why banks had gotten into the business as well, to protect their own profits. The mutual funds were taking huge hits now, and though the hits were limited mainly to the blue chips at the moment, when the calls came in from individual clients to cash in their money and get out, the institutions had to sell off as yet untroubled issues to make up for the losses in others that should have been safe but were not. Essentially, they were throwing away equities that had held their value to this point, for which procedure the timeless aphorism was 'to throw good money after bad.' It was almost an exact description for what they had to do.
The necessary result was a general run, the drop of every stock issue on every exchange. By three that afternoon, the Dow was down a hundred seventy points. The Standard and Poor's Five Hundred was actually showing worse results, but the NASDAQ Composite Index was the worst of all, as individual investors across America dialed their 1-800 numbers to their mutual funds.
The heads of all the exchanges staged a conference call with the assembled commissioners of the Securities and Exchange Commission in Washington, and for the first confused ten minutes all the voices demanded answers to the same questions that the others were simultaneously asking. Nothing at all was accomplished. The government officials requested information and updates, essentially asking how close the herd was to the edge of the canyon, and how fast it was approaching the abyss, but not contributing a dot to the effort to turn the cattle to safety. The head of the NYSE resisted his instinct to shut down or somehow slow down the trading. In the time they talked—a bare twenty minutes—the Dow dropped another ninety points, having blown through two hundred points of free-fall and now approaching three. After the SEC commissioners broke off to hold their own in-house conference, the exchange heads violated federal guidelines and talked together about taking remedial action, but for all their collective expertise, there was nothing to be done now.
Now individual investors were blinking on 'hold' buttons across America. Those whose funds were managed through banks learned something especially disquieting. Yes, their funds were in banks. Yes, those banks were federally insured. But, no, the mutual funds the banks managed in order to serve the needs of their depositors were not protected by the FDIC. It wasn't merely the interest income that was at risk, but the principal as well. The response to that was generally ten or so seconds of silence, and, in not a few cases, people got into their cars and drove to banks to get cash for what other deposits they did have.
The NYSE ticker was now running fourteen minutes late despite the high-speed computers that recorded the changing values of issues. A handful of stocks actually managed to increase, but those were mainly precious metals. Everything else fell. Now all the major networks were running live feeds from the Street. Now everyone knew. Cummings, Cantor, and Carter, a firm that had been in business for one hundred twenty years, ran out of cash reserves, forcing its chairman to make a frantic call to Merrill Lynch. That placed the chairman of the largest house in a delicate position. The oldest and smartest pro around, he had nearly broken his hand half an hour earlier by pounding on his desk and demanding answers that no one had. Thousands of people bought stock not just through, but also in, his corporation because of its savvy and integrity. The chairman could make a strategic move to protect a fellow bulwark of the entire system against a panic with no foundation to it, or he could refuse, guarding the money of his stockholders. There was no right answer to this one. Failure to help CC&C would— could—take the panic to the next stage and so damage the market that the money he saved by not helping the rival firm would just as soon be lost anyway. Extending help to CC&C might turn into nothing more than a gesture, without stopping anything, and again losing money that belonged to others.
'Holy shit,' the chairman breathed, turning to look out the windows.
One of the nicknames for the house was 'the Thundering Herd.' Well, the herd was sure as hell thundering now…He measured his responsibility to his stockholders against his responsibility to the whole system upon which they and everyone else depended. The former had to come first. Had to. There was no choice. Thus one of the system's most important players flung the entire financial network over a cliff and into the waiting abyss.
Trading on the floor of the exchange stopped at 3:23 P.M., when the Dow achieved its maximum allowable fall of five hundred points. That figure merely reflected the value of thirty stock issues, and the fall in others well exceeded the benchmark loss of the biggest of the blue chips. The ticker look another thirty minutes to catch up, offering the illusion of Further activity while the people on the floor looked at one another, mostly in silence, standing on a wood floor so covered with paper slips as to give the appearance of snow. It was a Friday, they all told themselves. Tomorrow was Saturday. Everyone would be at home. Everyone would have a chance to take a few deep breaths and think. That's all that had to happen, really, just a little thought. None of it made sense. A whole lot of people had been badly hurt, but the market would bounce back, and over time those with the wit and the courage to stand fast would get it all back. If, they told themselves, if everyone used the time intelligently, and if nothing else crazy happened.
They were almost right.
At the Depository Trust Company, people sat about with ties loose in their collars, and made frequent trips to the restrooms because of all the coffee and soda they'd drunk on this most frantic of afternoons, but there was some blessing to be had. The market had closed early, and so they could start their work early. With the inputs from the major trading centers concluded, the computers switched from one mode of operation to another. The taped recordings of the day's transactions were run through the machines for collation and transmission. It was close to six in the evening when a bell sounded on one of the workstations.
'Rick, I've got a problem here!'
Rick Bernard, the senior system controller, came over and looked at the screen to see the reason for the alert bell.
The last trade they could identify, at exactly noon of that day, was for Atlas Milacron, a machine-tool company flying high with orders from the auto companies, six thousand shares at 48 1/4. Since Atlas was listed on the New York Stock Exchange, its stock was identified by a three-letter acronym, AMN in this case. NASDAQ issues used four-letter groups.
The next notation, immediately after AMN 6000 48 1/4, was AAA 4000 67 3/8, and the one under that AAA 9000 51 1/4. In fact, by scrolling down, all entries made after 12:00:01 showed the same three-letter, meaningless identifier.
'Switch over to Beta,' Bernard said. The storage tape on the first backup computer system was opened. 'Scroll down.'
'Shit!'
In five minutes all six systems had been checked. In every case, every single trade had been recorded as gibberish. There was no readily accessible record for any of the trades made after twelve noon. No trading house, institution, or private investor could know what it had bought or sold, to or from whom, or for how much, and none could therefore know how much money was available for other trades, or for that matter, to purchase groceries over the weekend.
20—Strike Three
The party broke up after midnight. The official entertainment was a sort of ballet-in-the-round. The Bolshoy hadn't lost its magic, and the configuration of the room allowed the guests to see the dancers at much closer hand than had ever been possible, but finally the last hand had been clapped red and hurt from the encores, and it was time for security personnel to help their charges to the door. Nearly everyone had a roll to his or her walk, and sure enough, Ryan saw, he was the most sober person in the room, including his wife.
'What do you think, Daga?' Ryan asked Special Agent Helen D'Agustino. His own bodyguard was getting coats.
'I think, just once, I'd like to be able to party with the principals.' Then she shook her head like a parent disappointed with her children.
'Oh, Jack, tomorrow I'm going to feel awful,' Cathy reported. The vodka here was just too smooth.
'I told you, honey. Besides,' her husband added nastily, 'it's already tomorrow.'
'Excuse me, I have to help with JUMPER.' Which was the Secret Service code name for the President, a tribute to his paratrooper days.
Ryan was surprised to see an American in ordinary business attire—the formal dinner had been black-tie, another recent change in the Russian social scene—waiting outside the doors. He led his wife over that way.
