A friend was telling us about her meeting with a gent who makes specialty Gujarati cuisine and how he was lamenting that he was the last of three generations who would stir a cauldron of oily, vegetable goop because his son is a banker with the Bank of America. I managed to sneak in the joke before anyone else could. “His son probably has a better chance of a steady income working with him rather than Bank of America since it’s probably going to fold up tomorrow.” Much laughter ensued.
If anyone had told me in school, where I scored a grand total of 1 on 100 in Accountancy (my teacher gave me one mark for drawing the ledger with impeccably straight lines) and scrounged a B in Economics (thank heavens for essay answers), that a few decades later I was going to be glued to a live telecast of voting on a financial services bailout package in the American Congress, I’d probably have smiled benignly and congratulated them on the quality of the weed they were smoking. But this whole meltdown business has been as riveting as a Hollywood movie. Plus, with the poshest bits of Bandra and Colaba having more white people than brown, it’s suddenly relevant because you see the strolling Caucasian couple and you wonder, “Should I ask when they’re moving out and if I can put dibs on their apartment?” because really, how long can they afford to pay Mumbai’s extortionist rents when there is a grown man in a suit crying in Congress to raise the money for their collapsing industry? Though what can you do other than cry when in a debate about whether to pump in billions of dollars into a flailing industry, the esteemed debaters quote Don Mc Lean and Mick Jagger.
The real reason I’ve been paying attention to this meltdown, however, is that it’s all a whole bunch of my friends are talking about. Because it’s their jobs and their bank accounts on the line. Also because quoting random overheard bits of BBC News (“The Asian banks follow a more cautious spending pattern and consequently aren’t quite facing the same crunch.”) hasn’t been a good idea. Either I get boxed ears or an enthusiastic conversation ensues about the financial services industry and the sub prime mortgage crisis, which I can spell and that’s about all I can do with these terms. What I have drawn up – and it’s so far proved pretty useful; everyone thinks you’re smart when you can dish a few correct dates around – is a timeline of how it all went down.
May 30, 2008 Bear Stearns, America’s fifth largest investment bank, went bankrupt and was bought by JP Morgan at $2 a share. It’s collapse is outlined in a riveting article in Vanity Fair. A day later, the internet had an inspired version of Tom Petty’s “Free Falling”. An excerpt:
And it’s a long day, watching them burnin’
There’s a fire sale, hittin’ banking stocks
Their ass ain’t covered, so they got a bare stern, an’
And the share price.. is tumblin’
Shares are free, free falling.
Yeah they’re free, free falling.
Through June, July and August, the investment banks did nothing other than post huge losses. Being devout followers of Douglas Adams, they didn’t panic.
August 18, 2008 Merrill Lynch found an unusual way of avoiding paying its taxes in the UK: it reported it had some $30 billion in losses. They also announced they weren’t going to have any new hires. Ya think?
September 7, 2008 Freddie Mac and Fannie Mae (who are not two dodgily-named people but Federal Home Mortgage Corporation and Federal National Mortgage Association respectively. And you thought Bengalis do strange nicknames) are taken over by the government. At that point, they thought this would avert a crisis. Hm.
September 15, 2008 Double whammy day because first Lehman Brothers went bankrupt and then Bank of America buys Merrill Lynch. This, among other things, seriously skews the power dynamic in a newly-married friend’s home because now her husband, a banker with Bank of America, is also her boss. On the plus side, it made another friend’s decision to quit Lehman and become an actor seem sensible. We can only imagine what this is doing to his prospects in the arranged marriage circuit, which is reeling about as badly as the American economy because suddenly everything is topsy-turvy. Take your damn bankers, say readers of classifieds, and give us an industry that is stable, constant, unthreatened, like … the cinema and journalism.
September 16, 2008 American International Group wilts and staggers to life after getting $85 billion from the Treasury. All those with insurance from AIG who had watched Sicko possibly started looking for boats with which to paddle to Cuba. Those with AIG insurance who subscribe to the New Yorker probably wondered why they hadn’t heeded David Sedaris’s words.
September 26, 2008 WaMu, which sounds like a first generation version of Wii, declares bankruptcy.
September 29, 2008 Wachovia was said to be in the process of being bought up by Citigroup. This saddened me because Wachovia sounds rather grand, like a little country nestled in the Alps, the kind that’s feature in Mills & Boons, have dashing princes with slightly German accents and never face bankruptcy. It saddened a friend in California a little more because he banks with them. Ironically, however, I’m the one who told him about Wachovia’s fate and within a second found myself abandoned on GTalk while he probably rushed to the nearest ATM. As it turned out, the barely-afloat Citibank is not the one buying Wachovia. Wells Fargo – not a Coen Brothers movie – will be doing the honours. Or so Reuters claimed as of 15 hours ago. September 29 was also when the first attempt at passing the bailout through the Congress failed and Dollar Stores across the country were probably putting aside a set of shelves for the stocks of investment banks.
TS Eliot said April was the cruellest month but for America, it’s definitely September and if one Osama gets cable in his hideaway, he must be feeling well chuffed at the collapsing heap of capitalist hubris, or whatever it is that he calls America. Fortunately, however, it is now October and with the bailout being passed last night, the excitement is – in all probability – over. Now to see who makes a movie of this whole debacle. After all, there must be some logic to how close Broadway is to Wall Street.
Excellent Blog. I’ve been reading along and just wanted to say hi. I will be reading more of your posts in the future.
The whole thing has been grizzly and horridly riveting. Everyone I know, including us, has their retirement tied up in pensions heavily invested in stocks of all kinds. Only time will tell how big a hit we all took.
I personally am investing in books.
books at least keep their worth as long as they do not physically burn or dissolve in water …
whoa, it was (is?) quite a ride, isn’t it. mostly a spiralling down one.
i have no real understanding of most of the matter, but it looks like some people way up there have been playing fast and loose … i hope they will not be the eones walking out with a smile.
it feels like one of those mega domino-tumbling things, and i don’t think it’s reached its end yet…. it annoys me that the bailing out of those who caused it (by doing rash things with money that no sensible, normal person would) is the (seemingly) only way to prevent the lot going crash.
…and still the ones who will really suffer are at the bottom of the food chain as usual. politicians and financiers…. pah!