U.S. defense intelligence operative Kate Molares is investigating a suspicious international money trail. Her instincts place her at the center of a plot involving a frightening new kind of terrorismâ€”financial terrorismâ€” perpetrated by a handsome Middle Eastern hedge fund mogul. His goal is to bring the global economy to its knees.
Kateâ€™s mission takes her from D.C. to Venezuela, from Cuba to Connecticut. She must race to piece together this global puzzleâ€¦or risk the catastrophic destruction of the worldâ€™s financial markets.
U.S. defense intelligence operative Kate Molares is investigating a suspicious international money trail.Â Â
Her instincts place her at the center of a plot involving a terrifying new kind of terrorismâ€”financial terrorismâ€” perpetrated by a suave, handsome Middle Eastern hedge fund mogul. Â Â His goal is to wreck the West by bringing the global economy to its knees.
Kate's mission takes her from the defense intelligence command center on the outskirts of Washington, D.C. to the oil-fueled economy of Caracas, Venezuela; from the Beaux-Arts buildings of Old Havana in Cuba to a hedge fund kingâ€™s magnificent back-country estate in Greenwich, Connecticut; from the United Nations to the site of a deadly Islamic conspiracy in the Iberian Peninsula.
Kate is in a race against time to fit together the pieces of this global puzzleâ€¦or risk the catastrophic destruction of the worldâ€™s financial markets.
Q: Briefly describe your story line for readers.
A: The Fund centers on how subversive political forces can make Warren Buffet's famous warning that derivatives are 'Weapons of Mass Destruction' â€“ actually come true. U.S. Defense Intelligence operative Kate Molares investigates a suspicious international money trail, which places her at the center of an economic warfare plot perpetrated by a suave, handsome, Middle Eastern hedge fund mogul. His goal is to bring the global economy to its knees. Kate's mission takes her from the defense intelligence command center on the outskirts of Washington, D.C. to the oil-fueled economy of Caracas, Venezuela; from the beaux arts buildings of Old Havana in Cuba to a hedge fund kingâ€™s backcountry estate in Greenwich; from the UN to the site of a deadly Islamic conspiracy in the Iberian Peninsula. Along the way, she meets up with titans of finance, senior government officials and a European royal or two. As one Amazon reviewer put it, the book "combines Tom Clancy with The Big Short."
Q: Is there a lot of financial jargon in your novel?
A: My challenge was to write a story that centered on the interesting dynamics of international financial markets but that could still appeal to a very broad audience. So I went about creating vivid characters in positions with economic and political power that would make very human decisions that readers could relate to. The biggest compliment I receive from readers is when they tell me that they would never have imagined reading a financial thriller but that once they started reading THE FUND, they couldnâ€™t put it down till the end.
Q: How did you decide on derivatives as the weapon of choice?
A: I was on another overnight trans-Atlantic flight unable to sleep, when a Financial Times story I was reading made me recall Warren Buffet's famous lines to his shareholders:
"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."
In thinking about a convincing story line, I took Mr. Buffet's statement one step further: If legitimate players in financial markets can abuse these instruments for the sake of their own profit, why couldnâ€™t someone with subversive political motives do the same?
Q: What are derivatives?
A: A derivative is a financial contract that only has a value because of the underlying asset to which it refers. By itself, it is nothing. It's essentially a financial side bet.
Originally, derivatives were used to protect against risks, such as interest rate and foreign exchange risk, or even the future price of a commodity like wheat or oil. In principle, derivatives can make financial markets more efficient by allowing credit risk to be taken by the investor most willing to bear it and by making pricing of credit more transparent.
Today, however, the world financial system has become a gigantic casino where large bets are made on anything and everything that can be imagined. At last count, the world derivatives market reached $582 trillion â€“ thatâ€™s equal to an astounding ten times the value of global GDP!
In the U.S., just four banks -- J.P. Morgan Chase, Citibank, Bank of America, and Goldman Sachs -- control 95% of the derivatives market. On average, the derivatives risk exposure of these "too big to fail" institutions is more than twice their capital, prompting calls for more stringent regulatory oversight â€“ a lobbying fight currently on the Hill. No one wants a repeat of past failures such as Bear Sterns, Lehman Brothers and AIG -- and the damaging ripple effect on the broader economy
Q: But how real is that risk described in your novel?
A: When I created the plot for The Fund, I could not have predicted how very real the threat could be. However, a month ago, I got my hands on a study commissioned by the U.S. Department of Defense titled "Economic Warfare." As I read the report, I realized that the U.S. Government had spent considerable time studying this threat -- the very one outlined in my novel!
The study describes how unregulated hedge fund activity coupled with easy access to complex financial derivatives instruments create opportunities not only for exploitation by profit-seeking capitalistic market players, but also by ideologically-driven parties with more surreptitious goals to weaken, if not destroy the U.S. financial system -- just like one of my characters, Nebibi, who develops a plan to manipulate financial markets via derivatives.