Metronome, The (8 page)

“What?”

“I am sorry, I am such an idiot. You did not know? I assumed you did.”

“Karen and Martin?”

“Yes, for at least a year. I guess it was a bad time to bring it up. Hey, it’s not like you were an angel. You’ve been doing that barista from the downtown’s coffee shop.”

“How do you know?”

“Pavel, do you really think that paying cash at a motel five miles down the highway would prevent people from knowing? Half the town knew.”

“Did Karen know?”

“I am sure she did.”

“Karen and Martin? Why?”

“I don’t know why Karen was doing it; she may have been pissed at you. Martin was serious. Perhaps he thought she was the ticket he needed, a daughter of a prominent congressman. Karen did not have any real interest in him, she dropped Martin like a hot potato when she left for the West Coast.”

“And what about you?  We were still going out as two couples as this was going on.”

“I had nothing against Karen, it was over between Martin and me by then. Deep inside, I was hoping you’ll find out and reach for me. Are you OK?”

“I feel like that guy in
The Truman Show
– everyone knows what’s going on, except for me.”

Like most married man, I loved Karen and I also wanted to be free, to have other women. Poor barista Michelle…She was the one that started flirting first. What was that line about cream in my coffee? Double meaning but delivered in a way that was not double at all. I was flattered, getting that ‘
I still have
it’ feeling. Funny, that’s what she said checking herself in the mirror the first time in a roadside motel. She wanted re-affirmation that she was still desirable after a lousy divorce.

What was I trying to re-affirm? That after eighteen years of marriage, a woman not named Karen could find me attractive? I imagined myself as the aging hero of Chekhov’s
The Lady with the Dog
, when he thinks of having two lives – one, open, seen and known by all, and another life running its course in secret, and everything that was essential to him was hidden from others. I did not have a secret life and perhaps unconsciously imagined that by creating one I’d find something of value. Except that it only made me feel like a foolish middle-aged Casanova. My secret life gave me no pleasure and carried no significance, only the embarrassment of trying to let Michelle down gently while finding a new place to get my morning coffee. And now it turns out that half the town knew about this “secret.”

Sunday, June 11

I tend to sleep on my right hand side, on the right side of the bed. I wake up with Sarah spooned around my back, snuggled to me, her breath warming my neck. I move, she wakes up and we make love. First slowly, in a pleasant, still half-sleepy state, then more frantically. Karen always closed her eyes during sex, as if she traveled to a different place. Sarah is all here, pinned under me, her eyes searching mine, looking to merge together in a single spasm. Afterwards, we lay side by side, breathing heavily, spent. I feel the bed rock slightly, look to my left. Sarah turned away from me, crying quietly, shoulders quivering. I raise myself above her:

“What’s the matter?”

Sarah shakes her head, says nothing.

We stayed in bed until almost noon, interrupted only by me running downstairs to get us some breakfast.

“What are you going to do?” Sarah asks.

“I am planning to fly to California tomorrow morning.”

“To see Karen?” I sense a twinge of hurt in her voice.

“Sarah, I would like to see my kids; I have not seen them in months. And I plan to retrace my father’s steps. When he visited us last year, turns out he went to Santa Barbara from all places. I want to find out why.”

She nods. “Where are your kids now?”

“At their grandparents in Southern California.”

“And Karen is there, too?”

“Yes, she is.”

She sits up. “Please be careful.” She kisses me hard on the lips.

Sarah leaves. Strange how you’ve known someone for years and discover the person anew.

I google New Treasury Island ELP, but the pickings are slim, and I can’t figure out who is really behind it. I try calling Martin, leave a voicemail. Then I buy tickets to Los Angeles for tomorrow morning, reserve a rental car, and book myself into Santa Barbara’s Garden Inn for a night.

My rolling bag, with my travel clothes, is in St. Petersburg. I go to buy a new one. It’s a hot summer day, and the streets are bustling with people: youngsters enjoying the-school-year-just-ended freedom, locals picking out places to eat, tourists with half-folded maps, young mothers pushing strollers, young fathers with babies resting in high-tech baby carriers. Bare skin is everywhere; unlike Californians with their year-round sunshine, New Yorkers are eager to grab as much sun as they can during the summer, skirts get very short, blouses cut low, sleeves disappear. I get a hot dog from a street vendor, then stop at a nearby travel shop and browse through rolling bags, until I settle on a dark-blue TravelPro. As I am paying, my phone rings. It’s Jack Mikulski.

“Pavel, can you meet me and my researcher at Langan’s on the 47
th
? 5 p.m.? Dinner is on you.” He cackles.

“OK, Jack, thank you for meeting me on Sunday.”

I booked an early morning flight, so I pack quickly. I have just enough time to walk to Langan’s. June is the best time to walk in New York, as it’s warm but not yet humid.

Jack shows up with a pretty young Asian woman in her twenties.

“Suzy Yamamoto – Pavel Rostin. Suzy graduated from Harvard Law School last year; prior to that she went to Berkeley where she studied finance. She did some research for a hedge fund in Connecticut; now she is interning at our investment bank.”

Suzy volunteers that she is not looking for a permanent job and is exploring her interests while waiting for her fiancée to finish medical school.

Jack chimes back in, “The HR could not pass up on someone with Suzy’s credentials. But the trading department does not want her around; they don’t think women mesh well with that testosterone-charged pit. She does not program, so the quantitative group does not know what to do with her either. So they sent her to the dead-end corner of risk management. Out of sight, out of mind. Suzy is going to a theater with friends, we don’t have her for long, so let’s order and get on with the story.”

For the second time in three days, I explain the sorry brief history of the Grand Castle Rock investment fund. Suzy throws out some questions related to the fund’s registration and disclosures, clearly she knows quite a bit about the field. But there is not much to go on, the Grand Castle Rock had only a few “accredited” clients. I did bring my file with the funding agreement, list of holdings and some of the subsequent paperwork. Suzy is hesitant because of confidentiality. Jack laughs and takes the file with a “she is young” comment.

I turn to the New Treasury Island ELP and my former partner Martin Shoffman. Jack listens for a while, then casually throws out, “I heard Martin was at the BJH Financial Products Group last week, trying to buy CDO insurance for a large anonymous client.”

Seeing my dumbfound expression, he bursts out laughing.

“Pavel, you are a babe in the woods, a babe in the woods. Sitting here, feeling sorry for your poor destitute partner. Martin must have sold you five ways to Sunday. Let me says this: I think the holdings of the Grand Castle Rock have not been liquidated. Instead, assets have been transferred to the Cayman’s fund.”

“Why do you say this?”

“Firstly, many of your holdings were not liquid; it would have been difficult to sell them. Secondly, your former partner trying to buy similar assets should be a clue even to a naïf like you.”

“You mean the insurance policies on CDO’s?”

“Yes. The kind that Martin is shopping for.”

“Why have you bought them in the first place?” wonders Suzy. “There is literally no market for them,”

I take a sip of my drink, ponder how to explain months of strategy in a couple of minutes. “CDO’s are ‘collaterized debt obligations.’ They are basically a product of mortgages that people took on their homes. Bankers sliced and diced the expected cash flows from these mortgages to create new securities, such as CDO’s.”

“And in the process they completely destroyed the natural risk management process.” Jack motions for another drink, he is warming up. “Back in the times of
It’s a Wonderful Life
, before extending you a loan the banker would think really hard whether you’ll pay it back. But then our government decided that people have this basic right to get loans, and now the bankers don’t care whether you’ll pay the loan back or not, they just turn around and hand it over to one of the government-sponsored organizations.”

“To make the long story short,” I say, taking back the conversation, “we modeled what woud happen to these CDO’s if the real estate market cooled off, and we realized that they are grossly overpriced.”

“Why?” asked Suzy. “In school, they teach you that markets are efficient.”

Jack laughs so hard, he almost hits his head on the table. “Efficient, my ass!”

I also smile. “You see, Suzy, in combining multiple mortgages in one big pile, the bankers argued to the rating agencies that they have diversified the risk and that the combined security is much safer than individual mortgages. But it’s a false diversification, because when the real estate market cools off, it affects most mortgages. Nevertheless, the ratings agencies bought this argument, and slapped the highest AAA rating on many CDO’s. That’s why they are overpriced. That was our big idea – to buy CDO insurance from BJH. It’s a gamble but with a possibly very high payoff.”

“It’s not a gamble; it’s a sure thing as long as you can hold the position,” Jack grimly states. “Eventually the proverbial you-know-what will hit the fan.”

Suzy has to go, but Jack asks me to hang on for a while. “Pavel, are you telling me everything?”

“Why do you think I’m not?”

“Suzy is a smart cookie, and she’ll dig out what dirt can be dug out here. But I’ve been around this business for thirty years, and I don’t need a ton of research to figure out the big picture. It sure looks to me like you’ve been set up in this whole ‘fund management’ thing. Someone knew where you were vulnerable and exploited your naiveté to screw you over. But what I can’t understand is ‘Why?’ Pardon me, but it’s not like you had any real money to be swindled out of. What is it you have that someone wants?”

I’ve known Jack for eleven years, he is not your usual business school-produced banker. He was an officer in Vietnam, came to the Wall Street in the 1970s, worked in corporate bonds for many years. Jack has been cynical about the business for a long time, claimed that computer-driven trading will destroy us all, has been labeled a Luddite old-timer and moved to risk management where he is writing scary memos that the management ignores. The bank is just waiting for him to retire. I worked with Jack on some of his risk-assessment models, did not think he was a Luddite at all, just a bit old-fashioned and conservative.

I tell Jack that my father had died in St. Petersburg last week and left me an expensive apartment, but that I don’t see how it can be connected to the fund business. I feel that I am crossing the line between an omission and a lie, but I am just not ready to share more.

Jack nods, though I am not sure he believes me. “I am sorry about your father. You never talked about him.”

“He and I have not seen each other often.”

“So there is nothing else you can think of?” says Jack, looking straight at me, probably trying to watch my body language.

I am tempted to tell Jack about the stolen package, but resist.

“No, nothing else.”

“OK. It’s puzzling that we don’t know the motive here.”

I agree, it is puzzling.

Monday, June 12

I am back on a plane, this time heading to Los Angeles. Some people like traveling; I am not one of them. I am susceptible to jet lag, and the whole process wears me down. At least I luck out again and the seat next to me is empty.

I open my father’s diary and go to the first 1942 entry, where I stopped on Saturday.

29 January, 1942

Mershov sent me on another visit to Smolniy. I get to deliver a package to Zhdanov again. He is in a good mood, not screaming at anyone. Zhdanov asks me:

“You look kind of young for a
militziaman
. What’s your name, how old are you?”

“I am Vladimir Rostin, seventeen,” I answer honestly.

“Where are your parents?”

“My mother was killed when she was giving a concert to the troops. My father was in the Fourth People’s Volunteer Division, he was last seen on August 11
th
counter-attacking the Germans.”

“Your parents died as heroes, you should be proud of them,” Zhdanov lectures me. “Their sacrifice was not in vain, they stopped the invaders. The most important work is to protect the Party. The Party will save the country. Are you living by yourself?”

“No, with a neighbor and a small child whose parents are dead.”

Zhdanov lifts up the phone:

“Bring me a food package. The usual: bread, jams, ham, sausages.”

I feel dirty taking it. But I think of Nastya and Andrei. We have to survive.

Listening to the radio. Olga Berggoltz’s husband died today from starvation. She was crying as she read her new poem:

I can’t feel grief or sorrow any longer.

I have to serve out my cursed sentence!

Your love condemned me to live

And to be brave.

Nastya breaks down, whimpering “my mother, my sister.” Little Andrei hugs her and they sway together.

Zhdanov in Smolniy…That’s the Smolniy Institute, the former aristocratic girls’ school from which Lenin had directed the 1917 putsch. It became the party’s headquarters in Leningrad. Stalin started the Great Terror here by assassinating Sergei Kirov, his potential rival within the party.

Zhdanov was the Leningrad’s party chief during the war. He personally signed hundreds of execution lists, condemning thousands to death. At one point, he was Stalin’s likely successor but died from alcoholism. The author of 
zhdanovshchina
, the cultural and artistic code of the Soviet Union, he was an incompetent dilettante that prosecuted great artists and tried to reduce all of culture to a chart of simple moral values.

But why did my father write
“Zhdanov again”
? And
“mother was killed during a concert”?
Must have been in the missing pages.

22 February, 1942

The bread rations have been increased to 300 grams for dependents. This is not enough to survive, but we still have a bit left from the Zhdanov’s package. The days are getting longer, the darkness starts to retreat.

We gather round the radio, taking in Olga Berggoltz’ latest poem: