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Kingdok finds the Stupid Rat Creatures in their hideout. He says that he should kill them for their insubordination, but instead he rewards them with a sack of skinned rabbits. He enjoyed knowing the town was terrorized and praises them for their good work.
Thorn dozes off during watch duty. She has a dream in which she is a child playing a flute. A large dragon sits with her as she plays, praising the Red Dragon’s tutelage and Thorn’s eagerness to learn and practice music. She asks to sit out in the garden, where she becomes an adult wearing a lavish princess dress. The Hooded One beckons to her and removes his hood, revealing Fone’s face. She startles awake to find that Fone is talking in his sleep.
Fone dreams of Moby Dick, in which he is Ishmael and Phoney is Captain Ahab. They’re aboard the Pequod. Smiley appears in the ocean as Moby Dick.
Phoney harpoons Smiley, in spite of Fone’s protests. Fone falls overboard and floats through the ocean on a coffin. He begs not to be abandoned, but the ship sails away. The Red Dragon suddenly surfaces, 10 times his usual size. Fone startles awake to find that he’s overslept.