ROI – Chapter Four

Twenty-four-year-old Daniel Burke also had a bittersweet morning. Thanks to Pantera, he was R$129 poorer but considerably richer for knowing Gabriela. As the cab cruised along Leblon beach, he wondered if his parents once frolicked in its waves. Where did they meet? How did they fall in love? His Blackberry buzzed again, startling him with a message:

Burke: ExxonMobil released the highest quarterly & yearly profits ever for a U.S. company. The Fed’s $146 billion stimulus package will save us. Give me a narrative on how the economy is improving. Need before Monday. Waverly

Lehman isn’t Exxon/Mobil you dip shit. He silently cursed, Exxon sells oil. America needs oil. Nobody needs toxic debt. The Fed’s package won’t save us. End of story. He typed tersely:

Mr. Waverly: Will send you a draft soon. Burke

Thanks to Waverly, Daniel had worked late Friday on an investor release, which forced him to rush to the Kennedy Airport still clad in his Wall Street armor. It was Waverly who originally recommended high-risk bundled mortgage portfolios that turned toxic. It was Waverly who hired Daniel out of journalism school to spin his financial press releases. “Talk about putting whipped cream on a pile of bullshit,” he muttered. Only last week, when global stock markets suffered the worst crash since September 11, 2001 Waverly wanted him to write that the decline was nothing more than a market correction. “This renowned Wall Street flagship will weather the storm as it has many times before. Lehman Brothers is simply too big to fail,” Waverly had told him. One thing for sure, Daniel thought. This isn’t the kind of writer I intended to be.

Did a Renaissance man such as himself belong on predatory Wall Street? Absolutely not. Why didn’t I become a novelist? He lamented. Oh yeah, according to my adoptive mother, there’s no money in it. He was jostled back to reality when a pigeon-chested, mono-browed doorman opened his cab door. “Welcome to the Sheraton Rio, sir. May I carry in your luggage?”

The doorman sounded like he learned his English by watching British Telecom on hotel cable. “I wish you could,” Daniel responded. “It’s somewhere between here and the Big Apple.”

“The Big what?”

“I meant New York City, Manhattan to be specific.”

“New York, New York.” The doorman exclaimed. “We get many visitors from there. No doubt, you are here for the Carnival. Sir, if you will allow me, I can fix you up with the best tickets in town.” He formed an okay sign with his spindly fingers. “If you need anything, anything at all, please let me know. My connections run deep. My nephew, Felipe, is the ticket broker in all of Rio. Now may I get help you with your luggage?”

“As I said a minute ago, it was lost in transit.”

“Oh, what a shame, sir,” he replied with an insincerity as transparent as an old vaudevillian actor. “You will need to shop for some new clothes. My cousin has an elite clothing shop. But you won’t find it on the strip. Those stores thrive on ripping off tourists. My cousin’s store is a more inland, maybe thirty minutes by car but it’s worth it.”

“It’s been a long trip,” Daniel cut in.

“No worries, Mister…”

“Burke. Daniel Burke.”

“If you’re tired, Mr. Burke, let me show you the tranquil pool and spa. We will pass it on the way to your room. And your room—the bed is so comfortable you could lounge there all day and order from our top-notch room service. Please, allow me to take your personal bags.”

“What, my computer and paperwork? If you would, take them to the top of this hotel and hurl them into the ocean for all I care,” he deadpanned.

“I…don’t understand.” The doorman glared.

“Forget it,” Daniel replied as he hoisted his bags, “They’re shackled to me like a ball-and-chain. I’ll never get rid of them. Thanks anyway.”

“As you wish, Mr. Burke.” The doorman held his bony hand out eagerly expecting a tip.

“It’s not that I don’t appreciate your efforts, but my wallet didn’t make it here either. A tip isn’t in the cards, pal.” Though the skinny doorman’s jacket had padded epaulets, Daniel could see them slumping. “I’ll have to catch you later.”

“Certainly, sir,” mono-brow hissed under his breath. He’d seen the American’s face before, but couldn’t place it. Unless he could make money off the American, it didn’t matter anyway.

Daniel spent three hours trying to get back his life. He called American Express to arrange for emergency money. They underwrote a R$500 advance from the hotel. He would have a replacement card by Monday. He cancelled all other credit cards. The front desk had provided him travel size toiletries, and a refreshing shower and shave rejuvenated him. Somewhat.

Finally, he stepped out on the balcony into the world he so longed to re-engage. A relentless Rio sun beckoned him to remove his shirt while the ocean breeze lathered a cooling mist over him. The crisp cadence of crashing waves lulled him into a meditative state. Daniel’s third floor room had a splendid view of the double pools, thatched huts and tennis courts. Just beyond the lush hotel grounds were the Vidigal favelas nestled in the mountains, and to their right was a distant view of Ipanema. Through a stately row of palm trees, Daniel watched guests frolic on the beach below. I could get used to this, he thought.

After wolfing down a club sandwich from room service, he wrote a press release for Waverly. After diligent Internet research, he wrote that ExxonMobil’s banner year was a reflection of a still vibrant global economy. He appeased Waverly and postulated that the government’s stimulus package would bolster the housing market, thus helping Lehman. “When pigs fly,” he grumbled as he hit the send button.

Daniel re-analyzed his career choice. He was finishing second grade when Lehman went public in 1994. Since that time, the firm grew revenues from $2.73 billion to $19.2 billion. CEO Dick Fuld was the darling of Wall Street. Daniel lamented. Despite the Burke family connections, even my adoptive father could not have known this flagship would capsize.

Deep within Lehman Brother’s balance sheets was a ticking bomb in the form of credit default swaps, a new concept in financial derivatives. Investment banks such as Lehman were not subject to the same regulations applied to depository banks. Lehman had borrowed significant money to invest in high-risk housing-related assets, making it vulnerable to any decline in the housing market. While generating tremendous profits during the boom, this vulnerable position meant that a mere 3–4% decline in the value of its assets would eliminate its entire equity. Financial oracle Warren Buffett had recently referred to them as “weapons of mass financial destruction.”

Two months after Daniel joined the firm, Lehman closed its subprime lender, BNC Mortgage, eliminating 1,200 jobs in 23 locations, and took a $25-million after-tax charge and a $27-million reduction in goodwill expenses. He knew too well that was only the tip of the iceberg. His brain ached, so he laid down for a much-needed nap. As his head sunk into the pillow, his Blackberry buzzed with another message:

Burke—I tweaked your draft, and our GM signed off on it. FYI, InBev is buying Anheuser-Bush. Mergers always rally the market and should boost our stock too. InBev also owns Brahma Breweries. Try one—you might like it. I also heard Rio has some of the hottest women in the world. Try one of these too. Enjoy yourself. There will be piles of paperwork when you get back. Waverly

For the first time in eight months, his walrus-faced yes-man boss made him smile. Daniel shook the jetlag from his brain, rolled out of bed and peeked inside the minibar. “Bingo,” he said as he popped the top on a Brahma that made a recognizable pfffffft in any language. He took a nourishing swig. “Hmm, tasty.” He picked up his PDA and typed out a brief response:

Mr. Waverly—I like your first suggestion—just drank my first Brahma. Will update you later on your second suggestion—Rio women. You will receive my full report in the near future. Burke

For the first time since New York City, he loosened his striped tie and removed a keychain from his front pocket. Clasped onto it was a sterling silver charm in the form of a book—a constant reminder lest he forget his dream of being a novelist, not a financial PR writer. Maybe there’s a story here after all, he thought.

He grabbed the hotel phone and dialed one last number for the day. “Hello, Gabriela?”

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