Abrams ground his right knuckles into his left palm under the table. He wanted to answer by saying that they couldn’t have been lying because none of them understood enough about the economy to know what the truth really was. They lied no more than his brother-in-law’s myna bird did when it proclaimed to anyone entering the living room that the sky was falling.
“No, Senator. I think that they were misled by certain conceptual issues of measurement and definition.”
“And the point is?”
“That we need to be realistic about inflation, about real inflation. The world is watching. The fact that we lie to ourselves doesn’t mean that foreign governments on whom we rely to buy our debt aren’t telling themselves the truth.” Abrams raised his finger. “The only reason-the only reason-that the U.S. bond market hasn’t collapsed in recent years is that foreign purchasers of our debt-based on their own, independent calculations and based on readily available data-still believe that despite the true rates of inflation and unemployment we’re still a good risk.”
Abrams let them absorb that thought, then said, “In addition to inflation as normally defined, there is also what I call functional inflation. Eighteen percent interest on credit card debt and the decline in real wages during the last thirty-five years, both have the same effect as inflation, but it has not been recognized as such.”
“Say our real inflation rate is seven percent,” Prescott said, “say our real unemployment rate is fourteen percent-I’m not conceding that it is-but just say. What does that mean for our bond markets?”
“It means that if there’s a spike in worldwide commodity prices, for example, for tin, copper, and platinum, inflation will skyrocket. We won’t be able to pay our debts and the usual buyers of our treasury bonds will back away.”
“To say nothing of what would happen if oil prices increase again.”
Abrams nodded.
“And if that happens all at once? “
Abrams heard the rustle of the business reporters leaning forward in their seats to make sure that they got the quote right.
“The economy won’t recover for a generation.”
Abrams thought for a moment, then decided to put the problem in the kind of concrete terms the public would understand.
“Let’s put it this way. To the holders of treasury bonds alone, we owe an amount equal to the gross domestic product of the U.S. for a single year. That is, all of the goods and services produced for consumption inside of the country-and there are a couple of ways at looking at how to pay it off.”
Abrams spread his hands.
“Just for purposes of perspective, here’s a hypothetical. Imagine paying it off in one year. Every penny that anyone earns goes to pay the debt. That means that no one in the U.S. eats anything, burns any fuel, drives anywhere, buys anything.”
Abrams watched a smirk appear on Prescott’s face. Apparently the only hypotheticals he appreciated were the ones he himself offered.
“Imagine on the other hand that we pay it off in ten years,” Abrams continued. “In that case, American lives will be limited to three things. Working, eating, and sleeping. And every penny that isn’t needed to pay for housing or for food, won’t go into movie tickers or cell phone bills or iPods, but will travel offshore to pay off the debt.”
Abrams watched the senators swallow and reach for their collars and dress necklines as if the truth was suffocating them.
Senator Prescott’s face flushed again.
“That’s science fiction, Mr. Chairman. Not economics. You can take any scenario and stretch it and expand it and turn it into a nightmare.”
Prescott’s pounding finger thunked against the oak dais, reverberating through the microphone in time with his sentences like a creeping monster.
“And I see no benefit in playing out in this hearing a fantasy of zombies and the world coming to an end.”
CHAPTER 47
CIA Director John Casher’s eyes surveyed the flowchart displayed on the wall-sized monitor at the opposite end of the conference table. He then glanced over at Glenn Pollock, the head of the Analysis and Liaison Division of the Financial Crimes Information Network.
“Does Gage have any idea of what he’s stumbled into?” Casher asked.
“About as much as we do.” Pollock pointed at the flowchart. “We believe that Tai Hing Consulting handled a little over a billion dollars in bribes and kickbacks, mostly for business done by U.S. and EU companies in Sichuan Province.”
“And they weren’t the only ones.”
Pollock shook his head. “They took five percent of whatever passed through their accounts, then transferred-“
“Five? I thought money launderers were still getting seven.”
“That was only step one. Another five percent was taken as the money went through accounts in the Bahamas-but there are some troublesome crossovers.” Pollock paused for a moment. “Really troublesome. For one, Tai Hing operates out of the same address as the front company that paid for the Muslim bombing in Xinjiang nine years ago that led to the arrest of Hani Ibrahim.”
Casher squinted over at Pollock. “Why pick that one to mention? “
“Because we think that Gage is on the prowl for Ibrahim.”
“His idea or someone else’s?”
Pollock shrugged.
“What do you mean by ‘same address'?” Casher asked. “Street number, suite number, what?”
“All of the above. It’s a shell company that’s managed by a British law firm in Hong Kong.”
Casher didn’t break his gaze, but felt himself cringe. The Muslim separatists had made the CIA look like idiots. The wire transfer order that paid for the bomb-making materials used by the terrorists stated on its face that it was in payment for explosives, but to be used in seismic studies to find natural gas deposits. It was like hiding in plain sight.
Casher looked back at the flowchart. “Any of the other companies on that thing operate out of the same place? “
Pollock nodded. “Two we’ve identified so far. Altogether the firm manages the affairs of about a thousand clients.”
“You mean they move money around for about a thousand clients without asking questions.”
“That goes without saying. Lawyers in the firm have come up on a hundred different money laundering investigations. Italian prime ministers. Colombian drug traffickers. Offshore gambling. The French accused them of handling some of the bribes that Halliburton and KBR paid the Nigerians during the 1990s.”
Casher rose and walked to the monitor, then pointed at three empty boxes and asked, “How long will it take you to fill these in?”
“That’s a problem. Gage’s office has dropped off the Internet grid and the last information that his wife called in was coded somehow.”
“You mean they caught on that we and the Chinese are watching and listening in? “
“It looks like it, but we don’t know what alerted them.”
“Let me get this right,” Casher said, and then held up his right arm high and to the right. “Over here we have some Muslim businesspeople in Boston who sent money to an offshore island, supposedly as a tax dodge.” He raised his left arm. “And over here we have a Hong Kong company that the money passed through and ended up in-“
“That’s not quite right. The account wasn’t in Hong Kong, but in the Caribbean, same as for the Boston
