I have been trying to educate myself about Wall Street so I could have intelligent conversations with the men in my life.
This has not been as easy as it sounds.
If you are like me, you have been doing a lot of head scratching lately, trying to keep up with the "why" behind the collapse of the financial markets.
Ok, right there, if you have been paying attention, I could have said something like subprime crisis or credit crunch, two reasons pundits have been giving for the meltdown.
But I have been trying to put this whole thing into terms that I can understand, to reduce it to something that makes it more personal. In fact, I have secretly begun to think the Dow, which is supposed to indicate the relative strength of a core group of stock solids but has lately been rising and falling seven hundred points in a day, is an acronym for a whole other phrase:
Dumb Or What?
Let's not dance around this: Wall Street is just like falling in love. One day you're up, the next you're down and there isn't a lot of rhyme or reason for the wild mood swings. One day you are in the power position, and the next day it's crash dummettes.
Come to think of it, the markets have even been acting menopausal which should be enough to finally give the guys a taste of what that's like: after agonizing months of back and forth, the boom is lowered and you are a dried up mess.
Credit default swaps seem themselves to be a kind of market Viagra designed to jump start the hormones of debt gone bad.
The whole current crisis thing turns out to be based on something called derivatives, which are calculus-type algorithms, and I stopped math entirely after trigonometry in the 11th grade, when you could look up the answer on a chart.
But like the good girl student that I am, I have been reading the business section of the newspaper religiously every day, forcing myself not to skip the parts that usually make my eyes glaze over or more to the point, cause me to break out in a sweat -- and this is not a joke.
When I studied algebra in the 7th grade (which then, in another case of terminology folly, was designated as the "new math"), I once had to be escorted to the school nurse for practically fainting after trying to reason out the age old question, "When John is leaving from Grand Central and the train has to make five stops before his stop and is going 50 mph and Mary has to pick up Billy at baseball practice and is driving 40 mph, how early should she leave home so she can pick up John in Larchmont just as the train pulls into the station?
And so on. You get the drift.
The extent of my previous knowledge on the subject of the markets was when my husband turned on Jim Cramer faithfully every morning before he went to work: it was all I could do to swallow my yogurt standing as far away from the television as possible while "that man" shouted in the background. It turns out Cramer didn't know anything more than anyone else.
But this time, I am thinking, I really need to pay attention in case I have to actually make a decision about something instead of presuming that the broker knows everything. It's not their fault. I usually exchange about 25 emails to try to find a time to talk to the broker just so I don't actually have to talk to him but can feel that I have contributed my small part in putting my shoulder to the wheel of the financial systems.
But right there you see my problem: I am still imagining this whole thing to be a physical thing -- something you can get your arms around, like a guy -- and soothe, by whispering sweet nothings in his ear.
Most of the brokers are afraid for their own livelihoods and I am willing to bet they don't feel as reassuring as they have to be to their clients.
But often their explanations are as byzantine as the terms themselves and I am afraid to ask too many follow up questions for fear they will think me a complete, hopeless ninny.
I could never possibly repeat what they have told me. But some things have jumped out as almost immediately translatable from intra-day trading to interpersonal relationships.
Like bailouts and interventions that are words they stole from our side to begin with. We know that it means when you have gotten out of control in love and cannot finish out the day without contact from him, and your friends, seeing your utter misery, make you go out with them for a very long dinner or when you abandon a relationship knowing it is not going anywhere fast.
But things like, commercial paper (loans with IOUs) or credit default swaps (insurance on bundled, second or third hand debt) are trickier to translate, harder, that is, than naked shorts which easily yield pictures of men in boxers trying to cover the gap between locker room fantasy and reality, every bit as illegal as not being able to produce the stock you indeed said you had.
In the old days, a triple A rated male would have been a creditworthy, asset-backed doctor or a lawyer, then a real estate honcho or movie producer or well, yes, even an investment banker. (Triple A for today? Who knows? Will mothers soon be telling their daughters, "Honey, make sure to marry a ______? )You could always trade up as long as you were somewhat liquid and if there were no counterparty like an ex-wife or girlfriend who was waiting to clawback; but if he were a commitment phobe, you would take your losses and bail from that toxic waste.
In any case: whoever had the leverage would be all-important: Could you trust him? Did he have more puts on you more or the other way around?
But if he had a future that would pay forward (did you get a ring and a house? What kind?), he could become a Structured Investment Vehicle, one you take the time to nurture (cook meals for, have kids with) one for whom you would risk exposure. He would make affection and commitment, normally unsecured derivatives, into a blue chip situation.
Eventually, it might be time to face facts that you were ready to deleverage from the whole thing, reduce your debts to him and the kiddies, hire a regulator or risk control officer (divorce lawyer) and become more liquid ("empty nest") and finally have time to recalibrate, i.e. go to yoga and pilates.
In the end, it all comes down to cash (which is the one term I understand without help), and the house. (Mortgage crisis terms are a whole other set of putting pretty names on disasters and which I don't have time to address because I need to call my broker before the market closes at four and see how we're doing.)
I'm not seeing a lot of celebs rolling into NY and wanting to clang that opening or closing bell at the stock market just now which is normally supposed to be a big honor and a great publicity stunt. Press reps are pretty savvy about not wanting their clients to be associated with failure. But it merely highlights the fact that the inmates are in charge of the asylum for six and a half hours every day.
At the end of another very long week of roiling markets, I spoke to a very smart woman friend who is more or less in the same boat as me (good student, bad at math). She reminded me that there is an upside to disaster and war: we all get educated. We know more about movements of earth, disruptive sea walls, bombs and craters, porous borders and the capitals of countries we will never visit. The words slurry wall and Ahmadinejad trip off our tongues and they are not so mysterious anymore.
So maybe my learning curve is, like yours, a case of lifting oneself by one's bootstraps. Or as my broker said today: muni tax loss swaps. You take the loss from one thing that was supposed to have been a sure thing (boyfriend or husband) and you get something else that costs more (new bf or husband) and then you don't have to pay taxes. Go figure because I certainly can't.
Apparently JP Morgan never did business with anyone he didn't personally trust, back when banking was done over a handshake. This would be a way I could have understood things, when you had to look somebody in the eye. Isn't this why internet dating often goes south: when it comes time for that all important face time at Starbucks, you're into some serious exposure.
I am perfectly willing to submit to the trickle down economics that I can understand, the one where you are at your freshman convocation and the president of the college asks you to look to your left, and then your right and realize that only one of you will be left at graduation and it probably isn't going to be you.
But until such time as I can understand all of this, the credit freeze will be my own personal, turbo warranted nuclear winter.