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Day IV
Day V
Now the woeful notes begin to make themselves heard; now am I come where much lamentation smites me. I had
come into a place mute of all light, that bellows as the sea does in a tempest, if it be combated by opposing winds. The infernal hurricane that never rests carries along the spirits in its rapine; whirling and
smiting it molests them. When they arrive before its rushing blast, here are shrieks, and bewailing, and lamenting; here they blaspheme the power divine. I understood that to such torment are condemned the carnal
sinners who subject reason to appetite. And as their wings bear along the starlings in the cold season in a troop large and full, so that blast the evil spirits; hither, thither, down, up it carries them; no hope
ever comforts them, not of repose, but even of less pain.
Dante Alighieri, The Inferno – Canto V
21
Creeping Decline
The slow creeping decline
of Western economies was gradually morphing into something more severe. In spite of the illusion of recovery that had been foisted off on the public by a complicit news media and liberally doctored statistics, the fundamentals of the economy continued to decline. As the months slipped by after the crash of 2008 any number of major cracks in the levee systems of the economy were now opening and a flood tide of adversity was soon to follow.
Those who knew what to look for were less surprised than the rank and file general public, which was of two minds. People that had suffered any great loss, unemployment, foreclosure, a decimated retirement portfolio, knew the depression by shaking its cold, bony hand each morning. Their prospects were bleak and getting bleaker as unemployment benefits ran dry. But those still gainfully employed, safe in their mortgages, remained largely clueless. They could read the bad news in the papers if they chose, but many chose not to, preferring the idle distractions the media was so skilled at delivering instead.
The signs of more serious trouble were everywhere apparent, and not only off shore where the world fretted over the solvency of the PIIGS. Portugal, Ireland, Italy, Greece and Spain were the rotting edges of the Eurozone, with $2 trillion in sovereign debt. But the U.S. debt was five times bigger and, up until now, America had enjoyed the same hallowed status it had bestowed on it’s major banks—it was too big to fail. But the trouble was far more serious than anyone was openly willing to admit, obvious as it was. One had only to look.
Gold decoupled from the dollar as the almighty greenback slowly lost its favored status as the world’s reserve currency. Even U.S. Treasury certificates lost their luster when sovereign wealth funds shunned the instruments, selling them off until the Fed itself had to begin buying treasuries en masse to try and prevent a bond market collapse. The bloated balance sheet of the Fed seemed ready to explode at any time. It had taken the purchase of most of the nations mortgage backed securities in 2009, and now it was single handedly trying to finance the national debt by buying up Treasury notes.
Analysts across the Internet, intrepid Bloggers and now even main stream commentators were warning that the “Crash of ‘08” was merely a foreshock. Paul Farell of the popular financial web site Marketwatch.com was one voice unafraid to pull his punches in a near mainstream forum: “The Big One is coming soon, bigger than the 2000 dot-com crash and the 2008 subprime credit meltdown combined. A huge market blowout. And as Bloomberg-BusinessWeek predicts: "The results won't be pretty for investors or elected officials." Wall Street's toxic pseudo-capitalism is imploding. Be prepared for a massive meltdown. Yes, already the third major bubble-bust of the 21st century, triggered once again by Wall Street's out-of-control Fat Cat Bankers. And it's dead ahead.”
Yet like so many other prophets of doom, Farell was read, then ignored, in spite of he fire and eloquence. But the signs were evident throughout the whole of the US economy, and nowhere more evident than th ehousign sector, where the market now held 8.5 years of unsold inventory.
The mortgage industry was still flat on its back. Fannie and Freddie had died long ago, but their corpses were being kept alive by the heart/lung machine of the Federal government. Web sites like Patrick.net and Dr. Housing Bubble chronicled the pain, though relatively few people were even aware of these blogs. Week after week they presented a raft of articles on the hard facts of housing, sometimes focusing on specific counties and cities to make their points. Orange County, California had been the heart of the old Countrywide operation that cranked out rivers of now toxic ALT-A Option ARM mortgage paper. It was now shown that while only 12,000 properties were officially listed as distressed in the county, a rigorous analysis revealed the banks had quietly refrained from moving forward on foreclosures for thousand more. The actual total—over 100,000 distressed properties in the “shadow inventory” there.
It seemed no community was safe from the pain. While Stockton, CA took the honors for the highest percentage of actual foreclosures on the market, places like Sedona, where posh housing on the red rock hills was now suffering a whopping 40% foreclosure rate, and Las Vegas, America’s dream city still lost in the fog of denial and illusion.
In Vegas the hotels and casinos continued to announce and build new expansions to the warren of properties there. The local papers mirrored the illusion. Everything above the fold was about plans for yet more hotels and casinos—this in a city that is glutted with accommodations and already home to 15 of the 20 largest hotels in the world. They all struggled to fill rooms but they were building yet more—upscale suites for the upper class business traveler, the folks most likely to be immune to the ongoing depression. Yet all the stories below the fold were about struggling area businesses and car dealerships meeting their demise. But the headline went to the planned opening of that new hotel, complete with a photo of a big earth mover scraping away at the lifeless grey-brown desert soil to plant the seed of another extravagant facility aimed at attracting more tourists with yet another casino.
There was something oddly discomforting about Vegas in this light. It stood as a symbol of opulence, triviality, extravagance, deception, overblown architecture, and the completely misguided notion that growth and perpetual expansion were to be taken for granted. It was the ultimate testament to the folly of humans as simple animals who were still fascinated by shiny things. The entire city was a theme park, the grand Disneyland of the American Brave New World. Like the ill fated development sin the oil rich sheikdom of Dubai, It defied credulity, with more hotels, more casinos, more cars crawling at a snails pace on the strip. And the oddest thing about the place is that it had largely become the playground of foreigners when the dollar tanked. What if the Asian and European tourists that easily made up 70% of the customer base there simply went home?
One hotel had labeled its opulent shopping district as “The Street of Dreams,” but in spite of the throngs of foreign tourists most people were simply gawking and sightseeing. They took pictures of everything, but bought virtually nothing. The street of dreams had become a nightmare.
Even upscale tourist traps like Sedona were now in steady decline. These wealthy enclaves had resisted the erosion of the economy like stubborn boulders in the stream, but by early 2010 Sedona, a Mecca for artists, gurus and alternative healers in the red rock mountains of Arizona, suddenly had a 40% foreclosure rate. The same was true of wealthy districts throughout the Bay Area in San Francisco.
For the nation as a whole, 30% of the population was edging toward the poverty line. 44 million were using food stamps, and for many it was their sole source of income. These people had no stocks, no bonds, no retirement portfolios, no health insurance. They had nothing at risk in the markets. They didn’t read Rupert Murdoch’s newly acquired and now highly politicized Wall Street Journal. They were the statistics the government strove so hard to redefine into a story that could bend a headline or to in their direction. Nobody could tell them there was a recovery underway, no matter how the BLS spun out its monthly unemployment numbers.
On Main Street, real unemployment moved through the 20% mark and threatened to go higher. Not even the governments stupidly stubborn data manipulation, simply removing discouraged workers from the work force tally, could mask the real pain on the streets. By January of 2010, thirty-six state unemployment insurance funds were already depleted and borrowing from the Federal government to continue issuing benefit checks. California, for one example, had a fund balance of just $110 million, and had borrowed $6.4 billion from Uncle Sam.
Elsewhere on Main Street, the dream of home ownership had long since become a nightmare, the consumer was dead, credit was all but gone, and retail and commercial sectors continued to fail at alarming rates. Worse than this, a subtle inflation began, most visibly in the food stores where boxes got smaller and prices got higher, month after month.
The banks had already become the scapegoat villains of the depression. They were justifiably blamed for the blindness, greed, malfeasance and fraud that had brought on the crisis. Incidents of violence against major bank buildings increased. People had been accustomed to silently seething over their decapitated credit lines and interest rates over 30% on their maxed out credit cards. But when the banks began to place extended holds on new deposits, even cash deposits, and when they subtly imposed more restricted daily withdrawal limits on demand deposit checking accounts, those who could read the signs knew a bank holiday was now imminent. All it would take would be some new “emergency” on American soil.
The wealthy were already well prepared for such an event, and the inevitable unrest that was sure to grow in the wake of more economic misery. They had been hoarding gold and silver for years, hiding funds in shell companies in the Caymans and Swiss banks. And they had been stockpiling other necessities of life—food, water, medicines, and hiring the security that would be needed to protect it all.
Companies like Blackwater had received a great deal of publicity for their work in Iraq and Afghanistan, but they were only one of hundreds of new security companies that had sprouted up like weeds, many under the umbrella of a new organization bearing the strangely Orwellan name of the “International Peace Operations Association.” Like well armed vultures, these security firms fed on disaster and unrest. After the devastating earthquake in Haiti in 2010, they immediately offered the wealthy interests on the island their able services.
Companies like “All Protection and Security” of Orlando, Florida threw up web sites to rake in their share of security contracts. Among their listed services were: “Route planning and monitoring” so the wealthy could remain free to move about the country. Armed escorts for convoys were a big seller. The list of services under the heading “Executive Protection” included dubious bullet points offering solutions for worker disputes, supplier/vendor disputes, and if all else failed the company actually listed “High Threat Terminations” as one of its offered services! Looters were casually shot on sight in situations where the normal rhythms of society broke down—except in the banking industry. When the looting started there, as one company after another heisted money from the public trust, no companies like “All Protection and Security” were ready to impose order. The SEC was, in fact, now run by ex-employees of Goldman Sachs.
Thus far the placid shores of the U.S. bore no resemblance to the chaos of Haiti or other distressed and lawless places in the world such as Nigeria, Ethiopia, Yemen, Afghanistan and Pakistan. The recent antics of Al Qaeda had produced nothing more than fumbling attempts to light shoes and underwear on fire, but any new “incident” that could command enough media attention and instill further fear would be a perfect trigger for the next stage of inevitable collapse.
Meanwhile, tensions in the Persian Gulf region between Israel and Iran continued to mount like a slowly boiling kettle. Oil prices moved relentlessly higher while both the DOW and the Dollar headed south. Before this a weak dollar had always resulted in stock market gains, but this second decoupling of the dollar and stocks was a key indicator that the truss systems of the world’s financial tower were buckling yet again. The tally of U.S. financial obligations exceeded $65 trillion, more than the entire Gross Domestic Product of the world.
22
The Nick Of Time
Flack looked through his binoculars
at the massive silhouette on the near horizon. “Looks like the cavalry has arrived,” he said aloud.
“Lemme see,” said Mudman, hovering at his side. Flack passed him the glass so he could have a peek at the ship. “What ‘s that, some big cruise liner?”
“Fairchild flagship,” said Flack. “looks pretty mean, eh?”
“I don’t see any guns,” Mudman handed the binoculars back. “What’re we gonna do, book reservations on that thing for all those guys up river with rifles?”
“Hell, Mudman, you saw what those helos did a moment ago. Those were civilian Eurocopters—but with a bite. I’m willing to bet this cruise liner out here has a few things up here skirts as well.”
“Yeah, like one of those giant megaphone’s to blast ‘em with sound?”
The Fairchild helos had circled the rig, lingering for ten minutes until there was no further sign the militant lighters. Then they swept out to sea in a roar of thumping rotors. A little over an hour later Flack saw the massive ship break the edge of the horizon.
The phone jangled and he picked up the receiver, irritated. “Now what?” he nearly shouted, still distracted by the vessel on the horizon. The voice on the other end of the line was unfamiliar.
“Chevron Robertkiri?”
“Yeah,
this is Rig Manager Flack. Who’s this?”
“Fairchild and company. Captain Iverson speaking on board company flag Argos. We’re cruising at 270 degrees from your position, you should be
able to make us out by now.”
“Right,” said Flack. “Corporate Boyz said we should expect you. Hope you people have a few more of those helos. I have eighteen people here on the
platform, and we’re stuck under orders to start tankering any crude we can move just as soon as you people provide the empty ships. You got tankers?”
“We’ll have Princess Angelina
ready to anchor for loading in three hours—500,000 barrel carrying capacity.”
“500K?” Flack glanced at his flow charts. “Christ that will take me two days to load—and
that under ideal conditions. I’ve barely got a pulse on the main pipeline right now, and if I lose my last pump station we won’t be able to move a thing.”
“Where’s this pump station, Mr. Flack?”
“Up
river, right in the middle of all the ruckus out there. I have a three man crew out there and they’re sacred shitless. Any chance you people can get one of those Eurocopters out to boost morale?”
“We’ll
do you one better, Mr. Flack. A chopper will be right over, and a fast lighter with a security team is heading your way now. In the meantime, could we set down on your landing platform and pick up someone who can
take our helo out to this pump station?”
“Roger that, Fairchild. I’ll have a man ready when you get here. But you better bring some muscle. I’ve been out here three years and
I’ve never seen it this bad before. You’re likely to run into trouble up river.”
“Roger Chevron. We copy that. We’ll be armed and ready.”
On board the bridge
of the Argos, Iverson scanned the coastline, noting the pall of black smoke rising in the distance.
“That’s an oil fire,” he said calmly to his executive officer.
“Aye,
sir, always hate to see it burning like that.”
Iverson nodded. “You can slow to one third. Take us in, Mr. Keeley, but no anchorage. I want us at a minimum of 10 knots at all
times.”
“Aye, sir.”
“I’ll be in the executive suites. You have the bridge, Mr. Keeley.”
“Thank you, sir. “ Keeley gave him a crisp salute as he
was piped off the bridge. Five minutes later the Captain knocked softly on the door to Ms. Fairchild’s offices.
“Come.”
He let himself in, removing his hat as he entered and tucking
it neatly under his arm.
“Afternoon,” he said matter of factly, crossing the plush carpeting.
“Yes,” said Fairchild, “but not a good one.” She had a harried
expression, her face tired and drawn.
“Complications?”
“Princess Royal is in trouble,” she said bluntly. “The fire is burning too hot to contain with retardant. The
bulkheads forward of the damaged sector may be weakening. The tugs have arrived, but she’s still in the main shipping lane and moving her under these circumstances is going to be very
dicey.”
“Doesn’t sound good,” the captain commiserated.
“It sounds absolutely frightening.” She returned. “I’ve got calls out to anyone I can find in Al
Fujairah for an at-sea offloading operation, but it’s going to be very risky. If one of the other holding tanks becomes involved in this fire we may not be able to save the ship.”
“The aft
compartments should be accessible,” Iverson suggested. “That’s three of the five—some 600,000 barrels. Vopak and Van Ommeren both have at sea loaders at Al Fujairah.”
“Yes,
they’ll be underway in an hour, or so I’m told. But that’s a lot of crude, and we’ve lost the main pumps on Princess Royal. They’ll have to bring in new equipment.” She gave him a
defeated look. “And she’s listing five degrees…”
“They’ll compensate for that. Shouldn’t be any trouble to correct that with ballast.”
“Some of the
oil in the center hold has begun leaking into the ballast zone,” she said. “Damn double hulled tankers. They’re top-heavy and unstable.”
After the Exxon-Valdez incident all tankers
calling on US ports had to be doubled hulled. The space between hulls was often used for fuel or ballast, with small areas for maintenance access. Fuel leakage into this area could be very hazardous. Iverson knew
the danger that the fire would spread was now very real. Elena looked at him, clearly disturbed. “I think we may loose her, James.”
She didn’t often address him by his first name, and the
sound of it was welcome. He wanted to move closer, offer something more to reassure her, but found the distance between them imposed by their roles as Captain and CEO too difficult to breach.
“We
don’t know that yet,” he reasoned. Men always needed to fixed things, he thought. Every problem was met with a potential solution, some workable alternative in the mind of a man. Elena Fairchild, for all
her discipline and the hard edge to her character honed by business dealings, was nonetheless a woman. She processed things quite differently. Iverson was sensitive enough to understand this, and took a different
tack.
“Here,” he said. “A bit of good news. It seems our local rebels didn’t want to tangle with the Eurocopters. They beat a hasty retreat for the river delta. We have a fast boat out
now with a security team. We’ll need to get out to one of their pump stations and secure it so they can move what they have in the line. But Princess Angelina should be loading in three hours or
so.”
Elena nodded half-heartedly, and he stepped over to the coffee bar. “You look like you could use a spot of tea,” he said, trying to sound as enthusiastic as possible.
She
mustered a wan smile. “I’m exhausted,” she confessed.
He poured her a cup from the ivory pot she kept at the ready. Two lumps, with a twist of lemon, just as she liked it.
“She’s tough old gal,” he said, coming round to Princess Royal again, his voice softening. “She’ll hold up long enough to get a good bit off into Volker’s tankers. They’ll
manage.”
“There’s more…” She took the cup, here dark eyes finding his, appreciating his closeness at the moment, the masculine presence, the quiet competence of the
man.
“What more?”
“Cable on my desk,” she said, too beset at the moment to explain.
He stepped away and saw the telex, reading it quietly, his brow raising a bit as he
did so. “I see,” he said. “Marines on Abu Musa. Leave it to the Americans to jump right in like that.”
“What are they up to? The Iranian’s will be up in arms and the future
of my company is right in the thick of it over there!”
“Intel thinks this was a missile,” said Iverson. “Maybe the Americans know something more.”
“Oh, they’ve
been angling for a reason to go after Iran since they knocked off Saddam,” she said, exasperated.
“Yes, well I can’t imagine they’re still spoiling for a fight right now with
what’s been going on with the banking system.”
“Don’t put it beyond them,” she said. “Fact is, Marines are on Iranian soil—“
“That island’s
disputed territory,” he said quickly.
“Yes, but the Iranians have an airfield there, and they won’t take this lying down. Listen to this news feed…” She punched up a screen on
her computer and read aloud.
“The Iranian defense minister warned today that his country could strike back at war vessels deployed in Persian Gulf if provoked further. ‘The Westerners know well
that the existence of warships serves as a fine operational target for Iran should they undertake further military action,’ Ahmad Vahidi says… And he went on to say there are now more than 90
war vessels in the Gulf - a waterway crucial for global oil supplies - and that foreign nations had created what he calls a military environment there. “
She shrugged with disgust. “Perhaps
someone should gently suggest to Mr. Vahidi that taking pot shots at oil tankers in the Gulf is hardly conducive to the promotion of peaceful commerce. Insurance rates are going to skyrocket again, not to mention
oil prices, which the only thing that might save us in this situation,” Fairchild conceded a crack of hope in the otherwise bleak news. “Oil’s moving. It’s gained $16. on the exchange in the
last hour, and futures are already at $130.”
“It’ll go higher,” said Iverson. “Traders are fleeing to commodities again to escape the mess in the US financial
system.”
“So we’ve got to salvage that oil on Princess Royal. If we can at least get those three compartments ashore it might just be enough.”
Iverson pursed his pips, his jaw
set with the realization that she was probably right. Things were wound up tight enough in the Gulf, he thought, and someone has lit the match. Now it was more than the oil in Princess Royal at stake. The
whole region could erupt at any moment, and the price of oil would erupt with it. It was certain to do so. It was just a matter of time, and very little of that remained.
Even as he was contemplating this,
the telex began chattering yet again. Elena Fairchild turned, half afraid to look. She leaned to read the text , her head shaking with an air of disillusionment as she did so.
“It gets worse every
minute,” she said quietly, pinching the bridge of her nose between her eyes where the headache had been bothering her the last hour.
“More trouble in the Gulf?” Iverson stated the obvious.
“It appears so,” she said. “Gulf of Mexico this time.”
Day V Continues soon
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