Hurricane Erin blows for Wall Street

Ed the Editor's personal blog corner

Yesterday, "Hurricane" Erin, the first major weather system of the year, was heading for US shores with a vengeance. Holiday makers and airport managers in the gulf were crapping themselves, their nervous fingers on the trigger, ready to beat a hasty retreat to safety. At the other end of the gene pool, speculators had their fingers on the Buy Buy Buy trigger, ready to take advantage of the potential gloom for oil producers, airlines and houses in the line of fire. But how the mighty are fallen.

Erin, a synonym for Wall Street in more ways than one (it was named after CNBC Business Channel beauty, Erin Burnett) has been downgraded from a storm in a teacup to a depression. As you can see, the meteorological news has created plenty of irrational and depressing behavior from speculators betting on the wind, but the mind boggles at what is coming next. What will the so-say savvy folks on Wall Street dream up as solution (or do I mean knee jerk reaction?) to the credit crunch storm.

As financial institutions run by suicidal managers melt before his eyes, the following dreamy observation came from analyst Rick Rantelli. (Judging by the state of his eyes this morning, he was on the wrong end of three rounds with Warren "Iron Mike" Buffet.)

Traders were expecting to recoup recent credit crunch losses by trading on the misery of flight delays and wanton destruction in the Gulf. Now look at them. They are screwed and can't off-load their stocks quickly enough.

When pressed on a strategy to limit losses, he ranted.

Baby and bath-water are two economic terms that spring to mind here, folks. This disaster is an opportunity for buyers with cash. Oh, wait, no one has any cash and we can't get a loan either. As you were.

Joey Smugman, an Australian-born trader who had the foresight to flee to cash when the Dow Jones stood at a record 14000, was quoted as follows.

Hedge funds and financial wizards have been squirreling away billions in profits for years, and burning the trail to where their risk has been parked. Shame that when it matters most, they can't quite put their finger on where their liabilities are right now, but never mind, I'm alright.

When pressed on that callous remark, he raised his pint of beer and replied,

Cheers. Can you hear that? It is the sound of hedge fund managers unraveling and screaming, Houston, New York, London Tokyo, we have a liquidity problem. But I'm OK, I'm rolling in cash. When I'm not drinking amber nectar for 2 devalued dollars a pint, I'm telling my broker to Buy Buy Buy financials. Making money is like falling off a log now.

His answer to the pending housing crisis was equally harsh.

Hey, if you think it is a crisis when banks stop lending money to people who can't afford it, then shoot me.

He then put 20% down on the bar and secured a line of 12 beers on credit.

See, the only crisis here is i don't think I can stay conscious enough to finish those drinks.

Meanwhile millions of financially unsavvy homeowners and holiday makers breathe a sigh of relief, un-batten the hatches, and get back to an honest day's work and play, living on credit they can't service! On the floors of stock exchanges worldwide, the traders get crunched; rain cloud Erin gets the credit for a sudden surge in umbrella sales in Houston; and the real Erin's colleague Mark Haines leaves us with hot tip to ride the mortgage problems - buy buy buy tent stocks. Funny old world.