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REDNECK PERSPECTIVE: Hedging life’s real risks
JACKSON HOLE, WYO – Blythe Winters-Paulson, vice president of ethics for Goldman Sachs, and for whom I served as a mastress, (a male mistress) spent some time at her home in Teton Pines last week. Her days were filled with electronic meetings with bankers wanting to hedge risk, insurance companies wanting to buy risk, oil companies wanting to buy politicians, politicians wanting to be bought, and foreign heads of state wanting to hide a few billion bucks. There also was Liz Cheney, who was asking to speak to the evils of financial regulation (and coincidentally, take campaign donations) at Goldman’s annual D.C. gala to benefit the families of imprisoned investment bankers.
Blythe unwound at night, using me for stress relief. Blythe is cute, adventurous, uninhibited, imaginative, and keeps a few bottles of single malt scotch on hand. Personally, I can’t fathom why women don’t like being sex objects. Works for me!
One night, while we rested in bed after successfully completing a triple Hong Kong swing with a half French twist (Blythe travels a lot and is willing to share her worldly knowledge), she explained to me how speculation in derivatives based on mortgage credit defaults works. As she finished, I heard opportunity knocking.
If speculation in mortgage credit defaults derivatives made billions, what about derivatives based on things people really need? As Blythe has told me, it’s all about providing financial security, occasionally even for the clients. So I opened a brokerage firm in the back of my trailer. My first call was from a man who had a date with a Utah girl.
“She wants to eat at Ignite,” he told me. “It’s going to cost a couple hundred dollars by the time she gets drunk on $12 cocktails. I want to hedge my financial exposure in case she won’t go home with me, and I need to take another one out the next night. Are you willing to take on some of the risk for a 20 percent premium?”
“Is she BYU or Utah State?” I probed.
“BYU,” he said.
I chuckled. I’d hedge BYU girls for 5 percent, but of course I didn’t tell him. “It will be 25 percent,” I said. He agreed.
Later that night, Bill Fix called from a poker game. “I’m playing bumper, and it’s time to exchange cards. I have a draw at a 4-flush nut low. The dealer just bet $400, and I want to reduce the risk of a call.”
“Who’s dealing?” I asked.
“Forget it,” I said before hanging up. That’s not a risk, it’s a certainty.
Then a climber called. “I’ve just put up a first ascent of a new variation of the Collins-Coombs variation of the Pownall-Gilkey variation of the Owen-Spalding Route on the Grand and then hula-hooped on the summit. I called the News&Guide hoping to get a special feature done on the climb with me on the cover. If they do it, I could get a pro discount at Teton Mountaineering. But if they don’t, well; it will have all been in vain. I want to disperse some of the risk.”
“Who did you talk to at the News&Guide?” I ask.
“Angus Thuermer,” he said. Easy money.
“Sure, I’ll take some of that risk,” I said. When it comes to publishing climbing stories, Angus is even easier than BYU girls.