The Financial Axis of Evil, Past and Present

The financial industry has unwittingly accepted the baton as the most wretched of sorts. Let us review the recent bearers of this ignominious torch:

Microsoft (MSFT) [1995-2000]

Gates and Co. had vanquished, destroyed, and humiliated all comers. Remember Netscape? Remember RedHat? Microsoft became synonymous with the term 'monopoly,' rivaling the post Civil-War empires of Ma Bell, Rockefeller's Standard Oil, and Carnegie's U.S. Steel. The clamor to break up the juggernaut came to a crescendo with both the U.S. Government and the European Union investigating methods with which to break up the software company. Redmond was the ubiquitous purveyor of personal computing, while Apple (AAPL) was in shambles. We were all indeed, PCs.

Wal*Mart (WMT) [2000-2005]

The collapse of the technology bubble distracted our attention from Microsoft and set our sights firmly upon this Bentonville, AR retailer. Wal*Mart became a caricature of greed - a dowdy big-box establishment intent upon crushing unions and neighborhood mom and pop stores. Due to the backlash, WMT was unable to gain traction within the city limits of larger Northern City Centers. Payroll legislation was enacted explicitly to repel Wal*Mart from gaining a foothold amidst these areas.

Abroad, Wal*Mart embodied reckless American capitalism and uncouth manner. In fact, Wal*Mart was to abandon ship - relinquishing control of all superstores within Germany. WMT sought to reform its image with an ill-fated advertising campaign intended to thwart Target (TGT) [Tahr-Zshay], the Minneapolis leader of the 'cheap chic' movement.

ExxonMobil (XOM) [2005-2008]

As energy costs continued to skyrocket, Big Oil became our next scapegoat and whipping boy. While the consumer began to falter under the weight of $3, then $4 gasoline, ExxonMobil was setting profitability records at a blistering pace. The statistics were indeed staggering: $41 billion of 2007 net income, $500 billion market capitalization, and 2008 Q2 record profits of $11.68 billion.

Citizens were forced to reconcile images of a Gulf Coast battered with a one-two punch of Hurricanes Ivan and Katrina with an industry riding the storm surge of astronomical oil prices. Americans were forced to acknowledge a boom time energy era that was to line the pockets of an unpopular Bush-Cheney administration at home, along with Middle Eastern, Russian, and Venezuelan adversaries abroad.

The outrage consumed all constituents this side of Texas: lawmakers, financiers, and Joe Six-Pack were all calling for blood. Big Oil executives were summoned to Washington to be exposed as swashbuckling cowboys, hellbent upon gouging the hapless consumer. The parade was to disintegrate into a fiasco of finger pointing, and ExxonMobil emerged as the all-too-convenient bane of everything wholesome.

Bank X [2008-Present]

Today, there is a new Sheriff in town. All banks are equally guilty in this Scarlet Letter Witch Hunt: investment banks, commercial banks, insurers, money mangers, and municipalities have been shunned as ramshackle casino operators. The fate and status of the entire financial system is being called into question as a fluffy paradigm resting upon a house of cards foundation of cheap credit.

Banker X masterminded the deal, hoarding cash, suckering Americans into exotic mortgages, repackaging these toxic instruments into ornate investments, and selling them off to all takers. Sniveling Banker X collected fees all the while and indeed guffawed back home to the bank - while honest, able-bodied Americans faced foreclosure and eviction.

Now, the high and mighty Bank X is on the verge of collapse, largely behind policy of its own doing and unapologetically seeks a $700 billion bailout from the Federal government and the loyal taxpayer.

The original proposal was flogged on Main Street and stalled in the House of Representatives. 'Good' had officially prevailed over 'Evil.'

That is, until Mr. Good opened up his 401(k) statement...

Stock position: MSFT - None; WMT - None; XOM - Long.

Comments

[rogerk2:]

If the American public really believed in capitalism, we'd cheer XOM's profits. Making big money is "the American Way."

Unfortunately, most Americans are closet socialists - share the wealth, regulate to keep prices artificially low, provide free education, pay for my old age, etc.

That's why we can't seem to get our political system to function efficiently. We keep sending mixed messages about what's important ... protect me from getting screwed (socialism), but give me freedom to screw somebody else (capitalism).

2008 Oct 15 07:01 PM