British pounds, German D-marks, Dutch guilders, and Danish kroner were disbursed in vast quantities to purchase yen, whose relative value, everyone in Tokyo was sure, could only appreciate, especially if the Europeans pegged their currencies to the dollar.
There was an element of nervousness to it, but they did it, acting on the orders of their superiors, who were even now leaving their homes and catching cars or trains to the various commercial office buildings in which world trading was conducted. Equities were traded off in Europe as well, with the local currencies converted to yen. The expectation again was that when the American collapse resumed, the European currencies would fall, and with them the values of stock issues. Then Japan could reacquire even larger quantities of European stocks. The European moves were a sad case of misplaced loyalty, or confidence, or something, the people in Tokyo thought, but sad or not, it worked in their favor. And that was just fine. By noon London time a massive movement had taken place. Individual investors and smaller institutions, seeing what everyone else had done, had moved in—foolishly, the Japanese knew. Noon London time was seven in the morning on America's East Coast.
'My fellow Americans,' President Durling said at exactly 7:05 A.M. on every TV network. 'On Wednesday night I told you that today American financial markets are going to reopen…'
'Here it goes,' Kozo Matsuda said, just back in his office and watching CNN. 'He's going to say that they can't, and Europe is going to panic. Splendid,' he told his aides, turning back to the TV. The American president was smiling and confident. Well, a politician had to know how to act, the better to lie to his citizens.
'The problems which the market experienced last week came from a deliberate assault on the American economy. Nothing like this has ever happened before, and I am going to walk you through what happened, how it was done, and why it was done. We've spent an entire week accumulating this information, and even now Treasury Secretary Fiedler and the Chairman of the Federal Reserve Board are in New York, working with the heads of the great American financial institutions to set things aright.
'I am also pleased to report that we have had the time to consult with our friends in Europe, and that our historic allies have chosen to stand with us as faithfully in this time of difficulty as they have in other times.
'So what really happened last Friday?' Roger Durling asked. Matsuda sat his drink down on his desk when he saw the first chart appear on the screen.
Jack watched him go through it. The trick as always was to make a complex story simple, and that task had involved two professors of economics, half of Fiedler's personal staff, and a governor of the Securities and Exchange Commission, all working in coordination with the President's best speech-writer. Even so, it took twenty-five minutes, six flip charts, and would require a number of government spokesmen talking who were even now on background to reporters whose briefings had started at 6:30.
'I told you Wednesday night that nothing—nothing of consequence had happened to us. Not one piece of property has been affected. Not one farm has lost anything. Each of you is the same person you were a week ago, with the same abilities, the same home, the same job, the same family and friends. What happened last Friday was an attack not on our country itself, but on our national confidence.
'Our confidence is a harder and tougher target than people realize, and that is something we're going to prove today.'
Most of the people in the trading business were en route to their offices and missed the speech, but their employers had all taped it, and there were also printed copies on every desk and at every computer terminal. The trading day would not start until noon, moreover, and there were strategy sessions to be held everywhere, though nobody really had much idea of what to do. The most obvious response to the situation was indeed so obvious that no one knew whether or not to try it.
'They're doing it to us,' Matsuda said, watching his screens. 'What can we do to stop it?'
'It depends on what their stock market does,' his senior technical trader replied, not knowing what else to say and not knowing what to expect, either.
'Do you think it'll work, Jack?' Durling asked. He had two speeches sitting in folders on his desk, and didn't know which he would be giving in the evening.
The National Security Advisor shrugged. 'Don't know. It gives them a way out. Whether or not they make use of it is up to them.'
'So now we just get to sit and wait?'
'That's about it, Mr. President.'
The second session was held in the State Department. Secretary Hanson huddled with Scott Adler, who then met with his negotiating team and waited. The Japanese delegation arrived at 9:45.
'Good morning,' Adler said pleasantly.
'A pleasure to see you again,' the Ambassador replied, taking his hand, but not as confidently as on the day before. Not surprisingly, he had not had time to receive detailed instructions from Tokyo. Adler had halfway expected a request for a postponement of the session, but, no, that would have been too obvious a sign of weakness, and so the Ambassador, a skilled and experienced diplomat, was in the most precarious of diplomatic positions—he was forced to represent his government with nothing more to fall back on than his wits and his knowledge. Adler walked him to his seat, then returned to his side of the table. Since America was the host today, Japan got to speak first. Adler had placed a side bet with the Secretary as to the Ambassador's opening statement.
'First of all it needs to be said that my government objects in the strongest terms to the attack on our currency engineered by the United States…'
'Mr. Ambassador,' he replied, 'that is something we could say just as easily. In fact, here is the data which we have developed on the events of last week.' Binders appeared on the table and were slid across to the Japanese diplomats. 'I need to tell you that we are now conducting an investigation that could well lead to the indictment of Raizo Yamata for wire- and securities fraud.'
It was a bold play for a number of reasons. It showed everything that the Americans knew about the attack on Wall Street and pointed to the things yet to he learned. As such, it could have no effect other than to ruin the criminal case against Yamata and his allies, should it come to that. But that was a side issue. Adler had a war to stop, and stop quickly. He'd let the boys and girls at Justice worry about the other stuff.
'It might be better of course for your country to deal with this man and his acts,' Adler offered next, giving generous maneuvering room to the Ambassador and his government. 'The net effect of his actions, as may be seen today, will be to cause greater hardship to your country than to ours.
'Now, if we may, I should like us to return to the issue of the Mariana Islands.'
The one-two punch predictably staggered the Japanese delegation. As was often the case, nearly everything was left unsaid:
'The United States seeks little more than a return to normal relations. The immediate evacuation of the Marianas will allow us to consider a more lenient interpretation of the Trade Reform Act. This, also, is something we are willing to place on the table for consideration.' It was probably a mistake to hit him with this much, Adler thought, but the alternative was further bloodshed. By the end of the first session of formal negotiations, something remarkable had happened. Neither side had repeated a position. Rather, it had been, in diplomatic terms, a free- form exchange of views, few of them well considered.
'Chris,' Adler whispered when he stood. 'Find out what they're really thinking.'
'Got it,' Cook replied. He got himself some coffee and headed out to the terrace, where Nagumo stood on the edge, looking out toward the Lincoln Memorial.
'It's an elegant way out, Seiji,' Cook offered.
'You push us too hard,' Nagumo said without turning.
'If you want a chance to end this without getting people killed, this is the best one.'
'The best for you, perhaps. What of our interests?'
'We'll cut a deal on trade.' Cook didn't understand it all. Unschooled in financial matters, he was as yet unaware of what was happening on that front. To him the recovery of the dollar and the protection of the American
