Tuesday, October 7, 2008

Community Supported

Approaching Grand Central Station from the Park Avenue ramp. 6:20 PM. Photo: JH.
6/10. Chilly here in New York, and looking like rain all day. Although last night’s crescent moon over the East River was a beauty.

The markets tanked across the world. Toronto off 5.3%; London down 5.8%; Germany 7.1%; Paris 9%; Russia plunged 20% before they suspended trading.

A friend wrote from London that she’d moved her funds out of the country and many of her (banker) friends are yanking their kids out of private schools (because they can’t afford it). Another friend called to tell me that they had to sell a house. Either Palm Beach, or New York, or Aspen, or Connecticut. They decided on Connecticut. Another friend who is a divorce consultant told me her phone is ringing off the hook.

People who wouldn’t ordinarily be interested in market matters are obsessing about it. 401K and many years of Money Market Funds later, they don’t know anything and now they really don’t know anything except to worry. A report on Sixty Minutes Sunday night (which I didn’t see) terrified them. And these are the privileged people.

Lehman Brothers Holdings Inc. Chief Executive Richard S. Fuld Jr., testifies before the House. (Susan Walsh/AP Photo).
Richard Fuld the CEO of the fallen Lehman Brothers Holdings was questioned before a Congressional Panel (the House Oversight and Governmental Reform Committee) in Washington. They are now questioning his fabulous income over the past few years (possibily as high as a half billion in 8 years). Mr. Fuld took issue with the figure. Possibly a quarter bill was his figure.

He added that the company’s employees owned 30% of the shares. “When the company did well, we did well. And when the company did not do well, we did not do well.” he told the committee. Actually a lot of those in-house shareholders had restrictions on their stock as to when they could sell it. There was a lot of waiting involved so the asset was more shadow than reality, waiting to appear. Now it’ll never appear anyway.

Mr. Fuld is well known in the international financial world and in New York social and philanthropic world. He was one of the titans. He had a reputation for being smart and tough. Those words are meant as synonyms for excellent executive/leader. He was admired. He also had a reputation for moving mountains; even literally, so to speak; or a mountain or hillside -- partially that is, to accommodate a lakeside mansion he built for himself a number of years ago in Sun Valley. Money can do that; that was the axiom.

The upshot of great wealth, the late Brooke Astor wrote in her memoir, Footprints, is arrogance. Mrs. Astor knew about the human condition.

Mr. Fuld has been living in a world, a very real world, for the past decade or two when men like himself were collecting enormous eight and nine figure annual incomes for their smarts and their toughness. Or so it was explained and we believed. This is not Mr. Fuld’s fault. His entire community supported his income producing methods and his income taking methods. Furthermore John D. Rockefeller and Henry Ford in their heydays made a helluva lot more than Dick Fuld or anybody else on Wall Street, including Mr. Buffett, ever dreamed of making. In real dollars, of course.

The problem is the dollars are not quite what they used to be.

The press quoted Mr. Fuld as saying he “takes complete responsibility” for what happened to Lehman. That phrase, “I take complete responsibility” I first started hearing about a quarter century ago when men in power were questioned about their questionable (and sometimes disastrous) decisions. I’m not sure what it means. Or what difference it makes. If the damage is done, the damage is done. So it doesn’t really mean anything at all.

As I wrote the other day, when the outlook is extremely confounding, at the end of my reading I check out the “words of the day” of Steve Judd, the British astrologer whose musings are often about politics and the financials. Actually I find them to be a relief.

On August 4th he wrote:

Never attribute to malice what can be adequately explained by stupidity.  That’s an old saying which could easily be used to describe what current politicians in the UK and the US are doing to their countries and their people. The increasing freneticism of recent months could be attributed to the conspiracy theories of ‘everyone dies except us in our bunkers and then we repopulate the earth’, but they’re just not that smart.  Genius has its limits, but stupidity is infinite.  And the astrology suggests that the ongoing ‘correction’ has only just started

Six weeks later on September 18th, he posted:

The events of recent days in the economic world echo the statements I made recently on the 31st August ‘I also note the next full Moon, strongly conjunct Uranus.  There will be sudden and probably disruptive events shortly which will change the whole dynamic.’  This is the end of crony capitalism and of monetarism such as expounded by Thatcher and the right.  It is the policies of the right that have caused this, through deregulation leading to greed.  This is the end of excess profit, and if you think that recent days have seen the worse, think again. The end of November this year will bring further developments which will further alter the dynamic in ways as yet indiscernible. 

Being an optimist by nature (and choice when nature opposes), I tend to think he means something good will come of it all. Although… However, this is what he wrote yesterday:

Dance as though no-one is watching you, Love as though you have never been hurt before,  and Sing as though no-one can hear you.  There are huge waves coming at us all from all directions so don't try and hold course, flow with the go instead. Remain inside your bubble and don't take it all too seriously. Another ten days and it will be less dramatic.
From the The New York Times' Boswell to the Bluebloods.
Meanwhile back in little ole Manhattan. Sunday in the New York Times’ City section, they ran a front page piece on me by a reporter named Caroline Dworin. Ms. Dworin worked on this for several weeks and interviewed me two or three times extensively and then several other times briefly. She’s a very good interviewer, at least for me, because she got me talking and I am one of those people who likes the sound of his own voice (oh, you’ve noticed) and can go on and on and on – a definite danger for anyone who prefers to conceal.

Aside from my palaver, Ms. Dworin was an excellent interviewer because she’d get me around to talking about exactly what she wanted to know. Sometimes that kind of questioning can get a little squeezy if you’re not standing on your own two feet (and many times we tend to favor one foot over another). But I am also of the mind that it’s better to be candid and frank if that how you like to think of yourself. We are never quite what we think we are; and we are often rarely like what other people think we are. A good interviewer, however, will go for that vein of truth, and I think Caroline Dworin did that with me.

When she finished she had so much information (all that palaver) that I wondered how she’d make it into something that wouldn’t put you to sleep. Well, she figured it out. Naturally, I can say that because I liked it. So I’ll share it to you (by clicking here) loyal readers out there who may wonder a thing or two about the character behind this voice.

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