The Panhandler

2010-11-15T13:18:00.002-08:00

Don't judge me too harshly. I was born for better things. You see me now after The Crash. But you should have seen me before. It's still hard to accept what has happened; I still find myself trying to impersonate the man I used to be. Those bankers thought they were pretty smart crashing the economy so that they could scarf up the ruins, but I'm smarter: I got in on the crash even before the rest of the country. I got in on the popping of the English real estate bubble in ’06. You may have missed that one. The only difference: I didn't get to scarf anything, I got scarfed.

I used to be middle class, maybe like you. My parents had twenty acres for their home outside of Chicago. I was scrubbed and combed until I was shiny. And I was a happy child, too. I was a king in my own fantasy world. But, as in other tragedies I, though noble and good in every way made a number of wrong decisions at critical moments and with them came downfall and self-realization. How could I have imagined in that idyll in which I saw our nearest neighbor’s big house as a speck in the mute distance the constant yelling, arguing, the filthy execrations that occur outside my window all day in the Tenderloin?

Losing a lot of money is bad, but it’s the realization of all the failings that led to it that’s really hard. Not long ago I had walked down streets in the city and passed people sleeping in doorways, possessions gathered close. They were haggard and dirty and I used to wonder what I would do in that situation. Would I really want to continue like that? What is it that keeps a person going? Only the fear of death? A hopeless, and painful existence lived only because one is afraid of not being any more. I wondered then, and I wonder now, what those folks had done, what mistakes they had made to get themselves into that situation. Were they like me?

Did they think that they were immune from disasters like the ones that they had obviously suffered? Or had they had, like me, presentiments of catastrophe? Just five years ago I’d been safe, or so I thought. It seems like yesterday and like another era. I’d gone away to investigate buying a property in Europe, and I came back to my place in a mansion/hotel in Pacific Heights. It was on the top of a flat roof that had served as my balcony. I had a quiet view stretching over the rooftops of the Marina, from which I could contemplate Angel Island with its flowing atmospheric displays, lonely Alcatraz, and the lights of Sausalito. I could see the Golden Gate Bridge with the same perspective as the richest of San Franciscans. What a place for self-delusion. I felt rich, but I wasn’t rich. Who was I kidding? I lived in a boarding house! Yes, I had a nice view but, as I always said to people, I was independently poor. And I forgot for a while that I had felt drawn to those folks on the street as though I could be one of them some day.

People don’t want to think about these things. We all know how people jumped out of windows in 1929 when they were ruined. And why not? It’s a reasonable response to losing everything you have. I’d heard of a multi-billionaire who killed himself upon losing just one of his billions! A couple of years ago when I realized that I was facing catastrophe I looked down from my lovely view at the ground below I tried to imagine falling, what the parabola of my fall would be, whether I would hit the ground cleanly or glance off of that planter box that seemed to be in the way. That would hurt, and I didn’t want to suffer, I don’t like pain. Would I lose consciousness on the way down? I would hope so. Even if not, I knew that the decision to jump would be the one decision I had made in my life that I would not regret.

WHAT HAPPENED?

It doesn’t take many bad decisions to destroy a small fortune. For me, three bad decisions did it.

Bad Decision Number One was an investment in an overseas project. I had taken a membership in an Internet site called International Living. One feature of the organization was finding places where an investor could put money to work, often by buying into real estate projects that were located in areas that were unexploited but which their “expert” thought showed promise of becoming popular in the near future. He claimed to have had many successes, had organized trips for wealthy folks to go and examine the sites that might become the new French Rivera.

. Their property finder discovered an incredible opportunity in Newcastle-Upon-Tyne which was experiencing a boom like they hadn’t seen since the discovery that coal would burn. A new building was going up and we investors were being given the chance by the builder to participate in the funding of the project by buying apartments for a very small down-payment which, International Living assured us, would be able to be sold even before the completion of the project—so heavy would be the desire to live In this wonderful place.

How could I resist? This wasn’t in one of those obscure places where they speak a language you’ve never heard of. These are people that speak my language and where they have a similar culture (!) How could it go wrong? A tiny deposit practically guaranteed a small profit at the very least, didn’t it?

I soon discovered that though they spoke the same language as me, they didn’t want to speak it very much. I found that the six thousand mile remove inclined them to be quite laconic when they deigned to answer their telephones or email at all, and this especially when the time came to admit that—between the digging the hole for the foundation and placing the final kitchen tile—the bottom had dropped out of the market due to the fact that there were quite a number of similar projects in town, all finishing at roughly the same time.

When the building was finished and it turned out that the buyers were not lining up outside the Estate Agent’s door and the fantasy of selling the units before they were done just on the promise of how wonderful life would be in that building revealed its true nature, the organizers of the project demanded full payment from those of us who had not had the wisdom to back out early.

Well, the deposit was small but for me—remember that I had only a small fortune—the full price that they wanted came very close to everything I had in the world. Though there had been mention of loans in the beginning, they didn’t come to pass and I had to liquidate most of what I had in order to pay these nice folks.

This was a problem. I had been trading stocks successfully for some time but now that I had had to give most of my money to the people in England I could no longer trade stocks. Equities require a reasonable amount of capital that I no longer had. The only answer seemed to be the trading of “futures” which require less capital due to the fact that in the futures market you have a great deal more leverage than you do in the stock market. To buy a stock you need half the value of the stock but in the futures market you can buy a contract on, say, a bushel of corn for a tiny fraction of the value of that bushel. Just as much money can be made from trading futures as you can get with stocks but with a much smaller amount of money in your pocket to begin with. Well, of course leverage works both ways as we all know now from the crisis in the derivatives market, and you can lose high multiples of the money you have in your pocket as well as gain them.

And so we have Bad Decision Number Two.

Now, I had read the disclaimers and I knew that there was a ninety-percent washout rate among people who try to trade futures. But those were other people. That wasn’t me they were talking about. I knew that I could beat the odds. I knew the rewards that awaited the successful futures trader.

My first experiences in scalping the E-mini S&P index futures were very encouraging. I found I could make $500 a day and more very easily. This went on for a couple of weeks. I could hardly believe it.

And I was right not to believe it. I don’t know if it was beginner’s luck or just a coincidence, but I soon learned how dangerous this kind of trading could be. The idea is to hold a position for as short a time as possible in order not to be exposed to the whims of the market any longer than necessary. This should limit any negative experience. So the first loss of a few thousand dollars one day was quite a shock. I realized fairly quickly that there was more to this business than I had thought. I started a long process of learning the ins and outs of the trading business. My losses exceeded my wins but I considered the money that I lost as tuition for the education I was getting. And the tuition was high.

But I still had enough money, I thought, to pay the tuition and learn the lessons. I knew I had to be careful, though, because money is used for tuition but it is also the tool a trader uses to ply his craft. A person who wanted to be a plumber would be unwise to pawn his wrenches in order to attend plumber’s school. After graduation he wouldn’t have any way to do his work.

I spent ten hours a day, seven days a week studying the markets, patterns of behavior, my own motivations and fears concerning what I was doing. For three years I worried over every indicator, every chart pattern. I watched the Moving Averages, the Keltner Channels, the Bollinger Bands, the Stochastics, the RSI's, and the all important MACD's. I questioned the motives of other traders, and my own. I questioned my psychology. I learned that self-sabotage is common in the business and I wondered if my own family background could be undermining my efforts to trade effectively.

I got into the habit of not looking at my account balance. After a couple of years I was in denial. I knew I was losing money and had been for a while. But I always found some reason for optimism, usually on Fridays so that I could avoid despairing over the weekend. In my studies on Saturday I would usually find a new system that would finally put an end to the losing so that I could have a nice dinner Saturday night. Then on Sunday I would see the error in my calculations and have to start again on Monday.

Still, I was getting better even if slowly. Could I get good enough before going broke? That was the question I realized at the end of 2007 that my situation was becoming critical. When I talked to my taxman I used the simile of a fighter pilot in a dive after being terribly shot up in a dogfight. I’m going straight down toward the earth with ferocious velocity and I’m pulling with all my might on the joystick. I see the earth coming toward me but gradually, so gradually, the nose is coming up. Yes I think I’m going to make it, I’m leveling off. If I can just clear those trees, I think I see blue through the windshield! Now I hear the tops of the trees hitting the fuselage, I can feel the thumps but I’m not going into them!

Yes, there was hope. I had had my first positive month in my history of trading. There really was hope. The only problem—as mentioned above—my education was costing too much. If only I hadn’t lost so much in that stupid English deal I wouldn’t be in such trouble. But I did, and my engine was starting to sputter. I had used up too much gas. I was hoping and panicking at the same time.

Then came 2008. I started the year with a bang. I had learned a new system for trading that looked pretty good in my back testing. It called for a short New Year's rally, or so I thought. I was hoping a lot at this point. I made an uncharacteristically large bet on that rally and the rally turned into a rout. It was the beginning of the Crash of '08. I lost a lot of money in that short time, a large percentage of what was left of my trading account. This was the end of my period of denial. This was my period of panic.

I now fully realized my situation. All that I had denied came crashing into my awareness. I couldn’t believe that I had lost almost everything. I felt stunned, paralyzed. At this point it seemed like every decision I had made for the last few years was wrong. Maybe all my decisions, maybe they were ALL WRONG, from the very beginning. I had always been full of self-doubt, but now it was overwhelming me. I was afraid to make any more decisions at all. They were all going to be wrong, no matter what. I stopped making decisions. I just waited. I knew, like the man in quicksand, that any movement would just sink me deeper. Now I was beginning to realize that I was heading into an impoverished old age. I had lived independently, blissfully ignorant of what dangers there were in life. I sympathized with the poor but never thought I would be poor.

Bad Decision Number Three

The bad decisions flow one from the other like falling dominoes. My rent in San Francisco was too high for a person with no income and I knew I had to find a cheaper place to live. Friends had advised me that the answer to all my problems was country living, and that was in my panicked brain as I searched for a cheap place to live. I didn’t really want to leave San Francisco but I thought I could more probably find a reasonable rent if I went some distance away. I searched the Internet and found a town seventy-five miles away where the rents looked much better. I thought that the little money I had left in my trading account could still be enough to get myself out of this situation if I reduced my overhead. So I moved.

My trading had improved with time as I mentioned before. I had good reason to believe that I would still be all right. But again, there was something that I hadn’t taken into account. One of the writers on the subject had described one of the dangers a trader faces—one of the many dangers: Be careful when there is any significant change in your life; it could throw your judgment off for a while. I had completely forgotten this little gem of advice. It was one of those little lapses of memory that the market loves to punish.

I was very unhappy in my new place. I had loved being in the city. I loved lots of people and things going on. I loved music and art as well as watching people bustle in the fancy stores downtown. The little town I had chosen is a place for people who don’t like cities very much. No one bustled in my river town. In this town if you didn’t own a backhoe or some such thing you were nobody. This is not a criticism. They are practical folks, not financial wizards, and that’s all to the good. We’ve seen what the work of financial wizards gets us. But I was out of place. The people were nice, though. The nicest, politest people I’ve ever met.

But it was so small, and there was nothing to do. And my cabin in the woods: I found it was much smaller than I realized when I took the tour, much smaller than the one I had rented in the city. The furniture that had fit comfortably in my previous apartment was piled up at the end of one room. And the twenty boxes of books I had needed to be stored in the garage of the new place. And it was in a flood zone so that the books might be ruined in a wet winter. And I didn’t know anyone. And it was too quiet at night. Too quiet in the daytime, too, except for the lumber trucks going by all day. I looked up from my deck at the lovely redwoods and wondered what I was doing there.

So I set myself up to trade my way out of the mess I had made for myself. I set up my computers and the monitors just like before, got a fast connection to the Internet, and went on as before. In the mornings I watched the patterns developing themselves on the monitors, livening up after the slow overnight session. I looked at the reports from the foreign markets to see if there was anything going on broadly across the world to see if it was going to be an active day in our six and a half hours. And I listened to the “squawk box,” a service in which the moment-by-moment action is described by a man who is sitting at the edge of the trading pit watching the traders gesturing, sometimes wildly as the prices fluctuate. As I looked out the windows at the frigid darkness of five o’clock in the morning I knew my state of mind was not good, though. I was sitting in the middle of the kitchen at my table, looking at the dirty pots and pans from the dinner of the previous evening. I couldn’t bring myself to clean as I would have normally. The floor too was getting dirty already. This was the country, after all. There was little pavement, lots of dirt that was tracked in with every trip outdoors. Luckily I didn’t know anyone in that area so there weren’t very many people tracking dirt into the apartment. I was just waiting to get some money. Why the hell do I need all this money, I wonder? A half million dollars down the toilet and I’m still sitting here ready to put my head in this grinder. If I had just stopped a hundred thousand ago…!

As it starts getting lighter out my window I see a number of people who also don’t have any money. They’re doing better than I am. They look like hippies. Memories of my early days came: there were hippies all around, happy I think, and free. They’re living in an old Volkswagen Bus. They don’t need money. There’s a young woman with flowers in her hair and a baby on her hip! A dear living cliché.

At the open Ben’s voice on the squawk is saying we’re up three quarters, up three quarters, up one, up one, one bid, half offered. He gets pretty excited at the open. I have to make a quick decision. Should I take a position here? We’re getting pretty close to the top of the Keltner channel! There’s a fibonacci extension nearby, could be a reversal there. The Nikkei was down this morning, the end of their day in Japan. But it looks like a rally. What am I to think? I’m confused. I can’t afford to lose any more.

Every day is the same. I try to fend off the cold and the confusion and I start losing again like I had two years earlier. I couldn’t understand why everything was going wrong all of a sudden. It was as though I had forgotten everything I had learned in the two previous years and I was experiencing that agony of constant loss every day just as I had before. I slap myself to get my attention. I have to remember this. Down a few hundred; down a thousand; throwing caution to the winds after being upset by the words of a friend down sixteen hundred dollars! But this was really serious now. My last chance at a decent life—I ‘m too old to be a hippie again—let me have something like I had had before was going away. I wasn’t supposed to die like this.

My account was now becoming dangerously depleted. I knew that it was necessary to be able to risk a certain without flinching in order to make anything. You can’t be afraid constantly, watching every tick on the chart, now up now down, now getting close to the band of probability, wondering if this is the trade that will break me. Almost every trade will go against you for a while before it turns your way. How long do you wait? That’s the question every time. Sometimes I’m hoping that this will be the killer, that this trade will finally bring an end to the horrible hope. Despair starts setting in, setting itself up against my real knowledge that I can do it. I have done it. But I’m not doing it now.

The same routine goes into the winter like the Nazis into Russia. Fighting the bitter cold and hunger—well, I wasn’t hungry yet—but the effect was similar. The despair was building even though I had good days occasionally like the ones I’d had before moving. Each one of those would of course buoy my hopes that the turnaround was at hand, that I could still do it, and do it in time. That was the hard part: I knew I could do it, but could I do it before I went broke?

I start abandoning trades at the very first sign of danger, guaranteeing myself a small loss. I was so afraid of losing a thousand dollars that I took hundred dollar losses instead. “Scared money can’t make money,” goes the old saw. And it’s true. I was scared, my money was scared; it was so small trying to face down the bankrolls of Wall Street, of the evil Goldman. Finally, I have to face the fact that I have been sufficiently ground down that I can’t pursue this dream any longer. I don’t have enough money left to pay the rent, little as it is in this mountain town. And I also don’t have enough to get back to the city where I think that I might be able to find work of some kind. There is certainly nothing in the small town even if I had liked being there. I started selling everything I owned of any value: Antiques that I had inherited, silver, rare books. Everything went, even the two thousand not-so-rare books had to go. I had no way to transport them anywhere and I couldn’t afford to store them. I had employed a mover to bring them up there but now I couldn’t keep any more than would fit in the car that I still owned at the time. It was all going away, my past, my future.

I thought there was still that little bit left in my futures account. They wouldn’t let me go down to zero. I knew that if I could still put on a trade that I still had some money left. As long as I didn’t get a message saying that there wasn’t enough margin left to cover the cost of the contract I still had something left. And I had the credit cards, too! I had a friend that recommended getting another credit card in case I wouldn’t have money to eat, so I did that. I thought maybe I could pay my rent with the credit card. But no. That wouldn’t do. They wanted cash. I wondered if I could take enough out of my brokerage to pay the rent, but there wasn’t enough left, though as it turned out I could go closer to zero than I had imagined. But I finally had to face the facts. There wasn’t enough left to stay and not enough left to go. I was at the end. I couldn’t sleep out in a field or under a bridge that I knew to be inhabited by others. I couldn’t slip into a garage at night hoping for a dry, and maybe warm, place to sleep. I was already too old. Those were just kids. I had to try to find some help. But I didn’t know where to look.

I had read in a book written by a guy who had gone broke before me that one’s friends, and even family, abandoned him when things went bad. No one wanted to have to deal with, or even look at a loser. What if he asked for money? Sure, he’s a nice guy but what if he asks for something? Or, worse, if he just looks at me accusingly and doesn’t say anything at all! That would be even worse. What could I say to him? “Would you like some money?” Fat chance. Others have their own worries.

I didn’t want to beg. Nobody wants to beg, I’m sure. But what if someone had asked me for money in the past? That was something to consider; turnabout is fair play. And there was someone who had asked me for money—for a very good reason. Of course I said I would do whatever was necessary. Who could refuse such a request? Not me.

So I steeled myself and called her and I asked her. I told her how bad things looked for me and how I might go hungry in the near future, I thought, how could she refuse? She had asked me for money. Money! And I didn’t refuse though the request wasn’t for the present; it was provisional. And she didn’t refuse either; she just didn’t do anything. I just didn’t hear from her again. It was as though I had already ceased to exist—and none too soon as far as she was concerned. Who was I to be asking for help? She had her own problems. Indeed, who was I?

She had said she’d do what she could. I didn’t know immediately that that meant “nothing.” So I waited for a little bit, going to the mailbox thinking maybe there would be something there. It wasn’t that I thought a helicopter would appear overhead with Ben Bernanke in the doorway throwing out money but I thought there might be something…anything. I knew she had a few million so the idea that she “couldn’t” do anything was absurd. Of course the economy is bad and she may have lost a million or so. That was probably her excuse.

I had a friend who asked me why I didn’t call my brother.

Why wouldn’t he help, my friend asked? He’s your brother, right?

Yes, I told him, I do have a biological relation who lives in a town near San Francisco, but we are not close. I’d forgotten that I’d mentioned the brother at some point.

What do you mean, not close? How close do you have to be in a desperate situation?
What’s his name? I’ll call him myself if you won’t, my friend said.

My good friend actually made the call. He described my situation with the expectation that there would be intense concern, the desire to do whatever was necessary to remedy the situation. My friend had a brother, you see, a real brother who would have had the appropriate reaction if my friend found himself in that kind of situation. So what he actually heard on the phone shocked him! Of course it was no surprise to me; I knew my brother.

I was actually more concerned that he would try to find a way to make my situation worse if he found out how bad things were. Only a few years ago he had manipulated my own father to deny me in the most hurtful way—the last and worst of thousands of small, vicious acts over the years— and I knew he would do as much today if he had the chance. I had been hated from the very moment of my birth, or maybe before, because it interrupted the infantile narcissism of those first six years of his life. I was his first competitor for the attention of Teet and Buck, and DinDin and Gaga, and all the other relatives with funny names who had doted on him as the first grandchild of his generation, and he never forgave me for that. But I think I’m safe from him now for what that’s worth!

So I was feeling more and more helpless. With my last few dollars I bought food and a bottle of Scotch from the market down the road. I sat on the deck under the canopy of redwoods and tried to think of what I could do while I got drunk. I filled my lungs with the essence of the trees. It would have been an easy place to live. Of course I loved the city, but I had become used to he quietude of this river town and at the end of hot days the deck was almost heavenly. I was almost unhappy that I couldn’t stay. I was surprisingly pre-nostalgic. Or was I just drunk?

It occurred to me just then that there could be just one more person I could ask for help. Long ago I had helped her a little but she had long ago paid that back so I couldn’t make her feel that she owed my anything. And I had lost touch with her gradually over the years. I thought she had bad feelings about me and that that was the reason we had been out of touch. It would be a real desperation move, and take real chutzpah to ask her for money. I didn’t want to do it. But of course I was desperate. Why would she want to do anything for me? It was a long shot. Could I get up the nerve to ask? I went out on the deck under the redwoods and had a drink. I watched the cats doing their high-wire acts on the railings in the complex of cabins. Don’t fall, kitty! The day had been warm though it was always cooler under the trees. The choice between embarrassment and death is not always as easy as it would seem.

Summer was coming to an end. The leaves were starting to fall off of the trees that obscured the two-lane highway from my kitchen window. I could see the ambulances going by now. I knew that by the time the leaves were all gone I would have to be gone as well. I had rented my cabin in the woods a year ago in September and so my lease was coming to an end in another month or so. I knew that I wouldn’t have enough money left to give them even the few hundred dollars a month that they wanted for the rent. But I knew that they had my security deposit which was worth more than a month’s rent so that made me feel less guilty about not being able to meet the terms of my lease. Of course the landlord would be unhappy but I just needed to make the transition back to San Francisco.

I had nothing more to sell. All of my worldly possessions, except for my rusty old car, were gone. All I had now was a plan. If I could get back to the city maybe I could make a living driving a cab. I had sent my meager resume out around a thousand times over the Internet and received no response at all. Nothing. The unemployment rate in the nation was over ten percent if you went by the figures that the government put out, but it was nearly twice that in reality if you were to believe other people. I believed the other people. They were the ones who saw the bread lines and soup kitchens. And I knew that even if I were the only unemployed person in the country I would still have a hard time getting a job with my work history. Cab driving seemed the only realistic way to make money. The taxi industry is an entry for many people into the middle class in America. Many immigrants do it, many who are extremely intelligent and well educated. I was much like someone who had come here from another country, except that I had come from another kind of life.

So I made the call. There was nothing more to do. It was a good thing that I had had a couple of drinks. And I got the answering machine, which was good because it would be easier to make the request of a machine than a human being.

I started to tell my story thinking that I was just talking to the machine but my friend picked up the phone upon hearing me. I felt as small as I’ve ever felt in my life, but she made it easy and offered—seemingly without a second thought—to help with a substantial sum, more than I ever could have hoped. I knew she wasn’t wealthy and that, even though my life might have been at stake, that I was asking too much. But I knew too that people who are not wealthy are much more generous than those who are; a fact that made me regret the number of well-to-do people that I had known! And, too, she is a woman: that explains a lot of goodness.

So I wrapped up my affairs and headed back to the city, poor and humble and waiting for more humiliation. I deserved it, I know. I always knew in my secret mind, but I had hoped to fool myself and others for the whole duration of my life. It wasn’t meant to be.

I’m hoping that I can get some help in repaying my friend for her goodness. I can’t get more than I need for food and housing without some help. Anything helps. Thanks in advance.

For further adventures you can go to atthegranada.blogspot.com

THE PANHANDLER

The Panhandler