Another batch of alleged miscreants was arrested yesterday, swept up in the subprime hedge fund situation, which is the worst financial scandal of the decade, unless you can think of another, which I would be happy to hear.

The thing that struck me was the whole perp walk thing. Yesterday it was the two dudes from Bear Stearns, Matthew Tannin and Ralph Cioffi. I’m sure you saw it all on CNBC already. Two well-dressed guys trying with as much dignity as possible to look nonchalant as they are marched, handcuffed, into a hoosegow. If this was the 1950s, they would have had their fedoras neatly draped over the shackles. But men don’t wear hats anymore, unless you count baseball caps and that wouldn’t have really done the trick anyhow.

In passing let me just mention that I think Mr. Tannin and Mr. Cioffi handled their perp walks very well. I have often considered what I would do if I were accused of a crime and paraded like a prize sow down a walk of shame, and I’m just not sure. Crying is bad. Makes you look guilty. Smiling is bad. Makes you look guilty. A thoughtful expression, without a tie, is perhaps best, even though that also makes you look guilty.

Wait a minute. How is it possible NOT to look guilty on a perp walk? The answer is… it’s not.

So isn’t the perp walk essentially punishment BEFORE the benefit of a trial?

So I guess my question is… why the perp walk? Did the several hundred other alleged wrongdoers who were arrested yesterday have to endure it? Were the two going anyplace? Weren’t they in fact surrendering to authorities? Did somebody expect one or both to escape, running like mad through the streets, taking the elevator to the top of the Empire State Building to lob themselves onto the heads of passing pedestrians? Were the media alerted to the time and place of the perp walk, to get the maximum publicity value for prosecutors from the event? Of course they were.

Who else should get one, if these two alleged sleazoids meritied the full treatment? Can’t you think of some? Sure you can. If you’re having a problem, go back and Google “subprime mortgage,” pick out a few of the more dramatic examples of lousy financial management bordering on fiscal irresponsibility… many of those guys are exiting with exit bundles the size of a goiter. Inside traders are routinely harvested. Many have gone on to highly successful afterlives and are quoted with respect in the Wall Street Journal every week or hailed as great philanthropists. Why no perp walk for them?

How about the individuals responsible for the ethnic cleansing of middle Europe? Did you see any of them in a perp walk? Or the former Nazis who have, over the years, been quietly deported back to some jolly fatherland? Or the latest multi-millionaire musician indicted in some violent act on their spouse or artistic competitor?

If he is indicted, will Eliot Spitzer get one when he surrenders to the forces of moral rectitude? 

The only full-fledged perp walks I can recall in the recent past are for 1) madams of high-priced call girl services, 2) Paris Hilton and 3) white collar doofuses who were caught after decades of Federal, State and Local inattention allowed many of the crimes they are alleged to have committed.

So what’s the story? Whyfore? Whereas?

The Brooklyn prosecutor who held the press conference after the perp walk was very stern. He outlined all the crimes of which Tannin and Cioffi (among many, many others) are accused. He then virtually scolded his audience, making sure we, the public, kept in mind that people in this matter were innocent until proven guilty and should have every right to establish their innocence in a court of law.

So then… why the perp walk, huh?

The first story this morning is about Warren Spector, who was fired from Bear Stearns (BSC) last summer in the first inkling of where we all were headed. As CNN Money reports this morning:

The former Bear Stearns co-president was one of the first heads to roll in the credit crisis when he was ousted last August. But being fired could have saved Spector’s fortune. As part of his resignation (a move suggested by then-boss Jimmy Cayne), Spector was forced to vest most of his stock options and restricted stock by December 28, 2007, when the shares closed at $87.35. That amounted to a little more than a million shares, according to the bank’s 2007 proxy statement, which would have been worth about $91.1 million.

Warren Spector gets fired. Ends up with $91 million. Even after taxes you’d have to say that was a nice payday.

Story #2: This morning the cafeteria workers who labor in the neighborhood lunchrooms are demonstrating outside a local building. Their employer has been resisting their demands for higher wages and benefits for quite some time, and they’ve taken their noisy, raucous drumbeat to a number of different locations recently. I walked by them just now. They don’t have a very good flyer. None of the issues are recounted in it. Just a large message in red: FOR OUR FAMILIES.

The corporations whose lunchrooms are served by this Union rear high above the street around here, each home to any number of guys who will get more when they are fired than the entire group now out on the street will earn in six lifetimes.

Of course, everybody suffers in a tough economy. Spector, for instance, was probably forced to leave a lot of long-term compensation on the table. I’m sure that rankles him in the dim hours before morning, when he thinks about what he might need to do in the future. For his family, you know.

Word comes today that the British billionaire Joseph Lewis is going to take actionto protect his investment in Bear Stearns (BSC), in which he holds a significant share.

Perhaps the most amazing part of this story is that just days before JP Morgan (JPM) struck the deal to acquire Bear Stearns for several thousand cases of two-buck Chuck, Mr. Lewis bought a bunch of the failing bank for $55 per share.

That’s a significant error in somebody’s judgment, and exactly the kind of thing that I have done during my entire investment career, always on the good advice of people who know something about the market. They don’t call me The Cooler for nothing.

Years ago, my company made an investment in a provider of business information services. I thought it was a heck of a company and still do. At that time, the service was owned by a larger corporation, a holding company that looked like a clear winner. I investigated and decided to make a plunge, purchasing what was then for me a significant position — probably about $5,000, I can’t really remember. The day I bought it, it went from $20 to $18, then after a few months drifted down like a wilting rose into a stinking weed to less than $6, where I dumped it for a loss.

This process repeated itself over and over again with each of my investments. For instance, a few years ago I decided to stop gambling with high-risk securities and go for a conservative portfolio that included GE (GE), IBM (IBM), GM (GM) and a host of other long-term stocks representing the spine upon which our nation’s strength is built. How could that fail? And yet, of course, it did fail, fail most spectacularly, as the market went nuts for digital foie gras and gave meat and potatoes a big fat yawn.

Finally, a couple of months ago, I decided that at least a small portion of my puny hoard should go to a company that was destined to fly high for the duration, never splitting, always building value. So I took a small, dormant IRA and put it all in Google (GOOG), which was then trading at $700. Not one analyst at the time said that I should watch my step. Go look up its price right now. You can Google it if you want.

So Good Luck to you, Joseph Lewis. It looks like you’ve got the will, the spunk and the resources to fight the inevitable hand of fate. And who knows? You may succeed. One of us losers has to get lucky some time, I guess.

Until then… any of you have any horror stories to tell?

I’ve been in business for about 5,427 dog years and at no time during my career has there ever been a day when somebody wasn’t worried about what some security analyst was writing about us. This factoid stretches over six iterations of four separate companies, with enough corporate permutations to confuse a particle physicist.

“Bob Weasel of Finster-Koolaid says we’re off on our guidance and won’t make our EBITDA for the quarter!” the CFO will write while forwarding the latest analysis from Weasel, who long ago decided to take a negative turn on our stock because it differentiates him from the other analysts and gets him quotes in the Wall Street Journal.

“What are we going to do about it?” people will cry. And of course there’s nothing you can do about it. Weasel has every right to his take. Its can’t be corrected, either, even if he’s wrong, because Weasel’s opinion is based on a deep understanding of the marketplace, our business sector, and the economy.

Ha!

Weasel and his kind are, as I am sure you know, generally found to be employees of banking institutions. Real banks. Investment banks. Naturally, you know, the research side is (relatively recently) well-separated from the side that actually invests in stuff, but still. Who’s going to argue with Finster-Koolaid? It’s a division of Omnivorous Potentate, the largest investment bank in this brane of the cosmos!

A few years ago, the former CEO of a former form of a former corporate entity that morphed into one of my prior corporate entities appeared at a conference of these geniuses. Granted, Bob was a loser. He had bad affect. Still, the company had a lot going for it. But the security analysts didn’t like Bob’s style. So within 30 minutes of the close of his presentation, our stock went down like Eliot Spitzer. 

People went off to Froggies Tavern early that day, I can tell you. Because those guys ruled. And we drooled, for a long time afterwards. Then a new guy came in that people liked, for whatever reason. And our stock went up. Same company. Actually, slightly worse off, if I remember correctly. Go figure.

So now we look around us and the very same guys who were telling us why we sucked hose water, boy, are they drinking from the other side of the tap. All the great intellects who said people should divest this or that, or that such-and-such would never grow, or that management needed a kick in the kiester… they represent firms that are hawking up huge chunks of lung every day!

Where were these Einsteins when their companies were lending more money than they had to sub-prime borrowers? Were they any less shocked than the rest of us when the piper came to call?

In retrospect, who the hell were they to tell anybody what to invest in, or any corporation what they should or should not do? And why is anybody still listening to any of them?

I’m sure your eyes goggled when you saw it too. JP Morgan (JPM) paid a couple or three hundred million for a company worth incalculably more. It’s stunning. And while one may wonder about the executive competence of those who engineering this catastrophe, those who simply showed up every day to do what was expected of them are now faced with an uncertain fate, one that has afflicted working people since the first Etruscans noticed a large group of Romans heading over the hill, and probably before.

Guys, you were once a nation. Now you are a duchy under a much larger corporate flag. Soon there will be fewer of you, and those of you who survive to wear the new colors will have obeyed certain rules, rules that will not guarantee your success but will enhance your somewhat slender chances. Here are a few suggestions from one who has been through it a few thousand times:

Know the lay of the land. It is possible that the world has moved on so completely that acquisitors no longer even feign collegiality. When I was a kid, when a company took you over they paid a lot of lip service to how great things were going to be for everybody. I know, because I was in the lip service department. “We have two great cultures here and together one plus one will equal four!” That kind of thing. These protestations were often accompanied by word the expenses would be “rationalized,” but such warnings also went hand-in-hand with assurances that resulting merged departments would be “stocked with the best both companies have to offer.” This is hogwash. When Rome wins, Romans take over. So get ready to become one or die as a lowly Briton.

Total merger may not be inevitable, however. Your colony may be permitted to exist under its own name, with its own government loyal to the Czar across the street. This will go better for you, since you can easily transform yourself into part of the transitional team that’s helping to deliver everybody to their individual fate. Either way, as of this morning you will need to eradicate your persona as a Bear guy and begin the transformation into a true Morganian.

Believe nothing you read. Accept no assurances. You are in a fight for your life and must now play by your own rules. Wolves — solitary, smart and predatory — do better than dogs.

How do they dress? What time do they come in to the office? Where do they eat for lunch? Think about these things. If you’re not executed in the first mass action, you may need these kinds of insights.

Who do you know that’s doing well in Rome? You’ve been in the game for a while. There must be somebody. Reach out and touch them. Make yourself known. Let it be perceived that if the new guys need a hand, you’ve got two, and are not encumbered by sentiment, prior loyalty or grief. You are ready to move on and are looking for ways to do it that are congenial to the new world order.

If you have a major project that even a blind man can see will be worthwhile, redouble your efforts. I am certain that, even as it bubbles under the water, the continent of Bear Stearns had things going on that could still make money for somebody. If your little island of productivity is bobbing on top of the water when the victors come around looking for survivors, so much the better for you.

Look for a new boss. Your new boss may be the same as your old boss, by the way. In my experience, your superior officers will be necessary for a while, so don’t assume that every one of them is toasted. But keep your eyes open and your heart empty.

Finally: Wait. Be very patient. And have courage. It is difficult to merge two gigantic entities. Your new masters will need your firm to perform, and will be looking for guys who can keep things going while they decide who shall live and who shall enter the land of decruitment.

Be cool. Calm. Acutely aware of opportunities and pitfalls. When they do move on you all, they will probably begin by offering packages of some kind to those of a certain level whose jobs once meant something to somebody. Those packages can often be negotiated by those willing to be a pain in the infrastructure. Do not leap before you look.

And each morning as you wake up, and remember that your country is no more, also keep in mind that many city states have fallen before yours, that survivors of defunct cultures now populate a host of brave new worlds.

Just ask the guys who used to work for Netscape. Many of them are doing quite well, I hear.

I had a fun time reading the Wall Street Journal yesterday. That isn’t always the case. I don’t know about you, but a lot of the time I find the nuts and guts of business kind of boring. Yeah, yeah. I know it’s important. Wake me when it’s over.

Not yesterday, though. We had three, count ‘em, three juicy pen and ink drawings on the front page, and each featured an executive whose fate seems attractive to me in one way or another.

First there’s Warren Spector. He used to be one of the ultra-senior players in charge of Bear Stearns (BSC), which was hit very hard recently during the subprime mortgage rate bust. I like this story because here we have a guy who deferred his appropriately generous compensation so persistently that he ended up making only about two million dollars less than the almost $34 million his boss did last year. That can make a senior officer a little testy. They tend to like a ten million dollar gap or so between them and their closest subordinate.

Bear Stearns stock has lost 27% this year. Still, this summer the CEO who fired Mr. Spector, James Cayne, continued to spend his Fridays off the grid in Jersey. Many CEOs do, of course, if not in Jersey. At the same time, you have to wonder what was going on in the corporate offices during July, when Mr. Spector also took his leave for a while to play in a big bridge tournament. You have to like a guy who doesn’t let business pressures spoil his priorities. It’s hard to be fired, of course, particularly when it comes as a surprise, as it reportedly did in this case. But I have to think that after a period of deep mourning, this accomplished executive will hit the ground, fold up his platinum parachute, and be off to his next super-luctrative assignment. Doesn’t that sound nice?

This brings us neatly to Robert Nardelli. He’s just been picked by enormous, slightly ominous, all-powerful and mysterious Cerberus to run its newly acquired Chrysler operation. He brings with him years of experience in making incredible sums of money, although he hasn’t done much with cars. That’s all right. I’m sure he’ll do very well, depending on your metrics.

This one is a huge no-brainer for me. Here’s a guy who ran Home Depot (NYSE: HD) for a few years, walked away with more than $200 million dollars. Do that a couple of times and you’re talking about real money. His record at Home Depot was somewhat inconsistent. On the upside, he grew the business in scope and reach. People liked him for that. On the other hand, if you talk to other observers, they point out that in 2003, a bit more than two years into his reign, the company posted its first decline in sales in its history. The company’s stock fell 8% during his time at the helm, while that of his closest competitor grew double digits and he earned $124 million, not counting what the Journal refers to as “certain equity awards.” Lord knows what those were, but they sound tasty, don’t they?

Like many a top dude, when revenue faltered Mr. Nardelli went out and bought it. He acquired Hughes Supply to build a wholesale supply operation. Today, that’s for sale. Stuff happens, you know? Not every deal works out. But at the same time, there was his controversial and imperious behavior at the company’s annual meeting, where he informed the shareholders that he wasn’t taking any questions and ended the meeting after only thirty minutes. I liked his reply to one query about the independence of his Board. “This is not the forum in which we would address your comment,” he said. That’s good grammar.

It’s said that this time around, Mr. Nardelli will receive not one penny unless he achieves a turnaround at the big car maker. Those who are concerned about him may contribute to a fund for his support during this transitional period. I’m looking for the website now. When I find it, I’ll let you know.

And finally, there’s Bert Fingerhut. He manipulated the relationship between the IPO market and mutual banks that went public. He got the idea from a book by Peter Lynch and over some years made $11 million at the game, which is not $210 million or even $124 million but is still not chopped liver. I’ll have to work until six years after I drop dead from exhaustion to make that kind of money. Now the Feds got after him and he has to spend two years in jail after being forced to apologize. “This was purely an act of selfishness and a crime of greed,” he told the court. I’m sure he’s sorry, and he probably has to give up at least some of what he scammed, although I didn’t see anything about that in the writeups.

But even if he does? I’ll be honest with you. A couple of years of peace and quiet in a nice, white-collar penal institution doesn’t sound horrible to me. It would be sort of a think-tank experience, like teaching somewhere off the beaten track. After he gets out, I have no doubt that Mr. Fingerhut will do fine. I’m sure there are several business schools who might be interested in what he could teach young entrepreneurs about the rewards of creative thinking, and the unpleasantness of getting caught.