Every day we hear about new problems with the economy. First it was the sub-prime mortgage crisis. Now throw in credit card, auto and student loan debt followed by a prime mortgage crisis and a liquidity crisis. When are they going to admit that capitalism, at least the American variety, has hung itself by its own rope (sold to it by Communist China, of course). High finance has gotten so complex and other wordly that instead of screwing the middle class - which was the intention - the capitalists have ended up screwing themselves! How else do you figure it when Citibank, Bear Stearns, Merrill Lynch and other high flying Wall Street financial institutions have written down or written off billions of dollars? How else do you figure it when companies that are supposed to insure bonds are going bankrupt themselves? How else do you figure it when rating agencies like Standard & Poors give triple A ratings to stuff that turns out to be junk?
These fancy, schmancy pants financial wizards have gotten too fancy for their (and capitalism's) own goods. They sell derivatives of derivatives of derivatives for those who desire synthetic exposure to the mortgage markets. Whatever happened to direct exposure? Not fancy enough! You know something's wrong with the whole system when the guys who are supposed to be getting screwed (those with adjustable rate loans) are simply walking away and those who are supposed to be reaping big rewards (the big banks, hedge funds and investors) are getting stuck in the crossfire and can't walk away. You know their whole trip is how to make money off of money as opposed to actually making or selling a real product or service and now they've got egg on their face and they're crying to the government for help, the very government that doesn't give a fig about helping out poor people, the very government that has given them massive tax cuts, the very government they decry and put down as incompetent, incapable and hapless, the very government they spurn, the very government about which Ronald Reagan mockingly said "I'm from the government and I'm here to help". Well, I guess they want the government's help now! "We're from the private sector and can you help us? Please?" These assholes think "government is bad, the free market is good" until they get into trouble. Then they come crying to the government for help! Their pitch has been and will be ... but, but we're too big to fail. Hah! They've outwitted and outsmarted themselves with their collateralized debt obligations, asset backed securities, planches and structured investment vehicles.
And these guys don't even know what's happening to them. They created a monster and now the monster of their own creation is devouring them! As if the government giving every man woman and child a paltry, measly few hundred dollars is going to solve the problem. They wish! Their predatory loans are coming back to bite them. Credit card loan teaser rates that adjust to usurious rates at the bank's will?! Loans to students with no bankruptcy options?! Congress again voted down bankruptcy protection for students! The average consumer is wising up that it's better not to pay usurious loans and let your credit rating go to hell than to be stuck in wage slave hell forever. Investors and true conservatives are bemoaning the fact that default and delinquency don't carry the stigma they used to. Get used to it! Neither does divorce or having children out of wedlock. You can tsk tsk all you want but until the laws are changed to make bankruptcy not an option (as they have been with student loans and as they are starting to with credit card debt), people will act in their economic self-interest and simply refuse to pay ... credit rating be damned! Of course, the next step after legally foreclosing on the bankruptcy option (except for corporations, of course) is the reinstitutionaliization of debtor prisons. Don't think it's possible? Don't think it's possible that, when civil penalties don't work, they won't resort to uncivil penalties?
Others agree:
Given the size of the market, and the lack of transparency as to who owns what, we really have no idea about the financial impact caused by the deterioration of the underlying assets. This is why we care. One can not look at history to help figure this out either, as we have never had so much credit product outstanding. Where we are currently in the credit markets is fresh territory, uncharted waters, the wild west. The system is so complex and interconnected that it is absolutely impossible for anyone, any firm, any anything, to get their arms around it. Smart people are going to figure out a way to make money from this uncertainty, and less smart people are going to lose a lot.
Bill Gross is warning of the possibility of financial Armageddon as a result of this financial pyramid scheme, along the same line that George Soros, another billionaire who generally knows what he is talking about, came out about a few weeks ago. Both of these wizards of Wall Street have been known to talk to their position, but that does not mean they are not right.
Where have all the underlying assets gone? Long time changing! Gone to graveyards every one! You know, capitalism is a shell game in which the capitalists don't even know which cup the pea is under. How can the average person who struggles to balance his or her check book possibly understand what's going on? It's so far removed from reality. No economic system should be so out of touch with the average person's experience and beyond the average person's comprehension. Heck, it's even beyond the comprehension of the SEC! Think they understand what's going on? Leveraged buyouts? Arbitrage? Derivatives? Puts and calls? When it gets beyond the Mary Poppins explanation that a child can understand ...
If you invest your tuppence wisely in the bank safe and sound.
Soon that tuppence, safely invested in the bank, will compound.
And you'll achieve that sense of conquest. As your affluence expands.
In the hands of the directors who invest as propriety demands.You see, Michael, you'll be part of Railways through Africa
Dams across the Nile. Fleets of ocean greyhounds. Majestic, self-amortizing canals. Plantations of ripening tea.All from tuppence, prudently, fruitfully, frugally invested in the,
To be specific, In the Dawes, Tomes, Mousely, Grubbs
Fidelity Fiduciary Bank!
... it gets too damned complicated!
