OK, so maybe the "zombie vs. possession" metaphor is lost on Washington these days. But after seeing Zombieland this week, I thought I'd use Columbus' rules to draw some conclusions about the current (and past) banking crises.
For those of you who haven't yet seen this cinematic masterpiece (which, alas, contains a few off-color swear words), the narrator and central character is Columbus, who is trying to get to Columbus, OH to check on his folks. He starts in his "dorm room" in Austin and meets up with other survivors on the way. Mayhem ensues, blah blah blah. It is a classic.
This movie, too, doesn't involve Romeroesque zombies, but more of the neo-zombie we've seen in "28 Days Later" and other recent incarnations. These guys move quick, and there's none of the traditional emphasis on head shots.
Anyhow, Columbus is a real anal retentive type, because sometimes that's what's required to survive the zombie hoards. He has a set of rules that keep him alive amidst all those that aren't. Some are pretty obvious.
Rule #1: Cardio. The first to die in the Zombie Apocalypse (ZA) are those who can't run away (I'm miffed at his conclusion that it's a bunch of "fatties" that get it first -- some of us can run when we have to!) Nowadays, the zombies in the banking sense can run pretty fast, it seems. So perhaps the message is "be ready to run." I hope this doesn't apply too well to our current situation.
Rule #2: Double-tap. Make sure that you use one extra bullet/shell to confirm the demise of each zombie. What military types refer to as the 'double-tap'. Cheap insurance.
Now, if you only have a double-barrelled coach gun, as does our hero for most of the picture, it would pay to count those 18 buckshot per shell as "double" and save the second barrel when possible.
Back to banking, though: even though we bailed out the thrift system in '89, we still had to come back and implement Basel in 1991 with FDICIA (and eliminate some patronage at the same time) and "prompt corrective action". Seems like whatever happens this time is going to be politically approved as well, with some House and Senate members pushing for lending standards to drop again. Hope we've got another barrel left after they decide what to do with Fannie and Freddie (even though I'd argue that they are "possessed" and not the living undead). See here.
Rule #3: Beware of bathrooms. This is where we let our guard down, where we are also most vulnerable for a variety of reasons. In other words, banks, when eliminating the waste, are the most at risk. Maybe we should make sure they don't cut too much.
Rule #4: Seat belts. It pays to take advantage of built-in safety mechanisms. Plus, EVERYBODY is supposed to wear them. Maybe FDIC should start stopping folks just to check. And make sure all vehicles are equipped, too.
Rule #7: Travel light. You never know when all those extra assets will have to be carried at market values. Or when things that were good as gold yesterday will be revalued downward because the ratings agencies were revealed to have no clothes.
Rule #12: Bounty. It's the quicker-picker-upper. Kind of like regulatory capital in the 80s. Good to have some around.
Rule #17: Don't be a hero. Ask Jamie Dimon at JPMorgan how that's going for him these days.
Rule #18: Limber up. The Fed certainly heeded this one back in 2007, as they started to create liquidity programs for any and every purpose. Just in case. This works best alongside cardio. See Rule #1.
Rule #22: Know your way out. Sounds like something for Bernanke to consider in the future. 2006 is calling! Not that all that liquidity wasn't useful, but it's being used (erroneously) to trick the rest of the world into looking askance at the dollar. Not good.
Rule #29: The Buddy System. We're not alone in this, just almost alone. The jackals out there are licking their chops on this, hoping the US takes a big dive and takes a hit for market economies. Hint: Fannie, Freddie, FHA, and CRA/HMDA have nothing to do with market economies. Patronage is patronage, here or in China. Thanks for playing.
Rule #31: Check the backseat. Or, the reset dates and reset rates for that matter. And income. And appraisals. And buyout clauses. And most importantly, don't let anyone in the backseat do the driving.
Rule #32: Enjoy the little things. Like bonuses for the next 5 years. And political contribs for that matter.
Rule #33: Swiss Army Knife. This is from the Boy Scouts -- be prepared. Everything on that knife has a purpose.
If you haven't seen "Zombieland" you'd better hurry up. It looks as though its theatre days are numbered, but there's always the dollar cinema run to consider. I can't wait for folks in Congress to get a chance to watch this -- maybe their favorite zombies (Freddie and Fannie) will collapse under their own weight and keep us from having to finally, finally put them down. Remember, double-taps.
More to come.
