By Bob Gaydos

SpaceX, SpaceX, SpaceX, SpaceX, Musk, SpaceX, Tesla, SpaceX, SpaceX, trillion, Musk, SpaceX …

If you had even a fleeting awareness of media reporting on the stock market for the past week or so, you could not escape learning that Elon Musk was offering what turned out to be a record-breaking IPO, allowing all the world to buy stock in his out-of-this world company, SpaceX.

You would also have learned that Musk would retain control of 80 percent of the shares of the newly traded company and, oh yeah, that the rush to buy shares and the resulting valuation increase in his company had made the South African billionaire, the world’s first trillionaire.

The world’s richest man just got much richer.

Shares for SpaceX were initially offered at $135, closed at $161 on the first day and have risen and fallen in the week since the offering as all the financial “experts” try to figure out if this is a really good investment or not.

That’s not what this is about. This is about what the world’s richest man — the world’s first trillionaire — plans to do with his unprecedented wealth.

Take it to Mars. Or the Moon. Or, preferably, both.

Because, apparently, there’s nothing a trillion dollars could do to make life on Earth better, even simply more livable, for millions of earthlings in need of food, clean water, a decent place to live, good health care and a basic education.

No, the man born into wealth and possessing a gift for buying other people’s excellent ideas and turning them into the promise of progress, albeit apparently unfortunately delayed by other people’s short-sightedness, wants to create a colony on Mars and permanent habitats (domed condos?) on the Moon for those who won’t live long enough for the trip to Mars.

Swell.

Just what we need. A dream of a better life on another planet, presumably populated by residents of Musk’s choosing, which is to say, all white. Maybe even all conceived by him, the father of 15 right here on Earth.

He also wants to put energy stations in space to handle the load for the coming AI revolution, which holds the promise of creating a perfect society by eliminating millions of jobs on Earth for those who actually still have access to food, water, health care, etc. And, not to forget the military, Musk wants to boost the payloads of his Starship rocket to be able to transport military personnel and materials anywhere on earth in less than an hour. Just like Amazon. Make war more efficient for the highest bidder.

I don’t get it, but I can’t say I’m surprised. After all, it was Musk whom Donald Trump turned to when he wanted to eliminate tens of thousands of federal jobs, eliminate food and health programs in the United States and elsewhere on the planet and in general snoop around in everybody’s life.

Doge, they called it. Department of Government Efficiency. Musk failed at that. Somehow, his young geniuses couldn’t manage to follow the law while they set about destroying people’s lives. Trump fired him. But, heck, even driverless vehicles have problems sometimes, right? What’s the big deal? We’ll figure it out. He just needs a few billion more to work out the kinks.

It stinks. Yet billions are pouring into Musk’s new publicly traded company because no one apparently wants to miss out on the promise of profit, if not the actual thing. Spending billions to improve the lot and lives of people in Third World countries is apparently not an attractive investment. Tossing a few billion at Louisiana, Mississippi, Alabama, West Virginia, etc.? Forget about it. Even their own members of Congress wouldn’t buy into that.

The thing is, Musk could do both. He could take care of the many needs on Earth and still go to Mars with a pit stop on the Moon. Maybe there’s something in the genes of the super rich — at least some of them — that allows entitlement to smother gratitude. Giving back is not in the vocabulary. Heck, Amazon’s Jeff Bezos, number two richest person on Earth, felt the need to buy the Washington Post, one of the nation’s most respected newspapers, and turn it into a hollow shell of its reputation because he didn’t like what it said about his rich friends.

Musk, of course, is entitled to do as he wishes with his money, within the law. But his new publicly traded SpaceX will allow the richest man on the planet to do as he wishes with a lot of other people’s money as well. I’m not sure a lot of people have thought through the return on their investment.

Facebook founder Mark Zuckerberg married girlfriend, Priscilla Chan. AP photo

… pretty soon you’re talking about real money                                                                                                By Bob Gaydos

Mark Zuckerberg lost $2 billion Monday, the second day after his company, Facebook, raised $16 billion in an initial public offering. Maybe you didn’t notice because Mark is still a long way from visiting the soup kitchen.

Facebook sold 421.2 million shares at $38 a share on May 17, a Friday, the biggest technology IPO in history. By Monday, the share price had dropped below $34, delivering that “blow” to Zuckerberg’s wallet. By the close of business Tuesday, Facebook shares had dropped to $31, but the founder, whose financial interest in the company stock was estimated at $17 billion, was reportedly enjoying his honeymoon and not fretting about the public’s judgment that his wildly popular social media enterprise was also wildly overvalued. He actually got married after the IPO, which to me implies true love.

At roughly the same time, JP Morgan Chase, the bank that is too big and too smart to make an investment mistake, much less fail, announced it had blown $2 billion — there’s that number again — on something called synthetic derivatives. This is what we make in America today instead of shoes and cameras and tires and auto parts. Jamie Dimon, the Zuckerberg of JP Morgan, was uncharacteristically embarrassed and apologetic about the loss, which, as with Zuckerberg, barely put a dent in the JP Morgan bank account, although it did get some people fired.

The problem with the JP Morgan fiasco, though, is that it is a bank as well as an investment company and $2 billion is still a lot of money to lose. It tends to weaken people’s trust in your judgment and maybe even make them put their money elsewhere.

Even worse, nobody, not even supposed experts on complicated investment schemes, can seem to explain what the heck a synthetic derivative is in the first place. I asked a college business professor to explain it and all I got was a blank stare. As far as I can tell, a synthetic derivative seems to be something akin to a fantasy baseball league for bored stock traders looking to hedge their bets on other investments. Whatever that means. I think they make it up as they go along. The main requirement seems to be that not even the people who create it know exactly what they’ve created. Maybe Mary Shelley would understand.

Once upon a time, banks weren’t allowed to take such risks with clients’ money, but that was before all the smart Wall Street guys and gals convinced their bought-and-paid-for members of Congress that really, really, really, really, really big banks didn’t need to be regulated and could be trusted to deal responsibly with complex investments as well as mortgages and savings accounts. Why? Because they were really big and really smart and could make a heap more money for the people who were bankrolling congressional campaigns — and for themselves. And because most politicians were too embarrassed to admit they didn’t have a clue what the big banks were up to.

I don’t venture into the world of high finance often because, like most Americans, never mind politicians, I don’t understand it very well. But at least I admit it. Plus, I get depressed hearing about $25 million golden parachutes for CEOs who mess up, lose other people’s money, but still somehow deserve to be handsomely rewarded for their service. It seems to me if you can’t hit a curveball anymore, you get released. Period.

I also find it had to understand why anyone these days would trust the same bankers who mortgaged this country’s future with phony baloney home loans to people who didn’t have a prayer of repaying them, then gobbled up federal bailout money to make profits, and then foreclosed on all those people to whom they gave bad mortgages — often without bothering to do any real follow up on the loans and their clients to see if they could maybe work out a way to pay.

These are not honorable people. These are people who see only the need to make more money, in any way possible, including conjuring synthetic derivatives. I’d rather invest in a crystal ball factory. The people who work at these super banks are this way because no one has paid the price for their greed. They say they are merely applying the principles of a free market to their trade — a market that returns less than 1 percent on savings accounts and charges fees every time someone answers a customer’s question.

This change in the approach to banking began at the end of the Clinton administration with repeal of the Glass-Steagall Act, which prohibited banks from co-mingling commercial and investment accounts. Risking clients’ savings by creating exotic investment packages and selling them to other clueless investors was forbidden.

In the wake of the 2008 banking crisis, the Dodd-Frank Bill was enacted, to return some modicum of regulation over the super banks that were created when Glass-Steagall was repealed. Part of that bill is the so-called Volcker Rule, which prohibits proprietary trading by commercial banks in which bank deposits are used to trade on the bank’s investments. The rule is named after former United States Federal Reserve Chairman Paul Volcker, who was named chairman of the President’s Economic Recovery Advisory Board by President Obama when he inherited the banks’ financial mess in 2008. Things being what they are in Washington these days, the Volcker Rule is not scheduled to go into effect until July 21 of this year. And no one expects that deadline to be met.

What’s more, some economists feel the rule is still too weak because it is full of exceptions and would not have prevented the JP Morgan Chase fiasco. (Volcker himself warned about the risks of derivatives.) All of this has, predictably, led to a lot of calls for stricter regulations on these super banks.

But Morgan’s Dimon, chagrined and embarrassed as he may be, isn’t ready for a return to the old days, when banks were banks and investment companies were investment companies and people knew their money was safe. In fact, he wants Volcker weakened so his minions can try to create even more exotic investment thingamajigs. Apparently, he just plans to watch his help a lot closer from now on and wants us to trust that he will do it. Shame on him.

Most likely, given the political climate, nothing is going to change. Democrats will argue for more regulation as they have for years. Republicans, who lately seem to believe only the rich should get richer, will demand no regulation at all. Meanwhile, these 20 or so super banks that now control the U.S. economy will continue to try to create billions out of nothing because sometimes it works. No one knows quite what they do, but everyone involved at the bank winds up with tons of money when it works and a chunk of that money finds its way to congressional campaigns. So it apparently doesn’t matter that none of it seems to create jobs or promote economic development or entrepreneurship. The derivatives just keep feeding the same overstuffed mouths over and over again.

Too big to fail? Too big to regulate? These banks are really too big to exist, but no one except the Occupy movement is making this argument publicly and persistently these days.

Which brings me back to young Mr. Zuckerberg. I don’t feel sad for him that his IPO didn’t cash in as big as some had predicted. (Some of that, by the way, was due to bad calculations by the NASDAQ and the big banks that handled the initial offering.) He and his partners made their millions or billions and one of them (not a native American) even renounced his U.S. citizenship to protect his profits from the IRS.

But hey, the way I see it, they’re entitled. Heck, they created Facebook with their own brains and there is nothing synthetic about it. They made it into the closest electronic version of a living, breathing organism. It has a pulse. It is a vehicle for people around the world to communicate instantly with each other at any time. Their product is useful, portable, entertaining, ubiquitous, optional — and free. In our economic system, that should equate to profitable. It may just not be as profitable as its creators thought it was.

But that’s what happens when people have even the slightest understanding about what they’re being asked to buy.

 bob@zestoforange.com