Hooter McCormick could add and subtract with the best of them, running shrink, basis and breakevens in his mind as fast and accurately as somebody punching buttons on a calculator.
He wasn't a fan of numbers, though, because they always seemed to run against him more often than odds said they should.
Maybe that's why every year about this time he was wound a wrap tighter than normal, which was akin to a fish being a might damper.
There were taxes for one thing, all of the receipt finding, bead counting and back-tracking just so his tax man could tell him how much more he needed to pay than what he'd already sent in against his will.
“Never worry about paying taxes; it means you made money this year,” is what a pseudo-college professor had told Hooter one time. The class was in business management. The teacher was a CPA in Lubbock trying to pad his resume with a weekly adult education class offered through the college.
“I'm not worried about paying taxes,” countered Hooter. “I'm worried about paying more than my fair share of taxes. I'm worried about paying Uncle Sam more and more of the money I make, especially when I seem to be getting less and less in return. I'm worried about doing all that when I'm alive, while also figuring out how to put back enough to pay the taxes on the place after I'm dead so that Uncle Sam doesn't get that, too.”
Ignoring the major points, the professor had smiled and replied, “I understand you're frustration, but if we'd paid less taxes all of these years how could we as a society enjoy the infrastructure, services and quality of life we enjoy today? Besides, taxes today are among the lowest in the nation's history.”
Hooter hadn't known where to begin. “Well sir, it's true the marginal rate is lower than the legalized robbery that occurred around the World Wars. However, it's also true that this nation never had federal income tax until that nob-head Abraham Lincoln approved it so the North could pillage the South…”
“But…” tried the professor.
“And, it's also true that a smaller percentage of us tax payers pay a bigger share of the federal tax revenue year by year, getting squashed harder and harder from both those with more wealth and loopholes than what we've got, and by those with lots less who receive more of that revenue as a benefit.”
“So, if you're telling me I should be happier being thieved from less than being thieved from at all, we're fixing to have a long chat.”
The debate digressed from there. Hooter never returned for the next class, but neither did the would-be professor.
Conjecture's Net Value
As agitated as taxes made Hooter—and as agitated as he made others about them—that paled in comparison to his dissatisfaction with the banking community this time of year.
With no local bank at Apache Flats, and an enterprise more fluid than top soil in the Dust Bowl, Hooter was usually looking for a new banker about now. That typically meant dealing with folks less than familiar with the ways of the cattle business, and a whole lot less optimistic than Hooter was. Even when things went right, Hooter usually found reasons to fire the new lender after the first year.
This frequent search is what had brought him to the newest bank in Lubbock, or at least the most recently merged one.
Edgar Pinwright III was one of those dapper types who wore his self-importance like a parka in a blizzard. He seemed courteous enough when the conversation began, though Hooter thought he seemed more taken aback than he should have with the financial information Hooter was providing.
“Mr. McCormick, I'm afraid we'll need more detail before I can be of service,” said Pinwright. He made a show of looking impatiently at his watch. “As I believe I mentioned to you when we spoke on the phone, you'll need to provide us with a balance sheet and some other rudimentary documentation before we can know whether or not we're in a position to help you.”
Had Pinwright had the chance to know Hooter, he would have understood that despite his appearance, wayward notions and unorthodox approach, Hooter McCormick ran a tight financial ship. Consequently, Pinwright would have known his last statement was an open invitation to disaster. For that matter, had he been savvier at reading people he would have known better.
“You tell me what oil and corn are worth, and I'll tell you how my balance sheet reads currently,” said Hooter.
“I'm afraid I don't understand,” tried Pinwright.
“Worth. Tell me what corn and oil are worth.”
“Mr. McCormick, I'm not sure what you're driving at, and I don't have a crystal ball,” said Pinwright, looking at his watch again. “I can tell you that today, not including basis, corn is worth about $4 per bushel, and oil is worth about $44 per barrel.”
“I didn't ask you what they were bringing; even a bat in the sunshine can figure that out,” said Hooter. “I asked you to tell me what they're worth.”
“But that is what they're worth,” said Pinwright crossly and with a bit of color.
“Last summer when corn was bringing $8 and oil was bringing $140, is that what they were worth?”
Pinwright was growing as uncomfortable as he was irritated. He wasn't used to being challenged by someone seeking a loan. “That's exactly what they were worth,” he snapped.
“So, oil is worth $140 one month, then $40 just a few months later? How on earth is such a thing possible if the market is allowed to work? And don't give me any of that gibberish about the recession, or how it was the Chinese stockpiling oil for the Olympics,” said Hooter. “Tell me their value, relative to the fundamentals, not some wishful thinking or the possible outcome of hedge fund hocus pocus.”
Pinwright took a deep breath and tried his best at a smile. “Mr. McCormick, I might remind you that it's you seeking the funds from our bank for this enterprise, not the other way around. In turn, that means you need to supply us with the information we require to make an informed decision, not the other way around.”
“And might I remind you that I'm giving your bank the opportunity to make money. I've come to you with a game plan and breakeven I can lock in on the board today, if you happen to understand what that means,” said Hooter.
“Mr. McCormick, I believe that…”
“Besides that, I'm coming into the deal with 30 percent as collateral. Seems like even a Democrat could see the charity in that,” growled Hooter. “What I asked you is what those commodities are worth, not what they're bringing, which is a whole ‘nother discussion that lots of folks, including me, don't have a good answer for right now. But, the answer says plenty about what my net position will be evolving to, don't you think?”
Hooter wasn't sure exactly what the definition of flummoxed was, but he suspected Pinwright's face would provide an apt illustration.
“Mr. Hooter, again, if you could just…”
“Yeah, I know, if I could just provide you with a balance sheet. Speaking of which, I'd like to see this bank's balance sheet, and other rudimentary documentation, of course, before I can decide whether or not I'm in a position to help you folks out with my money,” said Hooter.
Pinwright buried his face in his hands.
“It's about risk, you know. And you know what risk is?” continued Hooter.
Pinwright slowly shook his head.
“Risk is the things in life you just can't account for, no matter how carefully you plan,” said Hooter. “Take me and you for instance. When you were eating your post toasties this morning, I bet you didn't figure on having a conversation like this today, did you?”