Drinking at the Baglioni in London tonight? Remember the grisly fate of Crassus...
"IT MAY NOT BE surprising that in these times of excess and extreme wealth, 'Let them eat cake' has become 'Let them eat gold'," sniggered an article in the Boston Globe back in November 1999.
Excess and extremes were everywhere in the financial markets. Enron was about to go from $40 to $70 to $90 (and then zero). Amazon's stock was trading above $75 (it's now $41). And so in New York and Boston, "select restaurants [were] sprinkling gold – real 22-karat gold flakes – atop their sashimi salad, roast lamb, and other pricey dishes..."
Ten years earlier, Tokyo financiers also ate gold flake atop their sashimi – as well as drinking gold-laced sake to wash down their gold-foil rice crackers and gold-wrapped candies. Drunken salarymen in Roppongi sushi bars struggled to eat golden food with golden chopsticks.
But just as the DotCom Bubble found its pin, so the sheen came off Tokyo's financial mania too. The crash starting in 1990 took gold-flaked noodles off the menu all across Japan – for the bigger the bubble, the bigger the bust, to paraphrase Ludwig von Mises.
And so far in post-war history, the collapse of Japan's credit bubble has been unmatched.
The Nikkei dropped 75% of its value by 2001. Japanese industry suffered three recessions to leave its total production unchanged after 12 years. Prices of residential land fell by nearly two-thirds. The male suicide rate went from 20 per 100,000 to 37 per 100,000 – only just behind the rate of growth in male unemployment.
Fast forward to London 2007, and gold's on the menu once again – this time as a drink at the Baglioni Hotel in Kensington. It serves a rum-peach cocktail (basically a Peachy Keen) with gold dust floating on top. Jeremy Paxman, a BBC news anchor, guzzled one for viewers to gasp at this Wednesday. Paxo also gasped at the hotel suites costing £1,900 per night plus VAT...the staff dressed entirely in black (Ermenegildo Zegna, no doubt)...and the courtesy car, a Maserati Quattroporte.
Could London's gold-lipped fund managers soon be sipping their last glass of bubbly? Anyone rich enough to drink gold might want to recall not only the market tops which such expensive tastes have marked in the last two decades.
The grisly fate of Crassus in 1st century Iraq might also give warning.
The fabulously rich ally of Julius Caesar, Crassus was famed for underhand business deals and snapping up distressed property on the cheap. He also grew convinced that he too could lead an army against the barbarians. But his 44,000-strong army was soon defeated by the Parthian horse-archers and camel corp in Mesopotamia...and Crassus met a grisly end in the desert.
"For Crassus," notes Peter Bernstein in his book, The Power of Gold, "the Parthians reserved a special fate that expressed their disdain for the money-mad civilization he represented.
"They finished him off by pouring molten gold down his throat."