Miss Mori was already there.

In a voice scarcely above a whisper she

proceeded to give him a rundown of pros and cons. It was the first time
I'd noticed any enthusiasm out of the woman all night.
I checked my catalogue. The piece was a Heian hand scroll, said to
be "exceedingly rare." After a few moments Noda motioned me over.
"Perhaps you could give us your opinion. What do you think?" He
pointed down. "The subject is intriguing. These are ladies-in-waiting for
the emperor, Fujiwara. Notice the delicate refinement of the coloring,
the matched fabrics, each enhancing the other like flowers in a bouquet.
That was eight centuries ago, just before the rise of the first shogun, the
first 'generalissimo' who would rule in the emperor's name."
When he said "shogun," niece Mori shot him a quick admonitory
glance. There was some kind of unmistakable electricity passing.
Something left unspoken.
"The Heian era ended with the great conflict between the Heike and
Genji clans that led to the death of the ruling emperor in 1185 and the
loss of the imperial sword at sea." Next he said something in guttural
Japanese to Mori, obviously very intent, and indicated one corner of the
painting, where the emperor sat. Her reply was quick and curt. Now, I
only know a little of the language, maybe a couple of cuts above Berlitz
level, but I did manage to pick up she wasn't talking about the painting.
Something to do with the emperor himself, though I missed the rapid-
fire delivery.
In response to Noda's question I tried to sound intelligent, saying
the ink coloring looked well preserved, or some such auction house
mumbo jumbo. It wasn't my thing really, which the man surely knew.
He seemed to know everything else about me. After he listened politely,
they switched back to Japanese and finally settled on a bid. I watched as
she marked it in the catalogue—low six figures.
Walton, I thought, you're dealing with a pair of heavyweights.
By then I'd decided not to bother bidding on anything. There were
too many curious twists, not to mention the building deal. Surely the
ritual had gone far enough, the samurai negotiating ploy of making your
adversary be first to reveal his game plan.
Why not bring up why we were there, just for the hell of it?
When I did, Noda betrayed a fleeting smile. "But of course, the
building." He made it sound like some kind of trivial annoyance, a
nuisance to get out of the way so we could all get back to the serious
work of admiring the pretty pictures.
 Touche, I thought. Round one to Noda, on points. "I assume you've
had a look at the package of materials I messengered up to your hotel
yesterday?"
A broker friend had put together some listings for office buildings
around midtown—it turned out the market was softening a touch due to
the latest construction binge—and I'd hoped that maybe something
would catch Noda's eye. Matter of fact, there were a couple of real
bargains over near Sixth.
"My people have examined it in detail. We would like to move
forward on the twenty-story building on Third Avenue."
For a second I thought he was joking. Sure we'd tossed in the write-
up, because it fit his profile, but it was a crazy all- cash deal, and they
wanted ninety million, firm.
"Did you read the terms on that one? It's all—"
"There is a vacant floor, is there not? Available immediately?"
"Well, yes, but—"
"There may be a few items to clarify—we would like your legal
opinion concerning the leases of the existing tenants—but nothing
major. If the seller is prepared, I think we could even go to contract
early next week, while I'm here. I would like very much to close as soon
as possible. If some of my staff can meet with the seller's attorneys over
the weekend, perhaps we can start work."
Over the weekend? No counter bid, no haggling? Now, you didn't
have to be a brain surgeon to realize this was a fast-track deal; Matsuo
Noda was a man in a hurry. "Looks like you just may have yourself a
piece of property. I'll try and get hold of them in the morning, if I can,
and start the ball rolling."
"Excellent." He hesitated a moment, as though framing his words,
then continued, "But in fact, Mr. Walton, we'd actually wanted to meet
you tonight for an entirely different purpose. I'd hoped we might be
working together on, well, some additional matters."
"Something else?"
"As you might surmise, we are not enlarging our presence here to
no purpose. Tonight I wanted to tell you something about the objectives
of Nippon, Inc. And then let you decide if what we propose merits your
participation. Your financial expertise could make you a great asset to
us."
Hang on, I thought. This thing is starting to go a little fast.
"What do you have in mind?"
 "First let me say you are a man I have long admired. Your style is
not unlike my own. We both understand the importance of moving
cautiously, of keeping our adversaries off guard. Most of all, there is a
rigorous discipline about your work. That is the style of bushido, the
way of the warrior." He smiled, and his tone lightened. "I think we
could cooperate very effectively."
Already I was wondering whether I really wanted to "cooperate" any
further with Matsuo Noda. Something about the man, and Miss Mori,
made me very nervous. Besides, I was trying to finish off work now, not
begin more. But he'd found out the one line that would keep me
listening. He'd somehow discovered I was a deep admirer of the old-
time military strategists of the East—such as Sun Tzu and Miyamoto
Musashi.
Like a hostile takeover bid, the ancient Japanese way of
combat was ritualized, as mounted warriors rode out, announced their
lineage (to the SEC?), then matched up with men of equal renown. The
samurai prized flexibility over brute strength; they had steel swords that
handled like scalpels and body armor that was a woven mesh of
lacquered-iron scales laced together in rows to create a "fabric" of metal.
Those weapons and armor made for agile movement, easy feints, fast
changes in strategy—all trademarks of mine on the corporate takeover
battlefield.
As a result, I fancied myself some kind of samurai too. . . .
The question was, how did Noda know this?
For some reason just then I glanced over toward Akira Mori. She
appeared to be studying a scroll with the detachment of a Zen monk in
zazen meditation, but she wasn't missing a syllable.
"Care to run through whatever it is you have in mind?" I indicated
one of the ottomans along the side of the room, now clearing as bidders
rose to go inside. I watched as the dark- suited Japanese businessmen
filed past, none with Noda's sense of style, and noticed that several
seemed acquainted with him, pausing to offer obsequious bows.
"With pleasure." He settled himself. Mori, now looking over some
screens, still didn't elect to join us. "First, may I presume you already
know something of Nippon, Inc.?"
"No more than what I gleaned from that package you forwarded.
Almost nothing, really."
He laughed, a flash of even teeth. "Perhaps I should be pleased.
These days too much visibility in the U.S. can sometimes stir up
'friction’."
 "Your prospectus indicated you help banks manage capital, so I
assume you're looking to enter the financial picture here."
That was the funny part, recall? There was no indication of any U.S.
action in his prospectus. Yet I knew that, overall, Japan's U.S.
investment, private and public, was in the tens and hundreds of billions.
Pension funds and industries were building factories, financing
corporations, snapping up Treasury paper. Japan had become a major
source of fresh money for the U.S. and for the world. But Nippon, Inc.
wasn't one of the players.
"Yes, we intend to be concerned, initially, with the position of
Japanese capital in the U.S. We are particularly interested in the matter
of Treasury debentures."
That was what anybody would have figured. Just that week the
Journal had noted that Japanese investors were expected to cover half of
our Treasury overdrafts for the year. They were advancing us the bucks
to keep up that spending spree known as the national deficit. They sold
us Toyotas; we sold them federal IOUs, using the proceeds to buy more
Toyotas. In effect they were financing the good life, supplying us the
"revolving credit" to buy their cars and DVDs and semiconductors.
"Treasuries always make a lot of sense." I picked up the thread.
"Full faith and credit of the U.S. government, all the rest."
"Quite so, Mr. Walton, but since all things are theoretically possible,
over the past few months I've undertaken a small program through
subsidiaries of Nippon, Inc. to begin cushioning Japan's exposure in
your Treasury market somewhat." He paused. "Now that my effort may
be expanding significantly, I was wondering if perhaps you might
consent to serve as our American agent in that endeavor."
For a second I didn't grasp what he was driving at, probably
because my involvement seemed totally unnecessary. Surely he realized
Treasuries were bought and sold here every day on the open market
through dealer banks? No big deal. Why bother hiring a middleman?
"I can make this quick. Why don't you just contact some of the
authorized Japanese brokers here in New York? You must have used
them before. Nomura Securities is well respected. There's also Nikko
Securities. And Daiwa Securities America. They're all primary dealers in
Treasury paper now. Buy or sell whatever you like."
Noda nodded. "Of course. But we both know the financial markets
can be very delicate. Impressions count for much, which is why I have
chosen to keep a low profile. Consequently, I would prefer to continue
to operate for a time outside normal channels. And in that regard, I now
believe it would be desirable to have an experienced American financial
specialist assist us. You, in particular, would be ideal."
I studied him. "Let me make sure I understand this. You're asking
me to step in and begin fronting for you here in the Treasury market?"
"That is correct, Mr. Walton." He rose and strolled over to the row
of tachi swords, where Miss Mori was still standing. They were lying on
a spread of dark velvet, and she was scrutinizing them with a
connoisseur's eye.
Now, I'd like to think I was a quick study of a situation, but this
one was definitely out of whack somehow. If all Noda wanted was to roll
over a little government paper, why the hush-hush? More to the point,
why a whole building in midtown? He could easily do it from Tokyo.
The scenario didn't compute.
"Before this conversation goes any further, I'd like a better idea of
the kind of activity you're talking about. Selling Treasuries? Moving the
funds into corporate bonds or munis? Commercial paper, equities."
"Sell?" He abruptly paused to watch as the staff began carefully
assembling the weapons to take inside for the sale, and his mind seemed
to wander. "You know, Mr. Walton, the sword always has held the
greatest fascination for me. To make one of these, layers of steel of
different hardnesses were hammered together like a sandwich, then
reheated, hammered out, folded, again and again, until there were
perhaps a million paper-thin layers." He pointed to one of the long
blades now glistening in the light. "You cannot see it, of course, but they
used a laminate of soft steel for the core, harder grades for the cutting
edge. And whereas the edge was tempered quickly to preserve its
sharpness, the core was made to cool very slowly, leaving it pliant." He
suddenly smiled with what seemed embarrassment and turned back. "I
take great inspiration from the sword, Mr. Walton. The man holding
one must learn to meld with the spirit in the steel. He must become like
it. What better than to meet the world with your hardest surface, yet
maintain an inner flexibility, able to bend to circumstance as the need
may arise?"
He stood a moment as though lost in some reverie then chuckled.
"Sometimes I do tend to go on and on. I believe it was selling you asked
about. The fact is you would not be actually selling Treasury
obligations."
"Then what . . . ?"
"Are you familiar with interest-rate futures?"
 "Of course." The question was so unexpected I answered almost
before I thought. Futures contracts were part of the big new game on
Wall Street, although most of the action was still out in Chicago, places
like the Merc and the Board of Trade, left over from the old days when
farmers sold their crops in advance at an agreed-upon price. The farmer
"sold" his grain harvest to a speculator while it was still nothing but
green sprouts. He was worried the price might drop before he got it to
market; the speculator was praying it would head up. The farmer,
interestingly, was selling something he didn't yet have. But even if the
price of wheat suddenly tanked, he was covered.
These days futures contracts were traded for all kinds of things
whose value might change with time. High on that list were financial
instruments such as Treasury notes and bonds, whose resale worth
could drop if interest rates unexpectedly rose. If you owned a bond and
were worried it might go down in value, you could hedge your exposure
with a futures contract, in effect "selling" it in advance at the current
price and letting somebody else assume the risk of future market
uncertainty.
Modern finance being the marvel it is, you could even sell bonds
you didn't own, just like the farmer's nonexistent grain. The Wall Street
crowd called this a "naked" contract, since you were obligated to go out
and acquire that bond in the open market on the day you'd agreed to
deliver it, even if the price had skyrocketed in the meantime. Or you
had to try and buy back the contract. Of course, you were betting that
price would go down, letting you pocket the difference.
Pious spirits on the futures exchanges called these deals high
finance and risk hedging. They operated, however, remarkably like
legalized gambling. Dabbling in interest-rate futures was not for those
with a dicey heart.
"Our objective," Noda went on, "is to cushion Japan's exposure
somewhat."
"With futures contracts?"
"Precisely. U.S. Treasury obligations are held by a variety of
investors in Japan, but up until now we have made very little use of the
protection possible in your futures markets. Nippon, Inc. will concern
itself with that."
I listened thoughtfully. "So you're saying you want to create an
insurance program for Japanese investors in case the price of Treasuries
weakens?"
 It made sense. If interest rates went up here, reducing the value of
their government paper, then the price of his futures contracts would
rise to offset the loss.
I glanced over at Japan's monetary guru, Akira Mori, who
was carefully examining her bronze fingernails. Was she the one behind
all this sudden nervousness about America's financial health? What
could these two know that we didn't, I wondered. It was all a bit
mysterious.
One thing was no mystery, though. Whatever was going on with
Matsuo Noda and Akira Mori gave me a very unsettled feeling.
"I'm flattered." I looked him over. "But afraid I'll have to pass. This
fall I plan to take off for a while and . . . catch up on some personal
matters that—"
"Mr. Walton," he cut in. "I would urge you not to lightly dismiss my
proposal." He was staring back at me intensely. "I can only say for now
that issues are involved . . . well, they encompass matters of grave
international consequence." Another pause, followed by a noticeable
hardening of tone. "Your other obligations cannot possibly be as
important. It would be in your best interest to hear me out."
Want the truth? At that moment all my negative vibes about Matsuo
Noda crystallized. He wasn't threatening me exactly. Or maybe he was.
The large viewing room was all but empty now. Maybe he'd deliberately
waited before getting down to his real agenda.
"My other 'obligations' happen to be very important to me just
now."
"Then please consider rearranging them."
"Besides, my fees can be substantial." They weren't all that
substantial, but I was looking to slow him down.
"Your fees do not present a problem." He continued, "This
afternoon a retainer of one hundred thousand dollars was deposited in
your personal account at Chase."
"What in hell . . .!"
"Money is of no consequence in this matter, Mr. Walton. Time is."
"You seem awfully sure I'll agree."
"We expect your involvement to begin immediately. I cannot stress
too strongly the urgency of what you will undertake." He smiled thinly.
"I also feel confident a man who enjoys a challenge as much as you do
will find our undertaking . . . intellectually rewarding."
Seems I was hired and I hadn't even said yes.
 This guy had another think coming. Besides, he could get anybody
to do what he wanted. He didn't need me. As I stood
there, I started trying to guess the dimensions of Matsuo Noda's
financial hedge. Taken all together, Japan probably had roughly a
hundred billion and change tied up in U.S. government paper. No way
could he be thinking of covering more than a fraction of that. I knew
plenty of law clerks who could do it, for godsake. A few phone calls to a
couple of floor traders in Chicago . . .
"Look, the most I can do for you is recommend some very
competent brokers I know to help you out. There shouldn't be too
much to it. You'll just have to go easy. You can't hit the market makers
in Chicago with too much action all at once. Prices get out of kilter.
Then, too, there are exchange limits. . . ."
"That is why we will be trading worldwide." Noda withdrew a
folded sheet of paper from his breast pocket. "Perhaps you'd like to
glance over our program. These are cumulative totals, which include our
activity to date, but we will begin moving much more rapidly as soon as
I've completed all the financial arrangements with our institutional
managers at home. Perhaps you will see why we need a monetary
professional."
I was still chewing on the "financial arrangements" part as I took the
paper, opened it, and scanned the schedule of contracts. While I stood
there, the room around us sort of blurred out. I had to sit down again.
All his talk about samurai and nerves of steel was for real.
Matsuo Noda had a program underway to sell futures on a pile of
U.S. Treasury bills, notes, and bonds he didn't own, "naked," in an
amount I had trouble grasping. I knew one thing, though: if interest
rates headed down, raising the value of those presold obligations, he'd
be forced to cover awesome losses. He'd be in a financial pickle that
would make Brazil look flush. On the other hand, if some disaster
occurred and U.S. interest rates suddenly shot sky high . . .
Numbers? The CBOT's long-interest contracts, notes and bonds, are
in denominations of a hundred thousand each; the Merc's short paper,
bills and CDs, are in units of a million per. Finally I did some quick
arithmetic and toted up the zeros. Something had to be wrong here.
Nobody had balls that big. I decided to run through the figures again,
just to be sure.
It was along about then that I realized all Noda's pious talk about
sheltering Japanese widows and orphans had been purest bullshit.
Resting there in my hand was the biggest wager slip in world history.