Free Absolute Risk by Steven Gore Page B

short-selling the franc the year before France adopted the euro. Borrowing and borrowing and borrowing and selling and selling and selling, driving the price down, the international banks and foreign corporations and governments dumping their reserves, forcing the French Central Bank to buy more and more and more to support the currency, then having to cave in at the end and devalue it. The price of bread doubled in a day, the price of gasoline tripled, and the French economy free-fell. Minsky then paid back the expensive francs he’d borrowed with the cheap ones he’d contrived, and Relative Growth pocketed five billion dollars.
    Every central banker in Europe knew that sooner or later Minsky would make a move on the euro, they just didn’t know when, or how he’d conceal his approach—and neither did Harris.
    Harris caught a view of himself in the mirror behind the row of liquor decanters. For a moment he felt more like an oblivious lemming than the Lewis and Clark of the financial frontier. He cringed at the recollection of what his wife had once said about hedge funds: They were like tapeworms living in the intestines of a host, absorbing what they’d made no effort to capture and profiting from what they hadn’t earned.
    Minsky walked to the bar, poured two bourbons, and handed one to Harris.
    “You really want to explain to Abrams how we do what we do just so he’ll stop talking about us?” Minsky asked.
    Harris’s face flushed. “I don’t know how we do what we do. It’s all gibberish to me. Fractals and scaling and string theory and entanglement.” He took a sip of his drink, then held up the glass and smacked his lips. “This is real. You can see it. You can taste it. It can get you drunk and make you act like a fool.”
    Harris lowered the glass and stared into it. “The problem with financial theory is that you get intoxicated with the idea that you can control the world, and then the world makes a fool of you.” He sat down in his desk chair. “What was that punk’s name? Levenstein? The guy whose jet you ended up with.”
    “Levinson, Mitchell Allen Levinson.”
    “Take a lesson. Look what happened to him.”
    Minsky smiled at Harris as if at a child. “What makes you think—“
    “Don’t take that pedantic, patronizing, schoolteacher tone with me.” “
    I was just—“
    “Just what? I’m not sure you even understand the mechanics of this. You’ve never been able to explain it in plain English.”
    “It would be like explaining quantum mechanics in words. Can’t be done. Unless you can visualize the math and physics in your head, you can’t really—“
    “And the other thing is that we base all of this on the theories of a traitor. How do I know that Ibrahim wasn’t just setting us up? That we haven’t walked into some kind of Islamic trap?”
    “Because the trillions of dollars held in the Relative Growth Funds are in our hands, not in those of some ayatollah. And not only can’t they get to it, not only can’t they compete with it, but we make sure we never compete on Islam’s home turf. Why do you think we have no investments in oil outside of the United States and have never speculated in oil futures? “
    Harris shrugged. “I wouldn’t know. I’ve never seen the books. Hell, I’m not sure anyone on the board has seen the books.” He slammed his glass down. Bourbon spilled onto the Morningstar Report. “Hell, I’m not even sure where the goddamn books are.”
    “Tell me what you want to see and you can sit down with our accountants and they’ll show it to you.”
    “Why should I trust them?”
    “Who would you trust?”
    “People with an incentive to catch each other cheating.” Harris stared down and drummed his fingers on the desk.
    “I’ve got an idea.” He looked up at Minsky. “Do we have some kind of petty cash account?”
    Minsky nodded. “I guess you could call it that. Usually about fifty million dollars.”
    “Hire all of the Big Four