RISMEDIA, December 8, 2009—I have a few movies I like to watch this time of year: A Christmas Story, White Christmas, and of course, the great Frank Capra Classic, It’s a Wonderful Life.
Starring Jimmy Stewart as George Bailey, it is a fictional tale about a banker who misplaces $8,000 of depositors’ money and is so despondent that he attempts suicide. The movie has a happy ending, of course, as angels show how important the Bailey Building and Loan Association has been to the poorer residents of the community of Bedford Falls.
It’s the kind of old-fashioned, heart-warming tale that we all really need right now. Written more than a half century ago, it harkens back to a simpler time when we believed in quaint values like honesty, integrity and fair play.
Fast forward to this holiday season. The year is winding down. The season of peace and love is well upon us. And, across town, the kids at the homeless shelter are embracing the end of 2009 with a mixture of excitement and bewilderment. Everyday, new friends come to stay for awhile, but having a home of your own was better.
So, this was an interesting year. Unemployment peaked at the highest level in more than 26 years, foreclosures reached numbers not seen since the Great Depression, and household net worth has declined more than $12 trillion. Lost jobs, lost homes, lost nest eggs and lost hope. Welcome to “Grapes of Wrath” 2009.
But, let’s not dwell on the doom and gloom. This is the season to be merry. Let’s see what the more fortunate among us are doing to embrace the holiday feeling. With the global economy continuing in a freefall and more disturbing revelations every day, we need to head for the happiest place on earth.
No silly, not Disneyland; I’m talking about Wall Street.
You would think that after Bernie Madoff, the bankruptcies, the bailouts, the bonus blowback and the revelation that securities sellers were paying rating agencies to classify junk as Triple A, it would be hard to make money on Wall Street. You would think that this would be ground zero of the great economic implosion.
But, you would be wrong. As we have already learned, the worse things get for everyone else, the better they get for Wall Street. See my blog: http://www.realtown.com/gwmantor/blog
And, things have been so bad for the rest of us, Wall Streeters are like five-year-olds on Christmas Eve, they can barely contain their giddiness. The Wall Street Journal recently reported, “Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street’s pay culture.”
More than one check in excess of a hundred million dollars will be issued. What does that person do all day? Move other people’s money around, taking a piece with every move. The more moves, the more pieces. Arbitrage, tranches, credit default swaps. Pieces of pieces moving round and round.
Proponents of the bonus structure argue that we need to retain the talented people who tanked the economy because they are so good at it. They are so right. In the absence of any regulation or enforcement, derivative trading exceeds the value of all the worlds’ assets by more than $700 trillion.
I have two nagging questions about that: how is it possible and what does it mean?
Someone please write to me and explain. It is a simple question, really.
If a derivative is a thing whose value is not its own, but based on the value of something else, and the value of all derivatives is $1,000 trillion, and the value of all the worlds assets is only $185 trillion, what exactly are the value of all those derivatives based on?
Is it a swindle and could it all come tumbling down? Anyone? Anyone? Bueller? Anyone?
But never mind, this was supposed to be a happy story and I’m just laying out where the joy of the season is coming from; trading stuff that may not actually exist. Why didn’t we think of that?
In addition to being the center of all that questionable trading, Manhattan is also the center of upscale retailing. Wall Street is a closed community and, within that community, there is a certain pressure to conform.
So, every year at Christmas time, there always seems to emerge a must-have item. One year everyone just had to have a Patek Philippe; then it was the full-sized Hummer, another year it was “discovering” Turks and Caicos Islands—ironically an 18th century pirate hangout and an active center of offshore financial services. Wink, wink!
So, where is the bonus money going this year? Believe it or not, guns. Not sporting weapons, mind you, but pistols. According to Bloomberg.com writer Alice Schroeder, the executives of at least one big name bank have been arming themselves out of fear of what will happen when their bonuses are disclosed.
She writes, “The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.” Read more.
You can not make this stuff up. So, while you may have been struggling for just the right gift idea, on Wall Street some bonus awardees are opting for revolvers.
I heard about a boutique over in Soho that imports exotic leathers and skins for custom made holsters, so accessorizing is no problem. And, if you have a Wall Street Executive on your Christmas shopping list, consider the Hoppe Bench Rest Gun Cleaning Kit in a handsome Cherry wood box. Experts recommend cleaning a handgun after every use so you know this is certain to be a much appreciated gift.
I know that this will probably lead to a rash of bankers with gun jokes on late night television, and, there is plenty here to work with.
But for Wall Street at least, the humor has drained out of it. I’m sure they wonder what has gone so horribly wrong with Main Street that George Bailey can no longer stroll the tree lined lanes of Bedford Falls without packing heat.
They are a tough bunch, those Wall Streeters. and if it comes to shooting it out with their customers, they’ll be more than ready.
Merry Christmas from Wall Street!
George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.
Mantor can be reached at GWMantor@aol.com.
Don’t miss these articles by George Mantor on RISMedia.com:
Are You a Victim of Predatory Lending?
The Foreclosure Crisis: Navigating Mortgage Payment Difficulties