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Curb Your Enthusiasm, Ben Stein

The world has changed -- and not for the better.
Author:

What follows is an email I sent to Ben Stein yesterday after reading his column in Sunday's New York Times Business section, "It's Time to Take a Deep Breath."

Dear Ben,

Well, the first days are the hardest days,
don't you worry anymore
When life looks like Easy Street
there is danger at your door.
Think this through with me
Let me know your mind
Wo-oah, what I want to know
is are you kind?

--The Grateful Dead, "Uncle John's Band"

I read with interest your

New York Times

column in the Sunday Business section.

It might be time to take a deep breath. But for another reason, to recognize the dramatic and the cumulative impact of excessive debt/leverage creation on our citizenry (especially the consumer-kind) and to consider the ramifications of the

Black Swan of Credit

event that awaits the unwind.

In your article, you have basically recounted the

same argument

that you have used in prior columns. You write that "the percentage of those who have defaulted is still fairly small." In other words, all will be well, as market participants are overreacting to an isolated credit situation and the

Fed

will pull us out of this limited mess.

Disappointingly you added Cramer to your criticism, using him as a symptom of the overzealous media. Jim is an easy target, too easy, and you take advantage of it in a derisive comment. I, too, have been at odds with Jim but, quite frankly, have

defended

him over the last few years because he is generally well-informed; he educates the individual investor (who believes too much of what he hears in the media), and has actually walked the walk (not just talked the talk) in running a successful hedge fund.

Not lost is the irony that you are critical of Jim Cramer for making a negative market comment, whereas most in the press have derided him for being too bullish. (I guess you can't win, Jimmy!)

Quite frankly Ben, the media is imbalanced almost universally on the side of optimism. They, to quote Cramer, generally (like Administration cheerleaders who "know nothing") are "talking" from their platforms in the press box; they are not on the field. And the "field players", like the CEOs at

YRC Worldwide

(YRCW) - Get Report

,

AutoNation

(AN) - Get Report

TheStreet Recommends

, and many others know the real truth. Economic conditions are a lot worse than you suggest as even our mutual friend, Larry Kudlow, had reduced the usage of his "greatest story never told" line because he, too, recognizes the direction the economy is taking.

You have consistently dismissed the notion that the subslime credit event would morph into an economic event. And, based on Sunday's column, you continue to hold to this view. Quite frankly, I am surprised that the recent signs of broader economic weakness (like Friday's job number) are so readily dismissed by you.

If you don't believe this ursine greybeard, I would suggest that you sit down with Howard Marks, the head of OakTree Management (a $30 billion hedge fund). He is out on the West Coast with you and has written some succinct pieces on the pendulum shift of credit, the lemming-like search for yield, and he has chronicled a number of other financial abuses of the New Millennium. His firm's telephone number is in the Los Angeles yellow pages, and I am sure he will take your call.

Some say the world will end in fire,
Some say in ice.
From what I've tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To say that for destruction ice
Is also great
And would suffice.

--Robert Frost, "Fire and Ice"

Finally, you also appear too quick to dismiss the alternative of "Ice" in your column, claiming "Some strict disciplinarians want to let the markets go through hell and let borrowers and investors suffer," which suggests that the Fed can reignite the economic "Fire." And, with the exception of your reference to a dollar crisis, you don't seem to think that too much can go wrong in our overlevered and unregulated (derivatives) financial world.

Apparently, you have missed some news out of

Barclays

(BCS) - Get Report

,

Deutsche Bank

(DB) - Get Report

,

Citigroup

(C) - Get Report

, all of the leading U.S. investment bankers and others who are up to their eyeballs in structured investment vehicles, bridge loans to private equity deals and unsold "junk bonds."

I could not disagree more with your conclusion that "If I were the editor of the business section for just one day, I would run one immense headline: 'Everything Is Going to Be Fine. Go Back to Work.'"

Ben, the world has changed -- and not for the better. Arguably, the Fed might be

pushing on a string

.

Curb your enthusiasm, Ben, because many of our friends in the financial and banking communities will not have a job when they return to work in the months ahead.

With Respect,

Doug Kass

Seabreeze Partners

At time of publication, Kass and/or his funds held no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.