If you want to plumb the depths of true confusion, try talking to a money maven these days. Most of the know-it-all financial types are walking around with a sort of bug-eyed, where-am-I look on their faces. And frankly, I derive a certain pleasure from their confusion.
I talked to one guy the other day who always is ready with a “can’t miss” stock tip, and asked him, “What are you recommending?”
There was a short pause, then he said, “A new Italian restaurant on 10th Street.”
“That’s it?” I demanded.
“There’s a neat resort in Zihuatanejo. I’m recommending that as well.”
“The market,” I persisted. “I’m looking for something to buy.”
He mumbled something incoherent before he hung up on me, but I got the message.
Ask the money guys what they’re so worried about and you get an assortment of responses. “Brazil’s going down the drain any moment now,” one will blurt.
“Russia has me scared,” says another. “The Asian flu is worse than I imagined,” according to a third weighty analysis.
And these are the geniuses who’ve been running our financial lives! These were the guys who beat us up because our quarterly earnings are up only 7% instead of 12%! They’ve just discovered that the Russian economy is volatile and that the Asian banking system is a mess. Now those are what I call revelations! No wonder junior partners at Goldman Sachs may be cut down to a mere $ 5 million a year.
It’s getting to be dangerous to write or talk about the financial markets these days. Time magazine last week ran a cover that asked, “Is the Boom Over?” and it showed a bunch of little guys falling off a downward curve. The day the magazine hit the streets, the market rebounded 380 points. The same day, Business Week’s headline read, “Global Crisis: Time to Act.” Its recommendations were a little scary, however. “Stick to strong companies,” one article advised. “Hunt for bargains in Japan,” said another. But then the accompanying piece warned that “Banks, high tech and blue chip manufacturers in Asia are being swept away by a wave of pessimism.” Now, that’s an incentive to invest!
The money guys who run the entertainment industry aren’t exhibiting what you’d call bullish tendencies either. Though no one likes to talk about it, most companies are cutting overall budgetary allocations for movies. That means fewer movies and fewer $ 100 million special effects extravaganzas.
More important, they’re also assiduously spreading the risk on those movies that they decide to make. Producing a movie these days is more about passing the hat than assembling the package. Suddenly the most popular people on any lot are the guys who can advance you a few million bucks against distribution rights in Europe or Asia – the very same people who were snubbed only a couple of years ago.
“For the first time I can remember, most of the ‘owners’ really hate the movie business,” said the production chief of one major studio who, understandably, did not wish to be identified. “That negativity penetrates down to the filmmakers, and that’s not good.”
The owners of the TV networks aren’t any more upbeat.
The biggest guessing game in network television concerns who is going to sell what to whom. Will the CBS network be spun off or will Barry Diller buy it at a garage sale? We keep hearing about layoffs and cutbacks. The only things constantly being upsized are the ratings of live wrestling on cable.
The good news about economic cycles is that they periodically teach the financial mavens a little humility. The Masters of the Universe must re-learn the limits of their mastery. I’m certain none of this makes the people in Brazil , Russia or Asia any happier, but it provides me with considerable solace.
Meanwhile, I plan to try both that new restaurant on 10th Street and the neat resort in Zihuatanejo.