Now we know the financial bubble is really over

I guess that when Jim Cramer called Lenny Dykstra a natural in a segment done byh Bernard Goldberg, that should have been our first clue:

Now it seems that the House of Nails was a house of cards:

The house of cards finally came down Wednesday on former New York Mets and Philadelphia Phillies centre fielder Lenny Dykstra.

For those who aren't familiar, Dykstra parlayed a successful car wash chain into a career as a supposed stock-picking wizard — touted by CNBC's own embattled guru Jim Cramer — and started a much talked about magazine for pro athletes (The Players Club), before one business associate after another started noticing that Lenny wasn't actually paying for anything.

Dykstra filed for Chapter 11 bankruptcy on Wednesday. The filing claims he has assets of no more than US$50,000 while claiming debts of between $10-million to $50-million. There are estimates that the actual figure is much closer to the latter.

I admit it: I was one of those people charmed by the Lenny Dykstra saga. You have to realize what it was like to be a 4'10" person in 1986 and watching this little fireplug of a guy play his heart out for the then-cocky, swaggering, fun-to-watch Mets. That Lenny Dykstra, who stayed married to his first wife and never struck anyone as being the sharpest knife in the drawer, should find a second career as a financial genius, had a certain Capra-esque charm that was very seductive. Many of us wanted to believe the Cinderella story of Lenny Dykstra. But like much of the events of the last eight years, it was a ll a mirage, and Dykstra instead of being a Capra hero, appears to have been more of a mini-Madoff:

Just in the past two years, Dykstra has been the subject of at least 24 legal actions, including 18 since November. Three suits hit the courts on Jan. 29. He's been sued by publishers and print companies, by three different groups of pilots and by a Maryland-based financial and litigation consulting firm that offered expert testimony on his behalf in an earlier lawsuit. He's even been sued by a die-hard Mets fan who was the best man at his wedding 20-some years ago, though that New York investor claims there is no bad blood.

One of the angry souls is Dr. Festus Dada, a Nigerian-born gastric bypass specialist, who filed a fraud/breach of contract suit and alleges Dykstra kept a $500,000 deposit after a deal fell apart to purchase a Southern California car wash and retail center then owned by Dykstra. Dada walked away from the transaction, claiming in the suit that Dykstra had made significant changes to the final escrow agreement, including the insertion of a five-year contract for Dykstra's old Phillies teammate, Pete Incaviglia, to serve as general manager under the new ownership.

"We had a closing date, but the good doctor thought there were no rules in this country," says Dykstra, pointing out that Dada himself has been a defendant in dozens of civil suits since 2000. "You'll see a laundry list [of suits], dude. OK, so much for Dr. Dada's credibility, huh?"

Dada's side of the story, not surprisingly, is different. He suggests the ex-ballplayer set out to rip him off, saying he believes Dykstra was desperate for cash and rushed to close on the $27.5 million deal within 30 days. Dada's attorneys say the property was so encumbered by liens that it was impossible to close so quickly.

"He thought he could keep my $500,000 and nobody would have the resources to go after him," Dada says. "But in this case, I am going after him. General surgeons are not intimidated by professional athletes.

[snip]

Two Players Club vice presidents filed claims for unpaid wages after they quit in January. The Minneapolis-based firm hired to design his Players Club Web site alleges Dykstra stiffed it on a $1 million contract, and then bounced two separate $125,000 checks.

In a particularly curious hunt for cash, Dykstra borrowed $250,000 from New York literary agent David Vigliano last May with an agreement to repay him $300,000 in November -- a robust 40 percent annual percentage rate. Vigliano filed suit after Dykstra didn't come up with the money.

[snip]

Even members of Dykstra's family are lined up on the list of those to whom he owes money. His older brother, Brian, has yet to collect a $12,000 judgment awarded by the California Labor Relations Board. His younger brother, Kevin, alleges Dykstra cheated him out of $4 million on the sale of the family-run car washes, though Kevin hasn't filed suit.

On April 16, Terri, Dykstra's wife of more than 20 years and the mother of their three boys, filed for divorce. Through her attorney, she declined to comment for this story.

The family rift runs so deep that until recently, Dykstra had spoken to his mother only once in the past three years, according to his brothers, and wasn't allowing her any contact with his sons, her grand children.

Last month, though, on March 23, Dykstra picked up the phone and woke up his mother with a call at around 6 in the morning, according to Kevin Dykstra, his younger brother. Lenny was stranded in Cleveland. He wanted to charter a jet so he could get to a business meeting on the West Coast, and his credit cards were maxed out. He needed nearly $23,000 and asked his mother for it, Kevin says.

His mother agreed to let him use her credit card.

Kevin Dykstra says she has yet to be repaid.

Would you take financial advice from this man?

Lenny Dykstra. The very name is onomatopoeic, describing as it does a short, tough, plug-ugly guy with a chew of tobacco in his mouth and a Napoleon complex as big as the swing of his bat.

Perhaps more than anyone else, Dykstra embodied the swaggering, cocksure chutzpah of the 1986 Mets. Strawberry and Gooden may have had the talent, but for those guys in 1985 and 1986, before the seductive allure of money and drugs had ruined them, playing baseball was no different from getting up in the morning. It's just what they did. It's what they were made to do. Dykstra was different. He wasn't built for the game, but through sheer dint of hard work (until he apparently succumbed to the siren song of steroids), he was one of the most exciting players in the game. To this day, every time I hear the song Centerfield, I think of Lenny Dykstra.

It's understandable that I would have been a Dykstra fan. I know all too well what it's like to a short person trying to make it in a tall world and having to talk louder and try harder. But for all that he made the game entertaining, the steroids and the fights he got into later in his career were an ominous sign that once his career was over, Dykstra might succumb to the downward spiral that affects so many professional athletes once their careers are over.

But those of us who thought Dykstra was just a dumb jock of limited innate ability and even less intelligence who put all his energies into playing over his head were dead wrong.

He may sound like a burnout when he talks, but today Nails is a successful businessman, respected investment prognosticator with an investment newsletter people pay a thousand bucks a year to read, subject of a recent profile on Real Sports on HBO, soon to be publisher of an investment magazine for professional athletes that he hopes will represent the perfect confluence of capitalism and doing a service for his brothers in professional sports who may not have his financial savvy, and the subject of this charming profile in, of all places, The New Yorker magazine:

Mets fans of a certain age will recall a popular poster from 1986, bearing the word “Nails” in bold letters across the top, and featuring a shirtless Dykstra, wearing eye black and holding a bat against his shoulder. The nickname referred to his tenacity and also to his peculiar Southern California lexicon. (“MTV is nails,” he explained in his autobiography, also called “Nails,” which was published in 1987, when he was twenty-four. “Winning is nails.”) He was wiry then; he used to complain that Lenny might as well have been his middle name, given how often it was preceded by the word “little”: Little Lenny Dykstra. He is lumpy now. Referring to his suit, which was pin-striped, he said, “It gets a little tighter, you know?” His hands tremble, his back hurts, and his speech, like that of an insomniac or a stroke victim, lags slightly behind his mind. He winks without obvious intent. In his playing days, he had a term for people like this: fossils. Nothing about his physical presence any longer suggests nails, and sometimes, as if in joking recognition of this softening, he answers the phone by saying, “Thumbtacks.”

[snip]

For many ballplayers, the growing-up point does not arrive until after retirement, when all the freebies vanish and equipment managers and hotel maids can no longer be relied upon for regular laundry service. Dykstra last played in the majors in 1996, at age thirty-three. Improbably, he has since become a successful day trader, and he let me know that he owns both a Maybach (“the best car”) and a Gulfstream (“the best jet”). The occasion for our lunch, however, was a new venture: Dykstra is launching a magazine, intended specifically for pro athletes, called The Players Club. An unfortunate number of his former teammates have ended up broke, or divorced, or worse. The week before we met, the ex-Yankee Jim Leyritz, himself twice divorced and underemployed, had hit a woman while driving home from a bar. He never grew up.

[snip]

Dykstra did not attend college, and, like many accomplished autodidacts, he is ever alert for signs of condescension, but he relishes his newfound opportunity to meet executives in a boardroom rather than on the charity golf circuit, and studies their habits carefully, to the point of noting their preferred e-mail font sizes. He is open about the fact that many businessmen—“​graybeards”—​have a hard time taking him seriously. “It’s like I got hit with an idiot stick—took ten lashes on the way in,” he said of a recent meeting. The steady pursuit and accumulation of class markers and status symbols is a handy defense against such anxieties, and during a rare break between calls he led me to a different computer, in the front seat, to show off a photograph that he was using as his wallpaper. “This is my bird, here—that’s a GII,” he said. “I wasn’t going to buy a plane till I bought a Gulfstream, ’cause Gulfstream’s the best in the world—and there’s not a close second, by the way. That’s something that was important to me. Like, all my hard work? Gulfstream makes me feel like it was worth something.”

So maybe he's still trying to prove his dick is as big as that of the big boys. But if that's what he's doing, at least he's doing it in a way that has not only made him wealthy, but might help some of today's athletes from meeting the same fate that befell some of his compatriots. And if the idea of little Nails, the kid with the chaw of tobacco in his cheek who always seemed more like your pain in the ass kid brother who wanted to play street baseball with the big kids than like any kind of profesisonal, turning into this macher in business isn't endearing enough, perhaps this is:

“Wives are key, dude. They are key. It’s a tough life. Your husband is gone and it’s always about him, and then—can you imagine?—he’s done, and all that happens, and you got no money?” (The fact that he and Terri have been married for twenty-three years, through stardom and retirement, seems to surprise even Dykstra. “Terri’s a special person, and I’m a very, very lucky guy,” he said. “It took me a long time to realize that. You know what I mean?”)

Look at the shattered lives of some of his 1986 Mets teammates -- Darryl Strawberry with a shaky hold on sobriety after battling drugs, booze, prison time for tax evasion, and colon cancer; Dwight Gooden, newly out of prison after repeated battles with substance abuse; Wally Backman, who was fired from a job he hadn't even started yet as manager of the Arizona Diamondbacks after the team found out about an old arrest for DUI and the fact that he was just about bankrupt. Given that Dykstra always had that short guy thing about having to out-macho the big boys, you'd think he would have fallen twice as far, twice as hard, just to show that he could. Dykstra is charmingly aware of his own intellectual limitations, admitting that he doesnt "read so good", but he managed to learn about high finance via books on tape and found out that this is something at which he excels, whether through some kind of innate ability or the same kind of sheer guts he used to show on the field.

The Mets' 2008 season starts next week, and for every question that the presence of Johan Santana may answer, there are innumerable new ones. Can José Reyes' ego be kept in check so that he thinks of the team as much as his own stats? Can Mike Pelfrey finally get his act together to be a credible fifth starter? Who the hell is going to play the outfield? And is this organization going to wake up and realize that either this team has to get younger or do something about its strength and conditioning program? But in an age of eight-figure-a-year incomes, this year's Mets could do worse than to look back at the gritty little guy with the big chaw of tobacco in his cheek, and realize that when push comes to shove, ever-vigilant moxie trumps lazy talent every time.