Wall Street's booming "bare" market

FROM A READER COMES a Reuters report of the indictments Wednesday of 17 people charged with running a "high-end prostitution ring that catered to Wall Street clients." The customers reportedly spent as much as $10,000 a night. Despite the downside of the economy, the ring was prospering, said Brooklyn District Attorney Charles Hynes. "The business of high-end prostitution is enormously profitable," he said, adding that clients often spent more than $10,000 in a single night.

And why not? The ring was called High Class NY and like some pharmacies and supermarkets was open for business 24 hours a day, which was quite considerate of clients who had to stay at the office after hours to help pay for their mischief. Fees ranged from $400 to $3,600 an hour for the ring's services. Hynes called the Wall Street clientele "all high-end customers coming from the financial markets. People with nothing but money." Still, we have to wonder about how the $3,600 sex investors figured to write off their high-end action as therapeutic business expenses.

A Wall Street bonus for Kasich?

CONSIDERING how proud Ohio's Wall Street-tutored governor, John Kasich, is of his proposed budget - particularly as it provides safe haven for the wealthiest Ohioans - it wouldn't be surprising if Goldman Sachs or Bank of America gives him one of their whopping bonuses.

How the wealthy try to dwarf a party

WITH ALL OF the awful news about how slowly the economy is recovering, I decided to check out some purchases to release some of my own pent-up frustration. Besides, as you probably have heard, now's the time for all good patriots to buy - anything.

An ad for a luxury condo on the 76th floor of a new high-rise in Manhattan strained my budget with a price of $16.8 million but it did offer such amenities as a second bathroom, health club, newspaper delivery at your door, running water and a superb view of the bus stop on the next block. The broker also offered immediate financing with monthly payments of not quite $18,000. But when I arrived at the place, there was a line nearly two blocks long of men in black suits and wingtip shoes, many of whom were grumbling about President Obama's unwarranted tax policies that punished the wealthiest Americans. "Wherever he was born did they think money grows on trees?" one of them huffed as he tried to slip ahead of 10 other potential buyers.

Figuring I had no chance in that puffed-up crowd of hedge funders, I decided to switch my cash to something I had always wanted - a Rolls Royce Corniche that was advertised in the Wall Street Journal for a limited time offer of $380,000. But by the time I found the show room, the convertible had been sold. "Sorry, fella," the dealer said, feigning a Rolls dealer's sympathy. "I could have sold a dozen Corniches in the past hour. You gotta be quick when you're reaching for your wallet against the Wall Street guys. A lot of these folks are looking for a dependable family car these days."

OK. I was disappointed, so it was time for Plan C. I had an eye on a spiffy Hargrave Custom Yacht after my last bonus and found one for $9.6 million. Again, too late. The dealer said he could have sold blah, blah blah.

Being of sound mind, I decided not to imitate the Morgan Stanley Trader (since fired, reports the New York Times) ) who tried to hire a dwarf for an ugly bachelor party stunt! Those guys on millionaires row are really a kick, wouldn't you say? But to be fair about it, they did want to create a job for a dwarf, no matter the cost.

On the way home I stopped at my favorite drive-in for a hamburger and fries, then drove off to a garage to have the mysterious rattle in my 18-year-old station wagon checked out. It was nothing more than something called auto arthritis, I was told.

The simple moral of all of this comes from the genius who first said that the rich are different from the rest of us because they have more money. The only thing we can add to that in today's political climate is that the very, very rich now have friends in congress to protect their need to own a Corniche or two and hire a dwarf. For ego therapy, of course.

A derivative is a derivative is a derivative

THE SUBJECT OF today's lecture, class, is the United States of Wall Street, in which we will explore the nature of, um, derivatives. Inasmuch as I don't have any idea of what I am talking about, I feel quite qualified in dealing with the subject. That is also true, I fear, of everyone in America except corrupt Wall Streeters and their lobbyists who are in the game solely for huge profits.

Wall Street, you should know, is the metaphor for tall luxurious office-like townhouses in lower Manhattan whose shadows so darken the street at the base of the ravine below that it would lead one to walk through the wrong door on an otherwise sunny day. Worse yet, few people, except those who have studied the ways of the Medici, Midas, Louis XVI and Shylock, are documented to entered the thick carpeted offices somewhere up the elevators. Wall Street loves shadowy mysteries as purposefully complicated as Rubik's Cube.

But we were going to talk about derivatives, weren't we? My pocket dictionary tells me that it is a "financial instrument" and it is really nobody's business how, say, Goldman Sachs, got away with making huge profits from gypping other people by "'betting" with the house odds in its favor while armies of unsuspecting investors lost everything in the rigged transactions that guarantee the sellers risk-free profits.

When I asked a banker to amplify the definition, he told me to "hush", adding that not even he fully understood how derivatives worked because like everything else these days, they were created in a remote province of China. "All you have to know," he said, "is when to buy long and when to buy short," which added nothing to my understanding of investment banking.

One of the problems as information tumbles out of Goldman is that so much of the vocabulary appears to be coded, as with a military invasion disguised with words to confuse the enemy. For example, you can go the "vanilla route," or the "exotic" route in your in investments (don't hold me to this!) or lean on someone who professes expertise in "structured product trading". After awhile, you may find yourself looking for MBA partners in a penny ante game with their hands always on the table.

There was a time when a lot more of us understood insider trading, which was nothing more than a broker with advance knowledge of a trade could...well, whatever he could do, to exploit the market.

Not anymore. With billions of dollars floating around in easy profits in those cash machines high above Wall Street, you need to know no more than the shortest distance from one trade to the next. Derivatives come in quite handy, but for the life of me, I don't know how.

There, now, has anything in today's lecture been helpful to you? A confession: I was going to mention hedge funds, but couldn't find anyone who could give me a hint.

Banks and Wall St: Reach for your piggy banks

THE CLOSING DAYS of the year have prompted financial advisors to call me for a "review" of our inertial investments. They, of course, wanted to lead me in a positive direction with cheery "maybe-we-can-upgrade" them . To what? I asked with a snarl, as if I hadn't heard it all before. Besides, how is one to react after all of the things that have gone into the tank for people like you and me with the experts in charge of our accounts.

I've also been getting written notices advising me of all of the changes taking place in the accounts in the new year. One of them from my bank folds out to nearly 19 inches of tiny print, which should immediately prepare you for the worst. To assist the confused reader, it should have at least been bundled with CliffsNotes. In bold face it declares:

"PLEASE READ THIS NOTICE OF CHANGE IN TERMS ("Notice") AND RETAIN THIS DOCUMENT FOR YOUR RECORDS."

Their odd insertion of a lower case "notice" was fair warning that it was written by the same kind of person who once sent me impenetrable Air Force orders with jargon that I never fully understood other than I had to report to such- and-such base at such-and-such time.

I did notice that the term "Credit Card" appeared more often than "savings account", which was comforting in that they weren't looking to me to help pay for Wall Street bonuses under their concept of the blessed free enterprise system. But I did take a stab at one of the paragraphs:

Finance Charges: If not already the case, your APR will be a variable rate calculated by adding 21.74% to the value of an index and will have a minimum and maximum of 24.99% . As of October 1, 2009 the APR is 24.99%. As of July 1, 2010, the maximum amount (cap) will be removed.

You could stop trying to decode the bank's 19" directive right there. What they want you to know in layman's terms is that the interest rate on your credit card is going up. And up. And up.

At the same time, the interest paid to me on my savings account and CDs is virtually invisible.

I also have been hearing from the folks who handle a portion of my securities . They sent me a flier that was reassuring. It said things like:

The team of financial advisors...strives to maintain current records of your investment experience and objectives. To this end please provide your...advisory team with any information that might assist them in determining your risk tolerance, financial circumstances and investment objectives.

Investment objectives?

When an advisor called me I told him explicitly what my investment objective was for my last remaining fail-safe mutual fund that has been mired in red ink for more than two years.

"SELL IT!" I barked.

"When?"

"As we speak".

"But..."

"As we speak!"

I had been telling my experts for more than two years that Wall Street couldn't care less about the little guys in the market. The big guys have proved it time and again that your money and mine was strictly a way for them to pocket the profits.

As Arianna Huffington wrote the other day:

The big banks on Wall Street, propped up by taxpayer money and government guarantees, had a record year, making record profits while returning to the highly leverage activities that brought our ecoomy to the brink of disaster. In a slap in the face of taxpayers, they have also cut back on the money they are lending....But since April, the Big Four banks - JP Morgan/Chase, Citibank, Bank of America and ells Fargo - all of which took billions in taxpayer money, have cut lending to buinesses by $100 billion."

The check for the sale of the my mutual fund arrived a couple of days ago. Against the advice of any financial advisor, I stuck it into the purgatory of a savings account. At least I know it will be safe there. How's that for a financial objective?

.