Because the bailout of banks following the Second Pulse crash was huge. They always are. The bailout of the 2008 crash, which served as the model for the two that followed it, was calculated by historians at somewhere between 5 and 15 trillion dollars. One careful guess said it was 7.7 trillion dollars, another 13 trillion; both added that this was more than the cost (adjusted for inflation) of the Louisiana Purchase, the New Deal, the Marshall Plan, the Korean War, the Vietnam War, the 1980s savings and loan bailout, the Iraq wars, and the entire NASA space program, combined. Conclusion: wars and land and social programs must not be very expensive. And compared to rescuing finance from itself, they’re not.
But wars too are good for finance, and a few more happened in the twenty-second century, sure. Hundreds of millions of people were suddenly refugees, and that’s a lot of terrorists to suppress. This was a continuation of the surveillance state that had been growing through the twenty-first century, what an earlier time would have called a police state, but at this point that term would have been aspirational. That this permanent war on terror could have remained a police action and had more success in its stated goals than it was achieving when waged as a pseudo-war was a view only mentioned by radicals whose words encouraged the terrorists.
Meanwhile this aspect of things also created new financial opportunities. Governments, being hollowed out by debt, couldn’t properly fund the security adequate to deal with potential opposition, nor were they good at small-scale asymmetrical warfare (meaning police action, which in fact they used to be good at). Since there was a need for more police but no funding for it, private security armies stepped in to fill the need. Lots of them. The rich, being people too, doing all they could to cope with the night sweats and zombie terrors of making fourteen hundred times as much money as the people working for them, made sure to finance the best personal and corporate security that money could buy, and mercenaries from all the refugee wars were numerous and available. This was good: when you are a small minority and you own the majority’s wealth, security is naturally a primary consideration.
So private security armies were everywhere, from Denver to upper Manhattan. This new industry seemed to challenge a principle that used to be called the state monopoly on violence, but then again if finance had taken over the state, possibly the state was in effect already a kind of private security force, so that there was no conflict there, but just an infilling of a market, a supply fulfilling a demand. Alas, as always happens, there were very many quite incompetent new companies in this new business. And an incompetent security company is a scary thing. Hard to know if the mystery of whether the state was still a force opposed to these private armies could be answered in any way one would actually want to see in the real world. A state revolt against global finance? Democracy versus capitalism? Could get very ugly.
That said, we must revert to the concept of soft power, and the Pyrrhic defeat, on which more later. In the meantime, along the drowned coastlines themselves, interesting things happened. There existed now a very long strip of newly useless but still strategic shallows, all over the world. No one could do much in this strip in the immediate aftermath, except get away from it, then get shipping ports operational again. People retreated inland, capital decamped. Governments too left the coastlines, relieved to be done with relief, as the remaining problems were intractable. Further salvage and repair was a job for market forces, they declared, but in fact market forces proved not to be interested. The drowned zones were not only not the highest rates of return, they were the lowest; they were labeled “development sinks,” meaning places where no matter how much money you pour in, there is never a profit to be made. The same thing had been said of Africa for centuries now, and lo and behold look how truly that prophecy had self-fulfilled. Recall the requirements for the highest rate of return: a stable hungry populace; good infrastructure; hot money; access to world markets; compliant and uncontested government. None of these obtained in the intertidal.
So, first looters and salvage crews and displaced residents all paddled in and out with what could be taken away. Then the squatters and the stubborn were left in possession. Others came in from elsewhere, immigrants to disaster. The narrow but worldwide strip of wreckage that they occupied was dangerous and unhealthy, but there was some infrastructure left standing, and one immediate option was to live in that wreckage. Though many stretches of new coast were more or less abandoned, New York, the great blah blah of the blah blah, with uptown still high and dry—yes, people returned to the drowned parts of New York. There is a certain stubbornness in many a New Yorker, cliché though it is to say so, and actually many of them had been living in such shitholes before the floods that being immersed in the drink mattered little. Not a few experienced an upgrade in both material circumstances and quality of life. For sure rents went down, often to zero. So a lot of people stayed.
Squatters. The dispossessed. The water rats. Denizens of the deep, citizens of the shallows. And a lot of them were interested in trying something different, including which authorities they gave their consent to be governed by. Hegemony had drowned, so in the years after the flooding there was a proliferation of cooperatives, neighborhood associations, communes, squats, barter, alternative currencies, gift economies, solar usufruct, fishing village cultures, mondragons, unions, Davy’s locker freemasonries, anarchist blather, and submarine technoculture, including aeration and aquafarming. Also sky living in skyvillages that used the drowned cities as mooring towers and festival exchange points; containerclippers and townships as floating islands; art-not-work, the city regarded as a giant collaborative artwork; blue greens, amphibiguity, heterogeneticity, horizontalization, deoligarchification; also free open universities, free trade schools, and free art schools. Not uncommonly all of these experiments were being pursued in the very same building. Lower Manhattan became a veritable hotbed of theory and practice, like it always used to say it was, but this time for real.
All very interesting. A ferment, a tumult, a mess. Possibly New York had never yet been this interesting, which is saying a lot, even discounting all the bullshit. In any case, pretty damned interesting.
But wherever there is a commons, there is enclosure. You can bank on that. You can take that to the bank. So to speak. And with things going as well as they were in lower Manhattan, such that some people even complained it was getting back to the same old shabby garbled expensive bourgeois wannabe mess that it had been before the floods, there began to rise into visibility a newly viable infrastructure and canalculture—the intertidal, the SuperVenice, occupied and performed by energetic people who were hungry for more. In other words, taken all in all, a place that might make for a very high rate of return on investment! So a situation was developing. Push was coming to shove. And when push comes to shove—well, who knows? Anything can happen.
PART FOUR
EXPENSIVE OR PRICELESS?
Property becomes a claim to the yield.
—Maurizio Lazzarato, Governing by Debt
The invisible hand never picks up the check.
a) Franklin
By the time I got back from rescuing the two little drowned rats with the building’s super, I was late to pick up Jojo. “God damn you guys,” I said as we gurgled into the boathouse, “you’ve made me late.”
“For a very important date,” Vlade added heavily.
“Thank you, Mr. Garr,” Roberto said. “You saved my life.”
I couldn’t tell if he was being sarcastic or not.
“Gowan witcha, get outta here,” I said. “Scraminski. I’ll see you in dining and we’ll celebrate your survival then. I gotta get going.”
“Sure thing boss.”
I dumped them on the dock with their stuff and got back out to the river to get to the office as quickly as possible. In fact I wasn’t so late that I couldn’t duck in and see how things were going before picking up Jojo. Since I was already a little late, a little later wasn’t going to matter.
I
paid the dockmaster at our building to give me a half hour and ran to the elevator. In my office the screens were on as always, and I sat down and started reading in a state of extreme interest. Because the thing about bubbles is that when they pop, they pop. The metaphor is extremely apt, because the speed of a bursting bubble is its salient aspect. There, and then not there. If you’ve got skin in the game when that happens, that skin is gone. Very important to get out before that happens.
So I did not want this particular bubble of submarine bonds playing off the IPPI to pop, as I didn’t quite have all my ducks in a row. Bubbles, skin, ducks, yes it was a morass of mixed metaphors, a veritable swamp one might say, adding another one to the ones already there, but this is what all the recomplications of the game have led to: it’s gotten so complex that it can’t be understood, so everyone resorts to stories from a simpler time. Part of my job was sorting through all the metaphors to see if I could grasp the real thing underneath them all, which was not exactly mathematical, thank God, but more a system, like a game. In the various inflows of information that my screens gave me, the system was revealed in parts (like jigsaw puzzle pieces, yes, but not) and that system in the end was not like anything but itself. A vast artificial intelligence, yes, but as to whether it was really intelligent, I think that too is another metaphor, like Gaia, or God. In fact no one is really home, so all the intelligence in this system, such as it was, was really in the people participating in it. Which meant there might not be very much intelligence there. And it was definitely massively fragmented. So, many fine or not-very-fine intelligences had in effect combined to make a team, but with no coherence and no way to get purchase on the situation. Schizophrenic but not crazy. Hive mind, but no mind. The stack, as in stacked emergent properties, but really stacked emergencies. Really best to think of it as a kind of game. Maybe. A game, or a system for gaming things.
Anyway, on this afternoon my screens showed things were fine. No crash in the last two hours. I would have thought the Chelsea wreck would have dragged the local IPPI down a little more. There had been a shiver, a shock wave resembling the little tsunami that had radiated from the collapsed building itself, but stop that; it was a drop of about 0.06 in the global IPPI, 2.1 in the New York regional. That was one indicator of how much New York still tended to stand for The City everywhere. But the Hong Kong exchange had taken in this news and damped the shudder, no doubt because buildings in Hong Kong were always melting and so they were used to it. So in less than a week the situation had gone through news of the collapse, negative reaction, and investment reuptake, and on it went without further fuss, trending upward as usual. I saw what it was: people didn’t want the bubble to burst. It would take far more than any one building or neighborhood, because too many people were still making money going long.
Just time for a sigh of relief, and a note to my friend Bao in Hong Kong to keep up the good work of giving me his take on trends there, and the closing of a couple of deals, and I could shut down and hustle over to Jojo’s office. At that point I was only forty-five minutes late, and only a little hyped up by all the day’s events.
“Sorry I’m late,” I began as I was allowed in and entered her office, and I could see by the look on her face that it was good I began that way. “Vlade requisitioned me as I was leaving the Met, we had to zip up to the Bronx and rescue those two little squeakers who saved the old man, it was their turn to be saved.” And I explained how they had managed to get Roberto stuck on the bottom of the south Bronx, with Stefan up in their boat holding his oxygen bottle and nothing else.
“Jesus,” Jojo said. “What were they doing up there?”
“I don’t know,” I said. “Fooling around like they do.”
She gave me a look I couldn’t read, then started shutting down her screens and gathering stuff into her bag. “Okay I’m ready. Where do you want to go?”
“How about back to the bar where we met?”
“Sounds good.”
In my skeeter, the locus now of such fond memories of our glorious date in the harbor, I felt the buzz of things going well, and in that excitement I described in some detail my relief at the fact that the submarine market had withstood the shock of the Chelsea building going under. “I’ve got to get my short-on as big as I can before the crash hits, or else I won’t be able to take full advantage of how much will be crashing, it’s amazing when you add it all up. Now that the IPPI is over a hundred it’s like a psychological tipping point, I think everyone is thinking it will start to soar.”
“Do you think your index is fooling them about that?” she asked, looking around at the other boats on the canal.
“What, like I’m spoofing or something?”
“No, just that it’s been going up no matter what happens.”
“Yeah, well, confidence is one of the variables being factored in, so it’s more like people just want it to be going up.”
“Don’t you want that too? I mean, wouldn’t that mean things were getting better for people living there?”
“Prices going up? I’m not so sure. But I am sure there’s a huge collapse coming in the housing stock itself. All the improvements in tech won’t be enough to make up for that.”
“But the index keeps going up.”
“Because people want it to go up.”
She sighed. “Indexes are strange.”
“They are. But people like complex situations reduced to a single number.”
“Something to bet on.”
“Or a way to try to track rates of inflation. I mean, the Cost of Living Extremely Well Index? What’s that for?”
She grimaced. “That’s to laugh at how rich you are. Check off the yacht, the fur coat, the jet, the lawyer, the shrink, the kid at Harvard, whatever else is on the list.”
“It’s definitely more fun to look at than the Misery Index,” I said. This was a simple index, as befitting its subject: inflation plus unemployment. “You could add quite a few more variables to that one too, I guess.” Such as personal bankruptcies, divorces, food bank visits, suicides … It didn’t seem like listing these variables was a good idea at this moment. “Or maybe the Gini index, maybe that’s a kind of cross between the Cost of Living Extremely Well Index and the Misery Index. Or you could go the other way and check the Happiness Index.”
“Indexes,” she said dismissively.
“Well hey,” I said, feeling defensive. “Don’t you use any?”
“I use the volatility indexes,” she admitted. “You kind of have to.”
I nodded. “That was one of the inspirations for the IPPI. I like the way it’s trying to describe the future with its number.”
“How do you mean?”
“Well, because it collates all the rates that paper due in the next month are going to get. So it’s kind of a month out. I wanted to do the same for the intertidal.”
“Read the tea leaves, tell their fortune.”
“I guess?”
“While things keep falling apart.”
“Yeah, that’s the balance, both things are happening. So it’s hedge heaven. You have to play both sides.”
“But now you’re shorting it.”
“Yes, I think the long is too long, like I said. It’s a bubble. Of course in a way that’s good, as I said. More to collect when it pops. So I’m pushing that angle too, keep on buying put options.”
“So you are spoofing!”
“No, I really buy them. I do flip them sometimes, just to help keep it all going until I’m ready.”
“So you’re front-running.”
“No no. I don’t want to do that.”
“So it’s like those accidental spoofers. You really do think it’s going up. But I thought you said it wasn’t going to continue.”
“But people think it is. It’ll go up until it pops, so I want it to keep going up.”
“Until you’re ready.”
“You know what I mean. Everything in place. Meanwhile, it’s a case of the more the
merrier.”
She laughed briefly. “You’d better watch out, though. If the crash is too big, there won’t be anyone left to make good on your shorts.”
“Well,” I said, startled. “That would mean everything. End-of-civilization kind of thing.”
“It’s happened before.”
“Has it?”
“Sure. The Great Depression, the First Pulse.”
“Right, but those were finance. End of a financial civilization.”
“That’s all it would take, in terms of you losing everyone who could pay you off.”
“But they keep coming back. The government bails them out.”
“But not the same people. New people. The old people having lost out.”
“I’ll try to dodge that fate.”
“I’m sure you will. Everyone does.”
She shook her head, smiling a little at me—at my optimism? my confidence? my naïveté? I couldn’t tell. I wasn’t used to that particular smile being aimed my way, and it made me a little uneasy, a little irritated.
We got to Pier 57 and I slipped the zoomer into one of the last slips in the marina, and we joined the crowd in the bar. Amanda was there with John and Ray, and they greeted us happily, Amanda with a start and then a knowing smile as she saw us come in together. It was nice to cause that start, as it’s never pleasant to be dropped. But we were friends and I smiled back, pleased to be paired with Jojo in the eyes of my friends. Inky was slinging it behind the bar and the clouds over Hoboken were going pink and gold above a brassy sun bronzing the river. High tide and high spirits.
After a drink we all retired to the rooftop restaurant and ate over the water in the twilight and then the dusk. A trio in the corner was playing Beethoven’s “Appassionata” sonata on pan pipes, red-faced and hyperventilating. It was warm for November, even a little sultry, and the steamers and mussels, pulled right out of the filtered cages underneath us, were tasty, as were Inky’s concoctions, which we had brought along with us to the table. The gang was having fun, but something felt different to me. Jojo was talking with Amanda on the other side of her from me, and of course Amanda was enjoying that; but they were not friends, and I felt a little coolness emanating from the J-woman that I could not show that I felt, not in front of the others. So I chatted with John about the events of the week, and we agreed that things were getting interesting with the new state attorney general taking over, said to be a real sheriff, though we both had our doubts. “They’re always just a touch second rate,” John said, to which I nodded. “You go from creation of value to destruction of value, you get a different kind of personality involved. It’s not as bad as the rating agencies, but still, it’s pretty bad.”