Reality In Numbers

“When market confidence collapses, Wall Street, like the cowardly Kansas town in ‘High Noon,’ needs strong, silent types for protection.

“Last week's Gary Cooper was J.P. Morgan Chase, which "rescued" Bear Stearns as a prelude to devouring it. This week, investment banks will report quarterly financial results, just as investors are trying to identify which brokerage houses will be strong enough to weather the credit-market storm…

“The tricky part is that in this environment balance sheets may not be the best indicators of strength. Early last week, Buckingham Research analyst James Mitchell, based in part on numbers reported at the end of Bear's fourth quarter, estimated that Bear Stearns had $35 billion in liquid assets and borrowing capacity, enough to operate for 20 months. Turns out it had enough for three days…

“As Bear Stearns learned, in this environment whispers of weakness alone can cause a pack of nervous lenders to flee from you.

“‘A company is only as solvent as the perception of its solvency,’ Oppenheimer analyst Meredith Whitney wrote in downgrading Bear Stearns on Friday.”

(“Ahead of the Tape.” Mark Gongloff. Wall Street Journal: March 17, 2008. pg. C.1)

WHAT IS ENACTED REALITY? What we manage is what the masses perceive as real. The objectivity of managed reality lies within its inter-subjective creation.

Our balance sheet is as real as it is perceived to be.