Wednesday, September 19, 2007

The Pawn Shop

#296 The Pawn Shop

No one knows the value of anything anymore except Hershel. Hershel runs this pawn shop down on Third on the lower east side. It’s an old school kind of place. No re-insurance here. No phony loan-y business. Just Herschel and his pawn shop, dust and dirt at no extra charge.

You bring him what you think is a Rolex, he’ll tell you in a heartbeat that it’s worth ten bucks, bought on the street from a guy with an attaché case on a little stand made for instant collapsing when a patrol car is spotted a block away.

Or, yeah, it’s a Rolex, alright. “I’ll give you 200 bucks cash or lend you 250.” “But it’s worth $2,000! See? Here’s the receipt.” “Nah, two grand’s what you paid for it, not what it’s worth.”

Hershel, chubby, unshaven Hershel, with the rolled up sleeve and the vest that won’t close and the beefy hands and the big lower lip knows stuff that the big mortgage companies didn’t. He knows what stuff is worth. And he knows you if can’t pay him back.”

And his customers know, too.

Hershel’s got the cash in his safe, or he doesn’t. He won’t lend you what he doesn’t have. He won’t pass his risk on to some other sucker. And he won’t let you borrow what you can’t pay back.

Hershel should be running Citi or Chase or one of those. Straighten this whole financial mess out in a heartbeat.

“Guys make a loan,” he says. “They don’t check the guy out. They got Harvard MBAs. They got State CPA licenses. Then they get worried so they sell the loan to some other guy and walk away with their cash. The other guy knows even less than they do.”

Hersh, you got a point.

“You come in here, you give me a pair of diamond earrings, I lend you a few hundred,” he says, “you can’t pay it back? So- long, earrings. They’re mine. I keep it simple.”

“Fella comes in here one morning last week,” he says, “wants to hock his condo – one of those pre-war jobs on the upper east side. I say gimme the deed. He gives me the deed. I look it over and tell him it’s pretty and I’ll lend him thirty bucks for it. He’s hopping mad. Says the condo’s worth two million at least. I say I don’t care about the condo, I’m talking about the pre-war deed, the piece of paper. He storms out.”

Hershel knows what stuff is worth. The rest of us, maybe not.

And that’s the first step into the financial vortex we’re in now. Hershel doesn’t try to hedge his losses. The buck starts and stops in his little safe.

Hershel can size you up in two seconds flat – knows if you’re coming back to get the Mont Blanc pen you just hocked for 50 bucks. Knows he can sell it for 75 if you don’t. Knows he won’t have to force you out on the street even if you DON’T come back for the thing.

Wall Street needs more Hershels.

I'm Wes Richards, my opinions are my own, but you're welcome to them.

(c) 2007 WJR

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