Let the games begin!

In honor of the Olympic games in China, I’ve decided to stage my own “Special” Olympics based on financial events. I, like most people, have been astounded by the displays of physical prowess going on in Beijing. However, I’m equally impressed by other Herculean displays going on in the financial markets.

After all, why should we merely applaud those who have developed their physical prowess to near superhuman levels? Shouldn’t we also applaud those who excel in other arenas of human effort… like backtracking, or blowing hot air, or flat-out incompetence?

Personally, I’m as impressed by someone who can contradict themselves in front of the American public as I am by someone who can leap over a giant hurdle using a pole. Both activities require great focus, determination, and the ability to ignore glaring issues that would unnerve most of us e.g. “what happens if the pole breaks?” or “what happens if people realize I have no idea what I’m talking about?”

So I’ve created a number of new events… as well as the world champions for each.

1) The Men’s Backtracking: Publicly Reversing Your Policy

The Men’s Backtracking is judged based on three key criteria. They are:

• The amount of time between your initial public statement and subsequent self-contradiction (the shorter the time span, the better).
• Your ability to publicly contradict yourself without showing a hint of self-consciousness.
• The significance of the issue you reverse positions on.

There were several frontrunners for this event. Among them was Merrill Lynch analyst Guy Moszkowski, who changed his ranking on Lehman Brothers a total of four times within a nine day period in June. Then of course there is Ben Bernanke—a financial decathlete if ever there was one—though he was disqualified for not actually following through with his verbal reversals: he never actually got hawkish, but simply brayed hawkishly.

No, the champion for the Men’s Backtracking is Hank “Super Hank” Paulson. On July 13, Hank ruled out a bailout for the massive quasi-governmental mortgage lenders Fannie Mae and Freddie Mac. He then completely reversed his position, asking Congress for a blank check to bolster up the two companies.

Paulson gets credit for the timing of his reversal—less than a few weeks—as well as his ability to officially “rule out” a bailout then ask for an unlimited amount of cash—after all, it’s not like he named a specific price. However, it’s the magnitude of the issue he reversed his stance on—$5 TRILLION worth of mortgages—that truly propels Paulson to superstar status for Backtracking.

2) Men’s Side-talking: Speaking Out of Both Sides of One’s Mouth

Virtually every Wall Street CEO is a high contender for this one. John Thain of Merrill Lynch is a particularly talented individual for this event, having denied the need to raise capital while raising capital numerous times this year.

However, it is our main man, “Bailout” Ben Bernanke who takes home the gold for this event. Bernanke has been talking about inflation as a “concern” for months now but has left interest rates in negative territory—below the current rate of inflation—time and time again.

It’s been a dazzling performance, not the least for Ben’s resolve. With virtually every sector you can name—industrial chemicals, chocolates, breakfast cereals, laundry detergents, breweries, etc—being forced to raise prices to maintain profits due to the increased costs of production, Ben has remained resolute about his negative “real” interest rates. He sounds like a Hawk, but inflates like a Dove. A superstar if ever there was one.

3) Women’s Giant Slaying: Taking Down a Financial Institution

Jessica Walters, former Vice President of Credit Strategy at Bear Stearns, was a chief contender for this event. Walters was one of multiple execs in charge of observing/maintaining Bear Stearns’ credit investments. We all know how that turned out.

Then of course there is Erin Callan, former CFO of Lehman Brothers, who got demoted when the investment bank came under fire for its 2Q08 $2.8 billion loss as well as various peculiar accounting practices—changing its financial results between the announcement and filing of the 10-Q, suddenly announcing $6.5 billion in collateralize debt obligations (CDOs) after fervently denying owning any of them, etc.

However, the winner for this event comes from the opposite side of the Wall Street spectrum. She’s not an executive, but an analyst, though her impact on financial markets has exceeded that of even Wall Street CEOs. I am, of course, referring to Oppenheimer financials analyst Meredith Whitney.

Whitney first made a name for herself last fall when she announced Citigroup would have to cut its dividend. Looking back on it, the proclamation was nowhere near as damning as subsequent statements. But at the time, Wall Street and the financial markets were still operating under the delusion that the credit crisis was contained and would largely be confined to subprime mortgages. Whitney’s statements not only catapulted her to the big time; they also earned her a number of death threats.

Whitney’s call was dead-on as were countless subsequent forecasts, each more bearish than the next. She’s now reached such stature that Goldman Sachs’ share price fell 6% the day she cut her 2008 and 2009 estimates for the investment bank. God help any other financial firm she decides to focus her attention on. Bully for you, Meredith.

This concludes our coverage for this year’s Bling Bling Games 2008. Due to space constraints we were unable to cover other notable events such as Most Vilified Speculator—David Einhorn and Bill Ackman were strong contenders—Greatest Market Manipulation—Bernanke and SEC Chairman Chris Cox were deadlocked, though a lifetime achievement award for the event went to Alan Greenspan—and The “Bottom” Calling Marathon—virtually every Wall Street CEO, pundit, and commentator out there. I’m Graham Summers, thanks for tuning in.

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