Perils of Caffeine in the Evening

The former Washington Mutual Building, photographed from the Bainbridge ferry, Seattle, WA, 9/27/2008

Well, I really can’t let a historic week like this go by without posting.

I’m a child of children of the Depression, and I’ve always adhered to the ethos of conservative conduct in my financial affairs that my dad and grandparents ingrained into me, even if my politics became more progressive as I swung further from their genetic orbit.  I’m lucky, of course, to have been their child, raised in a cocoon of relative comfort.  But that comfort was the result of careful spending and investing, blue-collar midwestern people who distrusted fads and stuck to their fucking knitting, even if that meant that I drove a 60 Chevy station wagon on my 65 - 67 high school dates, and I didn’t hit a golf ball until I was well over 30.

I’ve cleaved to their cautious approach, even when, through the 80’s and 90’s, a smarter person would have bought as much Seattle real estate as the (now evidently stupid) banks would have allowed.

So, I arrive at this pivotal moment in our civic life sort of conflicted.  The prudent child-of-children-of-the-Depression is totally disgusted at the calamitous result of the profligacy of the Wall Street money-jocks, aided and abetted as they have been by the Reagan-induced paucity of regulatory oversight.  I really buy into the whole revenge thing that the populist rhetoric is espousing.

And then, there’s the retirement investor side of me, worrying about my portfolio.  I’m sure I have a lot of company here.  Our guts are telling us to scream, “let the fuckers stew in their own foul juices!”, while we realize that our own nest eggs are redolent with those same juices.

I’m not so worried about the part of my paltry portfolio that’s managed by Warren Buffett.  It may rise and decline with the market, but it’s invested in diverse and proven businesses.  It’s kind of cool to see my stock price jump every time he’s quoted in the Wall Street Journal.  This quote from last week epitomizes why I cling to my BRK investment even in the face of Warren’s imminent demise.  Berkshire has been sitting on an inordinate amount of cash for several years, with Warren being frustrated that prices were too high for him to make many major acquisitions.  Then, these Wall Street firms feeling the Arctic breeze on their naked asses started calling him:

Mr. Buffett received a call at 4:30 p.m. that Saturday from a private investment firm trying to assemble a group to buy the embattled financial giant. “I’m calling about Bear Stearns,’” the private investor began, according to Mr. Buffett. “Should I go on?’”

Mr. Buffett recalls thinking: “It’s like a woman taking off half her clothes and asking, ‘Should I continue?’ Even if you’re a 90-year-old eunuch, you let ‘em finish.” Mr. Buffett says he passed on the proposed deal. Bear Stearns was bought by J.P. Morgan Chase & Co. the following day.

So now he’s made a couple of adroit investments in Constellation (an energy company that was teetering) and Goldman Sachs.  Presumably, he got the full frontal, but we’ll have to wait for his next quarterly SEC filing to know for sure.  Even in today’s bloodbath, BRKA only got a scratch.  While that’s not guaranteed to continue if things continue to deteriorate, I’m in for the long term.

So I’m torn between emotion and pragmatism regarding this taxpayer bailout.  I don’t want to take it in the shorts as a taxpayer while Wall Street geniuses skate on their golden parachutes, and I don’t want to take it in the shorts as an investor while the Wall Street geniuses still skate on their golden parachutes.

I’m glad I can still earn a living by working and can take a (not-as-much-as-previously) long-term view, but I still cleave to my 1983-vintage feeling that “the “Reagan Revolution” was built by invading all of society’s safety margins.”  Environmental, financial, social.  Line ‘em up and mug-shot ‘em: Social Security, mentally-ill homeless people, savings & loans, a coordinated energy policy, the coddling of a DOA auto industry that should have been left to die, Lehmann-style, in the mid-80s.

Who knows what happens tomorrow.  I’ll still get up and do work for clients that seem to be able to pay me, I’ll still watch in gob-smacked horror at the stock market, wondering if it’s a once-in-a-lifetime buying opportunity, or a ruinous armageddon.

The good thing is, I’ll probably still get up tomorrow.