Rough Music

I’ve slowly become an apologist for my industry. I say “slowly” because a year ago when Bear Stearns went belly up, I wanted Jimmy Cayne to go to jail along with several others at Bear Stearns. But in truth, I was just hoping someone would wipe the floor with his ass. So many friends and people I worked with got whacked. They were out of a job and/or unable to retire because Mr. Cayne was playing bridge. I was livid. Sick. I spent a decade of my life there. This wasn’t business. This was personal. 

Around the same time, I spoke to a friend who was a teacher. Her response to Bear Stearns’ demise was “well, everyone who worked there has a lot of money so it’s not like they’re suffering.” I paused. Aghast. Stunned. “Well, that’s not really the way it is.” I replied. I felt like saying “are you out of your fucking mind?!!!” But I knew she wouldn’t believe it if I told her. She wouldn’t believe that most of the people at Bear Stearns were just people earning a living. They had families. They had bills to pay. They were no different than her.

A year later I found myself defending AIG bonuses to my boyfriend. Then it hit me. I was like a teenager defending my school. It’s fine when I say it sucks, but god forbid someone else does. But the discussion wasn’t even about AIG. AIG isn’t even my industry. They’re a fucking insurance company.

Had I become this defensive by feeling personally attacked by the media and strangers? By the generalization that ALL people who worked on Wall Street should be burned at the stake? Had working a block away from the NYSE and fighting my way home through various protests made me want to come to the defense of my “comrades” who worked inside? Had it become clear that the public and the general media were disgracefully misguided on the financial industry? Yes.

The mere fact there are protests at the NYSE make this very clear. The angry mob doesn’t even know what people in the NYSE actually do. If they did, they certainly wouldn’t be protesting there. But as we know, perception is very different from reality.

It seems the perceived reality of Wall Street is a bunch of middle aged white guys in Hermes ties and Armani suits sitting around a board room conjuring up ways to screw people. Like witches stewing over a caldron; mixing and watching a magic potion clicking their Ferragamo shoes while the rest of us get the shaft. This is a fallacy.  And this fallacy has created a public monster.

And it’s not just the result of the current financial collapse. Even back in the late 90’s, during a time of great prosperity, I often avoided the question about what I did for a living. After all, I lived in the East Village, home to the most tolerant and open-minded group of New Yorkers, except if you worked in finance. I was tired of being berated. Christ, I was just earning a living doing something that interested me. But I had to hide like a Communist in the 1950’s.  So even in the best of times, when people are making big returns, Wall Street is still an evil empire.

Of course, when people are making money, they credit themselves. And when they lose money, they blame someone else.

The truth behind the “Great Oz” of Wall Street “wizardry” is that the vast majority who work on Wall Street are hard working people earning a living. I am one of those people. I’ve never owned a home.  I’ve never owned a luxury car. I don’t own art. I can’t fly first class. I didn’t get a job on Wall Street because my parents knew people.

Be careful on your witch-hunt. Be careful you don’t catch a bunch of dolphins when you bring in some tuna.

Funny. Nowadays I just say I’m unemployed. Seems to be in vogue. Especially down on Wall Street.

Last week, Bernanke predicted the recession “could” end this year. Well, he’s out of his mind. Let me re-phrase. He’s lying. This is the same Bernanke who, less than a year ago, offered assurance there would be no recession while I jumped up and down pulling my hair out.

The IMF conducted a study on 124 banking crises over the last thirty years where massive debt overloaded the banking sector. Out of the six that occurred in wealthy nations, the speed of recovery varied from 2 (South Korea) to 10 (Japan) years. I think we can all agree that what’s happening now ain’t a typical banking crisis. Ending this year? No.

What was equally baffling was news that the market rallied on Bernanke’s comments. This was just plain wrong. The market rallied on technicals. As the DOW hit its worst levels since 1997 the market panicked. The “it can’t be this bad” panic actually created a rally and the DOW subsequently bounced off its 7100 level. And it happened again on Wednesday and again on Thursday. This had nothing to do with Bernanke.

I told a friend if the economy does show signs of strength in the next 6 months, to look out for hidden mine fields amongst the smoke and mirrors. In my mind, these will be the credit card companies. I suspect they won’t be racking up interest charges on new purchases these days while the sheer number of credit card defaults could make sub-prime mortgages look like a blip on the radar screen.

As virtually every sector in the stock market plummets deeper into the abyss, one thing eludes me. The credit card companies have remained relatively strong. Mastercard and Visa have actually outperformed the Dow in the last month. This worries me greatly. And it should worry all of you. But don’t be too concerned. Just like credit card debt, we will all simply pay for it later.

The average American household carries $10,700 in credit card debt. What was once a vehicle for emergencies, occasional purchases and travel expenses became a free for all “lay away plan.” And what’s even more outrageous is these companies can charge whatever interest rates they like. I consider their rates “usury” however, it seems the public disagrees given that they kept charging.

In 2005, credit card companies lobbied hard to change the bankruptcy laws in order to “protect” themselves. They won. This was really just an opportunity to eliminate massive amounts of risk while doling out $50,000 in credit to college students with zero credit history. In retrospect, they were just begging to be regulated. These laws won’t help them now. The public will soon want their heads on the chopping block. And I have no doubt the Obama administration will be more than happy to oblige.

How credit cards assess their risk is their business. If they deem it suitable to give an 18-year-old $50,000 in credit, that’s fine by me. However, don’t cry when you don’t get paid. And in turn, I don’t want to hear the whines of consumers who can’t pay their bills because they needed a new plasma TV. Leave me out of it. Cheap, easy credit is what caused the current banking crisis and what could soon create a credit card debt debacle. If you think consumer spending is at an all time low now, wait a few months. You’ll be able to get that $40 sweater at the Gap for $9.99.

Now these companies are offering incentives to people with large balances. American Express is offering $300. $300? Was that the magic number the algorithm machine spat out in order to alleviate their risk? Are they so deluded that they actually believe people have the money? Are they reading the same papers I’m reading? So if I rub the $300 American Express genie, $10,700 will automatically appear in my checking account? Well, if that’s the case, I’ll be swiping like crazy this week at the 5th Avenue fire sales.

This past week reminded me of an old lesson: at the end of the day, from stock prices to consumer spending to credit card debt: something is only worth what someone else is willing to pay for it.