Angry People
What scares me most about the current fuss is the anger I hear from so many people who should otherwise know better. These folks, fairly sophisticated Greenwich types who made nice livings as Wall Street prospered, are furious at the financial world and are determined to see people punished, regardless of whether that brings down the entire economy. I see the economic pie as expandable so if a Dickie Fuld pockets a kabillion trillion dollars, I don’t see the result as less money for me. But these people do. In their dreams, I suspect that they’d like to see all the money in the country collected in Washington and redistributed “fairly” which really means, to them. Of course in 5 years the wizards, whoever that group proves to be in the next business cycle, will have once again ended up with the majority of that money, but my angry friends don’t see that far. The want retribution now, and the hell with fixing the current problem.

Their Congressmen have returned home for the next two days to get a sense of public opinion. I’m very much afraid that they will act on that opinion and do nothing when they get back to Washington or worse, really screw things up.

On a brighter note, the dollar is way up against the Euro and the Pound. This is probably the perfect time to head out on vacation, preferably to a place without newspapers, and relax.

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  1. Anonymous

    “Furious at the financial world” = jealous of those who “made it” and got a bundle, while the complainers are comfortable, but not G4 owners yet. JMO.

    Were these people beneficiaries of the boom, I bet they’d be a LOT quieter.

  2. Chris Fountain

    That’s what disappoints me – these people did make it – as real estate agents, we all (well okay, some of us) benefitted from selling huge houses to these guys. We may not have accumulated enough to buy our own Gulf Stream IVs but so what? I put three kids through college and kept a roof over there heads in Greenwich, a rather expensive town to live in.

    And what scares me is that, if these people can’t see past their anger and have no understanding of what will happen if commercial paper stays dried up, what’s going on in the heartland, where folks benefitted only indirectly from the past years of richness and who wouldn’t understand a derivitive if it bit them? Bad things, I fear.

  3. Anonymous

    It is always easy to say “redistribute the wealth” when you have lots of it (see: Buffett, Warren on raising taxes).

    But mostly, all I see is jealousy. There is an old saying that “anger is a blocked wish” and I’m guessing that these people wish to be richer.

    Ask them if they are willing to give up 20% of their income to subsidize this redistribution. Because mark my words, the complainers are considered “rich” in the U.S.

    It is somewhat disheartening to hear the “rich” bashing the “richer”.

    I grew up in town, with a dad who put me through college and a roof over my head. We were quite comfortable, but when I went to college at 17, was the first time I realized we weren’t poor. By Greenwich standards, I felt “poor” at home (no country club membership, no tennis court at home, only 1 trip a year, had to work during summers in college, etc.).

    So, long story short, I think these are people who have enormous envy of the enormous houses. It must be tough to sell houses in the tens of millions to someone you consider an arrogant S.O.B. who is no smarter than you, while you (royal “you”, not you specifically CF) live in a mere $2 million house. A house which to 99.999% of America is a huge and wonderful place, but in Greenwich is considered an “outbuilding”.

    CEA

  4. Anonymous

    Hubris in Greenwich

    I think much of the anger people in town are feeling stems from their frustration with the way the town has changed. Greenwich has become disgustingly ostentatious and many of our residents (particularly those with the 10,000+ sf homes and G-4’s) have become arrogant and self-entitled. Once upon a time, Greenwich was a place where there were small family run stores and restaurants where anyone who lived in town could shop or eat. There may have been differences in the size of the homes people where people lived, but their homes did not define who they were as a person. People did not wear their homes, cars or G-4’s on their sleeves. Twenty years ago, many of the residents of Greenwich worked in the financial industry just as today, but the way people behaved then compared to how they conduct themselves today is vastly different. Our town is the poster child of the culture of greed and “me-first”.

    The current financial crisis is a problem that has been created by this culture both in corporate America, Wall Street and Washington. The average person is only now realizing that the Wall Street hot shots, making 8 figure bonuses, have actually just been swapping a lot of paper (the value of which nobody knows for sure), while aided by the de-regulation in Washington and the loose monetary policy of the Fed. Everyone has been “passing the hot potato” hoping they wouldn’t get caught with it in their hand. Now they have been caught.

    The thing that makes people angry is that the sh– didn’t hit the fan until after these guys had been paid hundreds of millions of dollars. There is no accountability. Even the people at Enron and Tyco had to pay a penalty. These days, it’s heads you win, tails someone else loses. Something seems vastly wrong with that.

    Perhaps Greenwich will not feel the pain of this financial crisis nearly as much as the average guy on the proverbial Main Street because many Greenwich residents have benefited from the profitable years of Wall Street and are better off than the vast majority of this country. Maybe we will feel it worse.

    Regardless of what the future brings, it’s time for all of us who have it better than 99.99% of the rest of the country to have some empathy for the rest of America. It would serve us all well to teach our children and grandchildren to emulate Main Street rather than Wall Street. If there is a silver lining to this whole mess of a financial crisis, perhaps it will be that old fashioned values such as humility and caring for others will return to our beautiful town of Greenwich.

  5. Chris Fountain

    As someone who has lived in town for 54 years, I can attest that the change you bemoan has been developing slowly, if inexorably, for decades, and not just in Greenwich. I strongly recommend my own book (now there’s a surprise) on the subject, “The New Millionaire’s Handbook”. Composed in 1999, it describs the very phenomenon you now deplore. There’s an Amazon link to it on the right side of this blog.

  6. Anonymous

    Thanks Chris – I will be checking it out of Greenwich Library tomorrow. Since my portfolio is down a bit lately, I have to watch my spending.

    Have you thought of doing a re-release with the more current title “The New Billionaire’s Handbook”?? Much has changed since 1999, my friend.

    But then again, much has changed since August as well.

    I am looking forward to some fun reading….

  7. Anonymous

    All signs point to these things as main reasons for the current predicament:

    1) Extension of credit to unqualified borrowers. The agencies bought whatever loans were out there and Congress went along with it as long as the campaign money kept flowing. Congress could find cover under the guise of increasing “affordable housing”.

    2) Miserable incompetance at the ratings agencies. Sophisticated buyers could make their own decisions but most foreign banks, small investors, and small pension funds relied solely on these ratings. The agencies based there financial “stress” levels on the early 90’s as a base. Didn’t work.

    3) Short selling with no uptick rule allowed hedge funds to eviscerate major companies in days. With rumors filling the market about funds pulling money from firms like Lehman, Merrill, it became a self-fulfilling prophecy as the firms had no sources of capital to fund their businesses.

    4) Aggressively low interest rates held down by a Fed that saw inflation as the real danger. They focused more on keeping core inflation down while all the while allowing a real estate bubble to grow. Greenspan should have seen it coming.

    5) Investment bank sales model that allowed traders and sales people within their capital markets divisions to make too much money on structured credit products. These guys knew that they could cram this crap down the throats of investors while making millions. Then in four years when everything went to hell they would have made their money and retired or moved on to something else. They would never have to look an investor in the eye on these soured deals.

    Now some sort of major government intervention seems inevitable. Who do you think the treasury is going to get to administer this program??!! It is going to be the same people, now called “asset managers”, who were part of the originating, structuring and packaging of these deals in the first place. They are going to make money on the way up and on the way down…what fools we are! Perhaps one of the biggest ironies is that Paulson made a friggin fortune as the head of Goldman, all the while benefitting from the creation of mortgage-related debt. Now he has us convinced that if we don’t hand over a trillion dollars tomorrow (literally tomorrow) that the world is going to fall apart. The Fed just pumped hundreds of billions of dollars into the system, that surely has an effect on loosening funding sources. The Fed should focus on maing sure the repo, commercial paper and other short term markets can function and that will be enough.

    We are being taken for a ride all over again. Doesn’t anyone see the robbery taking place????

    -Stanwich