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SEND IN THE CLOWNS
by Bob Kronish

It doesn’t seem that far back, but 27 years ago, the musical A Little Night Music, written by Stephen Sondheim, opened on Broadway. The words to the show’s hit song Send in the Clowns are uncannily relevant to the stock market. Assume that the character singing the words is either portraying Nasdaq or the rest of the stock market, depending on which one is going up.

Isn’t it rich, are we a pair?

Me here at last on the ground, you in mid-air!

Send in the clowns!

Isn’t it bliss, don’t you approve?

One who keeps tearing around,

One who can’t move!

Where are the clowns?

Send in the clowns!

Isn’t it rich, isn’t it queer?

Losing my timing this late in my career!

Where are the clown’s, There’s gotta be clowns!

Maybe next year…maybe next year.


What brought that to mind was a news release regarding a lawsuit brought by a Canadian investor against the broker/banker Bear Stearns. What makes the story particularly pertinent is that the investor claimed that he incurred $300 million in currency losses based on the poor advice he relied upon from Bear Stearns’ chief economist Wayne Angell, amongst others. That name might not be familiar to you, so allow me to refresh your memory by pointing out that Mr. Angell was, for two decades, one of the illustrious members of the Federal Reserve Board, and worked with Alan Greenspan for a number of those years.

But here is the real kicker. Mr. Angell’s boss at Bear Stearns is the Chief Executive, James Cayne. As a major witness in the jury trial that ensued, Mr. Cayne raised the defense that since he considered Mr. Angell "an entertainer", his company could not be held responsible for the investor’s loss. To emphasize this defense strategy, Mr. Cayne cited as fact, that economists are right only 35 percent to 40 percent of the time, and "they don’t really have a good record as far as predicting the future." Mr. Cayne continued, "I think that is entertainment, but he [the investor] probably doesn’t think it is."

I always knew that economists could make it in showbiz as comedians, could tap dance their way around any economic problem, and could croon any tune they were paid to sing. The jury found against Bear Stearns, but could not quite decide who was the bigger clown, Mr. Cayne or Mr. Angell. However they did break out in song after the verdict, singing from the same Sondheim tune:

Don’t you love farce?

My fault I fear!

I thought that you’d want what I want,

I’m sorry my dear.

Quick send in the clowns…

Don’t bother…they’re here.

Yes! They sure are.