Sunday, May 15, 2011

To Hawala

The Lawrence Finney property was more than a vacation home to Albert Finney. With double-digit inflation came turmoil; with turmoil came nervousness. Albert Finney’s Freham homestead, a mini-mansion on an eighty by one hundred and fifty foot lot, wasn’t as safe as it had been. There had been three burglaries in three months in their exclusive neighbourhood. One of them, two blocks down, had been a full-scale home invasion. The police didn’t get to the scenes in time for any of them. Rumours flew that professional thieves were beginning to bribe the dispatchers in at least one major security company.

That invasion had been too close for comfort. Albert, his wife Susan and their only son Neil, although personally unaffected, had felt threatened enough for Albert to look for new digs. Their first choice was a luxury condo with security force on the payroll, but the sight of the old Finney property going on the market for $23,499,000 got Albert looking into it as a home. Not a vacation home, a new home. Like small towns everywhere, the town of Wakia was less prone to civil breakdown than Freham the unwieldy city. Albert had been enough of a genealogy buff to know that his great-great grandfather had lived up there. From what he could find, Lawrence Finney had been a fisher and small-scale farmer with the stereotypical-Irishman potato patch. That part of the land, though only a few acres of the mostly tree- and rock-filled property, had been enough to scrape a living from should the fish go scarce.

When he found out that his twice-great grandpa Lawrence had homesteaded that exact same $24 million plot, he had hit the offer without thinking twice. The family progression from tavern owner to major hedge-fund principal had resulted in Albert having enough liquid assets to buy the place on the spot. He could take his own time selling his Freham home.

Most of his neighbours, in a kindly way, thought he was nuts. He was shrewd enough to be reassured by that straw poll: it meant he could still sell the old address at a nice premium. The central bankers who wanted to cure the economy from a real-estate-induced depression had done their jobs too well: real estate had indeed recovered. More than recovered: hard assets, even real estate, became sought again as inflation loomed and ran rampant. Only this time, real estate wasn’t in a bubble unto itself. The entire economy had become ridden by the inflation bubble; if anything, real estate had been mighty slow out of the gate. As the reality of high inflation set in, though, homes and condos had started to catch up. Gold was closing in on $20,000 an ounce.

Albert has been late to becoming a father, even by citified standards. He was now fifty-three, thirty-seven years older than his boy, and had more than enough to retire on. He knew, as did the gold market, that the stated rate of inflation woefully underestimated the real thing. Although formally 14%, it was more like 30%: perhaps more.

Both Albert and Susan could see the way things were going. Crushing liabilities, the consequent deficits and the increasing need for the central bank to monetize them had set off an inflation spiral. The central bank’s sterilization dams blocking the inflationary effects of the monetization had developed serious cracks. A legislative remedy, hard credit-growth controls, was making its way through the legislature. Albert knew enough about the financial system, not to mention about his equally shrewd colleagues, to know that any such attempt would have enough loopholes to make the repair job crumble. What politician would dare say “no more credit” to the masses, without escape hatch?

Adding to the trouble was the fact that the dollar was plunging on the forex market, even though its more successful competitors were being inflated too. Yes indeed, the dollars were being repatriated. Even the proposed credit-rationing law could do nothing about the dollar carry trade, whose proceeds were going into gold and commodities. Given the inflation spiral, it was a better bet than high-interest short-term debt in less soft fiat currencies. Commodities kept going up: you just peeled off enough of a position to pay off the interest on the carry loan and let the rest ride. If a mistiming mishap took place, the central bank was there. More and more, the central bank was creating new reserves; more and more, those new reserves leaked into the carry trade.

Albert was old and experienced enough to see where the long run was going. In order to scope out how it would end, he used a trick that his father taught him at thirteen: the Nash Empathy Principle. In order to see how the game would play out, imagine that you’re your opponent and find the best move he or she could make. Then make your own move with that best play in mind.

He tried to imagine what he could do had he been the head of the central bank, but his imagination came up dry. That was the trouble. He could easily find ways to profit from inflation, knowing the ins and outs of the monetary, banking and shadow-banking system, but the prospect of stopping it baffled him. The only way out was to unleash a monster depression, which was politically impossible.

The financial pom-pom wavers were pushing the message that the robust economy could survive an extended spell of double-digit inflation. Albert knew better. He also could see the bleeding edge of civil chaos coming to Freham. So could his wife: she had gently pushed him to move after the home invasion.

So, he and his family were well prepared to move up to Lake Wakia permanently. Although distant, he had an ancestral claim to the property he had bought. He was prepared to go prepper, but he was shrewd enough to not pack anything in advance except for furniture, gadgets and clothes. He knew quite well that buying local was the way to go. Not only food, but also firewood. He’d be spending a fair bit of fiat up there – with one important exception, decided on because the product didn’t exist in any quantity up in Wakia.

His savings were in gold mining stocks: with a wistful tear, he had cashed in his share of the hedge fund after stepping aside for his successor. All of the proceeds were put into mining stocks – all of them. Albert was sure that the stocks would go up by the time it came time to pay his tax bill. In miniature, his manoeuvre was the same as the commodity carry trade: sell some of what went up most and pay the tax bill with the proceeds. Wash, rinse and repeat for the next tax year.

There was a risk of the stocks going down in the interim, but well-timed buys and the overall trend made it slight. Albert had comped out the risk and decided it was well worth shouldering, although not without a few qualms. Since his firm had been a hedge fund, he was not entitled to the bailouts the trading department of the banks now expected as a matter of course. That made him more prudent in his calculations than his professional colleagues trading for the banks. They justified the bailouts by the monumental amount of income taxes both they and the banks paid when times were good. He once noted that he and his own firm paid enough of a fair share to qualify, but wasn’t let in. They didn’t like where he was going with it, so he kept his further thoughts to himself for the sake of professional peace.

Now retired, with a private portfolio spilling out more than enough dividends to meet his needs, Albert saw to that exception on the day before he and the family moved. He had budgeted the entire day for the chore.

Going into a large bank, one with a very ample supply of gold coins, he wryly noted to himself that he could wait in the lengthy line for the first time in what seemed his life. The bank occupied the entire first floor of a high-rise that spanned half the block.

A now-balding, gray-haired thinnish man with not much girth, slightly more than the average height, Albert’s casual clothes could not hide his wealth. Perhaps that was because he wore them like his distant cousin Darren Finney would wear a three-piece suit. A bespoke suit, silk shirt, gold cuff links, genuine soft-leather shoes and Hermès tie were just Albert’s work clothes.

He went in with a huge cash balance. Two and a half hours later, he exited with a very heavy briefcase. It contained two hundred and fifty one-ounce bullion coins, one hundred half-ouncers, one hundred quarter-ouncers, five hundred tenth ouncers and five hundred twentieth-ouncers. The last had been a bit of a stretch for the bank’s inventory. In addition to the coins, he also had a single hundred-ounce gold bar. Having to haul five hundred ounces, he moved slowly towards the taxicab he had hailed by cell phone. Thankfully, the civil breakdown had no influence in the business district: instead of rustled, he was treated with great respect and given a wide berth. Aware of how conspicuous he was, he trundled to the door while blushing.

Tongues could wag: it didn’t matter. Had any authorities decide to inquire, his obvious lackadaisicalness with security would make his story about having lost the gold plausible. By ‘losing’ the gold, he would do his part to save the economy from the decaying currency. Albert planned, in his retirement, to help pave the way for an alternate money. He and a few others, at first, would save what part of the economy that they could.

As he struggled to get the gold-filled briefcase into the taxi, he wryly noted to himself that he was part of a conspiracy. A conspiracy of goldbugs.

All next day was moving day. The transport-truck moving van arrived promptly at 9 AM. It was more than a two-hour drive to the old Finney homestead. Because of the time it would take to load and unload the furniture and effects, the van and the men were spoken for over the entire day. Albert hoped that he wouldn’t have to put them up overnight.

As Susan and Dylan settled into the soft and conformable leather front seats of the 2019 Mercedes S550, Albert regretted having bought such an expensive vehicle. He himself was taking up their second car, a 2018 Mercedes G55, with the gold-laden briefcase tucked in with his personal effects. It was an excellent off-road vehicle, but both Mercedes yelled out “luxury.” He wasn’t sure how they would fit in, now that he and his family were moving for good. He did have an ancestral claim, but it was rooted in the distant past. So much had changed since his great-great grandpa had given up farming and fishing for taverning.

Albert had gotten into the hedge-fund world the honest way. His father had been a business professor and Modern Portfolio devotee; as a result, he grew up with quant theory for breakfast and dinner. Albert getting his MBA at an elite school followed as a matter of course.

Crucially, the dad had also passed along his observations about life and business to his eldest boy. Those discoveries came too late to help the father, in the practical sense, but they were early enough to help young Albert. His old man had passed away nine years ago, at seventy-four, and Albert had made sure that the funeral was lavish as well as tasteful. He remembered it turning into a business funeral. At the time, he felt that his dad deserved no less: he had deeply wanted his son to succeed, and the power funeral showed his son had. His father’s colleagues and friends had been duly, genuinely, impressed.

After years’ worth of retrospect, though, it had planted a seed of doubt. Is that was Albert the man really wanted – to turn his dad’s final rest into a quant-driven investment conference?

As he saw his wife and son off, with the moving van still parked and being loaded in the oversize driveway, he realized he now had the chance to think things through. Remembering the home invasion in the neighbourhood he was now vacating, he crazily hoped that his dad’s grave wouldn’t be desecrated once he was gone.

Susan had noticed that he had begun to act shy, like he had done when they had first met. She had enjoyed the money and the status; she was mature enough to realize that both cost in terms of Albert’s time and attention. But, he shucking off the yoke was something for which she had been profoundly glad. They had a lot of catching up to do.

The house, a full 6,500 square footer, now had a large but tasteful “For Sale” sign on the lawn. The real-estate agent had been charged with managing the transaction, up and including having access with spare keys. Albert hesitated before getting into the G55. One of the moving men accosted him as he was looking around the front yard for the last time: “You worried about something?”

The man was cheerful, and Albert realized that people like him were going to be the Finney’s neighbours. “No,” he responded with Freham urbanity. “I just wanted to say good-bye to the place.”

“Okay; happy waving,” the guy finished with a smile before getting back to his work.

Because Albert was in the habit of driving fast, he beat Susan up to their new place. Not stopping to look at his new neighbour across the road, he drove along the quarter-mile driveway and was rewarded to see his homestead. More than a century ago, there had been a modest pre-ranch house made out of milled wood. Now, in the same location, there was a 3,500 square foot spread – still in ranch, as there was more than enough land for it – done in modern rustic cedar. Three chimneys poked up from the spread of roof. Thankfully, a detached two-car garage was to the right of the house.

Instead of a lonely fisherman’s dock, there were now two extensive spreads of lumber that jutted into the lake. The one on the right, replacing that old dock made of slapped-together crib and saw-milled lumber, was made of solid-professionally made cribs that supported pressure-treated boards. Built on the network of docks was a three-slip two-story boathouse, whose roof angled up like an elongated barn’s. Several hundred feet to the left was a thick dock that split into two, making for a slip for two guest boats that fitted in single file. The rest of the dock was elongated enough to make room for six other docked boats. The fat part of the dock was big enough for dock chairs, and there was a forty-foot spread of dock running parallel to water’s edge joined to the rest. The place where Lawrence Finney’s old still had been was now covered by a dockhouse garage that was big enough to hold two ATVs along with the dock furniture and fixings.

For more than a century, this land has served as a haven for rest, recreation and relaxation. For Albert and his family, it was now a permanent home.

After looking around the large, circular, gravel-dusted dirt driveway, he stopped to wonder where the rest of his family was. His wife drove more slowly than he, but she should have gotten here by now. Did she stop to shop?

Five minutes later, Albert saw what she had stopped to do. The S550 was at the head of a three-vehicle procession ambling in towards the driveway. The other two were a Ford F250 and a Dodge Ram extended-cab; both trucks looked used.

There was a strange boy in the front passenger seat beside Susan, looking a little bemused. Neil was on the bench seat of the F250, looking dutiful. In the driver’s seat beside his son was a stranger whose features looked vaguely familiar. The man in the Ram was simply a stranger.

When she got out, Albert noticed his wife was genuinely happy. She was a good height, a little lanky, with streaks of grey in her black hair. The boy beside her now looked flummoxed, but he was smiling too. They had evidently chatted on the way in. The fortyish-looking man and Neil got out at the same time, both silent. The fellow in the Ram was silent too as he got out, but his eyes were twinkling. Neil and the strange lad walked towards one another as his wife walked to him.

“You’re not going to believe who I met!” she enthused. “The people who live on the other side of the road, they’re your distant cousins!”

Really! Albert’s eyes widened as they lighted on a man who – unbeknownst to him at that point – almost literally lived on the other side of the tracks. No wonder Susan had mixed kids with him.

Taking her words as an introduction, the man strode forward. He was a little bulkier than Albert, but about the same height. There was a vague resemblance in the eyes, the way that both men’s were set into their respective skulls. Darren Finney had only a widow’s peak, and his hair was closer to sandy than Albert’s dark, but their faced were both angular and their noses both snubbed. He wore his jeans and lumberjack shirt comfortably.

“Hi, cuz. I heard you’ve moved here permanently.”

“Makes for quite the homecoming,” the stranger observed while seeing a chance to move into the conversation. Extending his hand to Albert after Darren, he introduced himself as Paul Mullen. “I own the marina upstream. Been the family business since my great-great-great grandfather persuaded his elder bother to come up and keep us from killing each other,” he added easily. Moustachioed, his hair was balding like Albert’s but not greying. His face was wider than the Finneys’, as were his eyes and mouth, and he looked like he was used to being in charge in these parts. “Myself, I head up the bad Mullens,” he continued with his eyes becoming merry again. “We’re the ones that sponge off the government. The good Mullens pretty much are the government. They’re the ones in town, most of them.” With those last two sentences, the merriness disappeared; he meant it.

But it came back. With Darren patiently watching, Paul explained the set-up as he saw it. Susan listened; she was learning. The two boys had edged towards each other, both shy. Despite Darren being eleven years younger than Albert, the boys were about the same age. Dylan, though, had something on Neil: he knew how to drive, while the more sheltered boy hadn’t taken his lessons yet.

That biographical fact came up between the men. When he learned that Albert’s strapping young boy hadn’t learned how to drive, Paul goggled. “Seriously?

“I drove a truck for the first time when I was thirteen!”

Dylan smiled as his thinner counterpart Neil, a bit lewdly. “Don’t take him too seriously. The Mullens, they whup their kids when the kids don’t do something.”

His dad overheard. “Don’t sneer at it, son,” he said edgewise. “It does get them doing something.” Turning to Albert, who he assumed was listening in too, “The trouble with you city folks is, you get whupped for doing something.” Seeing Albert’s uncomprehending look, he specified: “Through the laws, cousin, through the laws.

“You can’t even cut down a tree on your own property down in Freham. Not even if it’s on a farm-sized spread,” he added as a coup de grâce.

“That’s the plain truth,” Paul added sidewise to Darren. “That’s why we have to take care of ‘em.”

Albert, still uncomprehending, looked back at the man who had gotten in the most words. Paul’s paunch now showed more than usual.

“The trouble is, Albert, it’s your great-great-granddad who started all the trouble by selling his place. It brought in the city folks.” Darren emphasized the point with a troubled nod. Paul continued. “I’m telling you because you’re the Feeney now; you’re the fit for the legend.” Darren circled his right hand as if to say “in a manner of speaking.” Oddly, he kept his left hand in his pocket when it had nothing to do. His right hand remained free.

“Oh yeah, he’s fitting the legend all right,” Darren added with merriness mixed with pride. “Albert here’s wife told me that he’s going into the family business. They call it ‘a wall-a’.”

“Hawala,” Albert corrected quietly. “A hawaladar’s a private banker, a node in a system of informal private banking.”

“Wrong, cuz,” Darren cut in cheerfully. “I looked it up before we drove in. The go-to guy’s a thak-uh-dahr.

“Yes, technically I’m a thakedar,” Albert responded with his still-citified polite, “but I’m the principal as well as the agent. If something goes wrong, I make good.” As he was clarifying, Paul pulled out his smart phone and looked up the term.

“I thought they cracked down on you hedgie guys when you covered up your mistakes,” Darren added a little too quietly. In his own way, he was telling his distant blood relative to not be a city sleaze.

Having found a summary and read it, Paul looked up from his phone and beamed. “Hey Albert, you really are the Finney! Gone right into the family business!”

Now confused, Albert looked at his cousin. There was something he wasn’t getting in all the cross-talk.

“Darren, how could our ancestor have been a private money-transfer node? From what I understand, there was hardly any money around before the town incorporated.”

Darren, the moment of warning now passed, started chuckling as if Albert had told him a good in-joke; his head turned to his old neighbour. “Might as well do the honours, Paul.” His eyes turned back to his distant cousin, expectancy mixing in with the merriment.

Paul did so, with a fair bit of glee. “Albert, old sod, your great-great grandpaw was none other than the local bootlegger. Your ATV garage, that’s the exact place he had his still.”

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