Prologue

Undisclosed Location, North Korea, Six Months Ago He let out a gasp for air as he awoke from the nightmare. It was like nothing he had ever experienced. He didn’t know who he was or where he was, and he had not yet processed that whatever was enveloping him was not reality but only a terrible dream. His body was dripping with perspiration and shook uncontrollably as though he was standing in a cold wind. He was seized with terror; the kind of terror you feel while walking alone at night in a deserted area, consumed with a sixth sense that someone is following close behind. The kind of terror where you can almost feel the body heat of your stalker invading the rear of your personal space as the distance between the two of you closes. The kind of terror that makes the hair stand up on the back of your neck and makes it impossible to turn around and look, because somewhere deep in the lizard part of your brain your threat-detection instincts tell you that if you turn around and look, you are going to die. The kind of terror that turns legs to rubber as they refuse to answer your brain’s commands, because your ability to control your body is being short-circuited by an existential threat. It was that kind of terror. He opened his mouth to scream, but nothing came out. His voice was gone. Everything shifted to slow motion as he waited, helpless, for whatever it was that was about to end him. He became consumed with sadness as he resigned himself to his fate, submitting to that ever- present force from which he knew there is no possible return. This was life in North Korea, or more accurately death. People didn’t pass away at a ripe old age surrounded by loved ones. People just came to an end, often violently. Always alone. Then, as fog of sleep continued to lift, his eyes regained their focus, and he surveyed his environment. He saw a ceiling with a single glowing bulb that was way too bright, hurting his eyes. The brightness of the light caused him to reflexively turn away and, as he did so, he noticed walls, then a door, but no windows. Surprised, he shifted his gaze again, down slightly and in front of him, and noticed that he was lying in a bed under a thin blanket. For a brief moment, he felt a sense of overwhelming relief as he realized that he had just awakened from a dream. But the fear began to claw its way back as he struggled to think. The nightmare had seemed very real, but he could no longer remember it. How could something so terrifying be erased from his memory so quickly? And, where was he? What was this place? Why was he here and for how long? Was this the nightmare? Small details started to return. He remembered arriving at this place on a Monday but, he couldn’t remember how he got here. He noticed a calendar on the room’s wall, and it read Sunday. How many days was that? Was it six or seven? No, he chastised himself, it was five, but then he thought about it again and was no longer sure. He kept trying to do the mental arithmetic, but the answer seemed painfully difficult, yet he knew it shouldn’t be. And which Monday? Had he been here a week, two weeks, or longer? He was certain he had not been unconscious the entire time. He remembered daily routines, meals, the shower, the questioning. He remembered taking several tests. They had been administered on a computer. He then remembered struggling with the computer, which didn’t make sense because he remembered he was supposed to be good with computers. And each test seemed much more difficult than the last. What were they trying to do with him? Was he being tortured? This was North Korea after all. Things didn’t have to make sense; they only had to appeal to Kim Jong- un. His pulse quickened as he tried to sit up and discovered his arms were shackled to the sides of the bed, limiting his mobility. He tried to move his legs and discovered they too were shackled. He tried to slow his breathing and force himself to relax, but his heart was beating so hard he could feel his pulse in his ears. In his ears! He suddenly remembered he was a graduate student in physics at Pyongyang University of Science and Technology, the top institution of higher learning in North Korea. He was cogent enough to know that the study of physics involved a lot of equations, so he tried to clear his mind by summoning an equation to do in his head. Nothing came to him. He then had the horrible realization that he no longer seemed to grasp what the study of physics actually was. His anxiety again rose rapidly, and he was close to a panic attack. He started taking deep breaths again to hold the panic at bay, then laid back in his bed and listened. He could hear the quiet whirr of an electric motor as it filled the space with the white noise of a ventilation system. It sounded oddly loud. Then, the door opened, and two men walked in. They didn’t look friendly and just stood in front of him at the foot of the bed for what seemed like an eternity. One of the men wore a white coat of some sort, the kind of coat doctors typically wore. The other was in a military uniform. He could not tell what kind of a uniform it was, but he noticed the man was wearing a sidearm. That seemed ominous, and bile rose in his throat as the terror started to return with his realization that this was now reality and not just a bad dream. The man in the white physician’s coat was holding something that looked like a patient’s medical chart. Their eyes locked as he finally spoke. “How do you feel?” he asked, reassuringly. “Where am I, why am I here, and what do you want with me?” the man asked, trembling and barely able to speak. “You are in the hospital,” the man in the white coat said, with a soothing voice. “You were found unconscious at work.” It was a lie. “Why am I chained to this bed?” the man asked, fear rising in his voice. This was North Korea, and he knew that anyone in authority, even a doctor, could represent an existential threat. “We were concerned you would hurt yourself. You’ve seemed to be struggling with some very bad and vivid dreams. We restrained you for your own protection.” The man in the white coat replied. “I need to ask you a few questions to help us understand how you are doing. We don’t want to release you until we are confident you are well. Please relax and answer a few short questions for me.” “OK,” the man said, sheepishly, knowing that resistance would be futile. In North Korea you didn’t refuse to answer questions to anyone in authority, even a doctor. “Excellent,” the man in the white coat replied. “First, explain to me, in simple terms please, the second law of thermodynamics.” The man looked confused, and silently stared at the doctor for several seconds. “What?” he asked. “I see here you are a graduate student in theoretical physics. We would expect you to know the answer the that question. Explain to me the meaning of the second law of thermodynamics.” “I don’t know what that means,” the man replied, his voice now cracking. It was a dangerous thing not to answer a question to a person of authority in North Korea. “Ok, let’s try something else. Define the word entropy.” The man swallowed hard. He recognized the word, but he could not summon the definition. “I don’t know,” he said, in a tone now dripping with fear. “Who was Albert Einstein,” the doctor asked, “and what was his famous discovery?” The man was visibly trembling now as he looked at the doctor silently with a blank star. “It’s ok,” said the man in the white coat, reassuringly. “Let’s try something different. If I have nine apples in a basket and my friend here takes four of them,” he said, pointing to the military officer standing next to him, “how many apples do I have left?” The man stared at the doctor for several seconds, appearing lost in thought, then answered “three.” “Excellent,” the doctor replied. The man felt a wave of relief. He must have given the correct answer. “Now just one more question. What is the sum of two plus three?” “Four,” the man replied, relieved again by his certainty that he knew the answer. “Excellent,” the doctor repeated. “You are coming along nicely. I am sure we will be able to release you shortly. I want you to relax and get some rest. We’ll give you some medication to help ensure you don’t have any more bad dreams.” “Thank you,” the man replied. In North Korea one always must appear grateful for acts of kindness. They were rare. The man in the military uniformed looked at the doctor and asked, “Remind me, what was his measured IQ when he entered the program?” “It was 145,” the doctor replied, “on the high-end of our graduate physics students. Our extensive testing has been conclusive. I can now categorically confirm that the program has been a complete success. I regard the testing as complete and we are now ready. I plan to keep this one in a longer-term study protocol for a while.” “Of course,” the officer said, as he casually withdrew the sidearm from his holster, pointed it at the man in the bed and fired one round into his chest and another into his forehead. The doctor took two steps backwards, stunned by the action and the deafening noise, then shouted, “What is the meaning of this? This is outrageous! I was assured I would be allowed to keep the last subject for longer-term observation! What are you doing?!?” “Not to worry, doctor,” the officer said, calmly, without the slightest acknowledgement of the violence that had just occurred, “and the Dear Leader thanks you for your service.” The officer then leveled the weapon at the doctor’s chest and fired two rounds into the man’s heart. This was North Korea. It didn’t have to make sense. It just had to appeal to Kim Jun-un.

Chapter 1 – Momentary Darkness

New York City, Present Day The skyscraper at is nestled in lower and stands on land adjacent to the former World Trade Center. It stretches 44 stories into the sky and contains 2.1 million square feet of office space. Opened for business in 2009, it houses the headquarters of the storied firm, . The firm was founded in 1869 by Marcus Goldman, a German Banker from , and the son of a German cattle dealer. Thirteen years later, in 1882, Marcus’ son-in- law, , joined the firm setting the stage for its eventual name of Goldman Sachs & Co. Over the succeeding 140 years, the firm grew into a financial powerhouse on Wall Street. In the process, it became a trusted partner to many, a villain to some, and the target of envy to countless. But there was one thing both the firm’s admirers and the distractors agreed on. Goldman had impact. The firm, love it or hate it, had gravitas, power and the intellectual prowess to crush most of its enemies. The firm employed the best and brightest college graduates. It was far more difficult to get a job at Goldman Sachs than to gain admission to the Harvard Law School. Several graduates from Harvard Law would apply for employment each year. Very few were hired. Those who made the cut were immersed in a ruthless up or out culture where young associates who didn’t live up to expectations were shown the door, often experiencing the first failure of their young lives. Within the building’s 2.1 million square feet of office space were six large “trading floors” where trillions of dollars of securities were purchased and sold. Goldman excelled at it. The employees who were the “traders”, as they were called, would spend their days buying or selling almost any kind of financial asset, and even many physical commodities, whose value could be expressed by a price. Their remit included stocks and bonds from companies around the world, U.S. government bonds that were used to finance the American budget deficits, foreign currencies, gold, oil, agricultural commodities and countless others. The process was called “making markets”, and it was the lubrication that allowed the global financial system to function. Business depended Goldman Sachs and banks like them to help raise capital for America’s industrial companies and manage financial risks. Without such institutions, the engine of global commerce would come to a grinding halt. Of course, the “traders” were also there to make money for Goldman. One of the large trading floors at Goldman Sachs was dedicated to trading bonds. It was called the Fixed-Income Division. “Fixed-Income” was a name that was originally coined because, in the early days of the bond market, bonds typically offered the investor a fixed-rate of interest, or a “fixed income”. As the market grew and became much more creative, that simple definition was no longer true, but the name stuck. The bond trading room was a vast open space with countless rows of desks. It was reminiscent of scenes from movies like “Wall Street” and “The Bonfires of the Vanities”. Each desk was equipped with multiple computer screens and terminals to provide employees with every conceivable computer-age advantage. Large TV screens were arranged around the walls of the room and continuously streamed CNBC, CNN, BBC, Bloomberg TV and Fox Business. Anything that happened in the world could potentially impact the bond markets, sometimes dramatically, so access to news and information was vital. Electricity to power all of the high- tech was also vital. The open floor plan allowed employees to easily and quickly communicate with each other. At any point in time, employees could be seen standing, phone cords hanging over their shoulders, looking at their screens and shouting information at someone else on the trading floor as they tried to complete a trade. Beth Hanniford, Managing Director of Fixed-Income and boss of the trading floor, sat in her office adjacent to the vast, open work space. She was a senior executive at the firm and commanded a 7-figure income. Her office, by corporate standards, was actually modest, and there was no en suite bathroom typical of the C-suite offices of so many large corporations. The emphasis on her space was function. The walls were glass, allowing her to see out onto the floor, and her desk was positioned to give her a commanding view. Beth also was assigned one of the desks on the trading floor so she could be close to the action, and she preferred to spend most of her mornings there. Her job, after all, was to lead her team in making money, and the best leaders always led from the front. Hanniford heard an audible “beep” from the computer screen to the left of her desk. The screen displayed a real-time feed of bond prices, and the beep was an alert intended to get her attention if market prices varied by more than a specified amount. She glanced at the screen and noticed the price of the 10-year U.S. Treasury bond, an important market benchmark, was falling. Something was up. Time to get out to the trading floor and see what’s going on, she thought, as she closed the research report she had been reading, stood, and quickly exited her office. As she walked out onto the floor, she saw three of her traders standing at their desks, forming a large triangle, and playing catch with a nerf football. “Hey Ryan,” she called out, “maybe you ought to put the football down and see what’s going on with the 10 year.” Her voice was jocular, as she was not scolding him but just trying to get him to focus. Traders were a different breed, and finesse was an important part of an effective management style. “Hey, boss,” he replied, “it’s a beautiful day in New York! There was a big seller of the 10-year out of Asia about ten minutes ago. Yours truly just so happens to be short the 10-year and, I might add, up about $80 grand on the position. I needed a distraction to keep me from losing my nerve and closing out my position too early,” he said with a laugh as he caught the ball, turned and immediately threw it to her. Being “short” the 10-year meant he had sold 10- year bonds he technically didn’t own. As long as the price continued to drop, his profit would increase. Hanniford just rolled her eyes as she caught his throw then, being a good sport, threw the ball in a perfect spiral to another trader in the triangle. The traders were smart and made a lot of money for Goldman, so, she would indulge them – to a point. Besides, it didn’t help her case that her boss had a basketball hoop in his office. Just then there was a loud “pop”, and everything went dark. The lights went out, hundreds of computer screens suddenly went black, and the sound of the ventilation system, an endless white noise that bathed everyone throughout the day, disappeared. For a moment, everyone on the floor ceased talking, and the room was dead-quiet. It was eerie and something most of the people in the room had never before experienced. , let alone Wall Street, didn’t know quiet. Then, just as suddenly, there was a second, much quieter pop as everything sprang back to life. “That’s the emergency power.” one of the traders shouted. “It just came up. We’ve got our screens back,” meaning that the computer screens were displaying live quotes again of where other banks were offering to buy or sell securities. Hanniford walked to the exterior window and looked out over lower Manhattan. Numerous other buildings appeared dark, although a few were starting to light up again as their backup power systems kicked in. At just that moment someone else on the trading floor stood and shouted, “I’m hearing the entire city power grid is down. All of Manhattan is out, and even the Burroughs are dark!” Somebody else stood up and shouted, “Chicago is without power!” Hanniford felt a chill, as her instincts were now forcing her to ask the obvious question, Was this a terrorist attack? Her thought was interrupted as a light flickered in the corner of her field of view. She turned again, looking outside, and surveyed the cityscape. More buildings seemed to be lit, though some were still dark. Good, she thought, at least backup power systems seem to be working. Was everyone on emergency power now, she wondered? Then her mind shifted to a more important question: how was the power interruption was affecting the financial markets? “Where are the markets?” she shouted. “What’s the price on the 10-year Treasury bond?” “There’s a very wide bid-to-offer spread,” the trader shouted. A wide bid-to-offer spread meant that other banks were trying to avoid doing business. They would offer to buy securities at prices so low or sell at prices so high that nobody would transact or, if someone was stupid enough to take their price, there would be a good enough “pad” in the price to reduce their risk. “Are any trades being done at those prices?” Hanniford asked. “No!” the trader shouted back. “Nothing’s being done. Everybody is just watching screens.” There was a slight flicker of the lights as someone stood and shouted, “I just got through to building services. We are back on the grid. They don’t know what happened, but power is back.” Someone else responded, “Chicago says they have power as well.” “The Treasury market is trading again!” another trader shouted. “Trading volume isn’t huge, but it’s growing. I think we are back in business!” “What’s the price now on the 10-year U.S. Treasury bond,” Hanniford shouted. “It’s risen a full point, but it is starting to sell off again. I think there was an initial ‘risk- off’ trade when everyone first thought this might have been a terrorist attack, but things are settling down.” A ‘risk-off’ trade occurs during times of high-uncertainty, like a potential terrorist attack, when investors suddenly sell riskier assets like stocks and look for very safe investments like U.S. Treasury bonds. “It was a good thing this only lasted a few minutes!” another trader shouted. Hanniford looked at her watch. The entire incident had only lasted about four minutes, but for four minutes, she mused, the entire financial system came to a halt. She decided the rest of her afternoon would be best spent on the trading desk monitoring the markets’ reaction to what had just happened. As she walked to her seat, there was an unsettling thought that she couldn’t shake. I understand how a blown transformer can take down a small area for a few minutes before power is re-routed, but how can that possibly happen to the entire city, and two large cities no less. Something’s not right here. As she got to her desk she called out, “Somebody find out how wide-spread this was.” One of her employees immediately answered. “Already on it, Beth. I’m hearing it happened in four large cities – New York, Chicago, Atlanta, and Charlotte. Nobody knows the cause yet, but all four are back on line. This doesn’t make any sense.” “You’ve got that right,” she answered. OK, I have no clue what happened, she thought, but I’m pretty sure this couldn’t have been an accident. Just then, her cell phone buzzed with a text telling her to get to the Boardroom. The bosses were gathering the Division Heads to discuss the impact and see if anyone had insight on what just happened. Something is terribly wrong, she thought, as she left the trading floor and headed to the meeting. The entire global financial system is nothing but a massive stream of electrons flowing all over the place. If we lost power for an extended period of time, we’d be in world of hurt. Power was everything. Without it, we’re screwed. She knew every bank in the world had robust backup plans, but no plan could be effective against a long-term loss of power. The impact on the global economy would be devastating. It would likely cause a global depression, and one difficult to recover from, because there was little the Federal Reserve or policy makers could do without electricity. That’s all that money was now, just electrons residing in a ledger. “Listen up!” she shouted. Everybody keep your open positions small. I don’t like this.” She quickened her pace as she walked towards the door.

Signals Intelligence Division, FSB (Russian Security Service, formerly KGB), Moscow Senior Lieutenant Demitri Petrovitch sat back in his chair and smiled as his commanding officer looked over his shoulder. “Flawless, sir. The test was a complete success.” “Well done Senior Lieutenant, very well done.”