Rich People Working on Sundays Should Make You Nervous

[NOTE: This was originally published online at a long defunct blog just before midnight on Sunday, September 14, 2008 — the day the financial crisis began in earnest. I was reminded of this post as Hank Greenberg’s $40 billion lawsuit against the federal government recently got underway.

If you haven’t yet, take a moment to do a little reading on the case filed by the former chairman and CEO of AIG. It’s embarassing, enlightening and occasionally entertaining. It’s also a valuable lesson. It teaches the government that if you don’t take white-collar hustlers to court for their shenanigans today, they might turn around and put you on the witness stand tomorrow.

Fair warning: this piece ends in a kind of metaphorical ellipses, because there was no end that night. Things were just getting started. For millions of Americans, it hasn’t ended yet. And why should it? Most of the same people are still in charge.]

I know rich people.

Went to school with some. Worked for some. Fished with some. Snorted MDMA with several of them on a particular night back in 1990.

Don’t get me wrong. I’m not saying I’m friends with the rich. Rich people only befriend other rich people, but they let non-rich people occasionally watch them at close range to remind themselves that they’re not non-rich. That was me on numerous occasions.

You’ll have to trust me: I have rich credentials. And not just money-in-the-bank rich, but owning-the-bank rich. These relationships and experiences have led me to several conclusions regarding the more affluent:

Rich people know everything.
Rich people like to own a lot of stuff.
Rich people like time to themselves to enjoy that stuff.

If you believe these three things, it seems that today – September 14, 2008 – we have officially entered into Big Darkness.

We’re fucked.

Right now, as you watch the Steelers/Browns game or a shitty rerun of one shitty show [Note: that’s a broken link to Desperate Housewives] or another [Note: this broken link went to CSI Miami], there are people on another channel in an emergency session that has preempted the regularly scheduled rerun of an even shittier show [Note: I can’t believe America has such horrible taste in television or that NBC has such horrible site maintenance that this link isn’t broken].

You see, Lehman Brothers – one of Wall Street’s five investment banks – is going belly up. Kaput. Nada. Gone. Just like you and me, they’re in debt. Unlike you and me (hopefully), their debt-to-asset ratio is estimated to be as much as 40:1. Imagine owing $4000 to a guy named Vinny and all you had to give him was a hundred bucks. Imagine how pissed Vinny would be. Now imagine you owed Vinny $60 billion and could only come up with a little over a billion. That’s Lehman.

On the same day and at the same time (at the same fucking time), Bank of America has had to bail out Merrill Lynch. In the last year, Merrill’s lost 80% of its value and its downfall was gaining momentum. In fact, it was starting to tank faster than John Goodman at a Boston Marathon. So BofA stepped in again. Again? Yup. For those of you with short memories, Bank of America was also forced to acquire another fantastically shitty company [Note: this was a link to Countrywide Home Loans] a mere 2 ½ months ago.

But wait. There’s more.

Today also saw AIG – one of the world’s 20 largest companies – begin to sell off everything but their Herman Miller Aerons to try and raise a little cash after their stock dropped almost 50% last week. Last fucking week. So how much do they need? Somewhere between $40 and $50 billion. Why? Because if they can’t touch it soon, Vinny’s coming for them after he puts a bullet in the back of Lehman’s skull.

This is all preposterous. And yet it’s all true.

You can go out and do the research on why this is happening if you’d like. You can follow the trail from the subprime market to the prime market to the entire credit market. You can familiarize yourself with CDOs and SIVs. You can read a little about Derivatives Time Bombs. But in order to truly understand how dire the situation is economically in this country today, all you really have to do is look back at those Rich People Rules we started out with:

Rich people know everything.
Rich people like to own a lot of stuff.
Rich people like time to themselves to enjoy that stuff.

First, take Rule Number Two: rich people like to own a lot of stuff. Today, a whole bunch of rich people are selling a lot of stuff they own. Whole companies worth billions of dollars are up for grabs. Hell, AIG was even going to auction off its luxury airline timeshare division. Are you kidding me? Rich people selling off a way to sip Krug in leather at 450 knots while avoiding TSA and armrest wrestlers like me? Desperate times.

Now look at Rule Number Three — rich people like time to themselves to enjoy their stuff — and then remember this: everything I’ve talked about so far has happened on a Sunday. No Hamptons or Cape Cod or Connecticut countryside. In fact, rich people didn’t even get as far as New Jersey today. Think about it: they opened up the stock market. On a Sunday. For trading. I’m assuming they rang the bell and everything.

So what does it all mean? No one seems to know. And that violates Rule Number One: Rich people know everything. I mean, when haven’t you heard some rich douchebag lecture a crowd about the benefits of America’s secret war against Pakistan,* or how he prefers Grindelwald to Banff, or why the National League should be forced to implement the designated hitter?

For the past several hours, CNBC has trotted out or phoned in every rich person that isn’t hunkered down in New York’s Federal Reserve building to give their opinion on what this all means to the economy. By the way, “the economy” is Rich People Code for “all the poor people who have to work.” It’s kind of like a Southern sports announcer calling a basketball team “remarkably athletic,” when what he actually means is “really fucking Black.”

Anyway, none of these pundits know shit. Not a one. Not guys from Goldman Sachs or Morgan Stanley. Not guys who used to work at Treasury. Not low-level Fed lackeys. Not Ivy League economists. None of them will even venture a guess. All they know is that it’s “not good.” In fact, “not good” is usual Rich People Code for “poor people are fucked.” And several of these guys – including the guy** [Note: I really can’t believe this link is still live] who’s at least partially behind our current predicament — are actually using the word “bad.” And when rich people use the word “bad” while talking about their money, that can’t be good.***

* Not calling William Pfaff a douchebag. The brandy-swilling asshole one table over from you who won’t shut the fuck up about foreign policy while you try to enjoy your anniversary dinner? He’s the douchebag.

** This is the most frightening thing I’ve seen in a long time. Start listening to Stephanopolous’ question with about 8:10 left to go. Then listen to Greenspan’s answer. Then tell me whether or not you believe his “best guess.”

*** I didn’t even mention Washington Mutual. Maybe that’s next Sunday.