Two Chili Dogs And A Side Of Bank...

Throughout history, Switzerland has enjoyed a reputation for (1) Fine Chocolates, (2) Artisan Cheeses, (3) Julie Andrews' Alps and (4) Absolute Banking Confidentiality. For many years I was fortunate to pass some time there, indulging my taste for Teuscher truffles and Mont d'Or cheese, working off their effects while pursuing a passion for down-hill skiing in Gstaad. Sometimes I actually found time to do business behind the unlettered doors of Geneva's private banks.

If memory serves me correctly, a long-standing joke about Swiss bankers went like this...One spring day a banker spies a man in a threadbare suit groveling on all fours in Geneva's splendid Park des Eaux-Vives, eating the sweet green grass sprouting beneath him. Drawing near, the banker recognizes the man as one of his biggest investment clients. "Well, Messr. Charlot," the banker begrudgingly admits, "I suppose, under the circumstances, we could let you dip into principal!" The tale, oft-repeated by the very bankers at whose expense the joke was told, was thought LOL hilarious, given its proximity to the truth. Neither did it diminish the appetites of the maniacal guardians of the banks' purse-strings, who dined -at their clients' expense - on pate de foie gras and Dover sole over lunch at the fashionable Park's restaurant of the same name.

If only banks of all stripes had been somewhat circumspect in their dealings of late...

For all the wrong reasons, all sorts of banks have been very much in the news recently - Commercial Banks, Investment Banks, Community Banks, European Banks, U.K. Banks, Asian Banks, Central Banks - and the list goes on. It was not so long ago that banks were not places of interest to most people - save for when one needed one - and then of course, as the old saw went - one could only get a loan if you didn't need one.

All that changed in the mid-80's, when banks looked across the street and decided that the grass was greener on the other side. Suddenly, it wasn't enough for Commercial Banks to offer the boring, but safe vanilla services: making mortgages and loans; providing checking and savings accounts; offering certificates of deposit or commercial paper, et al.

These staid institutions, often built of stone to impress the public with the gravitas of their existence, woke up one day and decided they needed to be - sexy - like their Investment Banking cousins. That way, they argued, their profit margins would benefit from economies of scale and provide improved customer service. No longer would a customer have to walk across the street to make an investment transaction. Everybody would benefit by vertical integration - blurring the lines with one-stop shopping. And, oh by the way, the commercial banks would need government deregulation to accomplish this, to make it an even playing field with the investment banks, which largely had hoodwinked the Securities & Exchange Commission (SEC) that their, the economy's, and the nation's interests being identical, all would be best served through self-regulation. Soon they, too, would be able to sell stocks, bonds, mutual funds, money market funds, et al. with minimal interference and oversight. The foxes were effectively in charge of the hen house.

One more thing, all banks could now play the Wall Street equivalent of Grand Theft Auto through derivatives and what ultimately became the two-bit buzz-word of the boom (and bust). Credit-swaps. Can you say "Par -tay?"

If all this leaves your head spinning, it should: a mind no less brilliant than the castle's own Ben Bernanke, was clueless that the barbarians were at the gate, much less inside its walls...until Wall and Broad began running blood.

How differently we once looked at the impenetrable oracles of Wall Street. Just a few decades ago, I was a young fire-in-the-belly stockbroker with E.F. Hutton & Co., Inc. Within a few years of my joining the firm, John Latshaw, whose Kansas City, Mo. firm, Latshaw & Co. had been previously acquired by Hutton, was appointed the Region's VP. John was an imposing, elegant man whose exact altitude escapes me now, but at the time, I was in awe of the gentleman who traveled with his own bed-extender, since most hotel beds could not accommodate his John Wayne-like stature. Unlike some of Hutton's Big Apple hierarchy. "Big John," as he was (secretly) called, always came calling with words of encouragement, even when the Boardroom was littered with bodies.

A generous man, John always shared his market savvy; he loved banks, and thought everyone should own one. That was one of the man's charms: he would readily share with you what had worked for him, in the belief that it would also work for you. John said that any time you could buy a bank for less than its book value, jump on it. Subsequently, my Rolodex (the Stone-Age predecessor to BlackBerry) contained the names of happy clients who literally could laugh all the way to the bank.

Of course, that was then. In the past decade, as banks became enfants terribles of financial opacity, investing in them took on a whole new meaning, mostly mumbo-jumbo, the results of which are currently being declaimed in every corner of the globe.

On another of his visits, John rolled out the Latshaw philosophy of entertaining - Martha Stewart not having yet ascended to being the doyenne of that medium. I particularly remember John advising his guys (and this gal) always to offer guests the very best you could afford. People - clients, prospects, friends - everybody should be treated "special," John said. Elaborating, John remarked, that in those difficult times (The DJIA either only moved sideways or sank, when it moved at all.) if hot dogs were all you could afford to serve, then make them the best damn hot dogs money could buy!

Not surprisingly, I have acquired a repertoire of frankfurter brands and knowledge of the best hot dogs served across the country. As it turns out, given the current vicissitudes of the economy and the whipsawing arrhythmia of the market, this information is perfectly timed. Now is an excellent opportunity to take a bite out of one's favorite "dawg," be it Ball Park or an organic tofu faux frank.

Back to John's "Everyone should own a bank theory." Thanks to the Federal Reserve's insistence that at least 9 banks will receive an infusion of cash by the government, whether welcome, needed, or not, all of us now will, as tax-payers, become de-facto partial, if only temporary, "owners" of said banks without spending a dime. Bank of America, Citicorp, Wells Fargo, JP Morgan Chase, Bank Of New York Mellon, are among the banks selected to receive a core infusion. Any other time, owning any of the aforementioned would be the stuff of dreams. Today we have to hope they don't become a nightmare.

It's not quite the scenario Big John had in mind when he made his recommendations so many years ago, but one has to move with the times. As for me, in this new, tighten-the-belt world we're going to be inhabiting, whether I'm dining out, or entertaining chez moi, I'll make mine
two chili-dogs, scorched, with a side of bank -er, beans.

THE PAST IS STILL PROLOGUE

  

   Every day on Wall Street is now becoming "the end of days," save for the fact that there is 

No Rapture on the faces of the people toiling in its vineyards at the crossroads of Wall and Trinity.  The first Monday in October this year, October 6th, was no exception to the string of disasters being chalked up in the cauldron of collapse.  

   The day's tumult came on the heels not only of  doubts about the newly-inked Rescue Bill for the Street, but on the no-holds-barred comments of a popular "telefinangelist," who blithely recommended on the "Today Show" that viewers divest themselves of all their stocks if they think they might need their money in the next 5 years...and who among us doesn't need their money in the next five days or weeks, let alone five years, apart from Warren Buffet , Bill Gates, et al? 

   Down by 800 points during early trading, the DJIA rallied, closing down 369.88,  falling below 10,000 for the first time in 4 years.   

   To even casual observers. this is cataclysmic, because in the 21 years since "Black Monday" of October, 1987, a whole new generation has grown up in the market believing they were bona-fide geniuses, having found the alchemist's formula for turning dross into gold - at least until the Tech  bubble burst, followed by the Real Estate bubble, now by the Financial bubble, all to be followed by the Disappearing Consumer bubble, coming soon to a mall near you.

   

   If  there's an iota of truth in the dictum that those who fail to remember history are doomed to repeat it, then it's "Come to Jesus Time" as the horizon for a meaningful, lasting turnaround recedes further and further into an uncertain future.  

   To a generation accustomed to being acclaimed "brilliant," which rejected authority to establish its own game-rules, and whose own expectations of instant gratification were fueled by Cristal Roederer at $500 a pop, if not Crystal -Meth, this is nothing short of disaster: being in free-fall is a new out-of-body experience.  

   This is the perfect storm of uncertainty, the combination of earthquake and tsunami in every touchstone of one's life.  The carnage is ubiquitous.

   Unfortunately, unlike the market's fairly quick rebound after the October 1987 debacle, this recovery is more likely to be reminiscent of the market's excruciatingly slow ascent after its December 6, 1974 close at 577.60, a twelve-year low that ended the worst Bear Market since the Depression of the 30's.   

   I know; I was drinking Maalox on that December 6th.  

   The next day, December 7th, was my birthday, which no amount of bubbly could make happy. At the time I had won my hard-earned "ticket to ride," I was the youngest woman hired by

 E.F. Hutton & Co., Inc.  During my tenure on the Street, the market experienced no less than 3 recessions in 9 years:  the Market was in a perennial Bear Market mindset for my entire Wall Street career.   Given that nothing matures a broker like a Bear Market, I was mature as Methuselah by the time I giddily  left Wall Street for greener pastures.  

   The collateral damage from unfolding events can't be foreseen, much less guesstimated. 

But old-fashioned American resiliency, tenacity and the shoulder-to-the-wheel, still very much in evidence along Main Street, are the inherent values that will see us through.

   In the meantime, to paraphrase Bette Davis'  character, Margo Channing, the fading movie star, in All About Eve, "Fasten your seat belts - it's going to be a bumpy ride."