Winter 2008
Life without a job was surprisingly agreeable. After the burnout pace of banking, it gave me time to just lounge around the apartment and catch up reading. My severance package paid the rent, since my lease wasn’t up for two more months, and I had a sizable sum sitting in my investment portfolio in cash and gold contracts. The Peter Schiff video had a profound impact on me, and shortly after seeing it, I decided to let all my options mature and closed out any long equity positions I held. The market’s last leg of gains was painful to watch with my money sitting on the sidelines, being slowly eroded away by inflation. It took almost a year, but when the market finally began its descent, my faith in the Austrian School of economics was validated. You see, the Austrians hold a simple premise, so simple that it often gets lost in the conversation. They simply believe that it isn’t possible to generate economic growth, let alone wealth and prosperity, through interest rate manipulation and currency printing. The idea that policy wonks in DC could fine tune the economy using their levers to eliminate natural business cycles, was ludicrous to the likes of Mises, Rothbard and Hayek. They accurately identified these counter-cyclical policies as the root of the problem rather than the solution. On the contrary, Austrians claimed that entrepreneurship was the key to growth, and when you goosed the stock market with low interest rates, all you did was encourage people to speculate on the financial markets rather than start small businesses. Think about it, if you can generate 15% returns with a few clicks from home, why go through the arduous process of starting your own commercial venture? An equivalent argument applies to existing businesses, since lower rates incentivize financial engineering (stock buybacks, acquisitions, etc.) over innovation (investment in new capital, research and development, etc.).
Anyway, despite having lost my job, I was sitting pretty. Flush with cash and having no shortage of time, I could afford to live like author David Brooks’ bohemian bourgeois, or bobos as he called them. I found myself lazily smoking cigars at the Nat Sherman townhouse, lounging at the Jazz Standard, even catching the L to Brooklyn on occasion to attend poetry slams at Spoken Word. But two months as a Bobo in paradise and I still had no idea what to do next. Austin allowed me to crash at his pad while I sorted things out. I knew I couldn’t follow Jason or Eric to another cubicle, at least not until all other options were exhausted. In a desperate effort to keep the dream alive, I decided to try my hand at currency trading. As I signed up for an account, it occurred to me how great it was that we lived in a time when you could begin trading with inordinate amounts of leverage within 10 minutes, right there from the comfort of your friend’s futon. It was easier than ever to get information on the web and new financial sites were popping up daily. One day while scrounging forums for trade ideas, I stumbled upon a site called Curren$y. They had just started a social trading platform that allowed people to copy trades made by experienced traders and contact other traders to talk shop. I started following what the pros were doing and tried to initiate conversations with the ones that seemed to make the cleverest trades. One of the few guys that responded to my introductory messages was a trader who impressively went short the Euro against the US Dollar near its peak of $1.60 to €1.
I asked him how he called the peak so accurately and he replied, “The exact timing was sheer luck, but you have to follow market sentiment. Don’t get too caught up in the fundamentals. They’re weak across the board. The perception is that Europe is on the verge of recession while the US is better positioned for growth. America is the cleanest dirty shirt in the hamper.”
I was impressed by his simple, counterintuitive response. He eschewed the technical jargon of most of the guys I talked to, preferring simple logic to Bollinger Bands and Fibonacci Retracement. We exchanged messages here and there, and then on October 8th, I woke to some exciting news. The Federal Reserve, European Central Bank, Swiss National Bank, Bank of Canada, Bank of England, and the Swedish Riksbank announced the first ever coordinated policy action in the history of central banking. I logged into Curren$y and saw a brief message from my friend: short USDJPY, meaning sell the dollar to buy yen. For whatever reason, without waiting to discuss with him further, I followed his advice and by the end of the year I almost tripled my money. Again, the explanation when it came, was simple: “When the Central Banks say jump, jump. Japan is fucked, just the same as Europe, US and Canada, but on the way to zero the currencies will dance to the tune of the bankers. Japan was the only major bank to sit out the move… so the trade was obvious.”
In the days immediately following the monumental announcement I realized the greatest benefit of trading currencies was that there are no clear market hours. I calculated that if I lived frugally, I could travel and live abroad for a whole year, just skimming the profits from my modest trading activity. I wouldn’t even cut into the principle, at least not a whole lot. After a couple more weeks of crashing on Austin’s couch, I packed my bags and caught a taxi to JFK. I was headed to the birthplace of Western society, with nary an inkling of the role Greece would play in world events to come.
My stay in Greece, while open ended (as I had booked no return flight), was rather brief. Athens had little to entice me. I had seen many images of the famous sights and didn’t play the role of tourist very well, constantly left unimpressed by the ancient ruins surrounded by throngs of amateur photographers.
The city itself was relatively drab, lacking the Mediterranean flair I’d anticipated. I didn’t linger and made my way to Santorini, only to find it to be occupied by a legion of fat British tourists and their unruly spawn. My first day on the island, I found shelter from the spectacle of beached whales at a bar near Perivolos, where I had a remarkable conversation with a banker from Athens that I can recall clearly to this day. Nursing a gin and ouzo martini in a back corner of the bar, embracing my seclusion, I noticed a man of about fifty walk in with a woman half his age. It seemed they too had little interest in the view and the pair made their way back to my end of the bar where I briefly exchanged a curious glance with the sharply dressed gentleman. He was wearing a tailored white linen suit and espadrilles, and on his arm, well she would be best described as a vixen.
Naturally, they held my attention as their flirtations crescendoed, and eventually he whispered something in her ear, sending her scampering out of the bar. He must have caught me watching her posterior because he laughed and motioned for me to come over. I obligingly made my way over to where he held court.
“She’s quite enchanting, isn’t she?” He asked in his careful, yet accented English.
“Indeed, you’ve done rather well for yourself. She must be half your age.”
Seemingly amused by the bluntness, which was the product of three martinis, he continued the conversation.
“I come here to get away from the city… What brings you here? A foreigner sitting by himself in the back of a bar is unusual in Santorini. There’s not much business to be done here, and you don’t seem to be engaging in any pleasure.”
“Well, to be honest, I didn’t plan on much but Greece hasn’t lived up to expectations. There’s something in the air, you can feel it, a sort of despondence. Just isn’t the vibe I expected. Honestly, I’m just looking forward to getting back to Athens and flying out of here.”
He nodded and replied, “It’s true, Greece has been in decline for some time. There are even those who say it’s been in decline for two millennia,” he gave a full belly laugh, “But people are prone to say anything. Why don’t you take a seat? My girlfriend will be gone a while… she’s, uh, powdering her nose.
That’s the correct phrase to use in polite company, yes?”
I responded as I took an open seat, “Only if she’s doing lines of cocaine, otherwise you just say: gone to use the loo.”
“Then yes, it was the correct use!”
Again he gave a hearty, infectious laugh, lifting my spirits somewhat.
He continued, “You’re not finding your stay in my country to be pleasurable. This is unfortunate. But do you have an idea why there is, such despondency as you call it?”
“Probably your insanely corrupt government and absurd pension benefits. People are just paid to laze their days away. It’s about the only Mediterranean thing about the damn place.”
I selected a response I thought would resonate with my well-heeled company, but instead my cynicism seemed to strike a nerve. Still, he gave a measured response. This was clearly a man who had heard it all.
“Ahh, the famous Greek pensions, a source of much consternation indeed. But we must look at it from a balanced perspective. You see, the Europeans bribe our illustrious politicians to sell out their country, so our politicians too must bribe the people to turn a blind eye, wouldn’t you agree? This is what you call a kickback, is it not?”
I was somewhat stunned by his blasé response, but its logic made sense to me. A people with such a long experience with democracy couldn’t be faulted for playing the game well. They just demanded fair compensation in return for handing over their sovereignty. We chatted for a while longer, until his lady friend reappeared and the conversation shifted. He returned his attention to her giving me the opportunity to take my leave.
Soon I was back in Athens and from there, carrying a little more patience for the third estate, I was off to Budapest to resume my aimless wandering.