3.23.08

The bunny is in a reflective frame of mind these days. In particular, he's been thinking of 1981 and 1982, and how they might be seen as offering a premonition of the current morass.

No, it wasn't Reaganomics, or crack cocaine. It wasn't Ultravox or AIDS, Swatch watches or masses of black rubber bracelets. These were the years that saw the theatrical releases of The Road Warrior, Escape from New York, and Blade Runner, seminal filmic visions of the full-throttle progress of modernity smashing head-on into the retaining wall of dystopia. The bunny wonders if David Bowie, who preceded this mood of celluloid Da-Sein himself, on vinyl, by a good decade, saw any of these movies, and what he made of them. Come to think of it, he wonders the same about Fritz Lang, Adam Smith, Thomas Malthus, and Aristotle. But that could just be all the blueberries he scarfed for breakfast going to his head.

Towards the point: the bunny sees this cute little crevice of doomsday augury (replete with some choice rides!) as perhaps offering a metaphorical prism through which to view a trend that was actually going on, though not in those years specifically (the bunny likes to truncate time, it's one of his few indulgences, humor him). To wit: the shift in mentality that seemed to occur as more and more financial houses went public. Again, it's not specific to 1981-82. It's not some sort of averaging of dates, not with the staggered IPOs of Merrill Lynch (1971), Bear Stearns (1985), Lehman Brothers (1994) or Goldman Sachs (1999). Remember, we are in the realm of allegory, not algorithm.

What has transpired since the start of the 1980s is not merely the longest bull market in (US) financial history, but also a transformation, nay, transmogrification, of the financial mindset from one of thrift, efficiency and self-sustainability to the firebombed casino before you today. And that, the bunny believes, is because the industry became a game of Playing With Other Peoples' Money.

The bunny can already hear the nay-sayers out there, braying about transparency and responsibility to shareholders. And what, the bunny would retort with a wry whisker twitch, would they make of the Bear Stearns debacle? What did they make of Alan Schwartz desperately saying anything he could to prevent a Pamplona-style run on the bank, while Jimmy Cayne and Warren Spector played bridge as Bear burned? For that matter, what did they make of Credit Suisse CEO Walter Kieholz mugging for the TV crews in Davos saying they didn't have large fourth-quarter write-downs, followed by sf2.86 billion in losses due to "trading improprieties" not two months later?

This, the bunny believes, is a classic case of oversophistication. Put too many people into too many dollars NOT THEIR OWN and promise them astronomical bonuses based on performance (you don't think the shareholders in investment banks, even solvent ones, get paid first, do yez?), and you will get Uncontrolled Investment Diversification Mitosis, the technical term for which is Greed. And greed, as all bunnies know, metastasizes.

This oversophistication is a direct result of financial sharpies constantly dreaming up new ways to make money, which is a lot easier to do when you're not gambling with your own. Let it go long enough and you get an unraveling of the whole gesamkunstwerk (yes, the bunny knows German), which then prompts government regulators to get involved, who are guaranteed to screw things up further, thus leading to the sort of meltdown depicted in the three films named at the top of this rant. Oversophistication, cheap money, SOMEONE ELSE'S MONEY, and human greed led humanity down this road.

The bunny sincerely hopes the bipeds can sort things out amongst themselves. A bit of self-restraint, doncha know. The bunny is a prey animal. He has no self-imposed delusions of morality as humans do. His concerns are to eat without being eaten, and to find enough does to sire his kittens before meeting up with the Black Rabbit of Death. His kind have been at this a long time (90 million years, give or take, and still counting!). He knows about survival. He hopes the banks and brokerages that made this mess will have the instincts to pull themselves--and the rest of their world--out of it, or we'll all be listening to that opening voiceover from The Road Warrior in live Surround Sound.

But, he fears, there's just too many of them in charge who clearly don't know what the buck they're talking about.

Bunny buttresses:

"Credit Suisse faces first-quarter loss" by Simon Kennedy, Marketwatch, 3/20/08

"UBS enters ranks of record losers after $14 billion subprime write-down" by Warren Giles, Business Report, 1/30/08

"Mortgage crisis talks under way" by Chris Giles and Krishna Guha, Financial Times, 3/23/08

"What Created This Monster? by Nelson D. Schwarz and Julie Creswell, New York Times, 3/23/08

"What Went Wrong", Economist special report (pp.79-80), 3/22/08

"Natural History of the Rabbit (Oryctolagus Cuniculus), by Alexandra Sardi and Janelle Cooper,

http://www.baa.duke.edu/companat/BAA_289L_2004/Natural_History/Rabbit/rabbit_Natural_History.htm