17 March 2008

The St. Patrick’s Day Massacre

Large print poetry like crutches in the trash; as subtle as a jackhammer in the street on Sunday morning. The somber shrill of bagpipes. A funeral for the firm masquerading as a parade for out-of-town amateurs to dress up in green and get loaded in the big city.

The storied bank founded by three guys with $500,000 back in 1923 survived the Great Depression, insider trading, the dot-com bubble and countless recessions but it couldn’t weather the perfect storm: the collapse of the subprime mortgage market and subsequent evaporation of client confidence. Mix that with a few self-fulfilling prophecies, the toxicity of rumour, a pinch of panic and what you’ve got is a good, old fashioned ‘run on the bank’.

The last of the independents. The punk rock firm. I waltzed right off a tour bus and into a suit. I felt at home here. Even the CEO at the time hadn’t graduated college. It was entrepreneurs over mathematicians. It was passion over brains. Experience through risk and chance. The head guys were poker addicts for crying out loud.

One of the largest global investment banks, securities trading and brokerage firms in the world bought for a song. Not even the sum of all its parts. We could’ve pawned all our flat screen monitors and come up with more than what they paid.

At 1.2 million-square-feet, our global headquarters alone is worth about $1.2B, based on the average $1,000 per-square- foot that comparable office space in the city is currently fetching... yet we were bought out for $240M. No choice. Beggars can’t be choosers.

Imagine someone telling you every $100 bill you had in your wallet was now worth 2 cents. Imagine your retirement pile going from a few million to a few hundred thousand overnight.

New York City, Atlanta; Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Irvine, San Francisco, San Juan, Whippany, New Jersey, St. Louis, London, Beijing, Dublin, Hong Kong, Lugano, Milan, São Paulo, Shanghai, Singapore, and Tokyo… for a song. Not even the price of the 45-story main office itself on Madison. Unbelievable.

Anything I wanted was a phone call away. Free cars. The keys to a dozen hideout flats all over the city. I bet twenty, thirty grand over a weekend and then I'd either blow the winnings in a week or go to the sharks to pay back the bookies.

Didn't matter. It didn't mean anything. When I was broke, I'd go out and rob some more. We ran everything. We paid off cops. We paid off lawyers. We paid off judges. Everybody had their hands out. Everything was for the taking. And now it's all over.

And that's the hardest part. Today everything is different; there's no action... have to wait around like everyone else. Can't even get decent food - right after I got here, I ordered some spaghetti with marinara sauce, and I got egg noodles and ketchup. I'm an average nobody... get to live the rest of my life like a schnook
We are now experiencing the first truly major crisis of financial globalisation. Never before have banks seen such destruction of their balance sheets in such short order. Moreover, there are signs that the problems are spreading. The risk premiums on commercial property, consumer credit and corporate loans have risen like the tides. Debt levels have been much higher than in the Roaring Twenties; the new-fangled tools of structured credit are more opaque.

Become a financial atheist and only put your money in the tangible. Invest in oil, gold, coffee, cocoa and sugar. Get your money out of intangible assets. It’s better off tucked underneath your Sealy Posturepedic at this point. The toppling banks are merely a symptom of a deeper rot. The banks are not the problem. Nor even the grotesquely leveraged funds. The problem is that an economic bubble financed by ridiculously loose monetary policy is unravelling and fast. Translation: Everyone is living beyond their means and trading on borrowed time and now the bubble hath burst. Investor confidence in the global financial system is on the ropes.

I walked down to Third because mozzarella is cheaper down there. I pulled out the last $10 from my $385 wallet. I said “no comment” when they stuck a mic in my face. I laughed when the unmarked in the tan trenchcoat with the golf pencil and reporter pad approached. I just let those visceral bagpipes speak for themselves. Revelry and dirge. Those rolling snare drum marching shotguns.

Back to 1923. 85 years. What a shame. Gone for a song. A joke. Embarrassing. Humiliating to the guys who built this place in the roaring 20’s.

I let my man Aldous do the talking for “After silence, that which comes nearest to expressing the inexpressible is music”.

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