Market mayhem eats into convention goodies

NET RESULTS:The current mayhem seems less visible in Silicon Valley, but it is having an impact, writes KARLIN LILLINGTON

IT ALL started with a few phone conversations with my parents in California over the summer. "Washington Mutual is having a really hard time," my mother said. "It might not survive."

Not survive? It was the largest savings and loan in the United States. My parents and I have accounts there. To maintain a US credit rating, I had an account I'd opened a while back with WaMu, the ridiculous abbreviation it had decided to go by a few years ago.

My parents had accounts with WaMu that they had come by indirectly. A couple of decades ago, they'd had accounts with Sacramento Savings. In the way of recent boomtime banking, it had been eaten by a larger competitor, which had been eaten by a larger competitor, which had eventually been eaten by Washington Mutual.

WaMu likewise had started small, but over time had become the Jabba the Hut of SLs, a bloated, sacklike creature full of digested competitors. As it turned out, it was an enormous, overstretched animal that made too many loans to people who could not pay them back.

Hence its increasingly precarious position. Things got very strange early last week, when I overheard a conversation between a man and a woman. They were standing in front of me in a queue curving up the staircase at the San Francisco Museum of Modern Art). We were waiting patiently to go into the Frida Kahlo exhibit.

"They're about to collapse! You've got to go get your money out of there," said the man. "I tell you, Washington Mutual is in really bad shape. They're going to crash."

Now, it is quite alarming to be standing in a queue in a museum with little on one's mind except looking forward to an exciting exhibit by an iconic painter, and hearing your financial institution is ready to implode.

It's not that I have a huge amount of money there, but I do have enough for a fairly enjoyable shopping spree. It is a shopping spree I'd prefer to have, rather than write off.

On the other hand, running to withdraw money is a bit Chicken Little- ish. Deposits were fully protected. Weren't they?

Two days later, in a scene more surreal than any Frida Kahlo portrait, a late evening comedy programme I was watching was interrupted by a news bulletin announcing that WaMu's assets had been seized by the federal government and sold off to JP Morgan. Deposits "should be" protected. Should be? What was this, 1929? It was well into Friday before reports confirmed they were protected, and that, for now, we were all to continue as usual with our accounts at WaMu. Meanwhile, one of the big San Francisco radio stations kept running advertising spots for WaMu that end with someone saying "Woo hoo!".

Woo hoo indeed.

But how can this even be happening? Where were the internal checks and balances?

Everyone is asking this, as the economy takes over half of the first presidential debate - a debate that was supposed to be on foreign policy (a debate in which John McCain went on about Ireland's "11 per cent" [sic] tax rate).

The current mayhem seems less visible in Silicon Valley - possibly even less disturbing - than the dotcom crash at the start of the decade. But it is having an impact. Just ask the chief executive of San Francisco biotech company Fluidigm, which was the lone company scheduled to have its initial public offering last week. The IPO was pulled once before - having been scheduled around 9/11. The chief executive was fairly philosophical about having to hold tight yet again but it must be difficult to be hit by calamity beyond your control twice, and have the media wanting to talk to you for all the wrong reasons.

In a wacky week, it seemed the only people with a bit of perspective were two panhandlers featured in a front page story in the San Francisco Chronicle. The pair - one homeless, one with sheltered housing - work the convention centre crowds outside the city's Moscone Centre.

The two literally "panhandle" by holding out a frying pan for change and keeping up a running patter of jokes - and in turn, get so much of the discarded convention giveaways that they rent a nearby storage locker for all their tech company T-shirts, caps, computer bags, fleeces, squeeze balls and other convention goodies.

They complained that attendees at Oracle OpenWorld - the most recent convention - were "cheap" as the pair's financial return was low, although they got some bags and hats.

"They're cheap," one of the pair said.

"I've been telling people I am going to pull my Oracle investments. I am moving my holdings to Microsoft."

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