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Chapter 1

They were laughing at her.

Maiden Lane, who was the Assistant to the Secretary of the Treasury and, in addition to that, a woman of high-percentile physical desirability, was not used to that sort of treatment. Being a long, slender, tightly-curved woman of forty five, she was a glimmering Venus illuminating a murky banker cosmos. Ms. Lane had made her sacrifices to the gods of vanity, performing self-flagellating penance on hotel elliptical machines at four AM for twenty years. Her high, firm curves and smoothly defined legs were accentuated by a wardrobe of tight-fitting business suits...thigh-length, black business suits. She was more accustomed to being ogled than mocked.

All those women she passed along the way, she often thought, pity on those androgynous trolls, sheathing their swords of sexuality in scabbards of shaggy uni-brows and frumpiness. Losers! She thought. Maiden, or Mae for short, had no regrets about wielding her weapon of sexuality. You have to think like a winner in order to win, she often reminded herself in rare moments of doubt. Idealism is the rationalization of failure. Never project weakness. Never go on defense. Never pull a punch. A woman must use everything she’s got if she wants to reach the capstone. It’s a man’s world.

For Mae, it was easy to titillate and manipulate the deprived, balding, Poindexter-archetype that she encountered over the course of Treasury Department business. Bankers, diplomats, establishment apparatchiks...they were all shallow careerists who believed in nothing other than accumulating personal prestige. Their ego was their drug and the political realm truly was a Hollywood for egomaniacal ugly people. With a flirtatious wink or a juicy pout she could fondle their egos and set them onto the proper path.

This ability got her many promotions.
Maiden’s assets were tools that had served her well—better even than her PhD—as she sauntered up the rungs of the Treasury Department career ladder. Her meticulously styled hair, hawkishness, and high-gloss finish polished her impervious shell of armor and ionized her aura of ruthlessness. She was an invulnerable animatron, a sort of robotic, political dominatrix...

...At least up until now.

These Chinese fellows today, the two in the limo, they just weren’t into her. This was not an insurmountable barrier for Mae as she could play it straight as well as anyone, but it did plant an irritating stone in her toeless pump. Perhaps they were gay, she thought to herself as she closed her knees tightly together.
Mae was sent by her boss to meet with a high-ranking representative of the People’s Bank of China: Minister Tsang. But no one was there to meet her when she arrived at the Shanghai airport. This she found disturbingly unusual. She was, after all, with the U.S. Treasury Department and it was extraordinarily atypical to snub U.S. officials. After making a call to the Ambassador’s office and being put on hold for eighteen minutes, Mae was finally instructed to wait outside for a car. She waited. Her irritation grew. She waited for three hours. Finally, a limousine pulled up.

The white-gloved driver leapt out and in heavy Chinese accent asked her if she was indeed “Mae-de-Raine”. He was wearing one of those little chauffer hats tilted to one side and his pants were too short, revealing his white socks.

“Maiden Lane,” she corrected him annoyingly and with condescending emphasis the ‘L’ phonic.

The white-gloved driver just nodded with averted eyes, shoved her bags into the trunk and opened her door.

It was as she was about to step in that she noticed the two young Chinese agents inside, glancing down at and fingering their mobile devices. It additionally highly irregular to be met by officials at the actual airport so Mae directed her assistant to take a cab to the hotel, rather than ride along, as she sensed there might be some unusual negotiations about to take place. Mae didn’t want risk of her assistant being called up before some kangaroo Senate Committee to explain under oath to her inquisitors what she overheard about whatever unorthodox deal was about to be made in the back of this limousine. Discretion was the first official secret she was taught once she attained a high-enough degree in the cult of the bureaucracy. A witness creates opportunity for discovery. Discovery means transparency. Transparency means oversight. And oversight is anathema to the efficiency of bureaucracy. You cannot be effective as an agency if you have an army of shrill, elected idiots questioning what you’re doing all the time. ‘Tis best to encourage Congress to snipe away at each other and stay out of the really important matters like economics. Deep down inside, congress really doesn’t want to know what is really happening because then they might really be held responsible for it.

The two Chinese officials sitting across from Mae were thirty-something, fastidiously dressed in fine black suits and polished shoes. Unusual as well. Jellied-up black hair, cut into fades, framed their high, wide, Mongolian cheek-bones and sneering faces. Both were still fidgeting their handhelds. They wore black sunglasses.

“Welcome, Ms. Lane,” exclaimed one of the fellows without lifting a glance from his gadget, “How was your flight?” He asked in perfunctory monotone. His English was nevertheless perfect.

“I guess I’m a little irritated,” Mae answered. “No one met me at the airport. I had to wait almost three hours. I was expecting to meet in person with Minister Tsang at his office at PBC. Are we headed there?”

“Minister Tsang has sent us in his place,” answered the other in similar monotone and without raising his eyes from his gadget.

“We beg your forgiveness, Ms. Lane...” continued the first “..but Mr. Tsang has urgent business with officials in Bhutan.”

“I see,” Mae continued, perplexed. Bhutan? She thought. What the fuck? “Are we going to meet with Mr. Tsang tomorrow, then?” She asked.

“I do not think that will be possible, Ms. Lane,” answered the first, finally putting his gadget away into his breast pocket. “However, we have been
empowered by Mr. Tsang to negotiate on the behalf of the PBC.”

“Please excuse me but I must say that this is highly unusual. You two gentlemen haven’t even introduced yourselves. Do you even know who I am?” Mae asked with condescension and a deep furrow in her brow.

The two young officials looked at each other, each aping the other’s smirk.

“Of course we do, Ms. Lane. We are well aware of who you are and who you represent. You are Maiden Lane, Assistant Secretary of the Treasury, and you’ve been sent in place of the Treasury Secretary to conduct negotiations with the PBC,” explained the first.

“Your Treasury Secretary did not feel it necessary to come to Shanghai to meet Mr. Tsang in person to discuss this matter and he sent you in his place. Conversely, Mr. Tsang did not feel it necessary to discuss these matters in person, particularly in lieu of urgent matters in Bhutan, so he sent us in his place. So you see, Ms. Lane, there is no need to feel irritated. Mr. Tsang has already reviewed your latest proposal and we have been instructed on how to proceed...”

“...Proceed on the behalf of the People of China,” completed the first.

“Forgive me, but what matter in Bhutan could be so urgent as to cause Mr. Tsang to miss a meeting with a U.S. Treasury Department official?” Mae snapped.

“Aha. Bhutan may seem insignificant to the Great United States of America but Bhutan is China’s neighbor and a close and important ally,” answered the second.

Bhutan: a launching point for Tibetan operatives, she thought.

“We have been fully empowered to conclude the negotiations here,” explained the first.

“What do you mean by ‘here’?” Mae asked, even more bewildered. “Here as in here in Shanghai?”

“More specifically, ‘here’ as in ‘here in this limousine’,” explained the first.

Mae struggled for a moment to find words which was an unusual experience for her. Even when she was caught she was quite capable of filling in any vacuum with semi-convincing bullshit. It had to be the uncustomary haughtiness of her Chinese counterparts, she thought. Sometimes the French and the Russians were rude, but never the Chinese. The good little Chinese...always so worried about pretense; a cultural thing, no doubt. So why the rudeness, today? They would never normally behave so rudely to American officials.

Mae’s irritation was growing into frustration.

“Are you serious? In this car? You want to negotiate a swap arrangement that could impact the value of a trillion dollars of your Treasury holdings in that back of a limousine?” Mae sat with a gaping-mouth for a moment before relenting. “Fine,” she declared, opening up her briefcase. She fumbled through it and removed copies of a summary document, handing pages of each to both of them. The two received their pages with barely extended hands. Their eyes, concealed by their sunglasses, did not bother to look at them.

“As you can see,” Mae explained in futility, “it is a pretty standard reverse-repo...one the likes of which we’ve executed many times before with the PBC. The bottom line is we are asking the PBC to purchase $400 Billion using the exchanges. It’s the same old drill, work the purchases through your third party dealers so it doesn’t set off any sovereign alarms. This should relieve some of the pressure on the Yuan. You’ll then use those dollars to purchase equivalent U.S. Treasuries that will be auctioned over the course of the subsequent seven days. Your purchase will be about half of the seven day issue. Our Fed will then repurchase those Treasuries from you within the next thirty days...with a guaranteed ten percent yield, of course.”
The Chinese gentlemen burst into laughter.

“Guaranteed?” mocked the first.

They continued laughing.

Mae’s frustration turned to anger. Who in the hell do these stooges think they are? She thought to herself. “I really think we should be speaking to Mr. Tsang directly about this. This is a negotiation with enormous sovereign ramifications!” Mae snapped.

“Like I said before,” explained the first, “we are authorized by Mr. Tsang, personally. We have his full and complete confidence.”

Mae knew then that she would get nowhere with these two. She stared at them in disbelief as their laughing trailed off and they went back to fingering their gadgets. She closed her attaché. She wanted nothing more than to leap out of the limousine, get to her hotel, order a $300 bottle of Chateau Lafite and make some calls to certain officials who could make these two stooges junior feel some retributive pain. But that was impossible at the moment as they were now on a congested, twelve-lane highway moving through an industrial sector of Shanghai at forty miles per hour. Mae wouldn’t dare get out in the middle of Shanghai alone.

Up until very recent times, the U.S. Treasury was supremely confident in its ability to habitually fuck the Chinese over. The U.S. owned China in a manner of speaking, or so they thought; owned them in the sense that every debtor really owns his creditor. If the creditor squeezes too hard calling in the debt, the debtor can just walk away. The Treasury Department, the biggest debtor in human history knew this and leveraged it. What was China really going to do if the U.S. walked away from making its debt payments? Send the United States of America to collections? Send out a Repo-man? Get real.

China made the market for U.S. debt since China owned so much of it. A bad issue, meaning a U.S. debt issue with not enough buyers, would catastrophically drive down the price of China’s portfolio, ultimately hurting the Chinese the most. Even when the PBC wasn’t overtly buying U.S. debt, they were covertly doing it through third parties and through other countries. The U.S. Treasury knew it had China by the short and curlies and they could always count on their Asian chumps to cough up another half trillion or so whenever needed to keep the deficit shell game going. The Chinese would never let the Treasury market tank. It would be their suicide.

This latest reverse-repo negotiation was supposed to be a slam dunk. Mae would meet Mr. Tsang like they had fifteen times already. He would pretend to be resistant. She’d flash him a little cleavage or re-cross her legs and then they would ink a deal. Afterwards they would go to dinner. China would then print, or more aptly—keystroke a cosmological shitload of Yuan, use those Yuan to buy a shitload of dollars, use the dollars to buy a shitload of U.S. Treasuries, then the Fed would keystroke a cosmological shitload of dollars and use that shitload to buy the debt back from the Chinese...plus ten percent, of course. At the end of the day, other than twenty percent inflation in the price of rice, what did China have to lose?
But something was different this time. Mr. Tsang was not present, sending these two stooges in his stead. And Mae hated them, now.
Why? Why didn’t Mr. Tsang come? She asked herself. Because of Bhutan? Impossible. No one snubs the United States for a Himalayan Deliverance—a tiny mountain kingdom of Buddhist gong-bangers.

“I don’t understand,” Mae remarked. “What is this, some sort of joke? This entire arrangement today is highly irregular.”

“Highly irregular indeed, Ms. Lane,” remarked the first.

Mae decided that she especially hated the first official. She hated his tone. She hated his phony politeness. She hated his Elvis fade.

“Unbelievable!” She snapped. “You two pick me up three hours late in this second rate limo and...and treat me like this and...and...just take me to Shanghai One so I can speak to someone there.”

“We can assure you, Ms. Lane,” interjected the second, “that the PBC will attempt to unwind our remaining U.S. Treasury positions in an orderly fashion.”

“Yes,” affirmed the first, “in an orderly fashion so that you might find other sovereign buyers.”

They both looked at each other and laughed, again.

“I would not delay,” added the second.

“I didn’t follow that,” Mae asked out loud. “What do you mean ‘unwind your remaining positions’?”

The second had to stop laughing and catch his breath before answering. “What we mean is that the PBC does not accept the terms of your latest ‘reverse-repo’ as you call it. And we want to also inform you that the PBC intends to sell our remaining U.S. Treasury holdings.”

“You Americans are so arrogant. The PBC has been discretely divesting itself of U.S. holdings for many months, now. Frankly, we are surprised your forensic accountants have not discovered this.”

“We sincerely hope that you are able to find new buyers for your new issues. Perhaps Zimbabwe might be interested...?” Snarked the first.
Bastards! Mae thought. She reached reflexively for her cell but then thought better of it, best not to show any panic. She composed herself the best she could. “What is happening here?” She asked them. “Don’t you understand? Don’t you know that this might trigger a dollar devaluation? If you walk away we’ll all lose! Who are you gonna export your chotskies too? Vietnam?”

The two laughed again. This time, the second had to remove his sunglasses and wipe the tears from his eyes. Then he started to preach. “There is an old economics axiom that they used to teach many years ago to your MBAs.”

“What are you talking about?” Mae asked.

“We are talking about investment theory, Ms. Lane. You see, we no longer believe that you can repay us, at least not without printing money in order to do it. America’s deficits are now growing so fast that she no longer even has the ability to meet her interest obligations. In other words, your America is bankrupt. America is insolvent and we cannot continue to...how do you say...‘to throw good money after bad’. Yes, that’s the term they used to use in school. The PBC has accepted that axiom and has decided to cut our losses.”

Mae stared at them silently, brow furrowed again.

“Sunk costs are sunk, Ms. Lane,” explained the second. “The era of China devaluing our Yuan in order to enable you fat Americans to watch the Texas Cowboys on 3D televisions made by the People of China is over.”

“This is outrageous!” Mae barked. “I demand to speak to...”

“Our negotiation is complete,” interrupted the second.
The first tapped the glass partition and the limousine quickly exited the highway, coming to a screeching halt in the middle of a bustling intersection. The driver jumped out, fixed his cap, darted to the trunk and removed Mae’s luggage setting it on the curb. Then, with white socks gleaming he darted around and opened Mae’s door.

“Please leave, Ms. Lane. We have no more business with you.”

Mae crawled out of the limosine. The driver slammed the door shut, shuffled back into the limo and the car disappeared into the smoggy commotion of industrial Shanghai.

Mae darted under an awning, took out her cell phone and speed dialed her boss, the Treasury Secretary. The odors of cooking oil, diesel fuel and dead animal nearly overcame her as it rang. The filth of laymen industry made her skin crawl.

“’T’ here,” came the other end.

“It’s Mae. I can barely hear you...I’m out on the street...Yeah, Shanghai, they dumped me here...I don’t know what to say. It was a very strange meeting...No, Tsang was not there. They sent two junior guys, real assholes. They said they aren’t going to throw good money after bad...”

Click.

Mae stared at her phone for a second wondering if she should redial, feeling conspicuous and helpless in her high heels and high gloss and high hemline amidst the noise and smells and dirt of the real world. She backed herself towards a wall and looked out for a sign, something coherent, an English phrase, an advertisement, anything American. She couldn’t find one single word of anything in English. There was no sign of the good old USA, not even a Coke machine. Her terror of conspicuous vulnerability quickly withered into a sense of mere insignificance as the hundreds of people that passed by every minute paid her absolutely no heed. No one cared one wit who she was at all. A lost American meant nothing to them, not even as a peculiarity. They were too busy buying and selling and making a living. If she were to drop dead at that instant she would just be swept out of the way into the gutter and stepped over like so much rubbish.

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