Aubrey McClendon - From Billionaire To Pauper
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Chesapeake Energy (NYSE: CHK) CEO, Aubrey McClendon, disclosed on Friday that he was forced to sell nearly all of his shares of common stock in the company over the past three days in order to meet margin calls. At last count McClendon held 33,469,359 Chesapeake shares, recently worth a few billion. McClendon ranked #134 on the 2008 Forbes 400 list of richest Americans.
Aubrey is our new poster boy for the credit crunch. While Chesapeake doesn't sell subprime loans, the lesson is the same --- If you buy something using other people's money and the market moves against you, you are screwed. This holds true for houses, stocks, CDOs, MBS, and anything else for that matter.
Why would Aubrey want to leverage up his stocks, he was already a very wealthy man? There is only one reason - greed. This explains our current situation. U.S. consumers and companies wanted things and they wanted them now. Banks gave it to them on the premise that houses or others assets would keep going up forever. Then POP!
"Neither a borrower nor a lender be."
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