Wednesday, January 18, 2006


Way back when, Wall Street folk seemed to possess a more ironic sense of humour. Earnestness was present in reasonable quantities but more subdued. Everything was "lighter" (in the Kundera sense) and even greed was somewhat repressed and viewed as rather uncouth. "Whooops" back then had a very specific meaning referring to the debt obligations of northwestern utility "Washington Power & Light" that suffered under the weight of red ink that resulted from Nuclear plant construction cost overruns. For creditors and equity holders, it was "whhooops", then "oouuchh!!".

Today, the 18th of January, 2006, and the fourth year of substantive recovery in Tokyo bourse share prices, marked a similar "Whooops-Like" historic event: the shuttering of the exchange early, before the close - alledgedly due to errrr ... ummmm .... "indigestion" experienced from a margin-cascade, and consequential volume surge of sell orders and the (cynical one might chime) direction of trade prices. What should observers make of it?

A simple exercise in Monty Python-inspired word association [football] around my office revealed "whooops" to be intricately linked to the humble yellow utilitarian banana peel. The image is both archetypically and comically delicious, and though my sample size was small (me myself & I!), it is even funnier when imagined with John Cleese (as Basil Fawlty) or Rowan Atkinson (as Mr Bean). I am sure visualizing either of them in connection with the slippery yellow fruit skin made you smile too. But why is it we humans find humour in witnessing others' slapstick misfortune? Why does this not only yield a smile, but gives rise to guffaws and even deep roaring belly laughs? We certainly wouldn't find the same humour if an old woman slipped on the same - even if that woman was for example, the very unfunny Margaret Thatcher or "Tipper" Gore.

The answer is that both Cleese and Atkinson have the magical ability to portary a blatant disregard for the obvious that sets up the comical moment. They are caricatures of misplaced self-confidence leading up to the "whoooops" that allows the observer to feel as if they were somehow deserving of it.

But what does this have to do with Japan, Tokyo, and the TSE? For me, the parallels are indeed striking. Investors (if one can actually call them that) have, of late, displayed a blatant and cynical disregard for prudence, value, common sense, and fiduciary responsibility in both their stock selection and their subsequent incessant ramping of such shares to higher and higher prices for no other reason than "they can" and they would (thank you very much) like to "borrow" some incentive fees from their unsuspecting investors. That they have been doing this individually, in collusion, or "en masse", makes little difference to the observer, who sees arrogance and overconfidence setting up the comical situation that makes laughter (peppered with schaudenfraude) and derision the correct and appropriate response to Tokyo's "whooooops".....

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