Ripple Effect
I am not going to buy a new car this month. It was a hard decision, actually, since this is about the best time in the world to pick up things on the cheap, if you have a little cash. The car companies are on the ropes; GM needs billions to get to the end of the month. Forget about Chrysler, which is too bad. I had a couple good hundred thousand miles with them.
Sales from the old Dodge Brothers Iron Works are off 46%, and I bet a dealer would throw in his first-born in you walked into the showroom with a check-book.
Only Ford is going to be able to squeak by for another few months. They are looking pretty smart about the strategic divestments they conducted a couple years ago. The bail-out the executives begged for two weeks ago was only the down-payment on something much larger. $15 Billion was on the table for that one, a number so puny in comparison with the $750 Billion the Congress shoveled at the banks it seems paltry.
The real bargains are going to be the high-end crap that the investors in New Work are going to be selling. That is where I wish a had a couple bucks to spread around this holiday.
OK, OK. Call it schadenfreude. I was wiped out this year, not quite down to bare metal but close enough for government work, as they say. I blush to say that I took unanticipated delight in the suffering of others who ought to have known better. They were all part of the ‘smartest guys in the room” crowd, the insiders. It felt appropriate.
I got to thinking this morning that the $50 Billion that went up in smoke in Bernie Madoff’s Ponzi scheme was a fairly large number- maybe enough to save Detroit, if it had been applied that way. It is actually a pretty big number, even in these science-fiction times of zero interest rates and investors with no interest.
Glancing through the Times, waiting for the glass guys to arrive to finish off the Hall of Mirrors project, I noticed that if you concentrated $50 billion in one market segment, you might actually do something pretty spectacular.
If you concentrated the impact of all that money between the Battery and Mid-Town in Manhattan, which apparently it was, the effect would actually be really impressive. The Times said virtually every segment of the Big Apple’s real estate industry has been touched in the scandal, from commercial banks to small-fry investors like I used to be.
I read that and wondered if that pompous prick Donald Trump got nailed. Forgive me if a little touch of joy in suffering came with the thought- it is the holidays, after all. And there is a clear ripple effect that will touch all of us even if we have nothing directly to do with Bernie Madoff.
I mean, we can’t all have President Bush’s superb reflexes to enable us to duck incoming missiles. I was talking to a pal on the phone after the glass guys called from Dumfies about a hundred miles south of town to tell me they were going to be late on the install and the morning was shot. My pal is an elegant woman of enduring beauty who normally has a great sense of humor.
It is sort of strained at the moment. She said her husband has a friend who sells bonds to the up-scale market, and personally knows a dozen people who have lost hundreds of millions in the scam. They all belong to the same golf club, and have had to resign in the face of the upscale version of Big Pink’s special assessment for new pipes- a $45,000 fee levied against the members for a makeover of the clubhouse.
Apparently one guy turned his mother’s entire fortune over to Bernie to manage for him, and left his Mom with $500,000 in her checking account. If I had the half million in the checking account, I thought I might go our and buy a new car to help Detroit, but I don’t. If you are used to having a cushion of a few dozen millions things look a little differently.
But as my friend said, it is all about greed. “Greed got us all here,” she said with a sigh. “Well, guess what – mom will be living life on a very limited budget for the rest of her That’s what it is, you know, just greed. We weren’t content making 4 or 5% on our money – we wanted more, much more.”
We agreed to talk after the holidays, assuming we can keep up the payments on our cell phones. I don’t know if Bernie Madoff’s thin greedy fingers reach all the way to Big Pink, but it is a relatively shallow pond, now that we know more about it, and there are ripples from everything.
Copyright 2008 Vic Socotra
www.vicsocotra.com