Betcha thought I was gonna write about Juice, right?
Nah, I think I’ll pass. Too much erudition, from too many sources, for me to contribute much here.
Instead, I’ll give this one out to my chum from school days – Johan (not his real name). Jo and I were pretty tight as kids. We both ultimately landed in the NY Finance Jungle, and continued to share some fabulous innings until – well – until the Great Financial Crisis nearly did him in.
I haven’t heard from him since.
There’s only one way to describe Johan: BIG. When I last encountered him, I’d put his height at about 6- 4 and his weight (to be generous) at a shade under 4 bills. He also possessed a big personality and an outsize ambition. To celebrate his 5th grade graduation, he wrote, directed, produced and (natch) starred in a musical called “Under 12”. He – no lie – escorted the current Mrs. Neil Young (Daryl Hannah) to Senior Prom. In Junior High, he organized dozens of the fellas into a force tasked with drawing martial images – soldiers, motorized vehicles, weapons, munitions – arranged in branch style of Army, Navy, Air Core, designated it his personal armed force, and named himself Commander in Chief.
For reasons I cannot fully articulate (including my inability to render even a recognizable stick figure) I remained a civilian.
As a relatively young age, he formed a mortgage origination company, which, before it ran into trouble (more about this below), became one of the largest such enterprises in the land.
All of which enabled his voracious appetites. I have accompanied him to witness his consumption of a 90 oz. Lugar’s Porterhouse, with all the fixins’. For dessert? The Cheese Plate if you please.
He also loaded up on Real Estate, purchasing a 5-story townhouse on 5th Avenue, located precisely in between the French and Polish Consulates. And then there was the place in the Hamptons (Southampton of course). You know? The one with the elevator?
We remained friends throughout, and, having established myself — albeit on a more modest scale, on Wall Street, we had a common set of acquaintances. As such, I was a frequent guest of his at the many uptight, look-at-those-rich-white-asshole parties he hosted at his East End palace every summer.
The crowd milling around the cee-ment pond was always somewhat stiff, and, having known him for ages, I was quite fond of him. So, each time, I made him the following promises:
1. I won’t be the first one in the pool.
2. If you go in, you won’t be alone.
I wish to state formally that I received no incremental consideration for these pledges. I offered them in the name of love alone, implicitly assuring him that I’d do nothing on my own initiative to embarrass him, but that if he chose to discomfit himself, I’d be his wing man.
But that was all long ago. At some point, Johan saw a big opportunity to convert a magnificent mortgage origination business into a REIT and was thus invested up to the gills in ’08 when the sushi hit the fois gras. His business went, inexorably, tits up. There were a lot of pissed off investors and employees. Lawsuits flew. The regulators came sniffing around.
He kinda went underground after that, and I don’t fault him for doing so. But he has not been heard of – at least by me – since.
T’was another lifetime; much of the world has changed since then. Mortgage underwriting standards, for example, have tightened dramatically. Newly minted fiat currency has overwhelmed the availability of assets against which to deploy it, leading to unthinkable-in-2008 surges in cross asset class valuations.
Perhaps of equal or greater importance, I defy my readers to find anyone that will blindly offer the above-mentioned promises to even their closest friend and/or relation. I certainly would not do so again. Not for five bucks.
Maybe it’s just me, but it seems that our community sharers are more likely to push us into the pool, and then laugh at us as we flounder around in our bedrenched polo shirts and chinos.
On the plus side, the Gallant 500 is an approximate 6 bagger since the Chablis stopped flowing at Casa Johan (East), and home prices have doubled:
There have been 4 occupants of the White House, 3 Fed Chairs and 5 Speakers of the House.
And, as we gaze into our crystal balls, the images are cloudier than they have been in quite a spell. Heck, the FBI Director his-self blithely informed Congress that he is unable to recall a point in his memory where so many contemporaneous threats have hovered over us. That, when one stops to ponder it, is quite a statement, covering a period that traverses the Cold War, the Vietnam era, Watergate, AIDS, 9/11, two Persian Gulf wars, the Great Financial Crisis, the coronavirus, the Jan 6th monkey circus….
And, of course, we can now no longer look to the Juice to guide us.
Meantime, the tape feels somewhat heavy, as investors register their disappointment that the Fed might be sheathing its rate cutting meat axe. I will cop to be triggered here. I know I have gone on and on about this, but whose nutty idea was it that rates should be declining at this juncture? In what universe would this be considered sound monetary policy — what, with solid GDP growth, full employment and stubbornly persistent Inflation?
Probably some of the same folks who believe increasing the deficit by a tril every hundred days is sound fiscal policy is who. Or cancelling student loan debt for millions with the stroke of a pen – in the name of compassion – is who.
I retain a tiny sliver of sympathy for the Fed, which, for the first time in its complex history, is losing money hand over fist:
This is most certainly an impressive result, particularly given that the stated capitalization of the organization is a skinny $43B – implying that last year’s loss equated to more than double the nominal valuation of the entire enterprise.
Of course, the Fed is worth more than 43B; one can call it priceless. But at some point, one can also forgive them for tiring of losing money – particularly given that they possess unlimited mitigants. They can simply lower interest rates, buy their own paper, and paint away these reversals.
I suspect they’ll need to wait a spell before doing so. I nonetheless remain bulled up here but won’t withhold a gnawing concern that maybe the financial chickens are coming home to roost sooner than I expected.
Because, in addition to our frenemies at the Fed, we must attend to the mullahs, who are acting up. Tactically, I believe this is a mistake on their part, as I don’t think that they can improve on the dividends they continue to cash in the aftermath of sending some thugs into Israel to kill hundreds of civilians, and then watch the world reverse the polarity of victim/perpetrator. Like the Fed, I believe that their wiser course would have been to stand pat.
Instead, they are acting in a bafflingly troubling manner. First, they telegraph this big drone attack, ensuring its failure. Then, in the midst of this, they announce that they’re done, that they ain’t gonna lob no more metal at their sworn enemies.
It doesn’t add up, and one can only speculate that they have more tricks under their Taqiyahs.
If they do, well, that will be a problem. But it’s not like we’re not gonna have to settle our obligations at some point. I mean, after all, after Juice did Brown and Goldman but was allowed to walk, a form of retribution awaited him. Approximately a decade later, they got pretty good. Took some of the merch he was storing in a Vegas hotel suite moved it to the next room, shoved a gun in his hand, and said something like “Juice, Juice, the guy next door has your stuff”. Naturally, he went over to get his shit back.
Whereupon they arrested him for armed robbery and sent him up the river for the better part of a decade.
Though less discussed than the murders, it stands as one of the most epic set ups in legal history.
And as for Johan, from what I hear, he waited out his ban from the mortgage industry, started another company, and ran into similar problems when the virus emerged. From all appearance, he’ll continue to spend the lion’s share of his remaining days fighting off lawsuits.
There’s a risk management lesson in all of this, but, as usual, I’ll be dipped in sh!+ if I know what it is.
I will, however, reiterate my unwillingness to either refrain from diving into your pool, or following you in if you go first.
Heck, I won’t even live up to my commitment not to write about the Juice.
Yup, that’s right. It’s sink or swim for all. And, given my withdrawal of the above-designated pledges, if it’s the latter, we’re all on our own.
Sinkro swim, in other words, is, for now, off the table.
TIMSHEL