William O. Perkins III says he turned a $1.25 million profit trading Goldman Sachs Group Inc. stock last week.You would think that would count as a pretty good paycheck for the Houston energy trader. Instead, the experience left him so angry about the demise of capitalism that he says he has decided to spend his profits on advertisements attacking President George W. Bush's planned $700 billion Wall Street bailout.
The president has run into a wall of skepticism over his plan. Troubled voters are calling their congressmen. Academic economists are churning out sound bites. Democratic lawmakers are demanding that the plan include perks for the working classes, while Republicans are saying the plan interferes with the invisible hand of the free market.
But the 39-year-old Mr. Perkins is putting cash behind his anger. He commissioned an African-American arts collective to draw a cartoon depicting Mr. Bush, Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke trampling on the graves of private enterprise and capitalism. Then he paid $139,104 to run the drawing as a full-page ad in the Tuesday editions of the New York Times. And he promises to spend a million more on ads before he is done.
"I see it as trickle-down communism," Mr. Perkins said. "We have a communist action where everybody is paying for the benefit of the few and hoping the benefits will trickle down to everyone else."
Mr. Perkins says he isn't motivated by politics. He hosted a fund-raiser for Democratic presidential candidate Barack Obama and contributed $2,300 to the Illinois senator's campaign. But he says he doesn't know where Sen. Obama stands on the issues he is raising and that his foray into antibailout rabble-rousing came about accidentally.
Normally, he trades natural gas for a $5 billion hedge fund that he declines to identify. He runs a venture-capital firm, Small Ventures USA, and develops energy projects in Central America.
But last week, he was betting his own money on Goldman Sachs. Other investment banks were crumbling -- the Treasury Department had forced Bear Stearns Cos. into the arms of J.P. Morgan Chase, Lehman Brothers was folding up shop and Merrill Lynch & Co. was selling itself to Bank of America. But Mr. Perkins figured Goldman Sachs was poised for a comeback. He liked its low debt levels and sound decision making; the investment bank had famously bet against the subprime-mortgage market that has brought so much grief to so many.
"I just felt that whatever the storm was and whatever bankruptcies happened, Goldman would be a survivor," said Mr. Perkins. "I believed that they had access to capital."
So he says he bought Goldman Sachs at $129 a share. The stock fell, so he bought more at $100 a share. It fell again, and he bought at $90. The next day it rallied and he sold out at an average price of $130 a share, for a net gain of about $1.25 million over three days of trading, he said.
Trouble was, the stock didn't rally because of the fundamental strength of the company, Mr. Perkins said. It rallied because the federal government announced that it would rescue Wall Street from its own subprime follies, he said.
"The stock did OK because the government came in and said, 'No one can fail,'" he said. "It's capitalism on the way up and communism on the way down."
His success left him furious, and he decided that someone had to speak out about the damage such a plan would cause to a system based on the premise that risk can bring failure, as well as rewards.
A Treasury spokeswoman declined to respond directly to Mr. Perkins. But Mr. Paulson told the Senate Banking Committee Tuesday that the government must act swiftly "in order to avoid a continuing series of financial-institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy."
To design his ad, Mr. Perkins called a favorite artist, Dawolu Jabari Anderson of Otabenga Jones & Associates, a four-man Houston arts collective. The group explores African-American themes, and its name is meant to recall the fate of Ota Benga, a Congolese Pygmy put on display at the Bronx Zoo in the early 20th century.
What Mr. Perkins got back was a cartoon showing Messrs. Bush, Paulson and Bernanke planting a flag in the graveyard of capitalism, Iwo Jima-style, with a hammer and sickle where the field of stars would normally go. Mr. Perkins said he plans to run a series of antibailout ads nationwide until he has spent all of his Goldman gains. "I've gotta give that money back," he said.
By: Michael Phillips
Wall Street Journal; September 24, 2008
