Friday, June 26, 2009


Chances are that not many readers will be familiar with the name of this week's Chutzpah of the Week award recipient unless, like myself, they use Reuters as one of their resources for financial news. The recipient's name is Joe Kinahan, and I selected him on the basis of a Reuters dispatch filed this morning by Leah Schnurr. The opening paragraphs of that dispatch should provide the basic grounds for my reasoning:

U.S. stocks faltered on Friday as weak oil futures pressured energy shares and a jump in the savings rate raised worries the economic recovery will not make much headway if consumers continue to be frugal.

Data showed that while consumer spending and income both rose in May as the government stimulus spread through the economy, much of the money was being socked away. Savings jumped to a record annual rate of $768.8 billion, the highest level since record keeping began in 1959.

"We need people to spend money in order to keep the economy humming," said Joe Kinahan, chief derivatives strategist at online brokerage thinkorswim Group in Chicago. "The consumer has been the stalwart of the economy at this point, and we still need them to be."

Now I grant that Kinahan serves primarily as a symbol for a more abstract collective that relies upon the views he expressed in those two sentences, and I also grant that such collectives have received past awards. Nevertheless, I tend to prefer singling out an individual (as I did last week with Daniel Vasella, CEO of Novartis) when it is clear that the individual embodies the chutzpah of the collective, so to speak. In this case, however Kinahan embodies not so much his own employer (about as unfamiliar to most of us as his name) as a prevailing view that reminds us (as if we needed reminding) of how wide a gulf there is between the interests of Wall Street and those of Main Street.

Once again we need to revisit the hypothesis that Wall Street's all-important metric of consumer spending is basically an external manifestation of an addictive behavior. From that point of view, a return to frugality (brought on by a lack of money to spend or borrow) constitutes an effort to "kick the habit;" and we can view economic recovery in terms of recovery from that addiction. Put another way, both consumers and markets are striving to return to more "sane" conditions. Kinahan clearly does not see it that way. He would prefer that Main Street return to the old habits that played such a major factor in getting the world economy into its current mess; and, when considered from such a global perspective, his self-interested Wall Street Weltanschauung escalates to chutzpah-level proportions. Thus, he deserves the award; and I am far from troubled by the fact that he will be too selfish to share it with all the others he represents!

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