On financial tsunamis and feeling better with oneself

Hobbes, we might or might not like it, but the truth is that the financial tsunami that started over 18 months ago with epicentre in the US housing market (and well-thought derivatives, at least well-thought for a mad-scientist, I think they liked to lovingly call them “quants”) is getting to a shore near you.

I bought RBS at 185p when the price looked like a steal, and today is trading at 101p… roller-coaster markets.

But what can we I do? what can we I do? what can we I do? I was, like many other, trying to buy on dips… and my investment in this case is a long term one, “for my pension” I like to say, but governments are marching in and there seems to be no solution to the mess other than mass bank nationalisation. Not that I am happy with it as a minor shareholder.

But the funny thing is that the art market, playground for billionaires, is also faltering (El Pais, 2/10/08) and the promised sky rocketing gold price is not nearly getting there. It seems like someone pulled the hand brake on the way out and we are stalling. Are we going to drop to the ground like MD-80’s do so well? Is inflation going to hit us hard at the worst of time? Are we near the end of western civilization as we knew it?

Well, if Putin, Chaves and Admadinejad are the leaders of the near future, I will always stick to partisan, useless failed democratic governments. At least the Bushes of this world make me feel better qualified that the Prime Minister or President of a major country. With a patronising “I told you so all along”, it makes me feel a better and smarter being than the sweaty, puzzled looking Gordon, George or Hank who look like gazelles invited to a lion’s birthday party.

And how about the promised bail-out? I think that one simple sentence included in the bill says it all:

Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children.

Is anybody at all taking this seriously? All this farce is just political posturing.

In any case, I share George Soros‘ idea that instead of using $700bn to buy toxic investments and wooden arrows, they should use it to capitalise banks and take part ownership of them. It could even be individually allocated for every US tax-payer pension.

But there is still hope. Wells Fargo and Citi are starting a legal battle (perhaps the last hope for capitalism?) in saving Wachovia. In the right corner, wearing blue trunks… Citibaaank!, with $2.2bn and trained by the infamous quick-fixer, bad thinker US goooooveeeeernmeeeeent!

An in this corner, wearing red truncks and $15.1bn, the capitalist hope, the unwelcome and unexpeeeected… Weeeeells Fargoooo!

Now Citibank is suing for $60bn to Wachovia and Wells Fargo for souring it’s fightless victory. Now it turns out that JP Morgan pushed off the cliff Lehman Bros… and got the crown jewels.

You know what I say? Back stabbing, suing over deals, forcing sales at dirt cheap prices… all this smells of good old style capitalism. I am pretty sure riches are being built at this point in time. Capitalism is well and kicking.

As for my RBS investment… the savings of a lifetime, I am glad I started late and I’m on my early 30s, but it is my “long term pension pot” so I will leave it there and will cross my fingers so that 30 years from now RBS will still be around.



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