Investors were close to a state of “stampeding Titantic” panic as the EBBS market was thrown into “turmoil” as a result of the recent hard line the U.S. government has taken against Outsize Executive Bonuses. Investors, pension funds, and individuals had viewed the EBBS market, or the Executive Bonus Backed Securities market, as one of safest places to put their money. But this past year, as the taxpayers’ outcry over the size of executive bonuses reached a crescendo, the EBBS market suddenly lurched into a downward slide and plunged. Executives and traders are said to be “both shocked and aghast” over the “breakdown in the entire American value system.”
Said one New York Money-fund manager,
“EBBS based funds were guaranteed to maintain their value no matter what happened to the economy at large. They were considered to be both the life vests and anchors on everybody’s money-fund ship.”
Mutual and money-managers claim that even in their worst case projections, their analysis did not predict a fall in executive bonuses and thus the securities which whose value such bonuses support. EBBS instruments were viewed as the “hedge of hedges” and could keep any sinking mutual fund afloat until a market improved.
One surprised New York money-fund manager summed up the Wall Street view:
“If the economy did well, executive bonuses went up; if the economy listed and took on water, executive bonuses went up; if markets got torpedoed, executive bonuses went up. If executives became so obsessed with the ninth hole at some upstate New York golf course and could not concentrate on their work, executive bonuses with up. And if executives fell from their yachts and drowned, their bonuses, their life insurance payments, and wife’s mood increased in value. EBBS were predicted to increase in value no matter what happened with the rest of world economy. “
Stated another baffled, but somewhat removed, money fund manger in Princeton, New Jersey:
The collapse of the EBBS market is akin to finding radiation-tainted rats digesting the life jackets at the back end of the lifeboat of your market-tossed ship. It means market portfolios, everywhere, are drifting about, half drowned, in a sea whipping wild with bad bear market news.”
Financial experts explain that an Executive Bonus Backed Security is a financial instrument whose value is derived from the size of executives bonuses at leading financial institutions and other U.S. corporations. In purchasing the security investors, in effect, bet on executive bonuses rising. When bonuses rose, so did the value of instrument or the mutual fund which had invested in them. Mutual and money-fund managers, viewed purchasing these instruments as a “no brainer” and invested heavy in the EBBS market.
Stated the savvy New York money fund manager:
“Anyone who looked at the breakdown between a financial firm’s profits, their payments to shareholders, and their internal payments to CEOs could have seen these instruments were a solid way to make money. Those who did invest in the EBBS market saw their earnings rise dramatically throughout the past two decades as government regulation declined. What we did not predict is that one day Congress would finagle a way for Government to interfere in financial markets. Who cares if CEOs are a bunch of bumbling bonus brats — as long you have a few EBBS in your portfolio, it is good for you, the market, and the U.S. Economy.”
However the public expressed a different view. Vance Cheers, an English Teacher at Pasco High School in Dade City, Florida, expressed a common taxpayer sentiment:
“These New York City bank bonuses are an economic travesty. I bet the executives are double dipping by doing all the buying in EBBS market themselves”
A French Finance Minister, Calay Malure, echoed the Dade City Teacher:
“The traviste’ bonus of the American system imbues a value price of justice equivalent to zero. Justice must receive a higher price or the incentive for executives will be to work less and dip double with the ladies more.”
The British Minister of Portfolio also agreed with the Dade City teacher.
“So those private portfolio mangers are panicked because rats ate up all their EBBS life vests. I say let’em take a dip in the salt of a real ocean and maybe they’ll stop trying to double their money every half minute at taxpayer’s expense. I’d say to taxpayers now is the time to go into EBBS market and short sell those darn bonus backed instruments right back to the place they came from.”