Authors: Lee Vance
“I met with your friend Theresa this morning. We need to talk.”
Walter tapped his glass more loudly, frowning in my direction. “If I could have your attention, please,” he said. “And if the serving staff would leave now.”
I settled back in my chair impatiently as half a dozen tuxedoed waiters finished straightening cutlery and scurried for the exits. Food was already on the table—a cold seafood salad for most, special dietary options for a few. The kosher meals came on disposable plates and were elaborately wrapped in plastic, like bouquets from an expensive florist.
“Gentlemen,” Walter said. “We have a number of guests today, none of whom require any elaborate introduction. Seated next to my son, our late arrival, Mr. Mark Wallace.”
I gave a small wave, figuring his only purpose in mentioning my name was to reproach me for being tardy. Walter was obsessively punctual. A few people clapped and gave me a thumbs-up for the Nord Stream scoop.
“On my left, Mr. Nikolay Narimanov.”
A frisson of interest crackled through the room, even the most determinedly blasé of the hedge-fund managers looking up from their BlackBerrys. Narimanov, a powerfully built man in his late fifties, attired simply in a black turtleneck and an expensive-looking leather jacket, was an oddity in this group—a nonfinancial guy who was every bit as wealthy and successful as his lunch companions but who’d made his money in the real world, like the proto-industrialists who’d dominated the American economy back when Wharton had written her novels. I’d wanted to meet him for ages. He sat motionless, enduring the scrutiny of the room impassively.
“Second to my right,” Walter continued, “the former assistant secretary of commerce, Mr. Clifford White.”
You could almost feel the temperature drop. White—Senator Simpson’s campaign manager—was a lawyer and a political fixer, exactly the kind of backroom Washington hack the hedge-fund types normally despised. His one brush with notoriety had occurred during his Poppy Bush–era confirmation hearing, when a Democratic member of the Banking Committee acidly inquired of the chairman precisely how many rocks the majority party had been forced to turn over before they’d found him. The ensuing ruckus had briefly made White a minor-league Republican cause célèbre, a Bork light. White smiled tightly.
“And finally, to my immediate right, our guest of honor today, Senator Joseph Simpson.”
The senator tipped his head to acknowledge a smattering of grudging applause. Most Wall Street conservatives are actually Libertarians, which means they loathe the Christian Coalition crap that Simpson and all the other Republican candidates feel compelled to pay lip service to. Pragmatic to the core, though, the conservative fund managers present knew that a candidate like Simpson—a Reagan-like proponent of free markets and minimal taxes—was probably the best they could hope to elect, regardless of his hectoring family-values cant. The applause terminated abruptly as White, not Simpson, rose to his feet.
“A point of order before the senator speaks,” White began. Someone to my left coughed the word “dickhead” loud enough to draw a reproving look from Walter. A handful of people laughed. White cleared his throat irritably.
“Senator Simpson would like to consider this a working session. To that end, he intends to explore certain policy positions that he hasn’t yet publicly advocated, and he is dependent on your discretion.…”
Yada yada yada. Senator Simpson was about to kiss the asses of the guys who could raise the really big bucks for him, and he wanted them to know he was secretly more their ally than he could ever say in public. I could sense the antagonism in the room building. White was trying to bullshit a room full of guys whose primary skill in life was to see things as they were and to act accordingly. Glancing away from White, I caught Narimanov looking in my direction. He nodded slightly, and I nodded back, wondering if he knew who I was. One funny aspect of my profession is that you often don’t know the people who are most familiar with your work. In the old days, when I had a broader distribution, I was always meeting people who greeted me as if I were a close acquaintance, and who were eager to resume intellectual arguments I hadn’t realized I’d participated in. Jarring as it could occasionally be, it was an effective icebreaker. It would be helpful if Narimanov turned out to be a closet fan. Like everyone else in my line of work, I was weak on Russia and really needed a top-level source.
“And now,” White said, making an ill-judged attempt at a ring announcer’s cadence, “the esteemed senior senator from the great state of Wyoming and, God willing, the next president of these blessed United States, Senator Joe Simpson.”
White turned to Simpson and began clapping enthusiastically. His applause echoed in the otherwise silent room, and he trailed off after a moment, sitting down, red-faced. You had to wonder about a guy so utterly unable to read his audience, although I gathered White wasn’t unique. I’d heard brutal stories about these lunches over the years—pretense, hypocrisy, and obfuscation were chum in the water, and more than one overly slick or mealymouthed candidate had been savaged.
Simpson rose leisurely and surveyed the hostile faces around the table. A tall man with a weathered, cigarette-cowboy look to him, he was frequently photographed in a string tie with a turquoise clasp and tended to poll well with female voters despite his conservative politics. I had a sudden conviction that things were about to get really ugly.
“Has it occurred to you,” he asked, smiling easily, “that I might not like you, either?”
He paused, the deathly silence that White’s introduction had generated gradually giving way to a ripple of appreciative laughter. Much to my surprise, he’d said exactly the right thing. Straight talk was red meat to this crowd.
“My father was a rancher,” he continued, a barely perceptible down-home twang to his words, “and the only time I ever bumped into financial folk as a kid was when the local bank manager would come around and inquire after our ‘delinquent payments.’ I learned a lot of words listening to that banker—words like ‘delinquent,’ and ‘arrears,’ and ‘foreclosure.’ It was quite the education.”
He paused again, and I took a quick look around. Everyone present was leaning forward and paying attention. Maybe the entire purpose of White’s introduction had been to make Simpson seem sincere by contrast. Either way, there was no doubt that the senator had a knack for connecting with people.
“I wanted to continue that education, so I went off to college and then to law school. And my ultimate objective was to get myself to Washington, where I could persuade the government to work harder for honest folk like my father, and like the neighbors I’d grown up with. So, after I graduated, I took a job with the Bureau of Land Management in the U.S. Department of the Interior, one of thirty fresh-minted lawyers they hired that year alone. And I thought I had all the answers. I had a whole bunch of New Deal ideas about programs the government should institute—about things the government should
rural America’s benefit. But much to my surprise, the day I started work at the BLM was the day my real education began. And what I learned was that everything the government touched became corrupt and bloated and snarled in red tape. I observed it time and again, firsthand, in every conceivable kind of circumstance, and I struggled mightily to integrate what I was seeing with my youthful big-government leanings. And then one day, like Paul on the road to Damascus, I saw the light. I came to realize that, as our esteemed president Ronald Reagan used to say, the nine most terrifying words in the English language are: ‘We’re from the government, and we’re here to help.’”
He was in a groove now, having segued seamlessly into what sounded like a pretty standard stump speech. He held forth on the evils of big government for a few minutes, mainly battering the Democrats and the decisions of our current president but also careful to disavow Republican follies, such as the infamous Alaskan Bridge to Nowhere. Realizing perhaps that his audience had a limited attention span, he wisely circled back to his starting point just as the energy started to leave the room and eyes began drifting back to BlackBerrys.
“So, it seems an irony that I’m a politician, the very thing I profess to dislike, and the very thing all of you so clearly despise. But let me tell you something I learned as a boy back home on the range—there’s a delicate balance in nature, and everything and everyone has a role to play. Coyotes are pests, but they keep down other pests, like rats and mice and rabbits. Financiers can be predatory, but they’re an instrument of market discipline, and they’re necessary if we’re going to get our economy going again. And politicians—well, maybe we can talk the truth sometimes, and tell people that more isn’t always better, that wishes are never fishes, and that strength and dignity are possible only when people accept responsibility for their own lives.”
There was some spontaneous applause despite the fact that he’d just compared his audience to animal pests, and it occurred to me that I might actually be listening to the future president.
“Let me turn now to the reason I’m actually here today, which is to share some thoughts on the economy. I recognize that you all probably know more about this subject than I do, so I’m going to work my way though some introductory material quickly and then get straight to my point.”
I listened carefully as Simpson sped through a coherent overview of
our current precarious economic situation. He had his facts and figures correct, which gave him a leg up on most politicians.
“What, then,” he concluded, “is the greatest long-term threat to our collective hope of rebuilding American prosperity for the generations to come? The Democrats are focused on a declining manufacturing base, the export of middle-class jobs, and rising income inequality. All important issues, I admit, although I differ on the appropriate policy response. But, ultimately, all trees in the forest. Where does America’s greatest
vulnerability lie? What is it that’s the actual lifeblood of our economy?”
“Energy,” I said, abruptly understanding why I’d been invited to lunch.
“Thank you, Mr. Wallace,” Simpson said, nodding in my direction. “That’s exactly right. Energy. The
production input that drives every single sector of our economy. The
input that drives every single sector of the
economy. We Americans currently import more than a third of the energy we consume. And rising demand for that same energy from countries like China and India means not only that energy prices will spiral ever higher in the future but also that the countries possessing that energy will increasingly have the luxury of deciding precisely who they’re willing to sell to—and who they aren’t.”
I glanced at Narimanov, who had his eyes half shut. Simpson seemed to be working toward a variant of the argument that had been advanced against the Nord Stream pipeline—that energy dependence gives energy exporters too much political sway. I wondered again why Narimanov was here, and where Simpson was actually headed.
“Slow down a minute,” one of Walter’s more cantankerous protégés interrupted. “You’re not suggesting an Apollo program or a Manhattan Project to make us energy independent, are you? Because we can vote for Al Gore if we want that. Jack taxes even higher, keep domestic growth in the toilet, and all walk to work in the snow while a bunch of Poindexters at some government base in Florida or New Mexico flush trillions down the toilet on solar bicycles.”
I’d half warmed to Simpson, and hoped he’d point out that both the Apollo program and the Manhattan Project had been resounding successes.
“Never,” Simpson said vehemently, disappointing me. “I’ve already told you my view of government-sponsored initiatives. The markets
will cope just fine if oil and gas prices increase smoothly through time. But
if the markets are given a chance to work freely. And therein lies the critical rub—of the top fifteen energy-exporting countries in the world, exactly two treat hydrocarbons as a free-market good. The other thirteen—a group that includes Iran, Venezuela, Angola, and Nigeria—have all demonstrated their willingness to use their energy resources as a political weapon. So I ask you gentlemen: What happens when one or more of these countries attacks our economy by not selling us their energy? Or, more important, how should we position ourselves in anticipation?”
Three or four people tried to answer simultaneously, their replies uniformly skeptical in tone. Walter rapped his glass with the butter knife again, hard, and everyone fell silent.
“A little more decorum, please, gentlemen,” he commanded sharply. “I’d like to hear from Mark first.” He turned to face me. “How about it? Do you buy the senator’s scenario?”
“Personally,” I said, leaning forward, “as an American and a father, my biggest economic fear for the next generation is runaway inflation on the back of unsustainable deficits and bankrupt entitlement programs.” My remark drew murmurs of approval. Inflation is to financiers as garlic is to vampires, and books about the Weimar Republic had become de rigueur reading in the hedge-fund community. “Still, the senator raises an interesting point. We’re not really vulnerable in the sense he suggests until global demand for oil and gas has met or outstripped supply, but it’s only a matter of time until that happens.…”
“Bullshit,” someone said, repeating the coughing trick. It was an audience that turned on a dime and never cut anyone any slack, but I had too much experience with them to be intimidated by heckling.
“Bullshit yourself,” I shot back. “There’s only so much oil and gas in the world. It’s going to happen.”
“When?” Narimanov asked. There was a rustling around the table as people turned to look at him again.
“Hard to say,” I replied carefully, wondering why he’d asked the question. His company did business in dozens of different energy markets around the globe. If anything, he could probably answer the question better than I could. “Short-term, demand fluctuates with the economy, giving us the boom-and-bust cycles that make cities like Houston go broke every ten to fifteen years. Longer-term, though,
demand tends to increase at something slightly greater than the population rate, which is pretty much reflective of ongoing development in the Third World. The great unknown is supply.”