Crash Page 3

  “And all the TV cameras,” Heather said. “It’s almost like we’re on a movie set in Hollywood.”

  Treadwell had to smile. “Yeah, and just about everyone here knows it.”

  An exciting murmur went up from a number of Rockingham’s execs who were staring at the monitors on top of their post.

  “We’re not trading yet?” Heather asked.

  “New issues like yours start trading around eleven, in an hour and a half. Right now the market makers are dickering among themselves about the opening price. A lot’s going to depend on the market’s direction. But everything is up to this point, which should help you.”

  “Fantastic,” she said. “I bet the farm—my farm—on our stock. Daddy said it was too risky, but I put everything I had—a hundred thousand—into it.” She looked up at Treadwell. “I believe in Rockingham, and I believe in Burnham Pike,” she said. She rose up on her tiptoes and kissed him on the lips. “I have to mingle. See you at lunch.”

  O’Connell was at his shoulder. She nodded at a passing TV camera crew. “Aren’t you worried that Bernice will see you kissing some young girl on the flat-screen?”

  “My wife hasn’t gotten out of bed yet,” Treadwell said. He spotted Seymour Schneider just a few feet away, and he gestured for the man to join them.

  Blue-jacketed Schneider, a Burnham Pike broker who’d been a fixture at the NYSE for more than twenty years, was one of the old men in the business. A couple years ago a Fox News analyst made the comment that “What Schneider doesn’t know about the market isn’t worth knowing.”

  The nearly bald man in his mid-fifties, with a look of mild surprise etched on his round, pale face, as if the world had just taken off on some strange tangent, came directly over, and he and Treadwell shook hands.

  Schneider had an intuitive feel for the market and had predicted the dot-com bubble’s bust in 2000, which had led to a recession and the subprime mortgage collapse of ’08, which in turn had led to the Great Recession.

  He looked like he was in a funk.

  “So how is it shaping up this morning?” Treadwell asked.

  “Like a house of cards.”

  “The market’s up,” Treadwell said.

  “It’s the debt, like a plague. And I don’t have to tell you how fast it’s spreading. But something’s just around the corner that’s going to send us past the point of no return. War, some earthquake or something, or maybe just someone screws up somewhere, and we’ll be swallowed whole.”

  O’Connell went pale and was about to say something, but Treadwell held her off with a gesture at the same time he spotted Spencer Nast, who was here visiting old friends and, like Treadwell, wanted to be seen cheering on a healthy market. Earlier that morning Nast had been telling them about the same thing that worried Schneider.

  “Okay, Seymour, you have my attention,” Treadwell said. “Talk to me.”

  “Do you need me to tell you how many trillions in debt we are in, just in this country, let alone the entire world market—Europe, Russia, hell, China? The amounts are staggering. It’s a debt we can never pay, and the market’s not going to like it. Could be a crash is coming.”

  “But the market can’t crash,” O’Connell said, which Treadwell thought was one of the dumbest things he’d heard in a long time, especially now when Abacus was ready to be released.

  “The market’s too high,” Schneider said. “It could be a repeat of twenty-nine when overnight it lost, what, a quarter of its value? Everyone was poor in an instant. Guys jumping off the roofs of their office buildings. The banks were carrying too much debt, and when people went for their money, it wasn’t there. Almost like the subprime mortgage crisis in ’08, only no one in 1929 thought to save the banks like we did. Too big to fail? Well, they did.”

  Treadwell had an ominous thought that Schneider knew about Abacus.

  “And don’t count on the circuit breakers, if this happens,” Schneider said.

  To prevent panic selling, the Securities and Exchange Commission required that when the market dropped 13 percent, trading on all exchanges had to stop for fifteen minutes. If the slide were 20 percent, all trading was canceled for the rest of the day.

  “Things aren’t going to get that bad,” Treadwell said. “Trust me.”

  “From your lips to God’s ears,” Schneider said, and he turned and walked away.

  “Do you ever feel guilty about what we’re going to do?” O’Connell asked.

  “Never,” Treadwell replied.

  “Well, I think of all the misery that’s coming to ordinary people and I…” She stopped, realizing she had said too much.

  Treadwell gave her a stern look. “Are you going soft on us?”

  “No,” she said, clasping her hands together.

  “The entire world economy is teetering on the brink, and it’s going to collapse anyway. You heard Schneider, and you heard Nast. We’re just speeding it up a little.”

  “And making a profit from it.”

  “Yes, and making a profit. We’ll be the last investment bank left standing in the ruins. It’ll be up to us to guide the economy back to health, so why shouldn’t we profit from our foresight and ingenuity? We’ll be saving the world.”

  “After we destroy it,” Julia said. But then she smiled and nodded. “But I see your point.”

  “We’re not ordinary people, as you call them,” Treadwell said, leaning closer. “Never forget it. We’re more like gods.”

  7

  The Mesa Airlines shuttle from LaGuardia to Washington’s Dulles Airport was prompt, as usual, but by the time Ben Whalen’s cab passed through the gate at the Washington Navy Yard on the Anacostia River, a stone’s throw from the Washington Nationals Stadium, the opening bell had already rung at the NYSE.

  He’d thought about Cassy and wished that she’d been able to be more open with him about what had been troubling her for the past couple of weeks. It was big, he guessed that much, but beyond that he was at a loss. He’d wanted to help, but he didn’t know what to do.

  On the other hand, she’d been funny last night when she’d laughed and said that she’d trade her BP secrets for his work at the Yard.

  Lieutenant Commander Chip Faircloth, an old friend from ten years ago on a couple of top-secret missions to Somalia—up around the city of Harardhere, north of the capital, Mogadishu—was waiting in his office in what was called Warehouse 7A. The cavernous building, which was one of the classified facilities, had for the past year and a half been the final test and certification site of the navy’s latest top-secret littoral project.

  Faircloth was the project director, and Whalen was the chief SEAL design adviser even though he was no longer on active duty. But he was damned good.

  Once Whalen had passed through the three-layer security posts to get into the building and was allowed upstairs to the office overlooking the construction floor, he found Faircloth hunched over a table studying a series of blueprints.

  “What’s the issue now?” Ben asked.

  Yesterday Faircloth had sounded stressed on the phone; now it seemed worse. “We’ve got troubles,” he said, without looking up.

  “W’s failed the pressure tests again?” Whalen asked. The project was named W after President George W. Bush, who’d authorized the one-billion-dollar price tag in 2008. And they were over budget by half that amount with no real end in sight.

  “We send your people to sea, and before they get where they’re supposed to get, they’re dead. Drowned.”

  “Where this time?” Whalen said, joining Faircloth at the table.

  “At the forward and aft hatches, but we expected that, and the engineers promise the problem can be fixed. But the ballbusters are the four exhaust tubes. Soon as we hit fifty percent drive power the seams open up.”

  “At what depth?”

  Faircloth looked up. He was a compact man, handsome in a rodeo cowboy way, narrow hips, a lot of lean muscle, and an angular jaw like W’s anti-radar profile, almost the sam
e as the B-2 bomber’s. Riding low on the surface of the water, the forty-meter stealth vessel was completely invisible to ground- and sea-based radars, and from the air, all but indistinguishable from sea clutter.

  The all but had been the sticking problem almost from the beginning. The ship had been designed to slip just under the water, like a submarine, for short periods of time. Long enough to land a SEAL team ashore completely without detection.

  But then deep-sea-penetrating radar had been developed, so the operational depth for W had been extended to twenty meters, something over sixty feet.

  “The Chinese S2 system can see to one hundred meters.”

  “Jesus Christ,” Whalen said. “The pressure hull isn’t that strong.”

  “Look, we just found out three days ago, so I ordered the increased pressure tests, and the hull is fine except for the hatches. No problem. But it’s the MHD drive tubes.”

  MHD—or magnetohydrodynamics—was a type of propulsion system that used magnets to electrically charge a medium such as seawater that could be pumped out rear vent tubes to push the ship forward. The advantage was that the drive system made absolutely no noise. Perfect for a stealth ship. The problem now was that at only half power the tubes leaked badly.

  Whalen stared at the blueprint sheet open on the table, then went over to the plate-glass windows that looked down on the construction/test floor where W was up on chocks—all 130 feet of her.

  Four techs surrounded by scaffolds were concentrating on the underwater profile of the aft end of the ship. Two of them were welding what looked to Whalen like patches around the MHD drive vents.

  Faircloth joined him.

  “Patches, for Christ’s sake?” Whalen asked.

  “Brightman thinks the fix will work.” Donald Brightman was the chief designer, and now he worked as chief of the sea trials and certification team.

  Two boats had been built. One was outside, partially submerged in a special pen in the Anacostia River. This was the dummy model on which fixes for problems found in number one would be designed and put into place for testing.

  “Like patches on the life preservers our guys used in ‘Nam. The ones that killed more SEALs than incoming enemy rounds. Remember the after-action reports we read?”

  Faircloth smiled, but without humor. “‘Our equipment is brought to you by the lowest bidder.’”

  “This is the same old shit, Skip. It’s a design flaw that needs to be fixed before I’ll sign off on the boat. I’m not going to recommend we send our guys three hundred feet down with those bullshit fixes.”

  “They’re on my ass about the cost overruns.”

  Whalen turned to face his friend. “What’s a life worth?”

  “I’m all ears, Ben. What do you want to do?”

  Whalen went to the blueprints and stabbed a finger at where the MHD drive itself connected with the drive tubes. “Let’s take a look.”

  They got white coveralls and hard hats from a locker and took the stairs three stories down to the floor, where Faircloth gave a throat-slashing gesture to the foreman in the aft scaffolding. The welding stopped almost immediately.

  “We’re going inside to look at something,” he shouted up to the man, who nodded.

  Because the boat was designed to ride low in the water when it wasn’t submerged, and had a very small conning tower, rising less than six feet above the deck. There were underwater hatches to allow the SEAL teams to get out of and into the boat, but the main entry was through the conning tower.

  Whalen and Faircloth climbed the scaffolding stairs to the deck and then the temporary scaffold to the convex conning tower hatch, which was open.

  Whalen went in first, but Faircloth hesitated for just a moment. “I’ll build these things, but I sure as hell wouldn’t go to sea in one.”

  “When someone’s shooting at you, drowning becomes the least of your worries,” Whalen said.

  Below, and a couple of feet aft, the control room was designed to accommodate only three people: the skipper, the dive officer, and the sonar operator. Forward were accommodations for six SEAL team operators. Aft was the three-man crew quarters, plus the galley, and the head.

  Below were the equipment spaces for weapons and explosives the SEALs would need ashore, along with electronic equipment.

  Just forward and aft of amidships the next deck down held the underwater gear, including three battery-operated sleds that would each carry two fully equipped operators up to three kilometers, six meters under the surface.

  In the center was the MHD drive itself, in a completely enclosed space. No maintenance at sea was possible, which would be a moot point in any case. There was no room in the design for technicians who could understand a problem and the equipment and spare parts to make repairs.

  It was another design flaw, in Whalen’s opinion, but one on which he was overruled.

  Faircloth opened a hatch that led to the lowest deck, with not enough room in which to stand, and they both dropped inside.

  Whalen went first, crawling on hands and knees to just aft of the center line, where the four drive tubes angled down from the MHD unit aboard.

  He sat down and shone his flashlight on one of the titanium struts holding the fourteen-inch-diameter tubes. The problem was obvious.

  Halfway between where the struts came from the drive unit and connected with the base of the tubes, hairline cracks were visible.

  “Son of a bitch,” Faircloth said. “Stress loads we hadn’t anticipated. No way it can be fixed.”

  “Because you guys never thought of harmonic vibrations,” Whalen said.

  “And?”

  “We start the run-up tests all over again. My guess is these stress fractures only occur at certain sustained power levels. Find out what those levels are, and either run above or below.”

  “Problem fixed,” Faircloth said.

  “I wish everything were that easy,” Whalen muttered, his mind still on Cassy and whatever was bugging her.

  8

  Cassy stood at her workstation, her eyes constantly switching between her four large computer screens as she inputted the first elements of a game she was trying to play with the system in order to trick the virus, or whatever it was, into showing itself.

  She was mimicking a buyer whose normal trades were showing up as odd lots. So far the virus-detection program she’d designed was showing nothing. The system was working the way it was supposed to work.

  But she knew better, and she was frustrated.

  “I’m not liking this, Donni,” she muttered half under her breath.

  But he’d heard her, and he moved over from his workstation next to hers, and studied her screens for a few moments. “Start with an even-lot trade, and see what happens.”

  She did it, but the buy came up as normal. “The same as when I do the odd lots.”

  “Can’t be,” Donni said. He nudged her out of the way and inputted an odd-lot trade of 1,013 shares, and almost instantly it came up as a normal trade. “It can’t have it both ways.”

  “That’s what I’m trying to tell you, and I’m getting a really bad feeling about this. It’s like the damned thing has a mind of its own.”

  “Acts like a virus.”

  “I told that to Francis and he blew me off.”

  “So what do we do?”

  Cassy switched to the screen on her right and brought up a recent history of trading from Dubuque regarding a grange holding company, which came in at lots of 1,001. Next she shifted to Danzig Capital in San Francisco, which came in at 1,002.

  “Numerical order,” Donni said.

  “I picked them at random,” Cassy said. “EconoMax, a trading firm in Minneapolis, came in at 1,003. Francis Retirement Fund, from a chain of hospitals in Gainesville, Florida, came in at 1,004.”

  “Artificial,” Donni said. “Can’t happen.”

  “But it is.”

  “I see it, but someone is manipulating the system. Has to be.”

  “Someone
or something,” Cassy said. “My guess is that the odd-lot trades are symptoms, like when your nose runs when you get a cold. A virus has gotten into our system. And the sequential odd-lot numbers are the giveaway.”

  When she’d found evidence of a data breach at Murphy Tweed, it had been similarly subtle and yet obvious to her. Apparent if you knew where to look and knew what you were looking at. But her boss back then hadn’t believed her any more than Masters had earlier this morning.

  “Okay, what do we do?” Donni asked.

  “Find the coding behind each trade.”

  Donni slid over to his station. “I’ll take Dubuque.”

  “I have Danzig,” Cassy said. She brought up the trade on one side of her center screen, and the BP account on which the company’s trades were managed on the other side. As soon as the programs got deeper into the code it became obvious that there were differences. Slight, but hardly insignificant.

  She moved over to Donni’s station. He was coming up with the same anomalies.

  “Not enough here to see how any difference could show up in the actual trades,” he said.

  “Try to delete the last line of the code,” Cassy said.

  Donni’s fingers danced over the keyboard, but when he hit enter, nothing changed. “We’re locked out.”

  “Penicillin,” Cassy said. At her keyboard she set up a series of commands that would seek and destroy whatever was locking them out—like an antibiotic for an infection.

  An instant after she’d hit enter, nothing changed.

  Norman Applebaum was one of the bright kids who last year, at the age of twenty, had dropped out of MIT because he thought that he was smarter than the professors. He wandered over from his station and looked over Cassy’s shoulder. “You have a worm,” he said.

  “Duh,” Cassy said.

  Norman shouldered her out of the way and entered a series of commands on her keyboard. He was a runt, with a prominent Adam’s apple and red hair in a ponytail.

  Nothing changed, and he looked over at Donni’s monitors for a longish moment before he shook his head. “Garbage in, garbage out,” he said almost disdainfully. “You guys gotta clean up your act before you can find anything meaningful.” He turned away and wandered toward the foosball table.