first majestic silver

Businessmen, CEOs and Other Desperadoes

July 7, 2002

Jean-Marie Messier arrived at the pearly gates. "This is heaven?" he asked. "Yes, Mr. Messier, enter," came the response. Behind the doors, Messier saw flames shooting up and desolation everywhere. "Wait a minute...I thought this was heaven," he protested. "Ah, no one told you... Heaven and Hell have merged."

Joke, thought by some to be funny,

reported in the Liberation

Poor J2M.

"The ex-master of the world negotiates his surrender," reads the headline in today's Liberation. The story might have concerned Kozlowski or Ebbers or any one of dozens of business execs under house arrest. Instead, it introduced an article about France's own wunder-capitalist, merger-king Jean-Marie Messier, CEO - until very recently - of Vivendi Universal, the world's second largest communications company.

On December 5th, 2000, when all things seemed possible, you could have bought a share in the newly-merged Vivendi, Seagram, Canal+ group for 70 euros. Two years later, "J2M", as he is known in the French press, announced some bad news. Vivendi Universal lost $13 billion in the year 2001 and had accumulated $34 billion in debt. By April of this year, the stock had lost half its value. By last week, it was down 2/3rds and yesterday, according to the Liberation article, J2M picked up the phone, called his staff in America and announced his departure...

J2M would be happy to walk away...take a vacation...get some sun, maybe. Or perhaps write a book. But, there is a little problem. Like Ebbers, Gilder and so many others, J2M was a believer. He borrowed $25 million to buy Vivendi Universal shares back when the stock was trading at 50 euros (more the twice the current price). Now, say people close to him, the poor man is close to bankruptcy.

Every revolution needs its intellectuals, its fools, its martyrs and its executioners. The revolution of the Information Age was no different. J2M...welcome to the guillotine.

Of course, $25 million is barely pocket change to many American CEOs. Under normal circumstances, passing the hat at any reasonable social gathering in Boca Raton or East Hampton ought to bail out the hapless frog. But now, CEOs of publicly-traded companies are all slinking off into hiding, fearing for their lives. Every time one of their breed gets his name in the paper, the others all breathe a sigh of relief...and look the other way as the poor man is trundled off to the scaffold. None come to his aid. Heck, they all claim they never met the man. And no way did they do what he did...uh uh...

At this point in today's letter, it is probably appropriate to declare an interest. Your editor has been the CEO of a communications company for the last 20 years. You wouldn't know it, of course. From his reckless demeanor, his Land's End wardrobe, and his low-rent headquarters in Paris's homosexual quarter, your editor is more likely to be mistaken for a hack journalist with a drinking problem than a hard-charging superstar CEO.

Not so J2M; he went to all the best schools, including France's elite ENA (where your editor is hoping to send Henry - so French taxpayers can pay the tuition). He took over one of the country's most important companies - Generale des Eaux - at age 40. Quick witted and ambitious, he soon became a media favorite and was rumored to be having an affair with Sophie Marceau, a beautiful actress.

No one suspects your editor of having an affair with a French film star. Alas. He has the imagination for it: what he lacks is the opportunity and the ambition. Whatever his virtues, your editor is too dull for life in the fast lane.

Still, he can't help but feel a little sympathy and solidarity with corporate CEOs who were lured into a life of high-living and low crime in the late '90s and now find themselves spat upon by every crackpot, politician and hack in Christendom. What's more, out of pure contrariness if nothing else, we feel we should stand up for our class.

We know quite a few CEOs. Whether they run filling stations or multi-nationals, they are decent fellows who do the best they can. They get to the office early and stay late. They know their businesses, and pay attention to the things they know. Few can afford to waste time gabbing about the Information Revolution, the WAT, or the federal deficit; they're too busy lusting after spiff in the conventional way - by working for it. Few get their pictures on the magazine covers or gain the favors of Hollywood starlets. Instead, they make do with their wives and their businesses...or failing that, find new ones.

Nor does anyone really care if they misstate their income or overestimate their earnings. Most - and your editor is no exception - actually live on what their businesses make. Business earnings are not some mythical figures made up by accountants and CFO sorcerers, but real money that is used to pay the kids' tuition and the family grocery bill. The CEOs we know don't run the risk of indictment for getting the numbers wrong; just the risk of humiliation when their checks bounce. No banks come banging on their doors to lend them money. No investors come up to them after church services eager to buy their shares.

You're not likely to hear these CEOs raving about the wonders of the New Era...but neither will you be stuck with their shares at 6 cents on the dollar.

Messier, on the other hand, might have contented himself with treating waste water at Generale des Eaux. But would that have given joy to the shareholders...or the tabloid journalists...or Sophie Marceau, for that matter? No...Messier had to jump beyond gray water into really deep doo doo. He bought Seagram for $30 billion and then USA Network for $10 billion. Then, he launched an internet portal called Vizzavi, which was - as you might imagine - a total flop. Finally, with the company facing debt payments it cannot make...and the stock trading at only $22 yesterday...J2M had to leave.

We will miss him.

Your editor, never once mistaken for Bernie Ebbers or Jack Welch,

Bill Bonner

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