The Bear’s Lair: A Crypto Christmas Carol

I wrote an “E-Christmas Carol” in 2001, set two years earlier, in December 1999. As prophesy, it was only so-so, but it captured the zeitgeist of the dot-com bubble quite well. This week, since we are in a new version of 1999’s gigantic bubble, I thought I would have another go….

Marley was imaginary, to begin with. There is no doubt whatever about that. He was an Apple Virtual Partner, the latest electronic wonder produced by Apple Inc. (Nasdaq:AAPL) to assist small businesses by providing them with a partner which could advise them on the aspects of running a business in which they might not be expert. If running your business did not involve including gluten-free options on the lunch menu, offshoring your revenues and adhering to the most stringent standards of Californian political correctness, of course, he was not all that useful.

Nevertheless, Eben Scrooge consulted Marley fairly frequently. As the inventor and largest shareholder of the crypto-currency Scamcoin (SCAM) now worth $4.2 billion on CoinMarketCap, he often had need of conventional business advice, even if accompanied by pious sermonizing. His social skills had rather atrophied in the decade he had spent in the basement.

On the day before Christmas, foggy and rainy as often in the Californian December, yet nowhere near cold enough to be Christmassy, Scrooge sat in his basement. His 2.4 million SCAM tokens made him a billionaire, yet Silicon Valley’s office lessors had refused to take SCAM tokens in payment for office space, so he was compelled to remain in the basement he had inhabited since he lost his office job in 2001. It was a cheerless place; bare concrete walls, a pile of pizza boxes in the corner and two metal desks, the other occupied for the last four years by Bob Cratchit, his engineer.

Cratchit did the grunt work on maintaining Scamcoin’s blockchain. He had thirty years’ experience in programming, but had been unable to find a job after the dot-com bust. Since he had a family, he had been forced to accept the pittance that Scrooge paid him – jobs for 52-year-old programmers did not grow on trees. His wife and children, including the young prodigy Teeny Weeny Tim, lived in another basement, less well furnished than Scrooge’s — Silicon Valley rentals being what they were. Of course, he too was rich in SCAM tokens, though nowhere near as rich as Scrooge, but a clause in his contract with Scrooge prevented him from turning them into cash for the next decade.

Scrooge was not feeling especially benign, to Cratchit or anyone else. Teeny Weeny Tim, a software prodigy, had taken to investing in Initial Coin Offerings using his father’s credit card, but being only 10 years old, had believed all the hype in their literature, and had landed heavily in debt. Now on Christmas Eve, Scrooge had discovered a virtual hole in his SCAM tokens wallet. Darkly, he suspected Teeny Weeny Tim of hacking it to cover his ICO gambling losses.

Eventually Cratchit came to Scrooge, shuffling his feet slightly:

“Since it’s Christmas Eve, Eben, and it’s 7.30 already, I wondered if I could get home to the family.”

“What use is Christmas to me? A day older and not a SCAM token richer. You will be in tomorrow, won’t you, it’s Monday.”

“Yes, Eben, but it’s Christmas Day, and today was Sunday.”

“Bah, humbug.” Cratchit left, and Scrooge spent another couple of hours refreshing his screen, watching the endlessly fascinating gyrations of the Top 100 crypto-currencies, Scamcoin among them. Finally, he turned off his screen, munched an old slice of pizza that was lying round, and trudged upstairs to the gloomy apartment which was all he could afford. He turned on the light switch, but then realized there would be no light; he had been cut off by Pacific Power, because of his gigantic power usage mining Scamcoin and the resulting unpaid electricity bill. He shuffled towards his unmade bed, then his iPhone buzzed. It was Marley.

“Go away!. What do you want with me?”

“Much. You need advice; I am here to give it to you.”

“It’s 11pm Christmas Eve. I need sleep, not advice.”

“On the contrary, there is no better time for advice. I am here to show you that you have a chance to avert your fate.”

“What fate? I’m worth $1.17 billion – at least I was ten minutes ago.”

“Not in real money, Scrooge. Your billion is no more real than I am. As a Virtual Partner, I am exceptionally good at telling the difference.”

“But I can sell my Scamcoin…”

“And pay the electricity bill? Not without crashing the market, you can’t. Sell enough Scamcoin to pay Pacific Power, and you will crash the market. It’s a very thin market. That’s because it has no reality, like me. You will see what I mean. Before dawn, you will be visited by three Robots. They will be virtual, like me, but they will have the power to show you what was, what is, and what will be.”

The iPhone want dark. Scrooge took off his clothes, sank into the bed, and entered an uneasy sleep. Soon, he was woken by the iPhone ringing. Before him stood a humanoid robot, complete with a red Santa Claus hat.

“Who are you?”

“I am the Robot of Christmas Past. Come, I will show you some things in your past, to remind you of your errors.” Scrooge felt himself being drawn towards the Robot, then they walked through the wall, which had become misty, into a large office conference room full of revelers.

“Where am I?”

“Look around you, and you will discover.”

“Oh look, I know now. It’s my first office Christmas party. And there is old Fezzy!”

It was indeed Carlo Fezzi, or Chuck Fezzy as he’d anglicized his name on coming to the United States, presiding at the punchbowl at the 1999 Christmas party of Fezzy “And here’s to Super Bowl XXXIV, for I am delighted to announce our commercial has secured prime position in the telecast, just before half time.” The room darkened, and light flickered on a screen. A dancing wig pranced across the screen on a football field followed by the Radio City Rockettes. They began a jingle: “Help yourself to a better gig. Look your best in a Fezzy Wig.” At the end of the jingle, the animated wig picked up a football and kicked a field goal.

“Oh, I remember that,” said Scrooge. “The commercial was a flop. Fezzy had to pull the IPO a month later, and went bust in 2002. Turned out Internet mail order wigs were not a viable business. He was right, you know, just 15 years early. If he’d done it now, it would do fine. But look at all those people enjoying themselves. I’d forgotten office parties used to be such fun.”

“That’s because Fezzy was dealing in real objects, in that case wigs and hairpieces” said the robot. “They needed a bunch of programmers organizing the Internet program, plus an office full of people dealing with customers, plus a warehouse full of hairpieces, also well staffed.”

“Horribly inefficient,” said Scrooge.

“No doubt, but it made for better Christmas parties. Still all those hairpieces fetched nothing in the liquidation. Only the animated wig was valuable – sold for $125,000 to a used car dealership in the bankruptcy sale.”

The scene devolved into mist, and another appeared, perhaps a couple of years later. An ethereally beautiful girl was sadly waving away a slightly older Scrooge’s hand. “No, Eben, it doesn’t work. You have become completely absorbed with the virtual world. I need somebody practical.”

“Belle went off and married somebody else, and they have lived happily ever after. Silly girl, I’m now worth $1.17 billion” said Scrooge sadly.

They were back in Scrooge’s bedroom again, the robot departed and again Scrooge descended into a fitful sleep, before being woken again by a second robot: “I am the Robot of Christmas Alternative Present. Come with me.” Scrooge followed it to the dinning room of a large suburban house, where Bob Cratchit was carving a splendid turkey.

“What’s this? Cratchit affluent? I thought he was permanently downtrodden.”

“This is the World Without Ben Bernanke. Bush appointed Larry Lindsey Fed Chairman in ’05, and Lindsey did no bailout in ’08 and raised interest rates quickly from zero in ’09. President Mitt Romney, elected in ’08 because he understood the financial crisis better than Obama, cut taxes and regulations and produced a high-productivity economy in which there were great jobs for middle ages techies. Cratchit is Senior Vice President of, which beat out Facebook in this timeline. Here there is also a complete lack of crypto-currencies – Satoshi Nakamoto’s day job in 2008-09 was far too engrossing for him to spend time in his basement inventing them.”

The scene faded, and again Scrooge found himself alone in his room. Sleep was impossible until sure enough, an hour later appeared a grim black robot: “Come with me, I am the Robot of Christmas Yet to Come.” Once again Scrooge felt himself drawn to the scene, in this case a desolate urban wasteland with addicts in the gutters, and no sign of productive economic activity.

“This is Christmas 2037” said the Robot. “U.S. Gross Domestic Product is $100 trillion.”

“But why is everyone destitute and unemployed?” asked Scrooge. “This is, a U.S. city, isn’t it?”

“Yes, it’s part of Queens” said the Robot. “You don’t recognize it because it’s one of the parts that nobody goes to. But other cities are quite similar.”

“But why?” asked Scrooge. “If GDP is $100 trillion, then unless there has been huge inflation we’re all much richer than in 2017.”

“Yes indeed” said the Robot. “But Gross Imaginary Product is $99.7 trillion.” The U.S. economy has stopped making physical products at all, and concentrated entirely on the virtual arena. This is the ultimate destination to which crypto-currencies and the virtual economy are leading.”

“How can I avoid this horrible future?” asked Scrooge.

“That’s for you to determine,” said the Robot. “But on your current course, this is where you will end up.”

They returned to Scrooge’s bedroom, and he slept fitfully for the remainder of the night. When he woke, he determined to be kinder to Cratchit, at least. He logged on, and tried to order a turkey for Cratchits family, for same-day delivery, but alas, his dollar credit cards were blocked. Only his SCAM tokens were available, with which he could order only a virtual crypto-turkey. With the Ethereum blockchain being so slow, it would take a full four days to “eat” but Scrooge doubted whether it would prove truly satisfying.

There was a knock at the basement door. Scrooge opened it and did not for a moment recognize his visitor. It was Belle, but a strangely altered Belle. No longer ethereal, or indeed beautiful, she had enjoyed two or maybe three facelifts and a considerable enhancement of her frontage. Indeed, she had bulked out all over, but it was very clearly rippling, glowing muscle not fat.

“Belle,” gasped Scrooge. “Er- how’s your husband?”

“Divorced,“ responded Belle. “All good things come to an end, and it’s time to try something new. I heard you were worth over $1 billion, but see no evidence of it.”

“$1.19 billion this morning,” said Scrooge. “But my SCAM tokens are very illiquid.”

“What YOU need,” said Belle, “is some resources spent on marketing and some good old American hustle. Fortunately, you’ve come to the right place. Twenty years in real estate have left me not short of a buck or two – and I can convince ANYONE of ANYTHING.” She flexed her left bicep.

“Gug” said Scrooge, overwhelmed.

“Come with me – we’ll sort you out. First, you need a session in MY basement, which contains the best gym in Santa Clara County.” She led Scrooge to a gleaming red Tesla Model S. A short drive took them to a magnificent McMansion, well over 15,000 square feet. The aromatic smell of turkey, cooked by Belle’s skilled staff of illegal immigrants, wafted from the dining room windows. Scrooge realized he was indeed extremely hungry.

Soon they were seated around a groaning table. At Belle’s hurried invitation, the Cratchits had joined them, since this seemed a better deal than Scrooge’s crypto-turkey. Belle glanced at Scrooge, running her tongue over her lips, in anticipation of joys to come. “See,” she said, “Physical beats virtual, every time.”

Glancing briefly upwards from his phone Teeny Weeny Tim mumbled: “God bless us, every one!”

The 2001 version:

The Bear’s Lair: An E-Christmas Carol

(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)