Ode to Monkeys

Marquel, TPVs NY Times Low Interest Section correspondent, was shopping with Mufi in the World Trade Center museum for something amusing when he read this article, Welcome to the Everything Boom, or Maybe the Everything Bubble. Around the world, nearly every asset class is expensive by historical standards.

Marquel understood that when the Times says expensive it doesn’t mean unaffordable. The Times, the unrecognized bastion of capitalism in the Western and Eastern worlds, meant unprofitable. The sad fact, according to the Times, is that there are less opportunities to become billionaires without working for it.

Because interest rates are so low, hovering around four per cent for almost everything, making a killing by just investing money is now almost impossible. A high risk investment, like let’s say a supermarket in Eastern Estonia, should carry an interest rate of ten to twenty per cent because of the risk of total loss. If it turns out to be a smart investment, a twenty per cent return seems only fair and rational. But interest rates are too low. It’s a bad time to be a billionaire. People are holding on to their money making the problem worse. So far these investors haven’t discovered the other principle of capitalism: instead of just trading cash go out and fucking work!

As a result the investments people are making, however comparatively low the number of them, are risky. The possibility of a bust is real. If one sector collapses it’s likely they all will (unless the government saves them but we know the third rule of capitalism forbids that so it could never happen).

Banks are “creating more money from thin air to try to stimulate growth,” said the Times without blinking.

Marquel blinked several times and Mufi, having seen bad economic planning in China, went totally blind. Marquel had to walk him home. Then Marquel went to the nearest investment bank to see what was going on. The bank was filled with suits. Manicures. Glossy hairdos. Mirrored shoes. Unused fountain pens that cost as much as a Maserati. Marquel always feels investment banks are like prisons. Filled to the top with criminals but nobody being punished. Just getting uglier with time and dermatological procedures.

I told the guard I heard we were going broke. I wanted to speak to their best and wisest advisor.

“That’d be Thaddeus Xanax,” he said.

“Fine,” I said, and in a minute I was sitting in a Corbusier leather chair in Xanax’s office.

I asked him whether this was all a bubble or a bust.

“Both,” he said.

“Then how do you plan to deal with it?” I asked.

“Stay out of the way.” he said.

“Well, that’s easy for you to say,” I said, “but how exactly will you stay out of the way?”

“Don’t buy overvalued equities or other investments.”

“But my understanding is that everything is overvalued.” I said.

“That’s because you have the common understanding. It takes an uncommon understanding.”

“Tell me about your understanding.”

“Okay,” he said, looking in all directions at once, including over both shoulders. “I’ll tell you a few little tricks.”

“Go ahead,” I encouraged.

“First, accept the low interest rates.” he said.

“Fine. I won’t make any money,” I protested.

“You will if what you buy is even cheaper.” he said. “The trick is to buy something for which four per cent interest is ridiculously expensive.”

“For instance?” I asked.

“Put together a package of contracts that depend upon the Knicks winning the NBA title next year. That will sell for basically zero. A return of four per cent is a windfall.”

“Can you do that?” I asked. “It’s basically gambling.” I observed.

“Isn’t putting together a few dozen worthless mortgages and selling them as if they aren’t a form of gambling? Isn’t it essentially gambling? Isn’t it nothing but gambling?” he asked.

“You’re right.” I said. “Any other ideas?”

“Tulips.” he said.

“What about tulips?” I asked.

“You use social media to hype tulips. You don’t need much time and you can buy social media experts, or parasites as I call them, for pennies if you look at the absolute cost. Instead of hiring one or two, hire a thousand or two thousand. It’s pennies if you look at the long term, which I normally don’t do.”

“Okay, tulips.” I said. “Everybody’s talking about them.”

“Then you sell futures in tulips. Accept the four per cent. But the contracts are free.” he said.

“Why are they free?” I asked.

“Because tulip sellers are poor. They used to live in the Netherlands. Now they live in South America. You get contracts from them for thousands of tulips. It’s all in good faith. They may not understand it but you do, so there’s no illegality. Then you sell those contracts the way junk mortgages were sold a few years ago. It’s kind of a derivative.”

“Okay, then what?” I asked.

“Then you get out,” he said.

“When?” I asked.

“Then,” he said, “As soon as you can. You let others hold the bag. You’ll take a so-called loss, but you lose nothing, everything you take in is profit. Four per cent is irrelevant to you. You’re not waiting for the return, you’re waiting only seconds after the contracts are made to sell them to people who are excited about tulips.”

“And what happens to them?” I asked.

“It depends upon how you view history,” he said.

“How’s that?” I asked.

“Well, a sophisticated economist would say that people might take losses, or some would lose or some would win. That’s the non-historical, economic model.”

“And the historical model?” I asked.

“In 1637, without social media, people went crazy about tulips. Investors bought what today would be billions in tulip futures. The entire world economy was resting on tulip contracts.”

“What happened? I’ve heard about this,” I added.

“It was a bubble. It burst. The world was in depression because of tulips.”

“Well a depression isn’t good,” I said.

“It is if you’ve made millions in the crash that caused it,” he said.

“Wow. You think that would work?” I asked.”

“Well I told you I couldn’t tell you everything. It won’t be tulips. But the result will be the same. So get in and get out, is all I can tell you. Don’t get hurt by the bubble bursting. I told you when you sat down, ‘Don’t get too close to it.’ “

“I won’t,” I said.

But I felt sorry for all the people who wouldn’t get that advice. Like all those Maddox investors who lost their life savings and retirement. Little old ladies. Orphans. Millionaires. Hmmm. I didn’t feel sorry for all of them but to feel sorry for some of them I guess I’d have to feel sorry for the others too. The world is too heavy a burden to carry by yourself. I went back to Mufi’s and he was ecstatic.

“I made $200,000 today!” he exclaimed.

“How’d you do that?” I asked.

“Remember when you took me home, I was totally blind,” he said.

“Yes,” I said. “That’s true. So how’d you make so much money?”

“I called my investor and made investments. He told me ‘read this, read that’ but I couldn’t even see. So I just invested.”

“The moral?” I asked.

“Don’t look.” he said.

I added, “And stay out of the way.”

***

BY MARQUEL: ODE TO MONKEYS