Monday, September 29, 2008

Nothing to Fear but Irresponsible Words



This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.

—FDR Inaugural Address

We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender…

—Winston Churchill

This sucker could go down.

—George Bush


It is widely reported that in the search for somebody to blame for the subprime crisis, some of the same Wall Street firms that foisted the subprime bubble on a willing world have pointed their fingers at rumors and the people who might spread them.

We do not argue one bit that the deliberate spreading of false rumors is potentially dangerous to real companies in a tight credit environment.

It most certainly is.

Yet we wonder how any spoken words could possibly have been more dangerous to the financial system than our own president’s comments to members of Congress, as reported in the weekend Wall Street Journal’s excellent inside view of the White House bailout negotiations:

Mr. Bush allowed everyone to vent their frustrations. Finally, he pointed out that both sides still agreed on the need to get the bill done. He added that "if we don't loosen up some money into the system, this sucker could go down," a repeat of the warning in his prime-time speech on Wednesday night that a financial panic is a real risk.

The President’s unfortunate choice of words—"this sucker could go down"—carry the same deer-in-headlights quality as his televised speech to the American people last week, in which he used the word “panic,” as we recall. At a minimum, it makes you nervous; at a maximum, it makes you want to throw up first and sell everything second.

What happened to the heroic, forward-looking rhetoric great leaders are supposed to provide in times of crisis?

FDR gave us “We have nothing to fear but fear itself.”

Churchill gave us “We shall fight on the beaches.”

George Bush cruises in with “This sucker could go down.”

We wonder: has a more irresponsible sentence been uttered, by anyone, during this entire crisis?


Jeff Matthews
I Am Not Making This Up


© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Wednesday, September 24, 2008

The “Oracle” Speaks: Listen Up, Hank



During the depths of the AIG crisis, which seemed like it was six years ago but was, in fact, early last week, we were contacted by a reporter who wondered if Warren Buffett would say something reassuring about the U.S. economy to help calm down the panic on Wall Street.

We pointed out that Buffett is, first and foremost, a money-maker. He is not a public treasure—although his shareholders treat him that way—to be trotted out on occasion to make pronouncements about the health of the country, as Old Man Rockefeller did back in 1929.

If Buffett was in fact going to do anything, we ventured, it would be to search for opportunities in the market freeze-up just as he had done in January and February of this year, when he bought $4 billion worth of auction-rate securities while those went into free-fall.

We said the world would only hear from Buffett after he pulled the trigger—not before.

Well, last night we heard from Buffett.


And what we heard was that “The Oracle of Omaha” is buying $5 billion worth of preferred shares in Goldman Sachs that carry a 10% dividend, and along with those he’s buying warrants for $5 billion worth of Goldman stock at $115 a share.

Last trade, $133.

It’s a classic Buffett deal: he's buying into a great company at a distressed price, with unbelievably good terms.

Now, Warren Buffett might be called “The Oracle of Omaha,” but he is not, in our opinion, an “Oracle.” (We explain why in “Pilgrimage to Warren Buffett’s Omaha,” coming soon to a bookstore near you.)


Still, oracle or not, Buffett is worth listening to.

And with this $5 billion-plus investment in Goldman Sachs, he is speaking loudly and—we think—quite clearly.

What we think he’s saying is that the $700 billion bailout plan being pushed down the country’s throat by Hank Paulson and Ben Bernanke—two men who both had seats at the bar while the lethal subprime mortgage cocktail was being concocted by Wall Street—is for the birds.

Sure, Buffett’s telling CNBC this morning that without the Paulson/Bernanke plan he might not be making this investment. And yes, he’s saying a Paulson/Bernanke plan would keep us from going over the edge.

But what else might you expect a man whose company, Berkshire Hathaway, has sold S&P Index put options with a notional value of $39.878 billion dollars as of June 30, 2008, to say?


As is always the case with Warren Buffett, it pays to look at what he’s doing—not what he’s telling CNBC.

And what he’s doing is not what the U.S. Treasury wants to do with Goldman’s sick brethren: he is not buying Goldman’s “bad” assets.

He is, instead, buying preferred shares with a nice fat yield.

Second, he is getting warrants to buy Goldman stock in order to capture whatever upside that his stability-inducing investment helps foster while Goldman adjusts to being a bank holding company.

Paulson and Bernanke seem to have had no such notions in their heads.


Their plan was to buy $700 billion of whatever junk got thrown at them by men in pinstripes who got paid very, very well for many, many years while they made some very, very bad decisions they now regret.

We wonder what else Paulson and Bernanke will want to buy to prop up the system: old, expired lottery tickets, perhaps?

More seriously, we wonder this: how is it that Warren Buffett can cut a better deal with the best-run financial company in America than the U.S. Treasury can ask from the worst-run financial companies in America?



Jeff Matthews
I Am Not Making This Up


© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Sunday, September 21, 2008

“Bail Out the Drunks, O’Malley, and Round Up the Usual Suspects”


A party begins in somebody’s back yard. It is quiet at first, nothing out of the ordinary.

But as the night wears on, the music gets louder, the voices get more boisterous, and things begin to get a little out of hand. The neighbors can’t sleep, and one calls the police, but nobody comes.

The party gets louder, more out-of-control. A second neighbor calls the police. Again, nothing happens.

The party kicks into high gear. Drunks wander into backyards and urinate on the neighbors’ houses. A window is smashed. A fence is torn down. Neighbors call the police with lists of specific offenses, but are told the party-goers are all consenting adults, and the police have no reason to believe illegal drugs are being consumed.

In short, the policeman says, the partyers can handle themselves.

Suddenly, above the music and drunken singing comes a hysterical scream. A neighbor investigates and finds a fight has broken out, and somebody has been killed. The party-goers are in a stupor. They can’t agree on what to do.

911 is called and police cars come screeching to the scene of the crime. They discharge dozens of serious-looking cops who surround the premises, shine their flashlights in the faces of drunk and retching party-goers, count the empty liquor bottles strewn across the yard and throw towels over dazed, naked couples.

After carefully sizing up the situation, the officers make their move: they tell the drunks, “We’ll pay for the damages.”

And they arrest the neighbors.


So it is, we think, that the U.S. Government—which certainly shares responsibility with Wall Street for bringing the subprime mortgage mess down on the heads of the American people—acted on Friday when after years and months of ignoring the subprime mortgage crisis, or at least hoping it would go away, eagerly embraced a quarter-trillion dollar bailout fund for the very Wall Street firms that had promoted, securitized and distributed those subprime mortgages that brought the world to the brink of a financial precipice nobody could fathom…and banned short selling, to boot.

“Bail out the drunks, O’Malley, and round up the usual suspects” seems to be the word from Washington.


How else to describe it?

How else to describe a government whose Treasurer proposes a quarter-trillion dollar bailout for his friends and former competitors on Wall Street, and whose securities arm bans short sales in 799 stocks—many of which lie at the heart of the drunken orgy otherwise known as the subprime party—instead of taking action against the Wall Street firms that caused the mess in the first place?

One commentator this weekend, we think, got it right, when he wrote, in part:

Then again, maybe the S.E.C. is trying to cover up its own culpability in this crisis. Four years ago, the agency pushed through a rule that allowed the big investment banks to take on a great deal more debt. As a result, debt ratios rose from about 12 to 1 to more like 30 to 1. Guess what Lehman’s debt ratio was when it went bust? Yep: 30 to 1.

Joe Nocera, “Hoping a Hail Mary Pass Connects”
New York Times, September 20, 2008

Joe Nocera was not, as we say here, making that up.

On August 20, 2004, the SEC enacted a rule called “Alternative Net Capital Requirements for Broker-Dealers That Are Part of Consolidated Supervised Entities.”

The effect of this rule, as Nocera pointed out, was that it allowed five firms to increase their use of leverage dramatically.

Those five firms were Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley.

If the Federal Reserve is supposed to “take away the punch bowl” when the economic party is getting out of hand, with this rule change the SEC brought in a distillery and said “Here, boys, have fun.”

And did they ever have fun!

Lehman Brothers ramped up its debt-to-equity ratio from 21.4 in 2003 to 30.5 in 2007. Merrill Lynch jacked up its debt-to-equity from 16 to 31 in the same period; Morgan Stanley from 21 to 32.

Now, you can read the actual rule change here:
http://www.sec.gov/rules/final/34-49830.htm.

But we’ll save you some time.

After declaring that “The principal purposes of Exchange Act Rule 15c3-1 (the “net capital rule”) are to protect customers and other market participants from broker-dealer failures [emphasis added]” the SEC states:


“We are amending the definition of tentative net capital to include securities for which there is no ready market [emphasis added]…”

What goes around, as they say, comes around, for as we write this, the U.S. Treasury is proposing a near-trillion dollar fund to buy securities for which there is no ready market.

You would think somebody at the table of Government bureaucrats and sober Congressional “leaders” trying to cobble together a rescue package might think to invite in the short-sellers who tried to warn Wall Street that these companies were headed for trouble.

But no.

Instead, short sellers—many of whom got the subprime collapse absolutely right, without ever resorting to the kind of abusive tactics short sellers as a class are now being accused of wielding in this fear-crazed environment—are being banished not merely from the discussion of what to do now, but from their profession by government directive.

Oddly enough, nobody seems to have considered using a simpler and far less costly way to fight the negative forces that began to feed upon themselves in recent weeks: simply reinstate the uptick rule.

That rule, which very effectively limited so-called bear raids in stocks by requiring that stocks be sold short only on an uptick, was removed by the SEC in 2007...after lobbying by Lehman Brothers and some of the same Wall Street firms now seeking shelter from the storm.

All in all Friday was, we think, a black day for free markets: those who got it right are being punished; those who got it wrong are being rescued.

And the homeowners enticed to buy at the top of the market using financial instruments they understood even less than the Wall Street firms that pushed those instruments, are not being helped at all.




Jeff Matthews
I Am Not Making This Up


© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Thursday, September 18, 2008

“Widespread Panic, Starting Today”


Some Congressional leaders who initially seemed to accept the decision [to rescue AIG]…sharply questioned the move on Wednesday.

—The New York Times



It was a chance to listen to two of the world’s most successful real estate moguls—Sam Zell and Vornado’s Steve Roth—talk about the state of their business.

It was also a chance to revisit the hallowed halls of our alma mater, the suddenly and shockingly no-longer-independent Merrill Lynch, at that firm's Global Real Estate Conference.

The venue, at 4 World Financial Center, was different than when we crunched oil supply and demand statistics for the Thundering Herd nearly 30 years ago in a windowless cubicle at One Liberty Plaza, right next door to what was then the Twin Towers.

Still, “Mother Merrill,” as most alum call the place, remains just that, although many we saw wandering the corridors seemed to be in a state of calm shock after the last month’s events. For the most part, they seemed more relieved than angry that the firm had been rescued by Bank America.

Our object yesterday, however, was not to check in on Merrill. It was to listen to Zell and Roth talk about what the heck was happening in the real estate markets.

And talk they did.

They also performed a kind of Mutt and Jeff routine reliving last year’s Equity Office Properties deal, when Roth’s ferocious bidding for Zell’s company pushed up the price of Equity Office Properties by $5 billion before Blackstone snapped it up at what will certainly go down as a peak-of-the-market top-tick if ever there was one.

Zell, for his part, modestly denied being a seer by selling office properties at the top. He simply pointed out that the office business “is a very capital-intensive business,” and “you didn’t have to be a great guru to look at the office market a year and a half ago and say, ‘it can’t continue.’”

The blustery Roth made Zell look positively demure. He defended Vornado’s bid for EOP, pointing out that it was half-cash, half-stock. And since Vornado’s stock price is down since then, he rationalized, “we were trading a portion of our assets at a high stock price.”

Maybe so.

But the more interesting comment on the state of the world came in the next session, which involved three less famous, but quite successful, real estate companies from around the world.

After much discussion about cap rates in London and Germany, and the difference between Canadian and US office markets, a question from the audience brought the crowd to attention. It was about what, if any, impact the three companies had experienced from this week’s events—specifically the bankruptcy of Lehman and the rescue of AIG.

The response was about as clear as it could be: “We have debt guaranteed by AIG,” one of the men volunteered, as do most real estate investment trusts he knows.

And if AIG had not been rescued by the government, he said quietly but firmly to the several hundred people in the room, “There would have been widespread panic, starting today.”

Quote, unquote.

We did not notice any so-called Congressional leaders in the room.


Too bad. They should have been there.


Jeff Matthews
I Am Not Making This Up

© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Tuesday, September 16, 2008

Rumors Spring Eternal



“The situation is dire.”

That’s the Wall Street Journal, quoting “a person close to AIG” in this morning’s paper.

Dire AIG's situation may be, but that did not stop rumors from hitting the tape—including the same rumor that always seems to crop up every time a financial company’s situation gets “dire” in the seemingly perpetual financial crisis of the last two years.

And we’re not talking about a negative rumor.

We’re talking about the rumor that Warren Buffett is either in talks with, or planning to buy stock in, or meeting with officials about, the company in question.

The reason for this recurring rumor, of course, is that Buffett heads a company called Berkshire Hathaway that happens to have a Triple-A balance sheet—a true Triple-A balance sheet, not a manufactured Triple-A balance sheet. So Berkshire seems to always be mentioned as the rescuer of choice every time this stuff happens.

Sure enough, the Berkshire rumor went around yesterday, thanks to Reuters, which reported that Berkshire had been in talks with AIG.

Yet the rumor made no sense to us.

First of all, Buffett only makes investments when he knows he’ll make money. He does that by buying assets at prices observably below their fair value. How much of AIG’s book of business can be rationally evaluated, and priced, in a few days’ time?

Second, Berkshire spent nearly five years extracting General Re—a company he knew very well, thought was healthy, and was certain he was buying at a good price—from 23,000 derivative contracts that cost Berkshire $400 million to clean up. And that was when the market for derivatives was healthy. How long would it take to fix an unhealthy AIG?

Third, Berkshire and AIG have a rocky history, with four of General Re’s former executives being convicted early this year of helping AIG construct a “sham” transaction to help AIG look better for Wall Street’s Finest.

All in all, the Berkshire-for-AIG rumor made no sense to us.

Indeed, today's Wall Street Journal reports that the company merely "talked with" Warren Buffett. Hardly the stuff of major acquisitions at a time of crisis.

But hope springs eternal.

And so will the rumor that Warren Buffett is going to rescue the next guy to get in trouble.


Jeff Matthews
I Am Not Making This Up


© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Friday, September 12, 2008

“Naked” Nothing



SEC Moves to Curb Short-Selling
By KARA SCANNELL and JENNY STRASBURG

July 16, 2008

WASHINGTON -- The Securities and Exchange Commission took unprecedented action against short sellers on Tuesday, acting on a widespread concern that negative bets against bank and brokerage stocks might be exacerbating the financial sector's woes.

In a dramatic emergency order, the SEC said it would immediately move to curb improper short selling in the stocks of struggling mortgage giants Fannie Mae and Freddie Mac, as well as those of 17 financial firms…
—The Wall Street Journal



Remember when “naked short selling” was ruining America?

Remember when the government’s move to restrict “naked short selling” was hailed as a rescue salve for America’s financial system?

We sure do. We also remember where Fannie Mae’s stock price was that day: it was $25.60 a share.

Last trade: $0.59 a share.

Turns out, maybe “naked short selling” was not the real problem at Fannie Mae.

Now, we have said many times in these virtual pages that we have never known any hedge fund investor who actually shorted stocks “naked”—that is, without properly borrowing the shares before selling them short.

And after the government's move it almost immediately became clear that the reason some stocks appeared to be shorted “naked” was not because hedge funds were improperly shorting stocks without a borrow. It turned out the problem was that the brokers themselves weren't properly locking up stock they had loaned out.

Yet we do not begrudge the government for attempting to clean up the short-selling process so that “naked short selling” can’t be done.

If it shouldn’t be done, it shouldn’t be done period, by anybody.

But the mid-summer frenzy over “naked short selling” reminded us of something Warren Buffett said when asked about the so-called problem at the Berkshire annual meeting in May, 2007, while answering dozens of questions alongside his partner, Charlie Munger.

Here's how we recorded it in these pages at the time:

Buffett begins his response with a sort of amused recap of the question for Munger, who for the first and only time of the day could not make out the question: “It’s about this so-called failure-to-deliver and naked shorting,” he tells his partner, clearly unimpressed by any supposed naked shorting crisis. He doesn’t even have a problem with legitimate short-selling.

“I do not see the problem with shorting stocks,” Buffett says, “But it’s a tough way to make a living.”


Recalling that Berkshire Hathaway made good money lending shares of US Gypsum to short-sellers when it was under siege from asbestos lawsuits, before the stock went up ten-fold, Buffett says: “If anyone wants to naked short Berkshire, they can do it until the cows come home. In fact, we’ll hold a special meeting for them,” he says, to laughter.


If the stock action in Fannie Mae following the end of "naked short selling" is any indication, Warren Buffett was dead right.

You can read more about this, and much else, in “Pilgrimage to Warren Buffett’s Omaha,” due out next month.



Jeff Matthews
I Am Not Making This Up


© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.


Monday, September 08, 2008

“Equal-Weight” a Wipeout? The Least Helpful Calls You Will Get Today



The least helpful calls you will get today will all be about two companies in the same business, and they will be so unhelpful it will make your head spin.

We refer to the inevitable price target reductions and recommendation downgrades of not only the common stock of Freddie Mac and Fannie Mae, but their recently issued, so-called “preferred” shares, as well.

Unlike most “unhelpful calls” we here at NotMakingThisUp highlight, these calls will not come from only one firm. They will come from many of Wall Street’s Finest.

Already one has slashed his ratings on the two stocks from “Buy” to “Sell,” as if that matters, while a second has gone to a positively mystifying recommendation of “Equal Weight.”

As today’s Wall Street Journal reports:

Under the plan, the government could wipe out most of the value of the common shares by buying nearly 80% of both companies “at a nominal price.” That would leave common stock holders with the remaining 20%, or one-fifth of what they owned on Friday.

How do you “Equal-Weight” a wipe out?


Jeff Matthews
I Am Not Making This Up

© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Monday, September 01, 2008

“Hello, Newman.” Or, “What’s the Deal With This Mojave Experiment, Anyway?”


The “Mojave Experiment,” if you haven't seen it already, is a new Microsoft ad campaign intended to spiff up Vista’s poor image. You can find a link most days on the Wall Street Journal web site.

If you follow that link, you’ll find a “Mojave Experiment” video in which a Proctor & Gamble-style hidden camera captures the reactions of “regular people” when they are shown cool stuff they can do on “Mojave,” which they have been told is a new Microsoft operating system.

The camera then shows their embarrassed reactions when they are told that “Mojave” is actually “Vista.”

It is straight out of the Proctor & Gamble soap-selling playbook, which should be no surprise, because Microsoft CEO Steve Ballmer started his career at P&G.

Unfortunately, the fundamental premise of the “Mojave Experiment” and those video clips is flawed. Only 43% of Microsoft Vista users call themselves “very satisfied” with it. And only 46% of Microsoft Vista users say they are “very likely” to recommend Vista to a friend or family member.

We are not making those numbers up, by the way: they’re right there on Microsoft’s own “Mojave Experiment” web site, in the footnotes.

As for the hidden camera video itself—well, anybody can videotape a bunch of people reacting with delight to product demos run by highly competent computer engineers from the company that created the program.

What they should videotape is a bunch of people attempting to load Vista on a computer and start doing stuff themselves, which is where the trouble has been, and show that to Microsoft engineers.

Years ago, Ford Motor’s advertising slogan was “Quality is Job One.” The slogan didn’t actually mean anything, but it sounded great. Unfortunately for Ford, consumers didn’t care about the slogan, they cared about the cars. Eventually consumers stopped buying Ford cars to the point where Ford is now being forced to actually do something about quality, instead of advertising about it.

Microsoft is looking more like Ford Motor every day.

But they’re not stopping with hidden camera laundry detergent-type web videos. They’re reportedly paying Jerry Seinfeld $10 million to appear in ads for Vista, presumably to counteract the devastating “Mac vs. PC” ads.

We’ve tried to imagine what will happen when Microsoft’s clunky, acronym-laden and user-unfriendly technology is combined with Seinfeld’s “What’s the deal with airplane peanuts?” schtick.

The first Seinfeld ad might go something like this.

Seinfeld stands at a microphone on stage in a nightclub setting: “What’s the deal with the ‘iPhone’ anyway? I mean, Apple didn’t release an ‘a’-phone and a ‘b’-phone and a ‘c’-phone…so why do they have an ‘I’ there? What’s the deal with that?”

[Modest laughter.]

He holds up an iPhone for the audience: “And how does it have “phone” in the name? I mean, come on, people—there’s no antenna, is there? [He mimes pulling an antenna out of the phone, as he always did on his TV show.] Hey, I don’t hear a dial-tone either. [He holds it up to his ear and shakes his head.] What’s the deal with that?

[Some chuckles.]

Seinfeld starts playing with Google Maps on the iPhone: “And have you seen how you move around these web pages? You move them around with your finger. [He touches the map, makes it bigger, smaller. Zooms in on a satellite image from Google Earth] I mean, hasn’t Apple ever heard of a mouse with a sophisticated interactive touchpad? What—are they afraid of mice now?

[No laughs.]

Seinfeld plays with the phone interface and notices he has a voice mail. “Hey, this thing actually tells you who’s left a voice-mail?” [Under his breath.] “I like that.” [Taps the phone and holds it to his ear, then says in a stage voice.] “Hello, Newman. I see you called me.”

[Laughter, applause.]

Seinfeld smiles, acknowledging the applause, then speaks sternly. “You know, Newman, this thing actually isn’t so bad. I just looked at my house in the Hamptons on this screen, and then I found out you can actually see who left you a voice mail. I can’t do that on Vista. You know what I think, Newman? I think you tricked me. Hello? Hello?”

[Scattered laughter, some confused murmers.]

Seinfeld clicks off the phone and starts scrolling through software programs: “And what’s with this ‘Apps Store’ anyway? I guess you can download these software applications…just incredible stuff here…”

[Newman enters the stage from behind the curtain with a team of Microsoft security men.]

Seinfeld, reacting as expected: “Oh, hello, Newman.”

[Some laughs.]

Newman, mechanically: “Hello, Jerry. Let’s make this easy for both of us. Just give us the iPhone and leave.”

Seinfeld: “I want my $10 million first, Newman.”

Newman, sweating, pulling at his collar as the audience begins to boo: “No chance, Jerry. You—shall we say—strayed too far from the script.”

Seinfeld, surrounded by Microsoft men, picks up the microphone stand and starts swinging it like a sword. “I want my $10 million, Newman! I’ll finish the script! Don’t take this iPhone!”

Newman makes a sign and the security men back off. Sweetly, he says: “Anything you say, Jerry. Just finish and you’ll get your money.”


Seinfeld resumes reading from the offscreen cue cards, unenthusiastically: “So what’s the deal with the ‘iPhone’ anyway. It’s not a phone….”

Newman: “That’s not good enough, Jerry!” He grabs for the iPhone.

Seinfeld, keeping it away from Newman: “All riiiiiiiiiiiiiight, keep the $10 million. I just want this iPhone, Newman!”

[Now other Seinfeld characters begin to appear on stage from different angles.]

Kramer: “Giddyyup, Jerry. You need that $10 million. Your career isn't what it used to be. Just hand over the iPhone, buddy.”

Elaine: “Hello, Jerome. How’s about you giving that old phone to little old Lainy?”

George: “Jerry, is hanging onto that piece of plastic really worth giving up $10 million? You give it to Newman and I'll tell you what happened in The Contest

Newman, giggling: “You haven’t got a chance, Jerry.”

Seinfeld, seeing someone else in the audience, shouts: “Uncle Leo! Help me!”


Uncle Leo comes up on stage, shouting: “Jerry! Hellooooooooo!” He viciously grabs for the iPhone.

Seinfeld falls to his knees, clenching it in his fist as they try to tear it away. He scrunches up his face and hisses: “Microsoft!”

The screen goes black.



Jeff Matthews
I Am, In Fact, Making This One Up


© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.