Tumbling With Titans

I don’t know about the rest of you guys but when I finally grow up I want to be a tycoon. I’m not talking about your Sean Combs’ or Carter’s. Bill Gates is more like it, but not entirely quite up to par. I’m trying to roll like J.P. Morgan, holding assets valued at the comparable land value of everything west of the Mississippi River. Maybe it is because I grew up on the parceled land that was his Long Island estate and became terribly envious of the rolling hills of Morgan’s beach and the seclusion of East (Morgan’s) Island. And to think that all of that property was just a summer retreat! What yachtsman wouldn’t admire? Of course I wouldn’t mind having a 2/3 stake in the national economy, either, but with that privilege comes a huge responsibility.

I suppose that is why the federal government hasn’t ever let that privilege happen again. The responsibility is just too great. The chances of the corruption of just one person are simply too high. In the case of J.P. Morgan, it was his brilliant deeds that actually led to shining the light on the dark corners of American finance and industry. J.P. Morgan was able to bail out the federal government in 1893 when it was literally running out of gold bullion –only a year after consolidating two companies to form General Electric. Morgan coolly created a private syndicate that was able to raise $65 million dollars worth of gold backing and, less than ten years later, still wielded enough influence to pull-off one of the only monopolies the United States has ever tolerated in the form of U.S. Steel. The equivalent of his dominance may never be witnessed again: everything from bridges and ships to wires and nails lined the pockets of J.P. Morgan.

Imagine being able to call “I got everything metallic” during the industrial revolution, or having enough money to bail out a bourgeoning, if not fledgling, country with straight-up gold bullion! Even negating the change of inflation, I don’t think that Puff Daddy, Jay-Z, and Russell Simons combined could get their hands on that much gold. Even if the big Black music moguls could amass a preponderance of the stuff that our dollars are based on, they certainly wouldn’t be using it to bail out the federal government. Black folks just don’t do that type of shit. But I bet you a dollar to a doughnut that one of those three people would have some gold, twenty-six inch rims. Seriously, I’m not a racist. I’m just playing the odds. Quietly, one of those guys probably already has some solid gold rims and just isn’t telling anybody. The funny thing is that their stereotypical example of corporate and personal irresponsibility is not different from their white counterparts or from those entities that are supposedly based in more conservative pursuits like insurance or mortgage lending.

The Big Five Brokerage firms haven’t exactly been the model of stability and prudence of late. Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns combined to pay out record Christmas bonuses back in November of 2006. Those brokerage houses shelled out over $36 Billion dollars to reward their employees, undoubtedly going disproportionately to the higher echelons in management. That is a lot of money for rims and wood grained steering wheels. Not too long ago these firms were floating in the clouds on a housing bubble, but somehow couldn’t see the long thin needle of unsafe lending tracking them and bearing down. As a result, today, 60% of the Big Five aren’t what they used to be: Bear Stearns, Lehman Brothers and Merrill Lynch were all negatively affected by the ongoing credit crisis. Notice that Morgan Stanley is still holding it down with Goldman Sachs but there is no telling if the trend will continue to rob America of some of it’s most storied fiduciary institutions.

Lehman Brothers was founded in 1850 in Montgomery, Alabama. Filing for bankruptcy isn’t supposed to happen to a company that managed to avoid folding during two world wars and The Great Depression, which even saw the closing of 11,000 of America’s 25,000 banks at the time. (Of course all of the closings didn’t happen on Black Tuesday, October 29, 1929, but most of them were thoroughly and completely ruined by 1932.) Lehman Brothers was so hardy that they managed to stay in business throughout the United States Civil War despite having a primary investment of cotton , and thus Southern cause sympathies. Demonstrating true American grit that some could argue is, in fact, greed; they turned a negative into a positive by laying down the groundwork for the founding of the New York Cotton Exchange in 1870 making the Lehman Brothers immensely richer for it in the process. I don’t know if it was chickens coming home to roost or not, but King Cotton sure has been the cause of a lot of my peoples’ pain. The one’s that got rich off of it can all go to hell, in my humble opinion. I’m not saying that the people that worked for the firm in 2008 are in anyway responsible or connected but I will say that I’m not sad to see Lehman Brothers go.

Oh what a complex that we live in! Most times I focus on the military part of the United States military-industrial complex, but these days and times have shifted my gaze. AIG, or American International Group founded in Shanghai in 1919, is one of the largest companies in the world to be bailed-out by the United States government to the tune of $85 Billion. A foreign, if not international, company with so many American interests that it had to be rescued by the tax payer despite a climbing national deficit, was going to go bankrupt because it couldn’t borrow the money from all of the subsidiaries that the behemoth insurance company actually owned. That just happened. Typically, in times of war the United States economy has done particularly well, but the wars in Iraq and Afghanistan haven’t gone according to the script. It doesn’t take a genius to figure out that something is amiss: are we really about to bail out a company from Shanghai that happens to be based in New York just because our economy is that screwed?  We’re not nearly as responsible in our choices as we used to be. Perhaps entrusting one man with virtually the country’s entire gross domestic product (GDP) is not a good idea but at least we were sure where Morgan’s loyalty was. He traveled the world and was even educated abroad but had the good sense to recognize that investing in the infrastructure and fabric of America would yield the highest dividends. Make no mistake that J.P. Morgan was a shrewd and ruthless baron, but ultimately he left us all better-off for the wear.

Sure the United States is set to recoup warrants for a 79.9% equity stake and the right to suspend dividends to previously issued common and preferred stock, but do you feel better about that prospect, or worse? Think about that and get back to me. I’m going to keep dreaming of being The Great American Tycoon, and casting myself as the hero. It just feels better that way, even if they don’t really exist anymore.


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