Miller used his cell phone to speed-dial Secretary of the Treasury Robert Nichols. The Fed techs had assured him that their phones were hackproof.
Nichols answered on the first ring. “Good morning, Joseph, how’s Marge?”
Marge was Miller’s wife, and they were close friends with Nichols and his wife, Judy. “Looking forward to seeing you guys at the club Friday night. But that’s not why I called.”
“What’s on your mind?”
“Have you been getting any rumbles from the White House about a financial crisis hitting the Chinese, and maybe spreading our way?”
“Practically every day, depending on who’s talking.”
“Don Pennington called and said Spence Nast paid him a visit to warn him about the China thing, specifically Liu Feng’s supposed plan to block the PBOC from bailing out the small banks whose debt load has become critical.”
“That’s common knowledge. What else did he say?”
“He thought that it was imminent,” Miller said.
He had a lot of respect for the secretary of the Treasury, who had earned his economics doctorate at Princeton and during the last financial crisis had served on the Fed’s board of governors in Washington. Most of what happened to save the American economy in ’08 and ’09 was his idea. It had helped that Nichols’s specialty was economic slumps. His book, The Great Depression, had won the Pulitzer Prize.
“Well, if it actually comes to the point where they start reneging on their bond payments to us, yes, it would become a hell of a mess.”
“Maybe we should think about mobilizing right now, in case the worst does happen. And Congress just might have to become involved like it did the last time.”
“Reluctantly.”
“Yes, but Paulson was convincing, just like you can be,” Miller said.
Nichols had a plain-speaking style that helped him get along with the politicians on the Hill, unlike Miller, who was thought to be capable but aloof and sometimes arrogant.
“I’m sure as hell not going to take this to the White House. Nast would fuck it up royally.”
“I agree, so it’ll have to be like ’08 and ’09 again when Hank Paulson, Ben Bernanke, and Tim Geithner took the lead in the bailout,” Miller said.
“It means you and I will have to step up to the plate, and I’ll leave it to you to tell Pennington what to do,” Nichols agreed.
“If it comes to that.”
“God forbid,” Nichols said.
“By the way, Bob, is there any truth to the rumor that you want to quit as secretary next year?”
“Nast is running around telling that to anyone who’ll listen. But even if it were true, which it isn’t, I’d stick around to see this thing to the end.”
“You’re the expert on depressions,” Miller said. “If Hank and the others hadn’t taken charge in ’08, what would have happened to us?”
“Unemployment, to start with. In ’08 it peaked at ten percent. In the thirties it hit twenty-five percent. But what worries me most is what would happen if we had to spend as much as Roosevelt, or for that matter, Bush and Obama, to pull us back from the brink of a total economic apocalypse.”
“I think I know where you’re going with this, and it gives me a massive migraine.”
“Our debt is way up, greater than in ’08 and a hell of a lot bigger than in the thirties. The question is: What if we couldn’t afford to pay off all the unemployment claims or bail out the banks so they wouldn’t fail? What happens if we couldn’t borrow more money because no one would trust us to repay, on top of all the other debt we’ve accumulated? That’s what gives me the sweats.”
“This won’t be easy, no matter what,” Miller said.
“If China does go down, and our debt load is already at the limit, let’s hope that nothing else happens.”
“It’d better not, Mr. Secretary,” Miller said. And he couldn’t help but feel that they were adrift at sea with an impossibly heavy anvil around their necks.