Most of Europe and the Americas still followed Roman law in this regard, and some early decisions in the wake of the First Pulse had ruled that the new intertidal zone was now public land. And by public they meant not government land exactly, but land belonging to “the unorganized public,” whatever that meant. As if the public is ever organized, but whatever, redundant or not, the intertidal was ruled to be owned (or un-owned) by the unorganized public. Lawyers immediately set to arguing about that, charging by the hour of course, and this vestige of Roman law in the modern world had ever since been mangling the affairs of everyone interested in working in—by which I mean investing in—the intertidal. Who owns it? No one! Or everyone! It was neither private property nor government property, and therefore, some legal theorists ventured, it was perhaps some kind of return of the commons. About which Roman law also had a lot to say, adding greatly to the hourly burden of legal opinionizing. But ultimately the commons was historically a matter of common law, as seemed appropriate, meaning mainly practice and habit, and that made it very ambiguous legally, so that the analogy of the intertidal to a commons was of little help to anyone interested in clarity, in particular financial clarity.
So how do you build anything in the intertidal, how do you salvage, restore, renew—how do you invest in a mangled ambiguous zone still suffering the slings and arrows of outrageous tide flow? If people claim to own wrecked buildings that they or their legal predecessors used to own, but they don’t own the land the buildings are on, what are those buildings worth?
That’s one of the things the IPPI did. It was a kind of specialized Case-Shiller index for intertidal assets. People loved having its number, which helped gauge investments of all kinds, including bets on the index’s performance itself.
Perhaps most importantly, it helped in calculating how much owners or ex-owners of intertidal properties had lost and could get compensated for, a number which Swiss Re, one of the giant re-insurance companies that insured all the other insurers, estimated to total worldwide at about 1,300 trillion dollars. That’s 1.3 quadrillion dollars, but I think 1,300 trillion sounds bigger. $1,300,000,000,000,000.
Well, but first of many firsts, in fact that’s far too low a valuation, if you are trying to accurately price what the coastlines of the world are truly worth to humankind. If you don’t heavily discount the future, which of course finance always does, the intertidal is worth about a zillion gazillion barillion dollars. Why say that? Because the future of humanity as a global civilization depends completely on its coastline presence, that’s why.
That being the case, the current wrecked zone also therefore represented an equal number of gazillion in losses. And yet no one knew who owned what, or on which side of the ledger any given asset resided. Were you in debt if you owned an asset stuck on a strand no one can own, or were you rich? Who knew?
My index knew.
And that was nice, because if the intertidal has any value at all, even if it’s only a zillion or two, then someone wants to own that. And other people want to leverage that value right out to the usual fifty times whatever it might be. Fifty zillion dollars in leveraged opportunities, if only someone could put a plausible number on it, or (which is really the same thing) allow people to bet on what a plausible number might be, thus creating the value.
That’s what my index did.
It was simple. Well, no, it wasn’t simple, it took all the quants at my disposal to work it up, and all my quantitudicity to comprehend even what I was asking the quants to quant, but the basic idea was simple—and it was mine. I made judgments concerning how the various pieces of the puzzle impacted each other and the total situation, and boiled it all into that single index number, and assured everyone that it was an accurate assessment of the situation. I listed for inspection all the elements that went into the assessment, and the basics of the calculation, which used classic Black-Scholes mechanisms for pricing derivatives, but beyond that, I did not give out the complete recipe of the algorithm, not even to WaterPrice. I did let it be known that for my baseline I began with the same starting point as Case-Shiller, so the two indexes could be better compared, and for sure the spread between them was one of the things people liked to bet on. Case-Shiller had designated an 1890s housing price average as their normative 100, and rated prices since then relative to that baseline. Shiller afterward often pointed out that despite all the ups and downs of history, when adjusted for inflation, housing prices had never strayed far from where they had been in 1890; even the biggest bubbles never took the index much over 140, and crashes seldom had gone below 95.
So the IPPI took housing prices, and simple sea level rise itself, and added to these two basics the following: an evaluation of improvements in intertidal construction techniques; an evaluation of the speed at which the existing stock was melting; a “change in extreme weather violence” factor derived from NOAA data; currency exchange rates; a rating of the legal status of the intertidal; and an amalgam of consumer confidence indexes, crucial here as everywhere else in the economy, although adding it to the IPPI was a new and controversial move on my part, as it was not a factor in the Case-Shiller. Using this mix of inputs, the IPPI said that in the years immediately after the Second Pulse, the submerged and intertidal’s worth had Case-Shillered down to very near zero, as was only right; it was a devastated time. But that was a retroactive evaluation, and in the year we introduced the index, 2136, we calculated the number to be 47. And it had been rising, unsteadily but inexorably, ever since. That was another key to its success, of course: a long-term bull market makes rich geniuses of everyone involved.
Yet another key was simply the name itself: Intertidal Property Pricing Index. Property, get it? The name itself asserted something that before had been questionable. It was still questionable, but all over this world property had already become somewhat liquefied; property now is just a claim on the yield. So the name was a coup. Very nice. Reassuring. Comforting.
So. Currently the global IPPI was at 104, the New York regional at 116, and both were still trending up faster than the noncoastal Case-Shiller, which was now at 135. And in the end it’s growth, relative value, and differential advantage that matters in determining how well you are doing. So yay for the IPPI!
As for the instruments used for trading on the IPPI, that was just a matter of packaging and offering bonds for sale that went both long and short on the index. We were by no means the only ones doing that; it was a popular investment, with the multiple variables involved making it a volatile high-risk, high-return market, attractive to people who wanted that. Every week there was a splash and crash, as we called it, and then a new method for aerating the submarine world would be announced, something we called a prize and rise. Meanwhile everyone had an opinion on how things were going and how they would go. And investors being so hungry for opportunities, the IPPI was performing well if judged simply by the number of bets being made on it; so well that it did even better, in the classic sort of bandwagon jumping that drives the markets and maybe our brains too: it was doing so well that it did better.