I had just enough time to get home from work and pour myself three fingers of Glenmorangie Finealta over some Evian ice cubes before my land line rang. Caller ID said it was my dear sister Rose.
Rose: Tom?
Tom: Hi, Rose, what’s up?
Rose: The reason I called is, can you tell me what the hell is happening with the stock market?
Tom: Rose, you’re a school teacher…
Rose: That’s right, I’m a school teacher. One who happens to have a 401(k) that’s lost about twenty percent of its value since July eighteenth, and over half of that in the last week!
Tom: Well, it’s not like you’re alone. After the debt ceiling circus, complete with the Gang of Six High Wire Daredevils, the Flying Democrats trapeze act, enough GOP elephant dung to fertilize Harry Reid’s entire pomegranate grove and a non-stop enthusiastic performance by a zany troupe of fire-breathing TEA Party clowns, the entire world economy is in a smoke-trailing tailspin. Over three trillion dollars have disappeared since last Friday, and damned if anyone can find them. And like they say, misery loves company, right?
Rose: I’d say, knowing you’re not the only animal in the slaughterhouse isn’t much comfort, actually. What’s the matter with this guy at Standard and Poor’s who screwed us all by downgrading America’s credit rating?
Tom: Oh, you mean David Beers, Managing Director, Sovereigns and International Public Finance Ratings Group, Standard and Poor’s, Incorporated?
Rose: Yeah, him. What’s he got against people like me?
Tom: Well, as I’m sure Mr. Beers would tell you, absolutely nothing at all. He’s like the repo man, you see. Somebody has to repossess delinquent vehicle properties, and somebody has to rate the nations which issue debt. It’s just their job, that’s all. So, here, on the one hand, you have the repo man, all muscular and festooned with tattoos, his corpulent belly protruding over his belt, his butt crack peeking out from his pants as he stoops, reeking of grease, gasoline, motor oil and sweat, to shove a jack under the front axle of the automobile some unlucky person could not pay for. And, on the other hand, here you have David Beers, with his sneering, snotty, condescending demeanor, his abstract, elliptical phraseology, festooned with his absurd, tasteless moustache, reeking of undeserved class privilege, his monstrously spoiled, amoral country club attitude peeking out from his metaphors, syllogisms and figures of speech, jacking up the United States of America by lowering its credit rating from triple-A to double-A-plus. It’s nothing personal when the burly, stinky fellow with a tow truck comes to take somebody’s car, and it’s nothing personal when Mr. Beers causes three trillion dollars to vanish in the middle of the worst global economic depression since His Majesty George V delivered the first Royal Radio Address, either. It’s just their job, that’s all. Yes, it’s a dirty job, it’s a nasty job, and it’s a job a lot of people are going to hate them for, a job a lot of people are going to despise them for, and a job a lot of people are going to revile them for, but, in the last analysis, this is far from a perfect world we live in, and therefore it’s a job somebody has to do, and so here we have them, the repo man and Mr. Beers, performing in those capacities. And truth be told, neither the repo man nor David Beers can do any better, so there they are – the necessary instruments of human misery. I say, pity them.
Rose: You would! How about all these people who I suppose have done their homework concerning these things pointing out that Standard and Poor’s is the same bunch of alleged financial geniuses who gave triple-A ratings to those mortgage-backed securities which ruined the United States economy in the first place back in 2008?
Tom: I am absolutely certain, should you pose such a question to Mr. Beers, he would quickly point out that Standard and Poor’s is by no means a monolithic organization, and that the obviously half-witted, presumably inbred, probably coprophagic bunch of upper-class Ivy League twits who valued all those ridiculous collateralized debt obligations, credit default swaps and other sundry harebrained financial derivatives to be triple-A, rock-solid investments all work down the hall from him and his colleagues, and that his department at Standard and Poor’s is in no way responsible for anything those pathetic, stupid, contemptible, ignorant idiots may have done.
Rose: Which, as I and the rest of the people in America – and the world, for that matter – who are getting financially raped at the moment would comment, all that means is up until now, Mr. Beers and the members of his particular department haven’t had the opportunity to conclusively prove that they – and, indeed, everybody who works on these debt rating committees at Standard and Poor’s – are just as remarkable, if not more so!
Tom: The proof is in the pudding, I guess.
Rose: The proof of Mr. Beer’s mother is in her pudding!
Tom: Oh, my goodness, gracious! Such talk!
Rose: That’s easy for you to say – you’re single and make lots of money.
Tom: Sorry, but there’s no way you’re going to make me apologize for either of those.
Rose: Did I ask for an apology?
Tom: Not in so many words, no, but…
Rose: Look Tom, I can’t stand this anymore – on even numbered days, the market bombs, on odd numbered days, it goes back up, but not enough to recover the losses. It’s making me sea-sick!
Tom: It’s called volatility…
Rose: Volatility? How come they don’t just call it mindless, superstitious, foolish panic?
Tom: Because calling it that would be too close to the truth, and the financial markets generally avoid the truth whenever possible.
Rose: Really? What’s their excuse?
Tom: Because Wall Street, just like Washington, has such high respect for the truth, they only use it on very, very special occasions.
Rose: No kidding?
Tom: I kid you not.
Rose: Well, that certainly explains a few things. Thank you.
Tom: You’re welcome.
Rose: But the question remains, Tom – what the hell do I do with my 401(k)? Should I buy gold?
Tom: I wouldn’t recommend that, no.
Rose: No? How come?
Tom: Because, at the moment, gold is trading higher than platinum.
Rose: And so?
Tom: And so, that’s totally insane – it’s proof positive gold is overvalued.
Rose: So should I buy platinum instead?
Tom: If you absolutely must buy some shiny metal, I’d say yes, by all means, buy platinum instead.
Rose: Okay, I get the message; all right, I don’t know… should I buy oil?
Tom: No way. Oil’s tanking faster than the stock market.
Rose: Huh?
Tom: If the world economy is grinding to a halt – thanks to Mr. Beers and his buddies – then the speculative bubble in oil is doomed, and that’s what the smart money thinks right now. Oil’s headed south faster than Jefferson Davis after the Yankees burned Richmond.
Rose: A bubble? Oil prices are a bubble?
Tom: Oil prices are the biggest bubble since the Internet craze back in 2000, if not the Dutch Tulip Boom itself.
Rose: But I thought…
Tom: You thought what Wall Street, the oil companies and the environmentalists wanted you to think, that oil is a scarce, diminishing resource that can only become more and more expensive as time goes on. Sound familiar? That’s the same propaganda that convinced everyone real estate was the perfect investment. And what did we get? A speculative bubble that wrecked our economy, that’s what! So forget it – investing in oil right now would be like taking out a sub-prime mortgage on a fifteen-thousand square foot McMansion in central Florida.
Rose: How about cash? Should I just move everything into cash?
Tom: Umm… will your 401(k) terms and conditions allow you to do that? Without a severe IRS penalty, that is.
Rose: Gee, I don’t know.
Tom: Better check. But with the Federal Reserve having lowered interest rates to around about zero and having promised, just yesterday, to keep them that way until 2013, cash doesn’t exactly seem to be a growth strategy, anyway.
Rose: Commodities?
Tom: You’d have to quit your teaching job and spend sixteen hours a day monitoring weather conditions, labor relations and politics in places like Indonesia, Australia, Ghana and Brazil. Commodities is no place for small investors, believe me.
Rose: Currencies?
Tom: That’s even worse – at least with commodities you can find out most of what you need to know by reading the news. With currency speculation, unless you’ve got a network of highly compensated insider contacts in every major international banking hub, you’re toast.
Rose: Options?
Tom: Multiply everything bad about commodities by everything risky about currency trading, divide that by your math skill percentile and raise the result to the power of how many seconds it takes you to explain the difference between a put and a call to your oldest child. Take that and divide it into your net worth – that’s what you will be left with after the options market gets done with you.
Rose: Okay, well, I know I can’t invest my 401(k) in art, antiques, collectables, memorabilia, action figures or comic books. So I admit it – little old school teacher that I am – I’m stumped. Tell me Tom, what the hell should I buy?
Tom: Treasury bills.
Rose: Treasury bills? You mean, I should buy the government bonds that Mr. Beers at Standard and Poor’s just downgraded from triple-A to double-A-plus?
Tom: Precisely.
Rose: Jesus, Mary and Joseph! Why?
Tom: Because, after you’ve gone down the list of alternatives, just as we have, you will realize, just as millions of investors have since last Thursday that, despite whatever Mr. Beers and his cross-eyed, knock-kneed, drooling cronies at Standard and Poor’s might have to say, right now, the best investment in the world is United States government debt!
Rose: Really? No beeswax?
Tom: No baloney, Sis. And think about it – what better way to tell Mr. Beers and his merry band of sycophants to go… ah… jump in the lake… than to loan Uncle Sam a big chunk of badly needed simoleons?
Rose: When you put it that way, it almost sounds… patriotic.
Tom: Sounds patriotic? By Jingo, it is patriotic! So do what all the smart investors are doing – put your money in Treasury bills!
Rose: Okay! I get it! You’re right! I’ll do it!
Tom: Good for you!
Rose: And I’ll tell everybody I know who has a 401(k), they should buy Treasury bills, too!
Tom: Excellent!
Rose: Because not only is it the best investment you can make right now, it’s also a great way to tell people like Mr. Beers to go… suck eggs!
Tom: Or something like that.
Rose: Oh, thank you, Tom! Wait a sec… what’s that? Damn it, I think I hear the kids fighting about something…
Tom: I won’t detain you, then. Nice to hear from you, as usual.
Rose: Uh… yeah… Hey! Put that down before I give you a time out you’ll never forget! Er, gotta go!
Tom: Sure. I understand. ‘Bye!