This weekend, I posted an item about how Chesapeake CEO Aubrey McClendon had to sell most of his stock in the natural gas company due to a margin call. He’s not the only one. This WSJ article goes into more depth,
“I got caught up in a wildfire that was bigger than I was,” Mr. McClendon said Saturday. He declined to discuss his personal finances in detail, but said his personal situation was stable. “I’m fortunate that I have other resources and I’ll be fine ,” he said.
Across the country, a number of executives and other insiders, including Viacom Inc.’s Sumner Redstone and a director of Coca-Cola Enterprises Inc., are facing cash demands from their stockbrokers and banks, demands that are requiring them to sell shares to repay borrowings.
No one so far has flamed out quite as spectacularly as the 49-year-old Mr. McClendon, whose company is based in Oklahoma City.
Casselman points out that McClendon’s basic strategy “of borrowing to buy lots of drilling acreage, often at high prices, has never varied” during his time at Chesapeake.
You know, this reminds me of a book that came out a couple of years ago that I didn’t get all the way through. It was a book by Kevin Phillips, who worked in the Nixon White House and predicted, with his 1969 book “The Emerging Republican Majority,” the eventual Republican take-over of our government. Phillips’ book “American ‘Theocracy” was basically about how three things were running this country into the ground: a dependence on oil, fundamental religion and credit debt. Phillips goes into that last bit further with a book released this past April called “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.” He saw this coming long ago. Check out a review of “Bad Money” here.