THE TAINTED TRUST (Volume 2 of The King Trilogy)

CHAPTER 10

         

August 14, 1980.

Louis Visconti had a banner day. All of the documentation was now properly executed, the blue cornered indentures safely in place in his firm's fire-proof safe, and he was now officially responsible for the management of the funds in the King's trust. The implications for Visconti's firm were enormous. Annual management fees would increase by orders of magnitude. If the funds were invested to yield a return anywhere close to those generated by the firm in the past five years, the fees would be would be stratospheric.

He worried about the intentions of Paul Volcker, Chairman of the Federal Reserve. Schnieder had told him that interest rates were going up, soon. If Schnieder's prediction was correct, the immediate future of investments in stocks and tangible assets was extremely bleak. He had to move fast. He commenced a program of liquidating stocks, investments in real estate, and other tangible assets. He planned to short bonds and ride the interest rate wave to the top. He would wait for the inevitable crash, then plunge again into stocks.

The plan gave Visconti an uneasy feeling, however. In March of that year, interest rates had peaked at sixteen percent and had been dropping ever since. Conventional wisdom continued to suggest the Fed was reflating the economy and that interest rates would continue to drop, but his respect for Schnieder's opinion allowed him to overcome his concerns. Schnieder had been correct too many times for Visconti to ignore his counsel. With prime rates at eleven percent and fear and trepidation in his heart, he pressed ahead with his plan. To him, preserving the trust's purchasing power as Mike had requested was a joke. Maximizing his fees was the name of the game.