Elie de Rothschild, who died couple of weeks ago while on a shooting trip in Austria aged 91, once told me the story of a young Arab kebab seller who always parked his stand across la Banque Rothschild on Rue Lafitte.  The Arab was asked for a loan from an acquaintance of his. “Look here,” he told the man, “I have a deal with the bank across the street. I will not lend money and the Rothschilds will not sell kebabs.”  End of story, as they say.

I thought of Elie, with whom I used to play polo, when the you-know-what hit the fan last week. Bankers should act like bankers, and not kebab salesmen. The latter try and sell to anyone within hearing distance. In the good old days, bankers lent money to those who could repay. When greed set in during the go-go days, they started lending to people unlikely to repay them. But there was a catch. The bankers covered themselves by selling the bad loans to others, greedier than themselves, and made a profit out of doing so. The Ponzi scheme has now caught up with them, hence the blood in the markets.

So, what happens next? If I knew I would tell you, but I don’t. What I do know is that we have a huge credit bubble, and debt is piling up on top of debt, and that can’t be good. Personally, I blew it. I wanted to do a Bernard Baruch of 1927, or a Jimmy Goldsmith of 1987, then got lazy and didn’t bother to play my instinct. Never mind. I have never owed anyone anything, so I’m fine, but I do worry about friends who live on the edge. The party could be over for a very long time, almost as long as it’s been going on.

Last month in St Tropez I thought of a satanic plot to relieve a certain Steve Schwartzman from couple of hundred thousand bucks. SS is the co-chairman of Blackstone group, and a man who recently made $200 million from taking his company public. Steve is worth about ten billion but is eager to make more. Schwartzman prides himself a tennis player. He played with a friend of mine who is a top player, and my friend let him win a tie-break, confirming his belief that he can hit the ball with the best of them. I asked my friend to tell SS that I fancy myself a racketeer, but to also tell him that I’m useless and that I’d like to play him for one hundred thousand smackers a set. Double or nothing would be up to the loser. Well, it wasn’t even close. SS turned it down flat, but not because—as my friend assured me— I could take the bum playing with my left hand. Here was his reason, more or less: “Taki will spill the beans to Page Six quicker than you can say Richard Johnson, and right now I cannot afford having the papers writing about me playing 100,000 dollars a set.”

Oh well, you can’t win them all, but the question right now is whether to buy or sell. As bank lending dries up, this will have a huge impact on private-equity deals which have helped to boost share prices. We will know more in three to four months. Markets hate uncertainty more than Henry Kravis hates poor people. The brave ones buy on moments of great uncertainty. The market spends most of its time veering between greed and fear. The best time to buy is when everyone else is scared shitless. You choose what you want to be, dear readers, Patton or Montgomery.

Photo of Charles Ponzi courtesy of the Boston Police Department.