Ig-Noblesse Oblige

.....a new term I have created that is a combination of "ignoble" (that which is base or common) and "noblesse oblige" (referring to the nobility's patronizing those less fortunate). I refer to the help that the "ig-noble" U.S. government has had to offer the ostensibly dashing aristocrats of Wall Street ("Masters of the Universe" just doesn't quite define them accurately anymore) in the last 9 months and to the unseemly ingratitude / outrage certain grandees in financial circles have expressed at the humilation of having to be rescued in the first place.

"How DARE you save me!". The image which flashes into my mind is that of a dissolute English Duke, who has fallen on his ass in a fox hunt after over indulging at lunch (for some bizarre reason I picture CNBC's Larry Kudlow, though he is not exactly the epitome of English landed gentry) and then venting his wrath at the poor footman who has had the temerity to help him up. Indeed there is a new found confidence among certain financial institutions on "Wall Street" that they don't need / no longer need or never needed any government assistence. "The worst is over! It's back to business as usual!"

...even though it's really not. This, in spite of the fact that everyone on "Wall Street" last September was in an "every man for himself" state of mind; thinking about raiding Costco for emergency suppies and of A) retreating to the woods of the Catskills or Apalachia (those earning from $500,000 to $ 3.5 million a year), and resorting to a hunter-gatherer way of life (the image of pasty-faced endomorphs fruitlessly pecking away at their Blackberries while foraging for nuts and berries is hilarious) or of B) feverishly burrowing into their climate controlled bunkers underneath their sprawling estates in Greenwich, C.T. (those earning $3.5 million > 100 gazillion + + + a year) to await the onslaught of the great unwashed.

This strange "on-again, off-again" disposition to accepting government aide is perhaps no better exemplified than by the "wild catters" in the east Texas of the 1930's virtually begging the federal government for intervention and help in regulating - REGULATING, the production of oil since rampant over production and the Depression made oil worth less than spit. How memories fade.

The Wisdom of the Financial Sages

"We're all learning that leverage works both ways..."

John Mack, CEO & Chairman of Morgan Stanley, in an interview with CNBC's David Faber on October 16, 2008

Permit me this 1 irreverence: "Duh!". Is this patronizing? Contrite? Or what? Here we have the CEO & Chairman of one of the most powerful and "storied" investment banking firms the world has known, confessing that he now realizes leverage works both ways. Forgive the comparison, but that is almost like a veteran card shark working the tables at Las Vegas suddenly announcing, "Gee whiz! You mean I can actually loose money here?"

And how much was John Mack paid last year? I don't not have the figure handy, but what does it really matter? It is so far beyond what he is worth, given the magnitude of his errors as helmsman at Morgan Stanley,and what this has cost shareholders- and after all, the buck should stop "there" and not with the board or with the nouveau scapegoats, the "compensation committee". Even if we cut John Mack some slack, and assume he was treading carefully in an interview- to suggest that he / they didn't understand what the pitfalls of leverage implied (as in

40:1 leverage) is to impugn his very ability to be where he is in the first place.

This is the way of "the Street"; has been for years and despite all the tribulations of the present will be the "way it is" for as long as greed remains the driving force on Wall Street: when you "score", you get all the credit and then can appear magnanimous in parcelling out money and "perks" to the underlings that serve you and the franchise. When you screw up, you can always parcel out blame to the board, the compensation committee, "the man" and to the regulators who should have known better than to trust you, and let you do what you did in the first place.

Uh......

"Only those who will risk going too far can possibly find out how far one can go." (T. S. Eliot)

Perhaps.....but then again, try asking those poor souls recently employed by or invested in Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, AIG and Washington Mutual.

Adieu L'ancien Regime

Plucked from off the front page of the Weekend Edition of the WSJ today:

"For financial institutions, 'the clock is ticking a heck of a lot faster today,' said Matthew Kelley, a bank analyst at investment banking firm Sterne, Agee and Leach, Inc...".

So it's come to this: the days of quoting banking analysts at the storied investment banks (Goldman, Morgan Stanley etc....) are now gone forever. We are left to quote the obscure; no offense meant to the good people at Sterne, Agee and Leach. Wow......if ever you needed a handy way to measure the magnitude of change on the Street!

It's almost like the extinction of the dinosaurs.....when the giants that utterly dominated the landscape suddenly disappear; the furry, little brown mammals- so long trampled underfoot emerge timorously into the daylight- without fear of being squashed or eaten, to forage amidst the detritus, and pick up where the leviathans left off. Adieu l'ancien regime.