Ghosts of Manhattan (20 page)

“It's an incredible offer, but we don't know that this is something we need. Have you been to the doctor or something?”

“No. I don't know if we need her help, but now is the time, Nick. If we're going to try, I want to try soon.”

“Julia, of all the years of our marriage, now feels like the worst time to try for kids.” Her look says that she demands an explanation from me. My work is still an issue, but that's been a constant and one that she can dismiss. The other issue is that I don't trust what is happening with us and with Oliver and I can't decide if I can discuss this with her and not hear something that will gut me.

“What the hell is that supposed to mean?”

My mind is working furiously but making no progress, like a car stuck in snow. I'm not able to see two steps ahead in the conversation. “I just don't think we're in a great place right now. Our relationship.” My phone vibrates in my pocket, announcing a text message. I hardly ever text, and I think about using this as a time-out from the conversation but I know that would make things worse.

“Nick, I know that. You know that I know that. I think I'd like to have a baby. There's a risk that our relationship isn't strong enough for this, but I'm running out of time.”

“You're not out of time but we both have to want this. If we have a baby, it isn't just our relationship that we're risking anymore. Going in half expecting to fail isn't good enough.”

“I don't expect to fail.”

“Then what's going on with you?” I nearly shout this and my aggression confuses her.

“What are you talking about?”

I look away, trying not to say it, but I feel it coming on like a heave of vomit that I can't swallow. “Oliver.” There, I've said it and part of me wants it back. I don't feel the relief that usually comes after throwing up. Julia stares evenly and seems not surprised but not guilty. “Not so much Oliver specifically. Just the prospect of someone. Julia, as long as I've known you, I've never felt even a hint of you glancing in another direction or trying to get a glance back. It's not an energy you put off. Until now. Now it seems like something you're open to.”

“Nick, nothing is going on between me and Oliver.”

“What does nothing mean? You never had sex?” I feel safe I know the answer to this.

“Of course not.”

“Never flirted? Never felt anything?” I want to feel convinced now, to drive out the demons.

“No.”

I think she's admitting to me as much as she's admitted to herself, which may be less than everything. “Julia, something is different. Worse. It used to be second nature that we're an unconditional team. Now I feel you're looking in another direction.”

“I'm not happy. You know that. But you're my husband and I love you.”

I realize it's not that I don't want to have a baby but that I'm afraid to. Julia deserves to be a mother. “I'm not saying no to a baby. Let's figure out the right thing.”

Julia looks away, frustrated and silent. This sounds like the same commitment to dialogue that has ushered by the years, but I mean for it to be more now.

“This isn't just talk. Go to the doctor and see where we are medically. Let's get all the information first.”

“Okay. I'll get in to a fertility doctor next week. Sooner if I can.” She seems suspicious this is just a delay tactic but is still claiming whatever ground has been made. Possibly she's already been to the doctor and has a loaded deck. At any rate, it seems clear she feels the current form of our relationship is worth putting at risk. The outcomes of a baby with us together and a baby with us apart are both better than more of the same. She's not going to settle for no action anymore.

I walk into the living room to check the text message. I open the flip phone and it's Rebecca's number.

where are you?

This is amazingly appealing but not the best timing. All of this will be hard enough without temptation. The phone buzzes again while I'm holding it open and it startles me.

where's the fence?

I close the phone. Crap.

January 25, 2006

FREDDIE'S IN A PANIC AND TRYING TO FOCUS HIMSELF
by memorizing his first few lines. We're waiting outside the conference room for Dale Brown to admit us so Freddie can deliver his report.

I hear Freddie muttering to himself, “Gentlemen, thank you for coming. This report is a summary review of, a comprehensive analysis of, crap. Gentlemen, thank you . . .” He's dressed slightly better than normal. Everything's been pressed but the clothes have the wear and the style of being at least fifteen years old and show the ill-fitting pushes and pulls from the changes in his body over that time so that it looks like he does his shopping at the Salvation Army. His ugly tie is pulled tight and straight around his neck in a knot that looks impossible to undo. He tried hard this morning and I feel sorry for him. He did the best with what he knows.

“Freddie, take it easy. You're going to work yourself into a lather.”

“I just need to get the introduction down. I'm not a very good public speaker.”

“It's going to be only a few guys. You know the information cold, just take people through it. You'll do fine.”

“I know, I know.” He sits down and closes his eyes and seems to be focusing on his breathing.

In a moment the conference room door opens and Preston Palmer steps out into our waiting room. He's the assistant to the president and I don't know him but have heard plenty. When he's not around Dale Brown, he assumes the full authority of the office of the president to throw his weight around and act like a jackass. When he is around Dale Brown, he acts like a manservant. “Okay. Let's go, guys.” He gives me a curious glance, then gives Freddie a condescending stare.

We follow Preston back into the conference room. Dale Brown is at the head of an empty table. His appearance is the other end of the spectrum from Freddie. His suit looks expensive and fits perfectly, and I see the stitching around the border of the lapel that is a sign of handmade work. His silk tie is in a fat Windsor knot and his hair looks like it was cut just this morning. He's handsome and young for his position, maybe only ten years older than I am. I imagine he's had some sharp elbows during his career.

Freddie looks around the room a few times, checking and rechecking for invitees to the meeting. I develop my own conspiracy theory that Dale Brown wants as few people as possible to witness his exposure to this information. Nobody wants a piece of this meeting, and I wonder why the hell I'm here. Dale also gives me just a passing glance, then stares at Freddie. I don't know Dale very well. We were in a golfing foursome once about five years ago, and we were at a twenty-person dinner once. With a prompt he might remember me. “Take a seat.” Preston points to seats on the opposite side of the table from Dale, then he also sits across from us.

Freddie pulls a stack of copies of his report from his bag and passes one to each of us, and the remaining copies lie in a pile on the table as a reminder of his unmet expectations of attendance. He clears his throat and begins. “Gentlemen, thank you for—”

“Listen, Freddie,” Dale interrupts. “I don't want a big preamble. Let's just get started and get through this.” He already knocks Freddie off balance. Dale would have said this no matter how Freddie started.

“Yes. Well, thank you for coming.” Freddie picks up the report and turns back the cover page. I pick it up and fan the pages. It's seventy pages of charts and graphs and block paragraphs of analysis.

Dale's arms don't leave the armrest of the chair. His eyes don't drop to the report on the table in front of him but stay locked on Freddie.

“As you can see in the executive summary—”

“Freddie, I don't have time to turn pages on your report with you. Let's bottom-line this.”

Freddie's hanging on by a thread. To his credit, as with many analytical minds, his anxiety forces him to slow down rather than speed up. “Okay.” He closes the report and slides it forward a few inches and releases it. “I have developed a framework for analysis.” His words are slow and plodding. “The result is a risk scale from one to ten, one being the least risky and ten being the most risky. The optimal level of risk to return for our firm is five point three.” His words are starting to come faster as he talks about his risk engine, which has become a living and breathing best friend to him.

“Fine.” Dale plays along. Preston is leafing through the pages, stopping at parts and reading closely, not listening to Freddie.

“The only thing I have yet to correct is that the one to ten isn't exactly to proportion. Meaning that if you move from a six to a
seven, that is more than just ten percent additional risk. It's exponential. Like an earthquake on the Richter scale.”

“Why didn't you fix it?”

“I just, well, I haven't gotten that part right yet.”

“Continue.” Dale looks bored but happy he's been able to make a criticism already.

“So moving higher than five point three can be significant. To use the analogy of a car, a score of six five would be redlining the engine.”

Freddie stops and looks over at Preston, who is focused on a page of the report. There are crinkles of concern on his forehead. He seems to notice the room has gone silent, and he looks up at Freddie, then over at Dale. Dale looks like he is about to ask Preston a question, then changes his mind. “Continue, Freddie.”

“Last year we were at a nine point one.”

Dale scowls. I think he was ready for a high number but I see real surprise that it is this high. “What the hell does that mean, Freddie?” He likes to say the name Freddie in a mocking tone like it's a disparaging word. “You tell me nine one and I'm supposed to use that information to manage the firm? You want me to act because we're a nine one on the Freddie scale?”

“It's all in the report, Dale.”

“I don't care about the goddamn report!”

Freddie is silent. We all are and we take turns looking at each other.

“Holy crap. Just keep going, Freddie.”

“Well, this year the scale can't account for the risk.” He quickly realizes his phrasing will lead only to more criticism of the model itself. “What I mean is, we're off the scale. We're higher than ten.”

“What in God's name does that mean?”

“It means that given external market conditions, the positions of the other firms, and our own positions, we're leveraged through derivative instruments to such an extent that the scale can't fully capture the risk. It's like trying to divide a number by zero.”

“I still don't know how you expect me to interpret this information.” Dale is staring at Freddie, ready for a duel and positioning for his denial that he learned anything here today. Preston is back to poring over the report and has a concerned look like he is trying to wish away the facts.

“Dale, the conclusion here is that this strategy could wipe out more than just Bear. Other firms are doing this too. Once we have a dip in the market, this will magnify the problem because there isn't anyone healthy to absorb the mess. There'll be no place to hide. The whole system is at risk.”

Preston keeps his eyes down on the paper, but he doesn't seem to be reading anymore. Dale smiles, and this time it's a friendly smile, as if to a child that doesn't understand and that he wants to help. “Freddie, that seems a little fantastic. You can't expect me to react to statements that the sky is falling.”

“It's not fantastic.”

“We had our best year ever. We're going to keep it going.”

“You mean your best bonus year ever.” Freddie is like the angry geek who somehow finds the nerve for a moment to stand up to the captain of the football team.

Dale tries to keep his smile, but this time it's dismissive. “I said we're going to keep it going.”

“That will risk the firm. Maybe more than that.”

“Don't be dramatic. You're here to help us make more money. Not less.”

“I'm here to help us manage risk in the optimal way. Not set us on a suicide course with the market.”

“Listen to me. We're making money. We're going to continue making money. We'll alter course when this cools off.”

“You have to alter course now. Now. We can't unwind these positions overnight. We have to gently unwind starting now and do it over a period of a year, maybe two, and hope the market doesn't turn before we're finished. We have to do it slowly, and even that comes with risk.”

“Risk from where?”

“People are going to start to wake up to how exposed the major banks are. Then they're going to start to make bets on the correction. The bets on the downfall will accelerate the downfall. That will push assets in the same direction as our unwinding needs to go and make it more difficult to complete. It will become self-fulfilling. We may not be able to get all the way out, even if we start today.”

“Then why try to get out at all? Let's keep our high earnings. We'll increase our bets and fight off the correction.”

“Because you will lose the whole company. Everything. The underlying bet isn't there.”

Dale knows Freddie is brilliant and he also knows that he himself is incapable of grasping the analysis in Freddie's report. The root of his disdain for Freddie is fear. Dale's belief system about success is that men get ahead on guts, vision, and persuasion. Freddie doesn't lead; he's someone you pay a salary to play a supporting role. If Freddie challenges this belief, Dale will defend himself the way insecure people in authority do.

Dale bangs his pen down and looks at Preston. He gives another friendly smile to Preston, then to me, inviting people to
agree with him and condemn Freddie. If his smile could speak, it would say, Can you believe this guy?