Panic Among the Ponzis
Elie de Rothschild, who died couple of weeks ago while on a shooting trip in Austria aged 91, once told me the story of a young Arab kebab seller who always parked his stand across la Banque Rothschild on Rue Lafitte. The Arab was asked for a loan from an acquaintance of his. “Look here,” he told the man, “I have a deal with the bank across the street. I will not lend money and the Rothschilds will not sell kebabs." End of story, as they say.
I thought of Elie, with whom I used to play polo, when the you-know-what hit the fan last week. Bankers should act like bankers, and not kebab salesmen. The latter try and sell to anyone within hearing distance. In the good old days, bankers lent money to those who could repay. When greed set in during the go-go days, they started lending to people unlikely to repay them. But there was a catch. The bankers covered themselves by selling the bad loans to others, greedier than themselves, and made a profit out of doing so. The Ponzi scheme has now caught up with them, hence the blood in the markets.
So, what happens next? If I knew I would tell you, but I don’t. What I do know is that we have a huge credit bubble, and debt is piling up on top of debt, and that can’t be good. Personally, I blew it. I wanted to do a Bernard Baruch of 1927, or a Jimmy Goldsmith of 1987, then got lazy and didn’t bother to play my instinct. Never mind. I have never owed anyone anything, so I’m fine, but I do worry about friends who live on the edge. The party could be over for a very long time, almost as long as it’s been going on.
Last month in St Tropez I thought of a satanic plot to relieve a certain Steve Schwartzman from couple of hundred thousand bucks. SS is the co-chairman of Blackstone group, and a man who recently made $200 million from taking his company public. Steve is worth about ten billion but is eager to make more. Schwartzman prides himself a tennis player. He played with a friend of mine who is a top player, and my friend let him win a tie-break, confirming his belief that he can hit the ball with the best of them. I asked my friend to tell SS that I fancy myself a racketeer, but to also tell him that I’m useless and that I’d like to play him for one hundred thousand smackers a set. Double or nothing would be up to the loser. Well, it wasn’t even close. SS turned it down flat, but not because—as my friend assured me— I could take the bum playing with my left hand. Here was his reason, more or less: “Taki will spill the beans to Page Six quicker than you can say Richard Johnson, and right now I cannot afford having the papers writing about me playing 100,000 dollars a set.”
Oh well, you can’t win them all, but the question right now is whether to buy or sell. As bank lending dries up, this will have a huge impact on private-equity deals which have helped to boost share prices. We will know more in three to four months. Markets hate uncertainty more than Henry Kravis hates poor people. The brave ones buy on moments of great uncertainty. The market spends most of its time veering between greed and fear. The best time to buy is when everyone else is scared shitless. You choose what you want to be, dear readers, Patton or Montgomery.
Photo of Charles Ponzi courtesy of the Boston Police Department.
Comments
No worries.
Our politicians here in America know what to do.
The only concern is wether the printing presses
at the FED can keep up with demand.
It is comforting to know that our Congress is
packed with economic geniuses who have grasped
the concept that money does not grow on trees;
no, it grows in the form of Middle class servitude.
Indentured servitude.
But in all seriousness, let’s hope and pray for the
total collapse of the fiat Dollar. It’s the only hope
left for working people in America.
Only then will we be rid of the cockroaches
that are riding the greatest system of
usury the world has ever seen.
Only then will working Americans once again be allowed
to own and possess actual money or to hold
truly private property.
Only then will America return to true capitalism,
true free trade, peace, prosperity and liberty.
The fiat Dollar is the single source of all that’s
wrong with America. The sooner it disintegrates
the better.
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Oro, Geld, Zoloto, χρυσόσ, d’Or - Is this a good time to buy it? And if so, why did William Jennings Bryant say, “Don’t crucify the working man on a cros of gold?”
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The problem is no one is actually scared. Ben “burn the currency” Bernanke will make it all better with his electronic printing press helicopters.
But that is the problem with moral hazard.
And that after a while the problem gets too big to fix.
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I think that the shift from the stock market bubble to the real estate bubble was pretty much planned, quite well actually, by the powers that be (friends of Taki). And there will probably be another bubble to follow, unless some international actors decide to play their cards, which I don’t think that they will quite yet because the trend of America weakening and them strengthening is quite strong and in a few years they will literally be able to “run the asylum” without any fuss. Time is not on America’s side, but the time ain’t right just yet IMO.
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Taki: “In the good old days, bankers lent money to those who could repay. When greed set in during the go-go days, they started lending to people unlikely to repay them. But there was a catch. The bankers covered themselves by selling the bad loans to others, greedier than themselves, and made a profit out of doing so. The Ponzi scheme has now caught up with them, hence the blood
in the markets.”
Taki sums up what Lasch called the “Revolt of the Elites”,
the swinging immorality of the 60’s has come home to
roost in America’s elite, who bear no responsiblity for
anything except their own self indulgence and short-term
greed. The “World is Flat” according to the new elite,
represented by the likes of Bush2, the grinning hypocrite
of the CEO classes, who sell out America’s legacy for
a pocketful of gold.
As bad as the Rothchild’s were, they were not as bad
as this bunch. Taki is right about that!
If there was any argument against the idiocy of
the folly of “fusionism” (the ill-conceived combination of social
conservativism and Wall Street economics) it is our
present “flat world” of constant war on behalf of
aethistic capitalism and the culture of self-indulgence.
“Destructive” Capitalism is no better then communism
and the “libertarians” among the right are the mirror
image of Marxist-Leninists, dangerous utopians that are the enemy of tradition and
good order.
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“I asked my friend to tell SS that I fancy myself a racketeer, but to also tell him that I’m useless...”
Split infinitive, Taki? Tsk, tsk.
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