Need I add that my own little dollar hedge for Amy was peanuts compared to what was going on now. Dai Nippon through its anonymous agents was dumping American currency in the multi-billions worldwide, but since Noda kept the action spread out, nobody bothered to notice the pattern. Ditto his awesome "naked" shorting of Treasury futures. I mean, anybody who'd troubled to assemble the numbers could have predicted somebody up on the bridge must have sighted a reef dead ahead. I kept trying to warn traders I knew, both on and off the exchanges, but nobody wanted to hear downbeat speculation from some Cassandra. They were all too busy pocketing commissions and ordering more champagne.
And then it happened. In broad daylight. I'll explain the operative details shortly, but if you were there, that could be a little like reviewing the theory underlying nuclear fission for somebody standing at ground zero when the bomb hit. So first let me recollect how it felt down in the trenches.
I was breakfasting at the dining room table downstairs that particular Monday morning--November 7, as we all remember so vividly--when Matsuo Noda dropped the first shoe, or maybe it's more accurate to say he began loosening the laces. I'd just finished squeezing some orange juice when I punched in the number of a financial update service on my trusty cordless phone, mainly to hear the (recorded) sound of a human voice. I'd totally forgotten the U.S. Treasury was holding its quarterly refunding that day.
Newsbreak. Dealer banks were reporting that demand for the long bond, the thirty-year, was extremely soft to nonexistent. Equally unnerving, there wasn't any noticeable interest in Treasury's ten-year notes either. The reason seemed to be that the usual heavy participation by major Japanese investment houses (typically twenty to forty percent of the total) had inexplicably evaporated. In fact, a rumor currently flying across
the floor of the Chicago Board of Trade said a number of Japanese securities houses and banks in New York had begun what appeared to be a program to divest their current Treasury holdings massively. Since spokespersons at Japanese outfits like Nomura and Daiwa Securities had clammed up, refusing to deny that rumor, the usual institutional buyers like Oppenheimer and Goldman, Sachs were holding back, nervous.