The things which are naturally everybody’s are: air, flowing water, the sea, and the sea-shore. So nobody can be stopped from going on to the sea-shore. The sea-shore extends as far as the highest winter tide. The law of all peoples gives the public a right to use the sea-shore, and the sea itself. Anyone is free to put up a hut there to shelter himself. The right view is that ownership of these shores is vested in no one at all. Their legal position is the same as that of the sea and the land or sand under the sea.
Most of Europe and the Americas still followed Roman law in this regard, and some early decisions in the wake of the First Pulse had ruled that the new intertidal zone was now public land. And by public they meant not government land exactly, but land belonging to “the unorganized public,” whatever that meant. As if the public is ever organized, but whatever, redundant or not, the intertidal was ruled to be owned (or un-owned) by the unorganized public. Lawyers immediately set to arguing about that, charging by the hour of course, and this vestige of Roman law in the modern world had ever since been mangling the affairs of everyone interested in working in—by which I mean investing in—the intertidal. Who owns it? No one! Or everyone! It was neither private property nor government property, and therefore, some legal theorists ventured, it was perhaps some kind of return of the commons. About which Roman law also had a lot to say, adding greatly to the hourly burden of legal opinionizing. But ultimately the commons was historically a matter of common law, as seemed appropriate, meaning mainly practice and habit, and that made it very ambiguous legally, so that the analogy of the intertidal to a commons was of little help to anyone interested in clarity, in particular financial clarity.
So how do you build anything in the intertidal, how do you salvage, restore, renew—how do you invest in a mangled ambiguous zone still suffering the slings and arrows of outrageous tide flow? If people claim to own wrecked buildings that they or their legal predecessors used to own, but they don’t own the land the buildings are on, what are those buildings worth?
That’s one of the things the IPPI did. It was a kind of specialized Case-Shiller index for intertidal assets. People loved having its number, which helped gauge investments of all kinds, including bets on the index’s performance itself.
Perhaps most importantly, it helped in calculating how much owners or ex-owners of intertidal properties had lost and could get compensated for, a number which Swiss Re, one of the giant re-insurance companies that insured all the other insurers, estimated to total worldwide at about 1,300 trillion dollars. That’s 1.3 quadrillion dollars, but I think 1,300 trillion sounds bigger. $1,300,000,000,000,000.
Well, but first of many firsts, in fact that’s far too low a valuation, if you are trying to accurately price what the coastlines of the world are truly worth to humankind. If you don’t heavily discount the future, which of course finance always does, the intertidal is worth about a zillion gazillion barillion dollars. Why say that? Because the future of humanity as a global civilization depends completely on its coastline presence, that’s why.
That being the case, the current wrecked zone also therefore represented an equal number of gazillion in losses. And yet no one knew who owned what, or on which side of the ledger any given asset resided. Were you in debt if you owned an asset stuck on a strand no one can own, or were you rich? Who knew?
My index knew.
And that was nice, because if the intertidal has any value at all, even if it’s only a zillion or two, then someone wants to own that. And other people want to leverage that value right out to the usual fifty times whatever it might be. Fifty zillion dollars in leveraged opportunities, if only someone could put a plausible number on it, or (which is really the same thing) allow people to bet on what a plausible number might be, thus creating the value.
That’s what my index did.
It was simple. Well, no, it wasn’t simple, it took all the quants at my disposal to work it up, and all my quantitudicity to comprehend even what I was asking the quants to quant, but the basic idea was simple—and it was mine. I made judgments concerning how the various pieces of the puzzle impacted each other and the total situation, and boiled it all into that single index number, and assured everyone that it was an accurate assessment of the situation. I listed for inspection all the elements that went into the assessment, and the basics of the calculation, which used classic Black-Scholes mechanisms for pricing derivatives, but beyond that, I did not give out the complete recipe of the algorithm, not even to WaterPrice. I did let it be known that for my baseline I began with the same starting point as Case-Shiller, so the two indexes could be better compared, and for sure the spread between them was one of the things people liked to bet on. Case-Shiller had designated an 1890s housing price average as their normative 100, and rated prices since then relative to that baseline. Shiller afterward often pointed out that despite all the ups and downs of history, when adjusted for inflation, housing prices had never strayed far from where they had been in 1890; even the biggest bubbles never took the index much over 140, and crashes seldom had gone below 95.
So the IPPI took housing prices, and simple sea level rise itself, and added to these two basics the following: an evaluation of improvements in intertidal construction techniques; an evaluation of the speed at which the existing stock was melting; a “change in extreme weather violence” factor derived from NOAA data; currency exchange rates; a rating of the legal status of the intertidal; and an amalgam of consumer confidence indexes, crucial here as everywhere else in the economy, although adding it to the IPPI was a new and controversial move on my part, as it was not a factor in the Case-Shiller. Using this mix of inputs, the IPPI said that in the years immediately after the Second Pulse, the submerged and intertidal’s worth had Case-Shillered down to very near zero, as was only right; it was a devastated time. But that was a retroactive evaluation, and in the year we introduced the index, 2136, we calculated the number to be 47. And it had been rising, unsteadily but inexorably, ever since. That was another key to its success, of course: a long-term bull market makes rich geniuses of everyone involved.
Yet another key was simply the name itself: Intertidal Property Pricing Index. Property, get it? The name itself asserted something that before had been questionable. It was still questionable, but all over this world property had already become somewhat liquefied; property now is just a claim on the yield. So the name was a coup. Very nice. Reassuring. Comforting.
So. Currently the global IPPI was at 104, the New York regional at 116, and both were still trending up faster than the noncoastal Case-Shiller, which was now at 135. And in the end it’s growth, relative value, and differential advantage that matters in determining how well you are doing. So yay for the IPPI!
As for the instruments used for trading on the IPPI, that was just a matter of packaging and offering bonds for sale that went both long and short on the index. We were by no means the only ones doing that; it was a popular investment, with the multiple variables involved making it a volatile high-risk, high-return market, attractive to people who wanted that. Every week there was a splash and crash, as we called it, and then a new method for aerating the submarine world would be announced, something we called a prize and rise. Meanwhile everyone had an opinion on how things were going and how they would go. And investors being so hungry for opportunities, the IPPI was performing well if judged simply by the number of bets being made on it; so well that it did even better, in the classic sort of bandwagon jumping that drives the markets and maybe our brains too: it was doing so well that it did better.
Of course it was true that certain assumptions I had baked into the IPPI needed to stay true for it to stay accurate. One was that the intertidal zone was going to remain legally ambiguous, jarndycing through the courts at Zenoesque speed. Another was that not too many of these once-and-future-and-therefore-present properties fell over too fast. If the rate of melting into the drink did not go exponential, or nova—if it proceeded, even accelerating, at a meas
urable rate that could be turned into a number that plotted not too hockey-stickistically onto a graph, one could follow that trend line up or down and see other trends and hope to predict futures, and, yes, bet again on that, without the IPPI itself ever cratering even if the actual physical stock did.
Thus my index contained and then concealed some assumptions and analogies, some approximations and guesses. No one knew this better than I did, because I’m the one who made the choices when the quants laid out the choices for quantifying the various qualities involved. I just picked one! But this is what made it economics and not physics. Ultimately the IPPI allowed for people (including WaterPrice) to concoct derivative instruments that could be offered and bought; and these could then be bundled into larger bonds, and sold again. So people loved the index and its numbers, and did not examine its underlying logic too closely. New paper was valuable in itself, especially when rated high by the rating agencies, who had such usefully short memories, like everyone else in finance, when it came to their own absurdly terrible judgment, so the ratings still mattered as a rubber stamp of legitimacy, ridiculous though that was given their history as a service bought by the very people they were rating. So now as always you could get AAA ratings, not for subprime mortgages, obviously bad, but for submarine mortgages, clearly much better! And the fact that all submarine properties were in some sense extremely subprime was not mentioned except as one aspect of the very lucrative risks involved.
A new bubble, you might say, and you would be right. But people are blind to a bubble they’re inside, they can’t see it. And that is very cool if you happen to have an angle of vision that allows you to see it. Scary, sure, but cool, because you can hedge by way of that knowledge. You can, in short, short it. You can, as I had found out by doing it, invent a bubblistic investment possibility more or less by accident, then sell it to people and watch it go long, knowing all the while that it is turning into a bubble; and all the while you can short it in preparation for the time that bubble pops.
Spoofing? No. Ponzi scheme? Not at all! Just finance. Legal as hell.
So, for the previous six months, reading the stats from around the coastlines of the world and trying to calculate all the trends, reading the tea leaves, the engineering journals, everything, including urban folktales, I had come to believe that the moment was approaching when this bubble was going to pop. Some places, like good old Manhattan, had a huge influx of technological innovation and human capital and sheer money, and here we were going to uptake the intertidal and make the best of it. But most of the world was well off the leading edge in all these relevant areas, and as a result, their intertidal was melting faster than it was being renovated. It had been about fifty-five years since the Second Pulse began, forty since it let off, and all over the world buildings were giving up the ghost and slipping under for good. Small buildings, big buildings, skyscrapers—those last fell with a mighty splash, and the market flinched and shuddered in their wakes—very brief flinches, just enough to adjust the IPPI, play the resulting jostle, and angle a few more points into our account—and then the bubble continued to expand. But it seemed like a moment of extreme simultaneous global badness was coming, and more and more I was shorting the very bubble I myself had helped to start in the first place.
What could be more nerve-rackingly cool.
And I was going out with Jojo for Friday drinks, and then maybe a float on the river, high tide at midnight, on a night of full moon, perfect! Oh! Oh!
So I left work and hummed down to Eldorado Equity on Canal and Mercer. Turning onto Canal Canal, as the tourists loved to hear it called, I found it crowded with afternoon traffic as usual, motorboats of every kind jammed bow to stern and thwart to thwart, to the point where more boat than water was visible. You could have walked across the canal on boat decks without ever having to jump, and quite a few flower sellers and mere passersby were actually doing that.
Jojo was waiting on her building’s front dock, and I felt a little spike in the cardiograph. I kissed the dockside with the starboard side of the skater and said, “Hey there.”
“Hi,” she said after a brief glance at her wrist, but I was on time, and she nodded as if in acknowledgment of that. She was graceful stepping along the deck back to the cockpit; looking up at her from the wheel it seemed like her legs went on forever.
“I was thinking of the Reef Forty Oyster Bar?”
“Sounds good,” she said. “So, do you have any champagne on this fine craft?”
“Of course,” I said. “What are we celebrating?”
“Friday,” she replied. “But also I made a little angel investment in some housing in Montana that seems like it should do very well.”
“Good job!” I said. “I’m sure the people there will be very happy.”
“Well, indeed. Security will do that.”
“The champagne’s in the refrigerator,” I said, “unless you want to take the wheel here?”
“Sure.”
I ducked below and brought back up a split. “It’s all in splits, I’m afraid.”
“That’ll do. We’ll be to Forty pretty soon anyway.”
“True.”
We had both worked late as usual, and now with about a half hour of daylight left, I hummed the bug up West Broadway to Fourteenth and turned west. As we purred along the sun-waked canal in the stream of boat traffic, I popped the split of champagne.
“Very nice,” she said after taking a sip.
The late sun spangled off the choppy water, shifting myriad blobs of brilliant orange over a deep black undercoat, the reflected light lancing everywhere. Yet another SuperVenice moment, and we toasted it as I let the bug putter along at the speed of traffic. The sunlight off the water suffused Jojo’s face, it looked like we were on a stupendous stage in a play put on for the gods. Again that feeling of I knew not what rose in the back of my throat, as if my heart were swelling; I had to swallow hard, it was almost a kind of fear, that I could feel this attracted to someone. What if you could really know someone? What if you could really get along?
Then my pad played the first three notes of the “Fanfare for the Common Man,” and I growled and checked it before it occurred to me that I should just turn it off. But before I did I saw the notice: that Chelsea tower that had collapsed had killed scores of people, maybe hundreds.
“Oh no!” I said without time to stop myself.
“What?”
“It’s that building that went down in Chelsea. They’re finding bodies.”
“Oh no indeed.” She sipped her champagne. “Did your IPPI come back up yet?”
“Mostly.”
“Do you want to go look at the damage?”
I think I might have gaped for a second. I did want to go look, but then again I didn’t, because although it was important that I stay on top of intertidal developments and get out before the bubble popped, that pop wasn’t going to happen just because this tower had done a Margaret Hamilton. And I was headed to the Forty oyster bar to watch the sunset with Jojo Bernal, and I didn’t want her thinking that I wasn’t giving her my top priority at this moment.
But in the midst of this cogitation she laughed at me. “Go ahead and go by,” she said. “It’s almost on the way.”
“True.”
“And if you think it might be a trigger event, you only have to push a button to get out, right? You’re prepped to move fast?”
“Nanoseconds,” I said, proudly if inaccurately, and turned the bug up West Broadway.
As we got up above Twenty-seventh it became a bit of a disadvantage to be in the bug, because its foils gave it a draft of almost five feet. Happily it was just a couple hours past high tide, which was all that allowed me to keep us headed uptown before I would have to cut west and out of the city.
As we got closer to the crash site, the ordinary ammoniac reek of a tidal flat was joined by another smell, maybe creosote, with notes of asbestos, cracked wood, smashed brick, crumbled concrete, twisted rusty st
eel, and the stale air of moldy rooms broken open to the day like rotten eggs. Yes, a fallen intertidal building. They have a characteristic smell.
I slowed down. The sunset poured its horizontal light over the scene, glazing the canals and buildings. A narrow bathtub ring marked all the buildings. Ah yes the intertidal, zone of uncertainty and doubt, space of risk and reward, the seashore that belonged to the unorganized public. Extension of the ocean, every building a grounded ship hoping not to break up.
But now one of them had. Not a monstrous skyscraper, just one of four twenty-story towers south of the old post office. Probably the use value and price of the other three had collapsed along with the one that had fallen, depending of course on if they could determine why it had happened. It was never easy to figure that out, making it a very good objective correlative for the market itself. Often crashes just happened, responding to invisible stresses. I said as much to Jojo and she grimaced and nodded.
We hummed slowly up Seventh, looking down the streets at the smash. No good would come from getting too close, as the canals around it were now dangerously reefed. This was obvious in the places where junk stuck up out of the water, and strongly suggested where swirls and ripples and little white potato patches roiled the black water as the tide ebbed south through the neighborhood. Other parts of the canals would look fine and nevertheless be hullrippers. So I looked by approaching the smash from several canals in turn, proceeding as far as I felt safe and then turning back.
The tower had obviously come down hard, pancaking maybe half its stories before spilling to the south and east. The shatter of its flat roof was tilted such that we could see all the water tanks and soil and greenery of the roof farm. Too much weight up there, probably, although that always was something that only became obvious in the aftermath. Emergency personnel were cautiously probing the wreckage from fireboats and police cruisers and the like, wearing the eye-popping yellows and oranges characteristic of disaster.