Lehman's Collapse Rattles the Really Rich
The phone has rung off the hook all weekend. "Are you OK?" I've asked friends whose husbands have been at Lehman Brothers. No, of course they are not. They just saw everything they've worked for go down the drain. A lunch barbecue with a Lehman executive who has been there 16 years was canceled. No explanation needed.
The Saturday papers predicted the end of other institutions, too: Merrill Lynch, AIG. On Sunday morning one of my savviest investor friends told me not to worry about Merrill Lynch. He said it had too many good parts to implode. He had seen John Thain, the chief, very recently and had a long talk. Thain had said his bank was too valuable to go under.
By Sunday night my friend was on the phone again. Now, the news was that the Bank of America was ready to buy Merrill at $29 a share. Given that Merrill's share price had fallen to $17 on Friday, this news, said my friend, proved that he and Thain had been right.
Sort of. We live in terrifying times. Even the election is not as much of a distraction as it should be from the economic pandemonium we are experiencing. At lunch and at dinner we all debate whether the panic is manufactured or whether a collective mental panic has always played an integral role in recessions, regardless of what the reality is.
Ordinarily people might be wondering about other things right now. For instance, there is artist Damien Hirst's brash step of cutting out the middle man in selling his works; there is the huge exhibition of contemporary art in Russia on Wednesday. Soon Daniel Radcliffe comes to Broadway in Equus. We're ending fashion week. But women talked not about clothes but about children, schools and how stressed their husbands were.
Until this week I've never heard really rich people -- as in billionaires -- sound scared. But now they do. Sure, they say, it's no time to be panicking. Stay calm and there are fortunes to be made. There are lots of assets going cheap and some people are going to get rich.
But for most of us it is time to hunker down. Time to hope we don't get that phone call: "Are you OK?" The answer, for all of us in New York, is no, we are not.
This article was originally published by the London Evening Standard
Follow Vicky Ward on Twitter: www.twitter.com/VickyPJWard
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It's about time the rich got a taste of this, the middle and working classes have been living with disaster for the last eight years.
Vicky, I understand your assessment of the super rich getting nervous and needing to hunker down.
Just a note here, we the middle class hunkered down a some time ago, because as always we feel the pain first. My heart goes out to the poor because they have never had anything to hunker down.
absolutely, well said! i don't wish anyone to be out of a job, but it certainly helps when you have financial resources available to you. hell, i know people who don't have anything worth pawning anymore.
Vicky says, "At lunch and at dinner we all debate whether the panic is manufactured or whether a collective mental panic has always played an integral role in recessions, regardless of what the reality is." Vicky, let me copy something from a book I've been reading:
If the winter of 1930-31 was gloomy, this winter is worse [1932]. Half of the working people in Cleveland are out of work and most of them seem to be on the streets, tramping through the bitter damp cold and the fierce Lake Erie wind, looking for work. The City of Cleveland’s work relief program is running out of money, so that little weekly sum won’t last much longer. Detroit’s relief funds are already gone, it is said, and New York City’s nearly so. The mayors of big cities are asking for federal help, but President Hoover worries that that would simply “magnify” the situation.
Vicky, this was not whining; nor was it a collective mental panic. Look--try to be more real than Hoover. Not too hard.
Ah. So NOW it's OK to be in the same life raft as the hoi poloi, eh, when all the past 8 or 28 years it was trickle down the yellow stream on them. I get it. Thanks for the memories.
Well, at least you can hunker down with your bag of donutes, Joe...
Let the Wall Streeters eat cake. They've been stealing from main street for years. Just like housing became an ponzi scheme, Wall Street is built on a house of cards full of narcistic people who would probably do well to start over and see what is truly important. We all know it isn;t money. Maybe Wall St. needs a good dose of reality.
F'em.
You should really consider removing this posting by Vicki Ward who laments the problems of her "really rich" friends while saying that, "Ordinarily people might be wondering about other things right now. For instance, there is artist Damien Hirst's brash step of cutting out the middle man in selling his works; there is the huge exhibition of contemporary art in Russia on Wednesday. Soon Daniel Radcliffe comes to Broadway in Equus. We're ending fashion week. But women talked not about clothes but about children, schools and how stressed their husbands were."
I don't know what circles she hangs with, but Vicki is seriously out of touch.
I think this post is supposed to be ironic. Do you really think people are ordinarily wondering about Damien Hirst and the economy of his art?
I have only nine words to say to Lehman Brothers:
Cry me a river. Wah, wah, wah, wah, wah.
Well put jalowei1957,... well put indeed,...
I understand the premise of the article. You are saying that not only are those of us that live closer to the bottom than the top are scared, now so are the rich. They know that our economy depends on people spending money. If the super rich had every thin dime in our country our economy would grind to a halt. Some would argue that we are just about there.
That being said I would like to offer a bit of advice for you to pass onto the super rich people you know. Now is the time to put the Ferrari into deep storage, and buy a couple of more reasonable cars. Board up the Estate home that is in the Hamptons or where ever the Mega Rich buy homes. Ditch some of the jewelry and the high dollar clothes. The reason I say this is because in the not too distant future being perceived as Rich may not be a good thing. When we have enough people that have lost their homes and life savings and are scared and angry and they go driving by in an exotic car, with a 5k suit and a 40k watch people will not think this is Cool anymore. They might also take some steps to help the peasants in order shelter themselves from our inevitable righteous rage.
The American Bastille Day is nigh.
Sadly I don't think so. Working Americans like McBush better and better.
Why is it "we the people" get to share in the downsides of these meltdown disasters the
financial "mismanagers" & CEO's create..... while still armed with their golden parachutes,
stashed excessive bonuses awarded amidst collosial losses...retaining perks....while the
Boards of Directors become suddenly invisible? Accountability needs to return...without
built-in rewards for poor performance.... None of these disaster occurred overnight...
Today,Lehman hires Jeb Bush as private equity advisor. People wake up and get REAL!
That was actually on August 30 of 2007 not today. The good news is, he probably lost a crap load of money today, though.
They hired him b/c he put a boat load of state pension $ there before the last election
I didn't read this as a call to pity the billionaires. Rather, it's an illustration of just how far reaching the economic crisis has become. It's typically only those of us at the bottom who even notice there's a problem. The fact that the billionaires are now scared speaks volumes about just how bad this could become.
Unfortunately, the government doesn't do anything until the billionaires start to cry. That's when they start hawking reform - when it's too late for the rest of us. This is the way it has always worked. In good times, you de-regulate so they can be even better (for some). When de-regulation becomes so extreme as to destroy the economy, regulation becomes fashionable once again.
The positive side to this is that progressive governments usually gain favor in these times. Whether that will happen this time remains to be seen. The massive amounts of disinformation being heaped on an unsuspecting public could counter the progressives' upper hand. Too many people seem willing to believe lies these days.
We only believe in hope. Which, apparently, is an audacious thing to do.
Good post; however, I'd like to address an error in it that seems is prevalent in much discussion on economics - the idea that this de-regulation frenzy is somehow cyclical. It's not. The history of the Western capitalist world first saw a Laissez Faire, virtually unregulated world until the disaster of the Great Depression. That singular event led to much wise regulation as well as the creation of safety nets for a large portion of working people. However, since then, the rich and powerful have been trying to get rid of regulation and safety nets in order to get back to a time when they called all the shots. With the success of Ronald Reagan, they found their opportunity. By pretending to embrace social and religious issues that are pretty much irrelevant to the wealthy class, they were able to con a broad swath of people into voting against their economic interests and thus for 28 years they removed regulation after regulation while weakening or removing altogether those safety nets and protections that were hard won. This was carried out under both Democratic and Republican administrations. Now the chickens are coming home to roost. I pray we don't have another Depression, or worse.
I guess the awe and shock will be when Jesus does not know these arrogant 2% whom think they are saved, but the bible tells us for a rich man to enter heaven it will be as hard as a camel going thru the eye of a needle! I for one do not envy the rich, what does one gain if they gain the whole world and loose their immortal soul in the end! I think we all ought to be glad we are not in that elite 2%, not saying that some of the 98% whom do not fit that category do not have to worry, but if one is blind and a biblical goat one has no chance of seeing they have lived or done wrong, at least the 98% can see and if they refuse to change it is not due to blindness but just pure foolishness, to believe they can attain the position of the 2% elite, whom look down on them as mere tools to their advancement, republican party has about 30% in the voting population never more and often less, some say 27%, that means between 25% to 28% are mere foot soldiers, servants in the republican empire!
The 2% elite whom worship at the alter of the "Republican Idolatry Money", might read their bible and the parable of the rich man whom wished to follow Jesus, and when Jesus told him he had to give up his wealth to the poor to follow him, the rich man went away sad, since he could not do that, his riches was his preferred choice, just as today's republicans scream bloody murder when a woman/man on welfare gets a meager poverty level welfare check of which no one would want if they had a better choice, and that section 8 slum housing with all its accompanying crime, or that federal food stamp program, yes they cry foul, lazy poor, shiftless, all the time demanding their tax breaks, corporate profits, on the backs of the minimum wage earners that the Glenn Becks & Chuck Norris's of the world like to denigrate as not paying their fair share of taxes as in a recent CNN interview, funny how these rich fat cats, that 2% whom worship at the Republican idolatry Money, might just be getting some karma, and with out a doubt on judgment day Jesus identified them in the "blind biblical goats" whom ignored the poor, naked, hungry, those sick and in prison, those the republicans like to use in their demonization speeches out one side of their mouths, all the time claiming they are compassionate conservative christians...., continued.....
"But for most of us it is time to hunker down. "
I would put registering as a Democrat as a much higher priority. Is it not time to give the Party that gave us this deregulated greed fest the middle finger? And to think that all this time they were telling us that it was the tax cuts that was making the economy hum. Shame on them.
Deregulation in financial industry happened in Clinton years...
Your research seems to be about three-fourths of one Hannity deep. You are mistaking the easing of regulations to encourage greater home ownership (Clinton) to the complete looking the other way as the store was emptied by looters (Bush).
I hope you are a wealthy, ProudNeo. Otherwise, you and so many others are being played for a fool by the Republicans. There complete and now clearly exposed reliance on lying ought to tell you something. Or are you ok with that, too?
It's funny...last winter I was saying, "this summer, everyone loses everything" and everyone looked at me like I had a third eye.
I may have been a few months off, and it may or may not be as dramatic as the Wall Street crash of 1929, but even that crash took a while to truly reverberate and "touch" everyone.
Make no mistake, though, this will be a modern depression, something like we have never seen in our lifetimes.
And when it truly hits "depression" magnitude, do you really want a president who admits freely he "doesn't know much about economics"? Or how about the woman who left her town $20million in debt and now screams "TAX CUTS!"?
I say we can't afford it. And we can't afford a VP who is disinterested in foreign policy.
Give. Volunteer. Vote. I do. www.barackobama.com
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