Debt of Honor

entire industry spectrum. Manufacturers Hanover was the next major bank stock to head down, and now the programs were starting to search their internal protocols for what a fall in bank-stock values indicated as the next defensive move in other key industries.

With the money realized by the Treasury sales, Columbus started buying gold, both in the form of stocks and in gold futures, starting a trend from currency and into precious metals. The sudden jump there went out on the wires as well, and was noted by traders, both human and electronic. In all cases the analysis was pretty much the same: a sell-off of government bonds, plus a sudden jump in the Discount Rate, plus a run on the dollar, plus a building crash in bank stocks, plus a jump in precious metals, all combined to announce a dangerous inflationary predictor. Inflation was always bad for the equities market. You didn't need to have artificial intelligence to grasp that. Neither computer programs nor human traders were panicking yet, but everyone was leaning forward and watching the wires for developing trends, and everyone wanted to be ahead of the trend, the better to protect their own and their clients' investments.

By this time the bond market was seriously rattled. Half a billion dollars, dumped at the right time, had shaken loose another ten. The Eurodollar managers who had been called back to their offices were not really in a fit state to make rational decisions. The days and weeks had been long of late with the international trade situation, and arriving singly back at their offices, each asked the others what the devil was going on, only to learn that a lot of U.S. Treasuries had been sold very short, and that the trend was continuing, now augmented by a large and very astute American institution. But why? they all wanted to know. That set them to looking at additional data on the wires, trying to catch up with the information streaming from America. Eyes squinted, heads shook, and these traders, lacking the time to review everything, turned to their own expert systems to make the analyses, because the reasons for the swift movements were simply not obvious enough to be real. But it didn't really matter why, did it? It had to be real. The Fed had just gone up a full point on the discount rate, and that hadn't happened by accident. For the moment, they decided, in the absence of guidance from their governments and central banks, they would defer buying U.S. Treasuries. They also began immediate examinations of their equity holdings, because stocks looked as though they were going to drop, and drop rapidly.

'…between the people of Russia and the people of America,' President Grushavoy concluded his toast, the host answering President Durling, the guest, as the protocol for such things went. Glasses were raised and tipped. Ryan allowed a drop or two of the vodka to pass his lips. Even with these thimble glasses, you could get pretty wasted—waiters stood everywhere to replenish them—and the toasting had just begun. He'd never been to a state affair this…loose. The entire diplomatic community was here-or at least the ambassadors from all the important countries were present. The Japanese Ambassador in particular seemed jovial, darting from table to table for snippets of conversation.

Secretary of State Brett Hanson stood next, raising his glass and stumbling through a prepared ode to the far-seeing Russian Foreign Ministry, celebrating their cooperation not merely with the United States, but all of Europe. Jack checked his watch: 10:03 local time. He already had three and a half drinks down, and considered himself to be the most sober person in the room. Cathy was getting a little giggly on him. That hadn't happened in a very long time, and he knew he'd be razzing her about it for years to come.

'Jack, you have no taste for our vodka?' Golovko asked. He also was hitting it pretty hard, but Sergey appeared to be used to it.

'I don't want to make too much of a fool out of myself,' Ryan replied.

'It would be difficult for you to do that, my friend,' the Russian observed.

'That's because you're not married to him,' Cathy noted with a twinkle in her eye.

'Now wait a minute,' a bond specialist said to his computer in New York. His firm managed several large pension funds, which were responsible for the retirement security of over a million union workers. Just back from a normal lunch at his favorite deli, he was offering Treasuries at bargain prices on orders from upstairs, and for the moment they were just sitting out there awaiting a buyer. Why? A cautious order appeared from a French bank, apparently a hedge against inflationary pressure on the franc. That was a mere billion, bid at 1 7/32 off the opening value, the international equivalent of armed robbery. But Columbus, he saw, had bitten the bullet and taken the francs, converting them almost instantly into D-marks in a hedge move of its own. Still digesting his corned-beef sandwich, the man felt his lunch turn into a ball of chilled lead.

'Somebody making a run on the dollar?'' he asked the trader next to him.

'Sure looks that way,' she answered. In an hour, future options on the dollar had dropped the maximum- allowed limit for a day after having climbed all morning.

'Who?'

'Whoever it is, Citibank just took one in the back. Chemical's sliding, too.'

'Some kind of correction?' he wondered.

'Correction from what? To what?'

'So what do I do? Buy? Sell? Hide?' He had decisions to make. He had the life savings of real people to protect, but the market wasn't acting in a way he understood. Things were going in the shitter, and he didn't know why. In order to do his job properly, he had to know.

'Still heading west to meet us, Shoho,' Fleet Operations told Admiral Sato. 'We should have them on radar soon.'

'Hai. Thank you, Issa,' Sato replied, an edge on his good humor now. He wanted it that way, wanted his people to see him like that. The Americans had won the exercise, which was hardly a surprise. Nor was it surprising that the crewmen he saw were somewhat depressed as a result. After all the workups and drills, they'd been administratively annihilated, and the resentment they felt, while not terribly professional, was entirely human. Again, they thought, the Americans have done it to us again. That suited the fleet commander. Their morale was one of the most important considerations in the operation, which, the crewmen didn't know, was not over, but actually about to begin.

The event that had started with T-Bills was now affecting all publicly traded bank issues, enough so that the chairman of Citibank called a press conference to protest against the collapse of his institution's stock, pointing to the most recent earnings statement and demonstrable financial health of one of the country's largest banks. Nobody listened. He would have been better advised to make a few telephone calls to a handful of chosen individuals, but that might not have worked either.

The one banker who could have stopped things that day was giving a speech at a downtown club when his beeper went off. He was Walter Hildebrand, president of the New York branch of the Federal Reserve Bank, and second in importance only to the man who ran the headquarters in Washington. Himself a man of great inherited wealth who had nonetheless started at the bottom of the financial industry (albeit living in a comfortable twelve- room condo as he did so) and earned his way to the top, Hildebrand had also earned his current job, which he viewed as his best opportunity for real public service. A canny financial analyst, he had published a book examining the crash of October 19, 1987, and the role played by his predecessor at the New York Fed, Gerry Lornigan, in saving the market. Having just delivered a speech on the ramifications of the Trade Reform Act, he looked down at his beeper, which unsurprisingly told him to call the office. But the office was only a few blocks away, and he decided to walk back instead of calling, which would have told him to go to the NYSE. It would not have mattered.

Hildebrand walked out of the building by himself. It was a clear, crisp day, a good one to walk off some of his lunch. He hadn't troubled himself to use a bodyguard, as some of his antecedents had, though he did have a pistol- carry permit and sometimes used it.

The streets of lower Manhattan are narrow and busy, populated mostly by delivery trucks and yellow-painted taxicabs that darted from corner to corner like drag racers. The sidewalks were just as narrow and crowded. Just walking around meant taking a crooked path, with many sidesteps. The clearest path was most often that closest to the curb, and that is what Hildebrand took, moving as rapidly as the circumstances permitted, the faster to get to his office. He didn't note the presence of another man, just behind him, only three feet, in fact, a well-dressed man with dark hair and an ordinary face. It was just a matter of waiting for the right moment, and the nature of the traffic here made it inevitable that the moment would come. That was a relief to the dark-haired man, who didn't want to use his pistol for the contract. He didn't like noise. Noise attracted looks. Looks could be remembered, and