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March 17, 2008

A Plaintive Question

Are there any pooches that America's elite haven't screwed?

This is the definition of "elite" in The Doubter's Companion: A Dictionary of Aggressive Common Sense by John Ralston Saul:

ÉLITE More common than a lumpenproletariat. Every society has an élite. No society has ever been without one. There is therefore little to be gained by worrying a great deal about the creation or protection of an elite. They protect themselves and someone is always ready to take their place.

The thing elites most easily forget is that they make no sense as a group unless they have a healthy and productive relationship with the rest of the citizenry. Questions of nationalism, ideology and the filling of pockets aside, the principal function of an elite is to serve the interests of the whole. They may prosper far more than the average citizen in the process. They may have all sorts of advantages. These perks won't matter so long as the greater interests are also served. From their point of view, this is not a bad bargain. So it really is curious just how easily they forget and set about serving only themselves, even if it means that they or the society will self-destruct.

—Jonathan Schwarz

Posted at March 17, 2008 01:38 AM

This line is really amazing: "Fed officials insisted that the $30 billion loan was covered by even the most conservative estimates of the Bear Stearns holdings."

Of course the reason that real investors who have their own money at stake (and not just the play money of the Federal Reserve) are all ditching Bear Stearns stock is because NOBODY KNOWS WHAT THAT CRAP IS WORTH. They own all this weird gobbledygook that has never had a liquid market. There is especially no market now that the last thing anyone wants is the kind of mortgage-backed sixth-level derivative that they have. So who knows what the value is? Any real live accountant knows the answer: when there is no answer, you write a zero. Not a $30 billion.

Now I'm sure Bear also owns some real stuff, but who knows what? Did the Fed really have time to do this due diligence in the last 40 hours? If so, they should quit their government jobs and go work for a merger and aquisitions house on Wall Street, because the pay is much better there.

Posted by: hedgehog fund at March 17, 2008 02:47 AM

Look, that rice chaser Saul ain't no prole, for Chrissakes. He was married to the former Governor-General of his country (Which I adore anyway.) so it bothers me as to how he can type that with a straight face. Now I generally adore his writing, so all I can say is, may we all have an elite that consists of those as aware as he is.

Posted by: En Ming Hee at March 17, 2008 03:05 AM

Interestingly, the origin of phrase 'common sense' was not intended to flatter. It meant 'the way commoners think' i.e, a narrow view. The nobles were the broad thinkers and true protectors of the realm.

Posted by: at March 17, 2008 05:51 AM

how long could this "don't let the ship sink" stuff go on? years? during which new investments and programs would be frozen?

Posted by: hapa at March 17, 2008 07:19 AM

Ask more questions. FDR graduated from our oldest elite-producing institution, where his greatest disappointment was not getting into Porcellian, the most exclusive final club. Did he, eventually, do some things to serve the greater good? Were there others like him, from similar elitist backgrounds? When did their numbers decline, and why?
Sure, much of elite do-goodism was noblesse oblige, but so what? We don't even have much of that any longer.

Posted by: donescobar at March 17, 2008 09:05 AM

well, the dollar is 1.58 EUR. I am guessing none of you will be visiting Europe anytime soon. Although there is one country over here that pegs its currency to the $, but I think you're too stupid to figure out which one. As for elites, you prefer some dumbfuck Average Joes run things? Or worse, you people? The Soviet Union tried that, the most loony and ignorant psuedo-intellectuals and the werkers together, mixed with some pyschopathological zealotry. And you can see how well that worked. And the good Rev Wright? Man, the worst sort of African-American fruitcake, the kind who think the CIA invented AIDS to kill black people, that birth control is a plot against them, and for Obama to say, oh I had no idea is just ridiculous. Obama actually scares me, a seemingly white guy who actually might be black after all.

Posted by: xyz at March 17, 2008 09:11 AM

oh you dumb bunnies, BS's paper is hardly worthless, it's just illiquid. The Fed is moving to keep the system from seizing up, much as most of you would love the world to return to a 12th century barter economy, the rest of us enjoy living in the modern world. And JPM is getting a bargain, but at the expense of BSC shareholders,and the reasons are too complicated to explain to morons such as yourselves. But some advice: BSC at 3 bucks is a screaming bargain, down the road the shareholders get more, much more, despite the headline deal.

Posted by: xyz at March 17, 2008 10:14 AM

the reasons are too complicated to explain to morons such as yourselves

Translation: I can't explain it, but I assume there are good reasons.

Posted by: David Grenier at March 17, 2008 10:34 AM

I got $100. I wanna buy 50 shares of Bear-Stearns! I mean, why not? Why can't somebody like me get a piece of this action? I've got a mortage, actually a couple of 'em. My money is just as worthless as that of some Wall Street bank. Shit, I gotta $100 bill...

Hell, I might even buy 100 shares. I can borrow the difference from my sister or brother. The WWL blog could put up a pool and get mebbe 250 shares, which would set us up for life if the outfit actually recovers. Shit, they've got a building on Wall Street that's worth over a BILLION $$$$. I wanna piece of that...

Posted by: konopelli/wgg at March 17, 2008 10:37 AM

"illiquid" = nobody wants to buy it.

I've got a car like that in my back yard. Not worthless, you understand, just "illiquid."

Posted by: SteveB at March 17, 2008 11:19 AM

man, I used to make a good living trading illiquid securities. value is based on cash flow. I once had some dumb bunny at Merrill sell me some 7% municipal bonds at 9 cents on the dollar. She asked me, are they in default? I said no, just illiquid. So she sold them to me. for a 90% tax free yield to maturity. I sold them a week later for 90 cents on the dollar. If your car was kicking off cash flow it would have value, you DB. Are you an AA?

Posted by: xyz at March 17, 2008 11:24 AM

You know, it's a shame that financial geniuses like xyz are in such short supply, because if we only had enough of them, they could buy all of Bear Stearns toilet paper and let us taxpayers off the hook.

You know how I know what my car is worth? I put an ad in the paper and see what people are willing to pay for it. It's called the free market, and although I've never been to business school, I think there might be a class or two about it.

Here's the basis for my financial expertise: I put myself through college buying old cars, fixing them up, and reselling them. Often, I'd meet a seller who would show me the Kelly Blue Book and a stack of repair receipts and tell me with all sincerity that the $500 they spent to put in a new clutch meant their car was worth at least $1500. Ruthless financial fat-cat that I was, I'd say, very nicely, "Yes, I'm sure you're right that it's worth $1500, but unfortunately, all I have are these eight one-hundred-dollar bills that I am now placing on your kitchen table." Usually they'd take the money.

So tell me, what was the car worth?

Posted by: SteveB at March 17, 2008 11:47 AM

I said no, just illiquid.

You keep saying that word. I do not think it means what you think it means.

My exposure to basic bookkeeping was a long time ago, but I'm pretty sure that an asset that changes hands twice in a single week, with its sale price multiplying ten-fold interim, would not generally be referred to as "illiquid."

Posted by: radish at March 17, 2008 12:58 PM

BS was insolvent, the fed is just playing the sucker of last resort.

Posted by: buermann at March 17, 2008 01:27 PM

"Obama actually scares me, a seemingly white guy who actually might be black after all."

A good friend of mine, often response with "wow, they still make people like you?" when encountering this level of blatant racism.

But then, xyz is such an obviously poor-quality troll (narcissists are usually better at hiding their fragile egos than this, as it makes them more elusive targets) it speaks of this blog. Better than no troll, I suppose.

Posted by: James Cape at March 17, 2008 06:18 PM

It's not really an elite, not even a pack of wolves, it's more like some assorted predators. 'Elite', I think, implies some common culture, some loyalty to the group, and at least some minimum solidarity with the rest of the population. I don't think they have any of that; there are exceptions, of course, like that Buffet guy, but typically they don't.

Posted by: abb1 at March 17, 2008 06:30 PM

Yup, abb1, but what "common culture?" Surely not the dread Anglo-Saxon, Oxbridge one that forced the writings of dead white males into resisting brains?

Posted by: donescobar at March 17, 2008 07:20 PM

I don't care what culture; a haute courtier culture or dead white males culture or any other culture - they just don't seem to have enough in common to form a group that could be called 'elite'; all I'm sayin'.

Posted by: abb1 at March 18, 2008 11:49 AM

"The nobles were the broad thinkers and true protectors of the realm"

This was meant to be a joke right? Surely the nobles were broadly thinking of their own interests.

Posted by: Coldtype at March 18, 2008 02:28 PM

"The nobles were the broad thinkers and true protectors of the realm"

This was meant to be a joke right? Surely the nobles were broadly thinking of their own interests.

Posted by: Coldtype at March 18, 2008 02:29 PM