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Against a short-term corporate foreign currency debt burden that Marvin's team estimated at between sixty and seventy billion dollars across the Indonesian corporate sector, twelve billion in usable reserves was inadequate to manage a serious speculative attack on the rupiah.
The hyenas were coming. They were already underway in its preliminary phase. The question was the magnitude and the timing.
"The rupiah position," Elena Marchetti said, during the morning call on July 28. Her voice was clear and unhurried — "We can establish a meaningful short position today through the offshore NDF market. The non-deliverable forwards are pricing implied volatility at around eighteen percent annualised, which is elevated relative to historical norms but not yet at the levels you'd expect if the consensus had fully formed around a near-term rupiah break."
"What's the NDF market depth on a hundred-million equivalent position in rupiah?" Marvin asked.
"In the offshore market, you can absorb that without moving the market meaningfully, spread across the major tenor points — one month, three month, six month. The three-month NDFs are the most liquid and give you the best balance between entry timing and thesis resolution window."
"What's the estimated cost of carry on a three-month NDF short at current implied volatility?"
"Approximately three point two percent annualised on the notional, or about eight hundred thousand dollars on a hundred-million equivalent position over three months. The trade becomes profitable when the rupiah depreciates by more than three point two percent against the benchmark from the entry level."
Marvin looked at the notebook in front of him. The page was covered in the tight calculations he'd been running since the morning's briefing. "My baseline scenario," he said, "is a rupiah depreciation of between thirty and fifty percent against the dollar between now and the end of the year. The current spot rate is approximately twenty-six hundred rupiah to the dollar."
A brief silence on Elena's end. Not disbelief — she had been working with this account for three weeks and had already recalibrated her sense of what she was dealing with — but the specific kind of pause that a professional makes when someone has just stated a position that is considerably more aggressive than the consensus and they are working through the implications.
"That would put the rupiah somewhere between thirty-eight hundred and thirty-nine hundred to the dollar by year end," she said.
"At minimum. My tail scenario is above five thousand."
Another pause. "The IMF program—"
"The IMF program, when it comes, will impose conditions that the Suharto government will accept in principle and resist in practice, because the structural reforms the Fund will require are incompatible with the political and economic interests of the people around Suharto who have built their wealth through the existing system. The program will provide temporary liquidity that stabilises the rupiah briefly before the political resistance to the structural conditions undermines market confidence again. We've seen this pattern before." He paused. "I want the position established before August 15th. Before the IMF announcement is public."
"I can have the first tranche of the NDF position structured by the end of this week," Elena said. "I'll work with David to coordinate the rupiah entry with the won positioning timeline so we're not overextending the forex book simultaneously."
"Good. Run it through the Singapore entity for the ASEAN positions and the Hong Kong entity for the Korean positions. Dad has the entity documentation from Ashford — coordinate with him on the counterparty confirmations."
"Understood."
He hung up and looked at the screen for a moment.
Outside, the Los Angeles afternoon was doing what Los Angeles afternoons in July do — building toward a heat that had no drama in it, no thunderstorm release, just the slow accumulation of a temperature that had nowhere to go.
'Wait', Marvin thought. 'Not yet. But soon.'
---
On the afternoon of July 29, Irving Meyers called.
"I wanted you to know," the old man said, without preamble, "that the third and final tranche of the original forty-nine million has cleared into the Zenith account as of this morning. The additional fifty-five million—" a pause "—I've moved faster than I anticipated. The Treasury position I mentioned matured early. I've also liquidated a position in a real estate partnership that I've been looking to exit for two years. The full one hundred and ten million will be in the Zenith account by August 15th."
Marvin absorbed this. "Ten Million more."
"Yes, ten million more. I have the money, so I'm investing in my grandson.. I told you forty-nine because that was what I could guarantee at the time of our conversation. I told you I was working toward the rest. I am not in the habit of telling you things I don't intend to deliver." A dry pause. "I should perhaps have been clearer about the timeline."
"You were appropriately precise for the circumstances," Marvin said. "Thank you, Grandpa."
"Don't thank me." The old man's voice had the quality it sometimes had — not warm exactly, but honest in a way that was warmer than warmth. "Do the work. That's all the thanks I need."
---
On July 30, Grant Meyers convened the first full team meeting of what was now being referred to internally, in the careful, identifying-detail-free shorthand of people who work in spaces where information security matters, as the Program.
Fourteen people, in the conference room of the LA law firm. Some by telephone, the audio bridge crackling with the quality of international connections in 1997, when transcontinental telephone technology was reliable but not seamless. The team in Seoul is on one line. Elena in New York — she was in Los Angeles three days a week and the rest of the time operated from her apartment in the West Village, where the time zone advantage for the Asian morning calls was marginal but existent. Patrick Yuen on the Hong Kong line.
Grant ran the meeting with the efficiency of a banker who has been in enough deal-closing sessions to have internalised the value of clear agendas and strict time management. Marvin sat at the end of the table and said almost nothing for the first forty minutes, listening as the team presented their regional assessments and position recommendations.
He spoke for the final twenty minutes.
The thesis, as he laid it out, was not new to anyone in the room — they had all received versions of it in individual briefings over the preceding weeks. But the assembled version, the comprehensive sequence from Thailand through Indonesia through Malaysia and the Philippines to the structural denouement in Korea, had a coherence and a precision that produced, in the room.
When he finished, Grant looked around the table.
"Questions," Grant said.
There were several. Elena asked about the instrument selection for the Korean won position — specifically whether the NDF market would provide sufficient depth for the size of position Marvin was targeting, or whether supplementary instruments through the onshore KRW market would be required. David Kim walked through the available options in detail. The consensus was that the NDF market was the primary vehicle and the onshore access through the Korean brokerage relationships Grant had established was the supplementary channel.
One of the New York attorneys asked about the regulatory risk — specifically, the possibility that one or more of the affected governments might attempt to restrict foreign currency transactions or impose capital controls that would impede the execution of the exit strategy. Marvin addressed this directly: Malaysia was the most probable candidate for capital controls, given Mahathir's publicly stated antipathy toward currency speculation, and the Malaysian positions would be structured accordingly with earlier and more conservative exit triggers.
Indonesia and Korea were less likely to impose effective capital controls, for different reasons — Indonesia because its regulatory infrastructure lacked the capacity to enforce them effectively, and Korea because the breadth and depth of its financial market integration with global capital markets made controls practically unenforceable without a complete financial system shutdown.
Patrick Yuen asked about the Hong Kong dollar peg — specifically, whether the currency board arrangement was defensible against speculative attack, and whether a Hong Kong dollar position was part of the thesis. Marvin said: the Hong Kong dollar peg is defensible because the exchange fund backstopping it holds foreign reserves in excess of the monetary base by a significant margin, and because Beijing has explicitly and publicly committed to the peg's maintenance through the 1997 handover and beyond. Attacking the Hong Kong dollar peg is attacking both the currency board mechanism and the political will of the People's Republic of China.
That is not an attractive trade. The Hong Kong positions in the Program are not currency positions but equity positions — tactical short exposure in Hong Kong-listed regional financial sector stocks that have Hong Kong dollar revenues but underlying exposure to the crisis economies.
There were no more questions.
Grant closed the meeting by distributing a one-page operational schedule — no narrative, just the retract form should have the dates and actions and responsible parties — and reminding the team that all external communications about the Program were to be conducted through the defined channels only.
The operation was not secret in any improper sense, but it was private, and privacy in financial markets is a form of edge, and edge, once surrendered, is rarely recoverable.
Marvin left the meeting and walked to the car that was waiting for him outside, a black town car from the Meyers transportation account that his parents had accepted as a practical concession to the realities of running an investment program from a home in Laurel Canyon.
He sat in the back seat with the window down, the hot dry air of late July in the canyon moving across his face, and he was quiet for the drive up into the hills, not thinking in the active effortful sense but in the passive receptive sense — letting the information of the past weeks settle into the shape it wanted to settle into, the way sediment settles through water until it finds the bottom.
He thought about the rupiah. He thought about the won. He thought about the moment, coming in October or November, when the Korean banking system would finally be unable to service the foreign currency obligations of its major corporate borrowers, and the Bank of Korea would be forced to choose between burning through its reserves in a defence that the mathematics said it would lose, or accepting the devaluation and the IMF program and the structural humiliation of a country that had, for thirty years, defined its national identity partly through the story of its economic miracle.
Will the butterfly flap its wings?
He thought about Samsung Electronics. About TSMC. About the specific qualities of the companies he intended to buy when the crisis reached its nadir — not the financial sector, which would take years to repair and whose recovery timelines were genuinely uncertain, but the industrial and technology companies whose underlying operational quality was unimpeachable and whose share prices were about to be destroyed by a crisis that had nothing to do with their fundamental competitive positions and everything to do with the currency dynamics and liquidity pressures of their local capital markets.
The crisis would make the money.
The aftermath would make the position and more money.
He had known this since November. He had been patient since November. He had seven more months of patience remaining, of a different and more demanding kind —
The town car turned into the driveway. The mockingbird was in the oak tree by the fence, doing something with three notes that it had been doing for six weeks.
Marvin got out of the car and went inside.
---
The same morning sun of Monday, July 30th, beat down mercilessly on the winding, serpentine roads of the Hollywood Hills, baking the asphalt and bleaching the sky into a hazy, pale blue.
But inside the climate-controlled, leather-upholstered interior of his Mercedes-Benz, Jeff felt nothing but the icy, electric thrill of impending victory.
The senior CAA agent pulled up to the heavily gated driveway of an elite, private recording studio tucked away in the lush canyons.
Resting on the passenger seat next to him was a sleek, silver Zero Halliburton aluminum briefcase. It didn't contain contracts or headshots. It contained the mixed master digital audio tapes (DATs) and isolated stems from a two-day marathon at Westlake Studios.
Jeff parked the car, grabbed the briefcase by its heavy steel handle, and walked toward the discreet entrance of the facility.
Standing by the heavy, soundproofed double doors was a familiar face holding a clipboard. "Mr. Raymond, go on in," the man said, stepping aside and gesturing toward the dim interior. "Mr. Horner is expecting you. He's been waiting all morning."
Jeff offered a sharp polished smile, extending his free hand. "It's good to see you, Peter."
The two men shook hands warmly. They had met previously at a sprawling Malibu charity gala hosted by an A-list director, a brief exchange over champagne that illustrated just how small and incestuous the upper echelons of the Hollywood circle truly were.
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