Is Greed Still Going to Save the USA?
Friday, December 5, 2008 | Ethan RobertsRating:
Several years ago, I awoke about 5 AM on the Friday after Thanksgiving, and coffee in hand, drove over to my local Wal-Mart (WMT) to try to scoop up some "Black Friday" Christmas bargains. But upon my arrival, and much to my chagrin, there were already hundreds of people lined up outside the store, huge trucks unloading boxes of electronics, and a couple of dozen cars dashing madly through the parking lot in search of a spot that was not to be found. I quickly became one of those circling the area.I finally secured a spot a good distance away, and as I walked toward the store, I came close to being run over at least twice. I thought to myself, "This is crazy, someone is going to get killed in this parking lot, and there is virtually no security to be found". When I reached the store and I saw the never ending lines and carnival like atmosphere, I turned around and headed back to my car, determined never to fall prey to the post-Thanksgiving madness again.
I have kept to that oath to this day. However, last Friday I was reminded of my concerns, with the story about the temporary Wal-Mart employee, 34-year-old Jdimytai Damour, who was trampled to death by a mob of 2,000 people trying to be the first ones into the Valley Stream, New York store.
In addition to feeling awful for the man and his family, this hit home particularly hard for me, as I grew up and spent the first 30 years of my life living in that very same Long Island town. In my youth, that area didn't even have a Wal-Mart store, but even then I witnessed the same mob mentality with the so called "gas shortage" of the early 1970s. Corporate greed and citizens stealing gasoline from each others' cars in the middle of the night were the stories of the day.
In addition to the employee who died, four shoppers, including a woman who is eight months pregnant, were injured. Even police officers who arrived to perform CPR on Mr. Damour, were stepped on by people trying to push their way inside. When the shoppers were told they would have to leave because an employee had been killed, they refused, asserting that they had been waiting on line all morning!
A spokesperson for the county police said that Wal-Mart did not have enough security control, a charge that Wal Mart executives have since denied. I don't know about you, but personally I believe the policeman's word over Wal-Mart's denial on this incident. Mr. Damour's family has now filed a wrongful death lawsuit against Wal-Mart, stating that they failed to provide adequate security, and that store ads offering deep discounts "created an atmosphere of competition and anxiety" that led to "crowd craze."
One store employee summed it up best. He said, "How could you take a man's life to save $20 on a TV?"
Wal-Mart mob, minutes before breaking down the doors and trampling a Wal-Mart temporary employee to death
Okay, we can all agree this is a tragic story, but what does it have to do with finances, and why should I detail this for The Tycoon Report?
I'm writing about this today because I see it as indicative of a pervasive greed that has taken hold of our society, one that has existed for many years, but now appears to be shaking the very core of our country and our future. The greed starts at the top, with crooked, self-serving politicians from both major political parties, continues on with corporations that put earnings ahead of personal safety and customer service, and trickles down to Average Joe and Betty, who turn into savages in the middle of a mad crowd, just to save a buck or two.
Wikipedia defines greed as:
"The selfish desire for the pursuit of money, wealth, power, food, or other possessions, especially when this denies the same goods to others. It is generally considered a vice, and is one of the seven deadly sins in Catholicism."
So greed is obviously a very strong force. But in 2008, greed has met its match, in the form of desperation. A corporate climate desperate to save itself with midnight madness and early morning blow-out sales, is doing battle with a consumer who, after shouldering the burdens of excessive debt, never ending taxes, and high food and energy prices, is desperate to try to save a few hundred bucks on gifts this Christmas.
And then there are the sharpies, prowling the stores at 2 AM to buy electronic gadgets for $300 that they can resell on eBay for $500. Think of them as the seasoning to the desperation-greed stew that has already been simmering for some time.
In the 1987 movie Wall Street, Gordon Gekko, played by Michael Douglas, addresses the issue of greed with the stockholders of Teldar Paper, a company he is trying to take over, telling them:
"The point is, ladies and gentlemen, that greed...for lack of a better word - is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed in all of its forms - greed for life, for money, for love, knowledge - has marked the upward surge of mankind.
And greed - you mark my words - will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
And greed - you mark my words - will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
Michael Douglas addresses the Teldar stockholders in "Wall Street"
But greed is now bringing down the American economy, as we hear the sordid details of the sub-prime "payola" era leaking out, along with daily tales of excessive consumer debt from Average Joe and Betty, who must have now what they really can't afford.
Now while we are on the subject of greed, let's not forget those little gray men in their little gray suits, kneeling before Congress for a hand out to keep their auto companies running on three sputtering cylinders. Of course, Congress was doing its best to act tough, even though a bailout deal for the Big Three is virtually already a fait accompli. I particularly liked the part where the righteous congressman asked for a show of hands of those CEOs who did not intend to fly back home on their private jet. Perhaps he expected the leaders of three of the largest companies in the world to travel to and from Washington on the Greyhound bus!
Congressional plan for how the big three auto manufacturers can cut travel expenses to once again become solvent
As you know, there is an old saying on Wall Street, that bulls and bears can make money, but "pigs (i.e. greedy persons) get slaughtered." Think about the last time you tried to get greedy on a stock trade, and whether or not it worked out for you. I know that most every time I try to get greedy, my trade moves the other way on me.
In the real estate world, I have seen many buyers and sellers try to be greedy, but neither side benefits. These buyers make unrealistic low ball offers that simply irritate the seller and destroy any chance of a transaction, while some sellers direct their agent to list their property at an unrealistic high price, then blame the agent when the home doesn't sell. In fairness, I should point out that some realtors will purposely advise a seller to list high in order to secure the listing. Then when the home doesn't sell, they blame the slow market and convince the seller to drop the price to where they should have started originally! So it rarely pays to be greedy.
But in both real estate and the stock market, savvy investors can take advantage of the greed of others. When stocks ran up to unsustainable levels in 2000 and 2007, smart investors shorted the general market, or particular sectors or stocks that showed signs of topping out. In real estate, smart investors and owner occupants are scooping up foreclosure bargains at a pretty fast clip right now, benefiting from prices that are far below the general market, and well below the prices from the greedy excesses of the 2004-2006 sub prime era.
In the real estate world, I have seen many buyers and sellers try to be greedy, but neither side benefits. These buyers make unrealistic low ball offers that simply irritate the seller and destroy any chance of a transaction, while some sellers direct their agent to list their property at an unrealistic high price, then blame the agent when the home doesn't sell. In fairness, I should point out that some realtors will purposely advise a seller to list high in order to secure the listing. Then when the home doesn't sell, they blame the slow market and convince the seller to drop the price to where they should have started originally! So it rarely pays to be greedy.
But in both real estate and the stock market, savvy investors can take advantage of the greed of others. When stocks ran up to unsustainable levels in 2000 and 2007, smart investors shorted the general market, or particular sectors or stocks that showed signs of topping out. In real estate, smart investors and owner occupants are scooping up foreclosure bargains at a pretty fast clip right now, benefiting from prices that are far below the general market, and well below the prices from the greedy excesses of the 2004-2006 sub prime era.
So Mr. Gekko, I now pose this question to you:
Is greed still going to save the USA, or could it possibly destroy this country's economic system?
Is greed still going to save the USA, or could it possibly destroy this country's economic system?
What do the Tycoon readers think? Let me hear from you!
See you next week!
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Ethan Roberts
Contributing Editor
The Tycoon Report
