Bears, Bulls, and Horses!

Ehrenreich and von Hoffman

Bears, Bulls, and Horses!

Ehrenreich and von Hoffman

Bears, Bulls, and Horses!
An email conversation about the news of the day.
Oct. 30 1998 10:45 AM

Ehrenreich and von Hoffman

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Good Morning, Ms. E:

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Have you, perchance, seen a TV commercial that begins by depicting nightmarish Las Vegas-like scenes intercut with shots of a terrifying merry-go-round where the animals the passengers ride are bears and bulls instead of horses? In the midst of this grotesque, neon chaos, a tower of serenity and security grows up in front of the viewer's eyes. This refuge for the financially frightened is NationsBank and the idea, I guess, is that anybody who makes it through those portals need never have a care again.

There are a few droplets of information missing from the ad and these suggest one's money worries may not be entirely over. NationsBank, you see, has been amalgamated with BankAmerica, California's famously foolish depository institution.

The Oct. 21Wall Street Journal carried a story whose lead read, "David A. Coulter, the embattled president of BankAmerica Corp., resigned Tuesday, less than a week after the bank reported more than $1.4 billion in write-downs and losses from volatile global markets that sent third-quarter earnings plunging 78 percent." Some tower of serenity and security, eh, wot?

The post mortems are still being conducted, but it seems that Coulter was just another dumb, greedy banker. That industry just sucks dunderheads to the topmost positions. Much of these losses, however, are attributed to one David Shaw, a former Columbia University professor, who, it was once supposed in certain lamebrain banking circles, had written a magical piece of software for trading in god-knows-what kind of paper issued by the devil-knows-what kind of scheming imps. (Pardon, the orange language, but Halloween is almost on us.)

This follows hard on the heels of the implosion of Long-Term Credit Management Capital Management and the loss of upwards of a half a trillion--spelt with a capital "T"--dollars. The Long-Term disaster, which for a few hours people thought might bring down the entire world, was run by a caballero named John Meriwether, who had recruited two other dotso-potso professors, with a different set of magical software disks. One of these two genii, a dude by the name of Myron Scholes, copped a Nobel Prize in economics in 1997.

At the same time, the formerly invincible George Soros, who doesn't use enchanted software but acts as his own Delphic Oracle, has taken huge losses and has closed down several of his investment funds. If Mr. Soros qualifies as one of the most self assured figures in world finance, he is not alone on the losers' bench. Another recent arrival is New York's Bankers Trust (!),  which fessed up the other day to having blown about a half billion the last quarter. I have no information about who may have been playing software witch doctor for them, but you may be sure when all the blankets are pulled off this bed, they'll find some fast talker who promised the avaricious dummies at Bankers immortality and a mountain of gold higher than the skyscraper they work in.

My joy at reading about their monumental losses is only tempered by concern that the dumb bastards may take us all with them.

Barbara Ehrenreich is contributing editor at theProgressiveand author of several books, including Blood Rites. Nicholas von Hoffman is a columnist at theNew York Observer. His books include We Are the People Our Parents Warned Us Against.