The current economic crisis (What is it, anyway? A short-term crisis? A long term recession? The start of a major depression? Something even worse? Does any one really know?) has reminded me of American Sucker, David Denby’s account of his stock market woes during the last time we had an economic meltdown.
Like countless other stock market investors, Denby, who writes very fine film reviews for The New Yorker, lost a bundle in the market when the “bubble” began to collapse in March of 2000. It is depressing to read Denby’s account of his experiences during the ensuing period. It is even more so when it is framed against the disintegration of his family after his wife leaves him and he tries to care for their two boys and maintain a home for them. The experience tears him up.
American Sucker is also about the people (Henry Blodgett, Sam Waiskal, etc) who he met during the boom and how they let him down, as well as his obsession with the rising market in spite of all that he knew and all that he had studied about comparable situations. There are passages of insight but there is nothing funny about any of them.
It became a “necessity” of sorts for him to profit from the boom, in order to collect sufficient funds to buy his wife’s share of their West Side apartment. Greed and desire got the better of him and so he hung on when the world around him was collapsing.
He was aware of all that too. He knew what was happening. He knew how to extricate himself. Still he kept making mistakes, kept up the hope for the turnaround that never came. We all did. Hope can be so destructive.
I found it interesting to compare his experience with mine. The boom never became an obsession with me as it had with him. More than anything it was a lot of fun. How could it not be with those daily ten-point jumps in Qualcomm and the morning call each day from my guy on Wall Street?
It became somewhat disappointing as the bottom fell out of the market. But that was only because I, along with most everyone else, had formed unrealistic expectations. They vanished very quickly, mostly because I wasn’t hung up on winning big and had profited more than enough, actually far more than I deserved, if one can speak of making money that way.
Denby is well read. In this book about financial and personal collapse he writes about Aristotle, Veblen, the Greenspan logic, and economic theory. He asks good questions, fundamental ones. He learned from the experience. We all did or think we did.
He is cognizant of the danger of dismissing bad news, how easy it is to become blind to evidence contrary to your own views, or to ignore the tell tale signs of corporate hanky-panky.
And so the bubble burst. It was amusing to recall those days, those heady days that come, if you are lucky, once in a lifetime. The current market collapse is different, of course, more troubling and far more widespread. But again there have been the unrealistic expectations, investor and corporate manipulations, and outrageous acts of executive greed. I am not sure we have learned all that much since the last time the bubble burst.
A few of Denby’s remarks about the experiences he describes in American Sucker follow. Some seem as relevant today as they did nine years ago:
For I had already lost something of incomparable value—not a possession but the center of my life…
Obsession leads not to satisfaction but to more obsession.
The sane approach to life, I told myself, was to find something that you were good at, something that gave you pleasure and was useful to others, and then discover a way to make a decent living out of it.
But if they were bored or stymied, was it any wonder that they devoted themselves to clothes and furniture or household goods or cars and the rest? Consumerism was the displacement of exasperation. You might deplore it, but there was no reason not to regard it with sympathy.
And what hurts most of all is that I knew. I knew about the delusions, the tulpenwoerde, the South Sea disaster. I knew and was convinced that this time it was different….Hope and greed are such commanding emotions that I filtered, censored, and abolished what I didn’t want to hear…I listened again to those I wanted to listen to.
People have now lost a lot of money. They can say I made a mistake, I lost a lot or they can say, Somebody fucked me. It’s much easier to say the latter.
It was a bubble. This is just the way that markets behave and the way people behave.
The system seemed to work, but the precariousness of it stunned me.