will Turner is not the kind of person to leave only one way to access him.” He reached back to rub at his shoulder.

  “Your war wound bothering you?” Bernadette teased.

  “Stitches,” Ben said. “They should come out; I just haven’t had time to make an appointment.”

  She kissed him, the taste of wine on her lips. “I could take them out for you.”

  “Your MI6 medical training?”

  She kissed him again. “Field craft and improvisational skills.”

  “What about the pain?”

  “I’m not worried. I know you’ll do anything to get me to stop.”

  “You’re on,” said Ben, returning her kisses.

  * * *

  At 9:00 p.m. Eastern Daylight Time the next day, President Willard Turner looked straight at the teleprompter positioned atop the camera. He had become expert at using this setup. Done right, each and every American sitting in their living room would feel that the president of the United States was there with them, talking to them and them alone. It was a powerful tool. His black suit, white shirt, and red tie conveyed the solemnity of the moment. Cynthia Turner had picked it out.

  “It’s the uniform of the alpha male. And tonight, that is who you are.”

  With that signal from his wife, the President addressed the American people as the most confident man in the world.

  “My fellow Americans. I come to you tonight at a time of great peril for our nation. But it also offers great opportunity. An opportunity to come together. An opportunity to put our party differences aside. An opportunity to fix some of our own problems before we face the kind of desperation that the leaders of the People’s Republic of China now face. And, perhaps most importantly, to prove once again that we are the greatest nation on Earth and that our founding principles of freedom and opportunity provide a shining beacon for all mankind.

  “When you elected me a year and a half ago, I promised that I would be straight with you. That I would not mince words. And tonight, I am going to carry out that promise. In our system, you, the American people, are the boss. And as a man who spent his life in business, I know that the boss wants and needs the whole, unvarnished truth.

  “As you doubtless know, last week the government of China unleashed what could only be described as an act of aggression. With their actions, they set in motion a set of events that could destabilize our markets, undermine the U.S. dollar, and drastically reduce our standard of living.

  “We met that challenge. You need to know that your government stood strong. We withstood the greatest act of economic and financial warfare ever unleashed by one nation against another. Our economy remains intact. The dollar continues as the world’s reserve currency. And our bonds continue to be the safest of safe havens for money from all around the world.

  “But while we demonstrated our strength, the leadership of China was demonstrating their weakness. They unleashed a torrent of financial instability to destabilize us and cover their own economic mismanagement.

  “My friends, China is broke, plain and simple. The government knows it. The people know it. As a result, their own people have been lined up outside their government run banks for weeks now, trying desperately to get their money out. Shocking as it may seem, at one point the authorities opened fire on a crowd of people whose only crime was to want the hard-earned money that they had saved over the course of their lives.

  “Tonight, our sympathies go out to the people of China. They have suffered mightily from decades of economic mismanagement. Theirs is a country where the government thought that it knew best. Their government directed the hard-earned money of their people into investments that brought prestige to the authorities rather than prosperity to their people. What happened in China is living proof that although our free enterprise system is not perfect, it represents by far and away the best path to prosperity.

  “Nearly four decades ago, the Berlin Wall fell for a reason. State run economies cannot compete with free ones. The government knew they could no longer afford their military. The people knew it and clamored to escape to the West.

  “China only learned part of that lesson. They adopted parts of the free market system. Whole sectors of the economy came to be driven by private enterprise and those sectors prospered. But the Chinese government continued to control what they thought of as the ‘commanding heights’ of the economy. State-owned enterprises dominated heavy industries such as steel and energy. Most important, state-run banks dominated their financial system. These banks lent money to failing enterprises simply because they were owned by the government and that government could not let them fail.

  “The only problem is that when banks lend money to prop up failing businesses and not profitable ones, they never get their money back. So the banks failed. And everyone knew it. That is why the people of China want their money back. But the money isn’t there. It has been wasted on projects owned, operated, and managed by their government.

  “As I said, our sympathies go out to the people of China. They are the victims here. And it is because of our sympathy for their plight that we are using maximum caution and forbearance in the face of the actions of the Chinese government. The actions they took were not primarily directed against us but in support of their own desperate position. Make no mistake: those actions were misguided. They will likely fail just as their government continuously failed through years of bad investment.

  “But let them fail on their own. We do not need to give them an excuse to blame us for their own failings. We are blameless. The policy of the United States of America was to hope that China succeeded in raising the living standards of its people. We showed maximum forbearance over their trade policies and over their currency manipulation. We did so not because they were right, but because we Americans believe in prosperity for all.

  “And yes, we did pay a price for our generosity. But prosperity for the people of China also meant that we did not have 1.4 billion desperate and potentially starving people pushing a government to take military action against its neighbors and the world. Prosperity is the best alternative to war. When people have something to lose, they are less desperate to take risks.

  “I want to be clear. We hope that China succeeds in righting its economy. We hope that they will follow our lead in recognizing the limits of state power and give more power to their people. We hope that China and the United States can work together for our mutual benefit. Yes, there are lots of things we hope for because we want the best for all the people of the world.

  “But hope alone is not a policy for success. We can and indeed we must simultaneously hope for the best and prepare for the worst. So tonight, I will lay out our principles for action to prepare for what may lay ahead. This is where I must be most direct to you, the American people, the ultimate boss of what goes on in Washington.

  “Our first principle must be to protect the American people and the American economy from whatever actions the Chinese might take. We have done this thus far. The Federal Reserve met the challenge posed by the actions of the People’s Bank of China head on. They will continue to do so. This battle is being fought out in the markets and we will not allow an attack on our prosperity through Chinese actions to destabilize our markets.

  “Our second principle is to do this as a unified nation. Secretary Steinway and Chairman Coleman have already met with the bipartisan leadership of the Congress. Yes, that’s right. Both parties. Together. In the same room. I know that is not how Washington has worked in the past, but i
t is how Washington is going to work from now on. We are going to view our friends on the other side of the aisle as our partners. America is a country in which the majority party ultimately prevails, but in which the minority party’s views are taken into account. Most important from my point of view, both parties must be fully briefed. I believe that if we share the facts as broadly as national security permits that the chances of any misunderstanding are kept to a minimum.

  “I am therefore asking the Majority and Minority leaders of both houses to designate three members of their own party from their chamber to, along with the speaker of the House and the president pro tempore of the Senate, form a joint intelligence task force to receive regular briefings, on at least a weekly basis, from both CIA and the Federal Reserve on what is happening.

  “Our third principle must be to learn from the mistakes of China. We are not in the desperate straits that China is in. Our country is strong. Our economy is strong. The full faith and credit of the United States is respected around the world. But it is no secret that this country has too much debt. And if we continue on our present course of promising more than we can deliver, we could end up facing the same problems China faces. As I said at the outset, we can hope for the best, but we must prepare for the worst.

  “So I am also asking the bipartisan leadership of both houses to appoint members from the budgetary and appropriation committees to join with Secretary George Steinway and the Office of Management and Budget Director Victoria Potter in hammering out an agreement to bring our fiscal house in order.

  “My administration has already proposed legislation to save and secure our Social Security system, to reform and coordinate the myriad transfer programs that comprise our safety net, and to reform our tax system. These ideas are sound, farsighted, and principled. But I also recognize that it cannot be ‘my way or the highway.’ I hope and expect that these ideas will form the basis for substantive reform. And I welcome the bipartisan leadership of Congress to advance their own ideas in these, and particularly in other areas, to put America’s budgetary house in order.