Shoes without Soul

Phil Spektor’s wife misses the sex because of her husband’s incarceration while the rest of America is getting screwed? Whadyathink about Countrywide Financial CEO Angelo Mozilo’s getting sued by the Securities and Exchange Commission for civil fraud in connection with his alleged “deliberately misleading investors about the significant credit risks being taken in efforts to build and maintain the company’s market share”?

Private internal memos circulating suggest he had already labeled the subprime mortgage market that represented the backbone of his company’s growth as “poison” and “toxic,” while touting his stock to the world (it is now a part of the Bank of America). There were a few other executives named in that suit. Is a criminal prosecution in the cards as well? Mr. Mozilo had quite a reputation as a well-tanned clothes horse… but will there be another wardrobe choice in his future?

With unemployment numbers rising (to 9.4% of basic unemployment, over 17% if you take into consideration those who want jobs but have either stopped looking or can only get occasional or part-time work) – albeit at a slower pace – Americans are both frustrated and angry at the unregulated business moguls who took advantage of a nation’s leaders who conveniently chose to let business pretty much regulate itself and looked the other way as they cut corners. Bernie Madoff is the poster-child for a laissez-faire government that allowed hog-slop-motivated-money-gorgers create sophisticated and complex structures that the overwhelming majority of Americans could never understand but were built on the backs of completely unregulated economic madness accelerated by both bad credit ratings and a system that created almost unlimited money to borrow to feed the monster we call our “recession.”

People are finding cheer in unemployment statistics? We’re still losing jobs and will lose a pile more… but we’re not losing quite as fast as some feared. Wow, sure makes me grin, ear to ear… the thought of double digit unemployment through most if not all of 2010. And that credit freeze that was supposed to be thawing… well if you are seeing that thaw anywhere, please let me know. If you want to buy a car or a house below $500K, you might score or if you are a big corporation, you might be able to “float some debt” out there… but the rest of it still seems to be a distant dream.

There are still lots of shoes yet to fall… beyond what we’ve seen to date… more credit default swap issues (loan default insurance, in effect), credit card delinquencies and the very questionable future of the commercial real estate market, to name three. The June 5^th theDeal.com: “If a new Moody's Investors Service report is to be trusted, don't believe the hype when it comes to predictions that the worst is over for the banks. The rating agency released [June 4^th] a report predicting roughly another ‘$470 billion in [pretax] of loan and security losses and write-downs in 2009 and 2010.’” Moody says it could even go higher, to $640 billion, in 2010. Hmmm, that doesn’t augur particularly will for unthawing the credit markets. And still we see that stock market ebb and flow on the daily news. What are they drinking or… well… you know.

Unfortunately, the trend lines are still pointing down. Consumer confidence may be rising based on statistical polls, but the plain fact is that consumers are still postponing any purchase that they can. Oil prices are rising, not because we are a carefree American society driving everywhere, but because of a general anticipation of global demand, the instability of the dollar and the reentry of speculators who are betting more on commodities than currencies. And then there’s all that “other stuff” noted above.

We’re not getting out of this mess anytime soon, and so learning how to cope in a world of less as the dollar continues to sink appear to be the “new skill for the future”… assuming you get around the job thang and the credit thang and the “what happened to my retire account and house value” thang.

I’m Peter Dekom, and I have this “seasick” feeling again.