Author Archives: Gray Rinehart

In the anti-gravity category:*

Last year, when gas prices were moving up toward record highs, the company that operates the vending machines in our building raised its prices. My twelve-ounce can of diet liquid caffeine carbonation went up, as did the prices of all the anti-diet items in the snack machine one pace to the left. This was concurrent with prices of almost everything everywhere going up and being blamed on the high gas price.

But since gas prices have come down to the lowest seen in years, the prices of these other things are still at their elevated levels.

The main effect of the lowered gas prices, then, appears to be higher profit margins for the purveyors of consumer goods. If they were wise, they’d plow those increased profits back into their businesses to improve their products, distribution systems and other practices, so that when the next increase in their operating costs comes along they don’t have to pass it on to the consumer right away — using the fat years to store away surplus for the lean years.

Wishful thinking.

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*I.e., the what-goes-up-doesn’t-always-come-down category.

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When I read the headline that Adolf Merckle, a German industrialist, had committed suicide over recent financial losses, I wasn’t too surprised: after all, accounts of businessmen jumping to their deaths after the 1929 stock market crash are legendary. When I read the early report, though, I thought there had to be more to the story.

The original story I saw highlighted Mr. Merckle’s $9.2 billion fortune and losses that were reportedly in the “hundreds of millions.” It seemed almost impossible to me that someone would choose suicide over losses that amounted to less than a tenth of their wealth.

And, as I suspected, there was more to the story. According to this Bloomberg report, “Merckle, 74, spent December negotiating with banks he owed about 5 billion euros ($6.7 billion) to save the family empire he built over four decades.”

So he was struggling with the potential loss of over 70% of his personal fortune. That’s a lot, no doubt, and quite a shock to the system, but it still would have left him with a cool $2 billion or more. That’s a quite different position from folks who start off with fewer zeroes and end up with next to nothing.

Maybe my perspective is skewed because I don’t have a lot of zeroes behind my personal fortune. (In fact, like many people, my personal fortune is effectively nil, since most of what I have is largely owned not by me, but by the bank that holds the note on my house.) And maybe there’s still more to this story, more than will ever come out. But it’s a cautionary tale, and a warning that we should maintain a sense of perspective that emphasizes what we still have, rather than what we’ve lost.

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