The Relativity of Money

Summer weather has arrived in the San Francisco Bay Area.  And my pool is still a deep shade of green.  Just don’t tell the boys at mosquito abatement.  Let’s just keep it our little secret.  Some years I’m good about keeping the chemical balance somewhat in line during the winter months.  Other years the “cee-ment pond” as Jed Clampett used to call his pool, actually looks like a pond; the only thing missing is a few lily pads.  After many springs of spending a small fortune in chemicals, not to mention the hours involved in getting out the green, one would think that I’ve learned the value of a little winter maintenance.  I haven’t heeded the financial lesson. 


 

It seems that when it comes to failing to learn from a financial flub I have some distinguished company in one Jamie Dimon, CEO of the nation’s largest bank J.P. Morgan Chase.  The financial giant lost 2 to 3 billion dollars on a stock trade gone bad.  When the trade took a trip south it brought with it a loss of another 14.5 billion in JPM market value.  JPM went gambling in the derivatives market again and lost.  For those with a short memory trading in derivatives is one of the major reasons that we find ourselves in a worldwide financial situation that resembles the green morass in my backyard.  Dabbling in derivatives is why the once proud firm Lehman Brothers went bankrupt and why there was a bank bailout.  Are these people like junkies that they can’t keep from repeating the risky self-destructive behavior that almost destroyed them before?  In a breathtaking bit of understatement Dimon said, “this put’s egg on our face.” 

In my job I recently discovered that 12 container loads of product that I had purchased, authorized production of and was now inbound from China actually was not covered by our customer’s signed purchase order; a serious breach of procedure on my part worth about a quarter of a million dollars not counting freight and potential warehousing costs. It was an uncharacteristic mistake that had my career passing before my eyes and literally made me sick to my stomach.  Luckily the sales department got the customer’s signature and I was able to loosen my sphincter again.

I guess the point here is in the relativity.  The greening of my pool means I’m lighter by a couple hundred bucks but there’s no real financial hardship.  It’s money that doesn’t get put into savings or investment.  Nobody is affected but there are some green eggs (but no ham) on my face when company comes by and sees the backyard bog.  My family is irritated because there’s no aquatic relief during a heat wave.     

Those twelve container loads from China were liable to cause both corporate and personal ripple effects.  It was an investment without a return, warehousing space lost possibly requiring investment in additional space and a few people beyond me being called to the carpet.  It had enough seriousness behind it to possibly put me in the ranks of the unemployed again thus affecting my wife’s upcoming retirement.  It was a pile of money that I have difficulty visualizing.

Jamie Dimon sans facial ovum

And then we come to Dimon and 14 billion dollars.  Fourteen BILLION. BILLION.  That’s one hundred and forty million Franklins.  What holds that many hundies.  A lot of attaché cases?  A big Samsonite?  A steamer trunk?  I’m sure that there’s some sort of equation that can calculate what it would take to hold all that money but it’s beyond my rude mathematical capabilities.  There is no ripple effect here.  It’s waves; big waves, the kind that surfers travel to other continents to ride.  It's potential tsunamis.  That 14 billion had to come out of somebodies’ pockets and we’ve yet to see if there is any effect on worldwide markets as a whole.  Congress, in its relentless quest for headlines and to be involved in almost anything, is talking investigation and there could be some (mere) hand slapping if it comes out that there were improprieties. A head or two could roll.  On the other end there are hedge fund managers who made healthy profits (again amounts beyond my comprehension) betting against JPM. 

There’s also an emotional relativity.  Two hundred dollars in chemicals is an aggravation to me but there are folks who would be in a panic over two hundred dollars lost; it could mean the difference between making the monthly rent or not.  My quarter of a million had me apoplectic but there are those who have no concept of dealing with those numbers on the one hand and Dimon on the other who would see it as a pimple on the corporate ass.  For his part Dimon seemed to be relatively calm about the JPM loss.  That’s either because individuals like Dimon are able to maintain their composure in the midst of an all-out crisis or he can put on a great charade on camera but when off he’s literally shitting his pants and pounding tumblers of Jack Daniels. 

Just for the hell of it I asked my wife what a dozen eggs costs over at Food Max where she shops.  About two dollars she told me or about 17 cents per egg.  As it turns out, Jamie Dimon is going to need a bigger face cloth.  He has 82,352,941,176 eggs on his face.  It’s all relatively inconceivable to me.