Is Flaking the New Capitalism?

I'm back from my quick sojourn down to lovely Orlando, Florida this weekend and let me tell you it was a perfect weather weekend down there. 84 and sunny. No humidity. Spent time at the Walt Disney World Resort. There were decent crowds but that might have been a lot of local Floridians coming out of the woodwork on the warmest weekend in quite some time even down there. It didn't look like the "Great Recession" down there though. The airport was a little empty, however.

So I came back today and was reading a few things. One was an article in the NY Times which talked about how buyers in NYC are now trying to get out of purchasing real estate that they have already signed contracts on and laid deposits down. What is their reasoning? Maybe the developer didn't EXACTLY represent what they were selling and thus it is a faulty contract. The article stated how lawyers for the buyers are going into these places with LASERS to figure out if the developer is correctly representing what the square feet of the apartment is! So these guys want out WITH their deposits refunded and maybe even suing the developer to make a little profit out of their "little financial mistake". Hmmmmm.

Then I read a bloomberg.com article "Chinese Art Dealer Weeps After Refusing to Pay for YSL Bronzes".  I dont know if you heard but the estate of Yves Saint Laurent, the French fashion guy, sold off a huge art collection a few weeks back that supposedly went for a lot of money and was giving people hope in the art market that things might be rebounding. Well the article states that this Cai Mingchao who bid, and won, for $40mm of some Qing dynasty bronzes is now flaking. As in he doesn't want to pay. Maybe he had some GE stock and didn't get his monthly statement until today and THOUGHT he had the $40 mil. He also started crying saying that his credibility was shot in this art business. Hmmmmmm. 

Um, I'm an old bond market guy. In the bond market we did a lot of things over the telephone. Even with computers and new technology, there was always a lot of human to human phone contact. You can imagine things can move fast in the bond market. If you were on the other end of the line, and you said "done" on a trade, it didn't matter if you were buying a $5 savings bond, or all of the trillions of global debt, you were on the hook. You didn't sign kaka (technical term) until well after the trade was done because you might have to do a bunch of trades NOW while the market is moving. If you ever flaked on a trade, the word would get out VERY quickly that you should be basically BANNED from the business and that system worked and works pretty well.

Now we have these stories on real estate and art markets. Say what you want about Wall Street but the way I always saw it your word was your "bond". Now we have people trying to get out of bad financial transactions while blaming everyone but themselves. I'd like to know the name of the person who held the gun to these people's heads who "bought" this real estate and the art. Oh, there wasn't any? Then they don't get out of these transactions under ANY circumstances. Trust me the world will be better off in these times if more people are held to a greater form of responsibility than what seems to be displayed now.     

Comments

[williambanzai7]

MOVIN TO BERMUDA SOON GONNA BE A SUBPRIME LOSS TYCOON
(Movin to Montana Soon, Frank Zappa)
WilliamBanzai7

Sing along link: http://www.youtube.com/watch?v=eJN_uWaVRfo

I might be movin' to Bermuda soon
Just to write me up a crop of structured subprime dross, Writin it up
Markin it down
In a little black box
That I can sell downtown
By myself I wouldn't
Have no coins to toss,
But I'd be writin my lowly Subprime dross
Writin' my lowly Subprime dross
Well I just might hire me some quantitative geeks
And I'd sell that geek fluff
To somebody else...
but then, on the other hand
I'd Keep take some subprime cheese snacks N' melt it down
Take some greek sauce N' swish it aroun'
I'd have me a crop of crap
An' it'd be on top

(that's why I'M movin' to Bermuda)

Movin' to Bermuda soon
Gonna be a Subprime loss tycoon
(yes I am)
Movin' to Bermuda soon
Gonna be a structured loss flykune
I'm securitizing' the ol' Subprime dross
That's growin' in Greenspan's scary bubble
Pluckin' the dross!
I plucked all day an' all nite an' all Afternoon...
I'm ridin' a small tiny hoss
(His name is GAUSS)
He's a good hoss
Even though He's a bit dim witted to strap a hedge straddle or
security blanket on anyway
Any way I'm writin' the ol' Subprime dross
Even if you think it is a little silly, folks
I don't care if you think it's silly, folks
I don't care if you think it's silly, folks
I'm gonna find me a derivative counterparty horse
With a brain just about this big
An' ride him all along the inefficient frontier
With a Pair of heavy-duty
Magic alpha-encrusted tweezers in my hand
Every other structured finance geek would say
I was mighty grand
By myself I wouldn't
Have no coin to toss
But I'd be writin' my lowly Subprime dross
Well I might Ride along the Level 3 border
With my tweezers gleamin'
In the moon-lighty night
And then I'd Get a cuppa cawfee
N' give my CRO a kick in the tush...
Just me 'n the pymgy pony
Over the Subprime dross Bush
N' then I might just Jumb back on
An' ride Like a Wall Street cowboy
Into the dawn to Bermuda
Movin' to Bermuda soon

(Yippy-Ty-O-Ty-Ay)

Movin' to Bermuda soon

[mike]

I've seen a lot of that crap in the real estate market--all these so called "experts" who rode the wave and than realized they were as dumb as they come and tried to put their problems on someone else. Well said!

[eric]

"Yeah, you were right on the screws...+ cover...can I do it away? Nah man, sorry, other dude left for the day..thanks for playing."

[fletch]

amen, rb. unloading non-agency bonds (or tryin to) from portfolio starting in sep 06 while the bull rush was still on via bid list and after learning their covers, i recall being tin-cupped by the sell-side children: "Can you give me something back?". The hoax was in. Traders? Market-makers? Hardly. You are correct, this market needs old school discipline and responsibility to return or be imposed.