So Bill Clinton says that the world’s economies have lost about thirty trillion dollars in value since the crisis started last summer, this amount represents almost twice the annual GDP of the United States. Therefore, I ask myself, self, where in the world did the money go? I mean if investing is a zero sum game, as in, for every buyer a seller, that would imply that somewhere somehow someone should be 30 trillion dollars richer, right? Wrong! Apparently, that is not the case; everybody is hurting at the same time. The same contraction and recession fever running around as if a bull in a china shop through the US economy is also battering Asian, European and South American economies.
The price of oil has gone from $145.00+ a barrel, to under $40.00 a barrel, yet it is not like the number of cars on the streets decreased by more than two thirds, has it? If in general, any good is worth what someone else is willing to pay for it, then does it mean if no one is willing to pay anything for a particular good that it is worthless? Although it would explain the reason why I have not been able to sell my 18 years old slightly used Honda, but that is beside the point, it is completely unfortunate that society has chosen to keep score of personal worth by the size of tiny little zeros on bank account statements. Why else would people who were happy to pay $750K for a house two years ago suddenly hate their houses now because someone told them they can only sell it for $450K? It is the same house, with the same marble counter top, the sun drenched gazebo and grand foyer that you claimed was a bargain when you were showing it off two years ago.
Normally, in previous downturns you retrained, relocated or reengaged to get over the hump. In this current climate, the hump is a small mountain. In this current tsunami, if you do not have a life jacket (savings at the bank) and the water comes your way, you will drown without question. This time around, we will not be able to borrow any kind of floatation devise (short and long-term loan) from anyone; even captains of large boats (banks) are taking water and are in need of a bail out themselves. The concept of perpetual entitlement that grow out of an MVP culture has been the ultimate corrupting influence, it made it so that was no longer enough to be comfortable, no, you had to be comfortable while doing as little work as possible or suffering any real visible struggle. Conmen disguised as Investment bankers paid themselves out of peoples hard earned saving while dishing out fictitious quarterly and yearly statements. So it turned out that even the trust fund babies, had trusted too much of their funds to these scoundrels and were treated like babies.
Now that Citibank and Bank Of America are all tethering on the edge, threatening to fall over and break into a thousand little banks, what am I to do with the now $5.00 shares that I bought for $60.00 seven months ago? Consider the sheer absurdity of the fact that BofA has over paid for two broken banks (countrywide and Merrill) in the space of less than one year, yet this is a bank purportedly being run by intelligent educated men. What happened to buy low, sell high? Or is Ken Lewis of the “buy high, watch it sink lower” school of financial crisis mismanagement? Sometimes when your broker or financial analyst or whiz kid or hotshot or whatever the hell else they call themselves starts going on about a sure thing ask yourself this question, if it is such a sure thing why doesn’t he sell his belongs and put everything on this “sure thing” and make a killing?
So If you ever find yourself laying quietly in the dark with a bottle of brandy in your left hand, and .45 in your right hand, contemplating the irrational option of ending it all, please do yourself a favor and don't. Take the time to think about the fact that two years from now, the good times will be here again.
