Rare Coins, The Big Short, Longmire and the Ignorance of What is True - A New Years Reflection

Happy New Year!

I want to write about coins today. I’m working on one of my resolutions, well, one of the resolutions still on the books from last year… procrastination. Instead of dishes, I’ve spent this morning going through an oatmeal box of coins looking for wheat-pennies, all-silver and In God We Rust Kansas quarters, so that I will get rich quick.

Not that the mess from last night is that big. I fed four of us soup – 4 bowls, 4 spoons, 4 glasses, placemats, a cutting board, knife, spoon and big pot. We were rushed to get to the theater to see The Big Short, the movie from Michael Lewis’ book (he wrote Money Ball and Flash Boys too) that explains the “housing bubble” that decimated the US and world economies. 

Anyway, as I mindlessly sifted through the grimy money today, I kept thinking about how this bank event set off the multiple moves I’ve made and redirected my life all because I ignored what was true. The sub prime mortgage I got into in 2002 allowed me breathing room at a time when my business was in a down turn. Eventually, it turned toxic for me.

The banker was the same guy who’d given me a line of credit in 1987 as my business grew. The line smoothed the ebb and flow of expanding and contracting inventory and receivables. I drew against the line to pay for inventory and paid it off when projects completed.  After Y2K and September 11, our customer mix changed to fewer but larger tickets. I could clearly see that cash no longer flowed. There was too much time between the time we ordered and the time we got paid. Policy adjustments and many other solutions didn't do the trick. 

Unlike one of my favorite scenes in Longmire, the Netflix crime show set in Wyoming (really New Mexico) I didn’t act on what I knew to be true. Sheriff Walt Longmire after recognizing a critical clue to his case, slams down a pair of boots near a chair on his front porch (facing the meadows and mountains, of course) and says, “I need new boots.” For several episodes, up to this point, he blamed this one despicable guy for the heinous crime that we viewers know the guy didn’t commit. Walt is invested in hating this guy. His deputy says, “what…?” Walt relates that when he was eleven or twelve, he got a pair of boots he loved just as his feet began to grow fast. He kept wearing the boots and getting more and more blisters till he just couldn’t walk in them any more and took them off for good.

The banker gave me a new, larger line of credit at his bank, with the stipulation that I needed to open an account there.  I agreed to refinance my mortgage but stood firm that I wouldn’t put the house against it.  I did have to personally sign for it, however, that in the end is about the same. The mortgage went into its adjustable phase and began climbing… from $1100 to over $2000 in a blink. I couldn't refinance again, because my credit scored had plummeted. My son finished college in April 2008 and I immediately sold the house at a 69% profit and moved to a rental with him until we both figured out our next steps. The proceeds allowed me to pay off remaining debt. He got a job and moved out. My timing was fortunate, the bubble completely exploded later in October 2008, my buyers took a 60% bath when they sold it in 2013.  

Michael Burry, MD, was the first to realized that the mortgage defaults would begin in earnest in early 2007.  He and the other groups of people portrayed in The Big Short didn’t really do anything to make people aware of it or stop it. In fact they hoped to profit and did make millions when it happened. The movie tries to make these guys somewhat less deplorable as they have their epiphanies that millions of people would lose their homes and livelihoods.  But, that’s not my point; they did nothing illegal, actually or anything amoral. The movie makes it clear that the US government, the ratings agencies and the banks knew, did nothing and weren’t punished. That is wrong, but still not my point.

My point is that it is really easy to miss and even easier to ignore the signs when you’re invested in something being different than it is. For two years my business didn’t turn a profit and I couldn’t pay off my line of credit. I tried new marketing, changing the product and looking for new markets. Really… I couldn’t picture a future. I couldn’t see why anyone would hire me, or what I could do. My feet no longer fit in any boots.

I want to say that I didn’t see the signs, but that’s not true. I saw them, I felt them and I ignored them. Walt didn’t ignore the last sign. I stopped walking only when there was no where else to go... but close the business. He got the right man with great pain to himself. Though I could have done it more on my own terms, I didn't, I let things happen to me, like the line of credit and all my other creditors coming due. I chose to ignore it, in hopes of finding the next bigger project, the In God We Rust Kansas quarter. 

It’s still fun to sift through coins hunting for the 8 types of rare coins and instant riches. It gave me time to think about the movie and especially about any signs I currently ignore. That’s a good thing to be doing on New Years Day. The dishes can wait.

Are you wearing boots that you love but they no longer fit?

ps. Just to be clear. I loved the Big Short. After hearing him live last summer, I have the utmost respect for Michael Lewis as a writer and researcher. 

pps. I love Longmire too, though I am still binging and hoping I can find something like the dishes to keep me from getting through the rest of season 4 . 

pops. Longe-mire- might be a good name for this sense of ignorance of things I know to be true.