Archives for: July 2009
Back in the good old days when mountain streams were teaming with salmon and sewing machines were propelled by pedaling, the money was usually made in a Bull Market. These days it is the species' excrement that would make a better epithet for the nature of financial markets, whose advances seem to have been increasingly propelled by peddling of piddly derivatives. But not to worry, taxpayers are always on a standby when it comes to changing Wall Street's investing diapers. The future is brightening already.
Let's start spreading the good news: Financial behemoth Goldman Sachs earned $2.72 billion in the second quarter. The quarter before it was $1.8 billion. That is all peachy, until you realize that just a quarter ago Goldman received a hefty check from us, taxpayers, whose size easily dwindles their combined quarterly profits. And I am not talking about the $10 billion of TARP money, which they rightfully returned. I mean the $13 billion which was discreetly channeled to them through the well greased conduits of AIG. With that in mind, their numbers don't look like profits any more, they look more like a High Way Robbery. Or a High School Musical - depending on whether you use hearing aids or Twitter for your communication needs.
It gets even more interesting if you dig deeper into the Yahoo!Finance article which announced their heroic feat: "Much of Goldman's Q2 strength came from its trading business." There! Mystery solved! Did you foolishly think that they would be making loans to people or produce anything of actual value? Nah, it is just spoils of gambling, silly, or - considering the fact that they own large part of the market - spoils of rigged gambling.
So Goldman Sachs turned up some profits. Woohoo! Now, after that check we cut them back in October, you might further hope they would perhaps like to give something back to the community. Nothing big you know - just build a school here, fund a health care research program there or cook a megavat of chicken soup for the victims of their relentless mortgage pushing. But you'd be moderately mistaken. Never mind that without the 13 billion bailout, they'd still be deep in the hole. These were their own profits, right? Why would they share them with gullible taxpayers?
If Wall Street was in Tehran, the Goldman Sachs's office windows would undoubtedly be pummeled with rotten tomatoes and cobble stones neatly gift wrapped in sheets of shrinking 401k statements. But fortunately for Goldman, Wall Street is in New York - so it is back to golf courses and jackpotluck dinners where the bankers can resume rubbing elbows with political elites and swapping recipes for financial disasters.
Smart? Nope. Slick? You bet.
So let's do a quick recap. Goldman's infallible ubertraders invest en-masse in opaque and poorly understood securities. When their bets go terribly wrong, uncle Ben rushes in with a huge AIG pacifier lest Hank's old buddies suffer any financial boo-boos. Is that how we want to run our economy?
If the answer is yes, then I would like to propose the greatest entrepreneurial idea of all time. I am going to call it Better Sachs. Not that I would have doubts about the absolute perfection of the current Sachs, but there will be lots of heavy betting involved.
Here is my business plan. Go to a casino. Bet constantly on red, preferably with borrowed money. If you win, you keep your money. If you lose, Mr. Bernanke will gladly repay your principal from the Treasury's bottomless coffers. This scheme simply cannot fail and if we start say 10-15 companies operating on this principle, I bet you a Goldman Sachs Executive Bonus that we will be out of the recession in no time. One idea can single handedly save our economy!
Any daring venture capitalists on the Wall Street want to bankroll this revolutionary proposal?
Silly of the Valley
Kids have an unusual propensity for silliness. They also have a very fluid mind. I think there is a causal relationship here.
Last weekend I visited a friend of mine, whose two pre-school daughters never cease to amaze me with their willingness to adopt and magnify the silliest ideas I could possibly imagine. On Saturday, we went for an easy stroll to a public park in the Raritan Valley. I used the gravel road tracing a quiet stretch of the river as a runway for demonstrating my newest rendition of Monty Python's Ministry of Silly Walks. The girls caught on with vigor and resourcefulness that no adult could ever muster, virtually negating their dad's previous efforts to highlight the virtues of proper ladylike demeanor.
Kids' mind is as malleable as it is hungry for absorbing new stimuli. It has no prejudices, no ruts and its components can reconfigure themselves with such ease that you'd think that their mental engine has been submerged in a potent lubricant. And I think that this lubricant is silliness - that mysterious state of mind that has all the attributes necessary for liberating it from the shackles of friction: it is random, imaginative, irreverent and provocative. Thoughts can freely swivel around arbitrary axes, glibly slide into new positions or even leapfrog over the trench of conventions and run wild into the infinite prairie of possibilities.
Where kids' neural networks resemble jungles of axons, constantly reassembling their synaptic connections as they grow, older people's mind is more reminiscent of a petrified forest. When they ponder problems, you can almost hear the creaking of the levers and gears, the huffing and puffing of the whole structure. Splinters and dust fly all over the place, clouds of steam are leaking through the joints. But there is no lubricant. Their sailboats are stranded in the shoals of routine, far from the refreshing winds of silliness. So far away in fact that when silliness actually comes to them, they will most likely knock on their foreheads, inadvertently revealing the advancing hollowness of their skulls.
Some people just take themselves way too seriously. They never run in the rain, they do not throw coins into fountains, they do not collect dolphin shaped pebbles. They forget to take proper care of their most precious engine, and after years of neglect, their thoughts move in awkward starts and fits. They'd rather blow their head gaskets than pour little oil into the crankcase. Eventually, they become prisoners of their own lives. They move routinely from one predictable party to another and there they sip the same English tea that they have been sipping for the past 20 years and discuss their near life experiences with other inmates while looking out of the window at those who drink life straight from the bottle.
I am not suggesting that we should all become clowns. Everything in moderation my grandma used to say. I have seen minds that were so fluid that they were unable to hold any coherent thought - think hunting a bar of soap on the shower floor. Some grip is necessary. But if you have to use WD-40 anytime you encounter a new idea, it maybe time to relax a little bit and kick back. Take a look around. If you see a statue of a stately lion in front of your municipal office building, do not hesitate and hop on it. Your mind will be glad you did.
A subway car after midnight is like a Hogwarts Express. Strange things can happen.
Once I was returning home from the city on the last train of Washington's Orange Line, which is around 3am on weekends. I sat next to a man from Midwest, who was trying to sell me a soy bean field behind his barn in exchange for an immediate cash infusion directed conveniently into his wallet. It was once in a lifetime opportunity to invest in agriculture, but I foolishly declined. On another occasion, I had the whole history of New York Mets explained to me in great factual detail and illustrated with animated gestures that faithfully depicted some of the greatest swings seen at Shea Stadium. All that without a single hint of encouragement on my side and meticulously spread over the 25 minutes which it took to chug from Metro Center to the West Falls Church station.
The crowning moment of my past-midnight rider career occurred a few months ago when I took a seat opposite to a pair of lovely young ladies, probably interns, one blond and one brunette, whose cheek colors were pink and light green respectively. At Rosslyn, the brunette half of the duo figured out that the unhealthy color of her cheeks must have been a result of some vile power struggle between alcoholic beverages and mayonnaise products taking place in her stomach. Without interrupting her sentence, she motioned her friend to step out of the car. Once outside, she promptly approached the short divider lining the wall of the station and nonchalantly regurgitated the feuding food factions into the crevasse between the divider and the wall. Acting with the routine swiftness of Nascar mechanics, she completed the cleansing procedure before the train doors closed, so they both had enough time to return to their seats, the brunette in a visibly pinker state. They regained their composure and picked up the learned gabfest wherever they left off as if besoiling a public place was an integral part of every young lady's early morning hygiene.
See, late trains are not populated by your usual standard edition people. By the time midnight strikes, normal people are already safely in their normal homes, tucked in their normal beds and dreaming their normal dreams. Midnight trains are prowled by special species, by beasts that have tasted the flesh of night, now sprawling across the rows of double seats and slowly digesting their pray, with blood still dripping from their newfangled vampire teeth.
You may see wildly disheveled characters with oily beards, whose mere presence at the Thanksgiving table would cause massive loss of appetite, you may see corpulent ladies with make up turned into highly abstract paintings that would leave Kandinsky gasping for air, you may see comparative alcoholics scanning the horizon with their foggy periscopes, fully convinced that they are on their way to the North Pole in a sleigh train pulled by Rudolf the Red Nosed Reinbeer.
And then there are the casualties of war. Wretched souls whose ill timed slumber carries them well past their intended destination. They are the angels of midnight trains - for theirs is the Kingdom of Terminal Stations.