Credit Market Blues

So I am an investment banker during the day (bluesman at night). The day job has been pretty hair-raising over the past couple of weeks. This week has been particularly eventful. We opened with a 778 drop in the Dow when Congress turned down the bailout and we ended with another 158 point drop today - the worst week for the stock market in seven years. I spoke with a lender today and he said "it feels like Monday happened a year ago." Yes -- events are flying fast and furious and the space/time continuum has been disturbed. GE 's short term debt is priced to yield 10%. AIG is in the crapper. Lehman is gone, WaMu is gone, Wachovia is going.

This situation was over ten years in the making. Two core truths were forgotten: (1) Living outside of your means leads to disaster, eventually and (2) If the credit is bad, no amount of mathematic manipulation can make it good. Fulminating about greed and lax oversight is satsifying, but misses the heart of the problem. Lots of good intentions, small errors and moral failures created a firestorm. It will take a couple of years to flush this from the body of our economy. Yup, I am an optimist - just a 24 month decline and recession.

One of my fellow daytime businessmen/nightime harmonica playas just got the news that he will have more time to practice his instument - his employer laid him off. CKM is a bright young guy, an internet marketing professional, he will land on his feet eventually. There are hundreds of bankers treading the bricks; hundreds more will join them. It ain't going to be pretty.

My little firm is sailing along - the dislocation creates opportunities for small fry like us. I can't say how long we will continue to experience good fortune, though...