Much like Baltimore in season 1 of The Wire, the markets are now approaching a cross roads, and market participants are not really sure what comes next.
So here goes, my take on the market, finance, money and the game:
THE BOND BUBBLE:
It's been brewing for years under the surface. But the take has been so sweet, just ask the guys over at Pimco that doubled their money, or any stock market investor. It's been a helluva ride, but then Omar came along.
This is where we are right now. Omar just knocked over the first stash house and the loss is bad, but still not devastating. But we all know what happened next.
Stringer Bell got shot.
THE END OF THE QUANT PARTY
I bet you forgot about old Prezbo. Well people tended to forget about the quants back in the day.
But then shit got real and so did the money. Much like the way Prezbo cracked the code for Wee Bay, quants discovered stat arb.
And, oh did the money flow.
But quants are not the typical BSD's of Wall Street and when they shut down The Wire, Prezbo did what all quants will eventually do: return to teaching.
The music at the quant party has been turned down, HFT got all but arbed away and good old Prezbo found that life as a teacher was much more rewarding.
PAULSON
Poor, poor John Paulson. Much like Jimmy McNulty he is not as smart as he thinks he is, he not as charming as he thinks he is and ...well... he makes a big bust, but ends up losing.
John Paulson hasn't made a correct market call since he bet against the US housing market and recently it became clear he was 56% in the hole for the year on his gold bet.
McNulty was asked where he did not want to go, and he ended up on a boat (where he eventually scored a huge murder). So I guess Johnny McPaulson has been on that boat for a while now. The question is... will he ever discover a container full of women?
Eventually McNulty becomes a murder police again and eventually fakes a serial killer and gets national attention. So I guess there's some hope left for Paulson.
Or maybe not. People got sick of McNulty after season 3 anyway. And we're already sick of Paulson.
QE
Major Howard "Bunny" Colvin even looks a little bit like Ben Bernanke - sans the beard.
And both tried to legalize it. It being drugs and free money.
"There's never been a paper bag for drugs. Until now". And I guess QE is like a paper bag for money. To carry it all in.
Bunny might be the more charming figure of the two, and with a grander vision, but much like Hamsterdam, the post-QE world is an ugly place - filled with sinners.
And now the door to QE has begun to shut down and soon Major Ben Bunny Bernanke is set to resign. The end of QE has resulted in much criticism from the biggest dealer in Hamsterdam: Pimco.
Pimco: "WMD. Got that WMD right here, yo."
THE FUTURE
A play by play for the season 5 ending montage:
- There's a montage on the wall with some of the Avon guys that died in the series: Pooh, Bird, Lex, Bodie and others. In the finance world these would be all the long only guys that got margin calls in 2008 and 2009 and were never able to get back in. They're all no longer in finance.
- Lester hooked up with Shardene (sans ugly glasses). I guess he is the chief quant, Jim Simons, living it up in retirement.
- Big dumb Herc is telling war stories in the bar with Dozerman. Just like the bond traders, they somehow did great - almost completely by accident.
- Lying ass Scott Templeton wins a Pulitzer. Zero. Hedge.
- The Greek is sipping his coffee and running the world. He is the buy side.
- Carcetti forgets about Baltimore and heads for Annapolis. Nicolas Sarkozy joining a PE-fund.
- Gus is still running the paper and Mike Fletcher's Bubbles-piece makes him a little famous. Gus is clearly Henry Blodget while Fletcher is Joe. (Oh they will hate being paper news guys)
- Commissioner Valchek. Future chairman of the Fed O'Neill (oh, snap!)
- Dukie is a junkie. So very sad. Dukie is the american middle class.
- Judge Ronnie Pearlman and public defender Cedric Daniels. Mayor of New York City Anthony Weiner and Senator (and eventually President) Eliot Spitzer.
- Wee-Bey and Chris are locked up. Madoff and Blankfein (wouldn't that be awesome?).
- Rawles is Maryland State Police. President of ECB Jeroen Dijsselbloem.
- Bubs is let upstairs. US unemployment finally drops.
- Kenard arrested for Omar's murder. The Spanish youth unemployment.
- Kids destroy camera. The death of the media. The rise of social media.
- The empty office where they had the wire. The NYSE floor.
- The public housing low rise from season one. New couch. US housing market slightly less shitty.
- Baltimore's waterfront. Oh, I don't know, US balance of trade maybe. This was a tough one.
- The police boat. Paulson is still on board.
- Homeless man and suited man. The 1%.
- Chess players. The hedgies are right now in Rome at a Goldman conference pondering how they will make a massive comeback.
- Montage of Baltimore. After all this. Nothing has change. Not in Baltimore. Not in the markets.
Afterall:
