IN MY OPINION - MARK WASHBURN
Charlotte Observer 4/16/08
Those with advanced degrees in global economics can just skip this and move on to the funny pages.
This is strictly for people who don't understand high finance and desire a cogent explanation for the recent unpleasantness affecting one of our bedrock businesses -- banking.
All the bulging foreheads are gone? Good. Now, just between us morons, here's what's what.
Q. Explain the monetary system.
Simple. It's called the "Big Wheel of Capital." Banks take your money. They lend some of it out. People pay interest. That gives banks more money. They lend more money to more people. That gives banks even more money. They take that money, call it a performance bonus, and give it to the bank's big wheels.
Q. What is the dynamic of our banks?
For years, the soundtrack of Charlotte banking has been that gobble-gobble-gobble of PacMan. Our guys snarfed up other banks. That means they showed growth. That meant people with advanced degrees in global economics bought their stocks. Stocks went up. Everyone was delirious.
Q. What's the soundtrack of Charlotte banking now?
That kerronk-kerronk of PacMan ghosts. It's actually the theme song for a bank Wachovia acquired in California named Fool's Gold West.
Q. Why was that a bad idea?
People with advanced degrees in global economics didn't notice it at first, but the housing market in California was out of control. Turns out, Fool's Gold had been loaning people like $600,000 a pop so they could afford a tent in the woods. When the tents collapsed, it turned out they weren't worth that much because under the law of emerging market economics, most people had taken to living under highway bridges.
Q. What will Wachovia do?
It will follow strict industry protocol -- lay off hundreds, then throw a fancy golf tournament.
Q. What about the recession?
There is no recession. Recession is a technical term meaning the economy shows negative growth for two consecutive quarters under a Democratic president.
Q. So the economy's good?
Excellent. Ask anybody. While the bottom has dropped out of a few minor industries -- airlines, auto-making, banking, housing, retail, newspapers, dry goods, wet goods, soggy goods and "American Idol" talent -- other key sectors of the economy are showing stunning growth, like Internet manly-man potions, bankruptcy filings and Bobcat ticket prices.
Q. Are there international implications?
Sure. People willing to cross borders clandestinely in search of better earnings will go back to Mexico.
Q. Is the situation at Wachovia serious?
Desperate. In fact, word on Tryon Street is that customers who walk in to deposit a mason jar of change will no longer be treated like puss-oozing carriers of plague.
Q. Surely there must be some good news for Wachovia.
Absolutely. Come Monday, quarterly results are due from Bank of America.
IN MY OPINION Mark Washburn
