I’ve been reading Michael Lewis’s book The Big Short, an astounding reportage on the stupidity, malfeasance and amorality of the people who apparently control our government—The Masters of the Universe on Wall Street. It’s important, I think, to not forget why we are very close to having economic collapse. It is clearly due to the unparalleled greed of those too-big-to-fail financial giants: Goldman Sachs, Citibank, B of A, Merrill Lynch, AIG et al. Others like Rolling Stone Matt Taibbi have documented this in very vivid style.
(Tell us what you really think, Matt):
“So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream.”
The Big Short tells the story of subprime mortgages, derivatives and credit default swaps through the eyes of several contrarian investors who worked diligently to try and figure out what was going on with the sub prime market and began to make bets against it. They made fortunes. And at the end of the game, the “smart” guys who derived a scam they really didn’t understand began to bet against themselves to cut their losses. It’s an awful story, well-told by Mr. Lewis.
Investor Rick Ackerman points out that, “…the illusion of prosperity seems likely to persist, especially with the stock market’s relentless rally, now entering its 14th month, to distract and disconnect us from the real economic world.” Most of the country is in a state of denial.
Chris Martenson, author of The Crash Course*, talking about Treasury auctions notes: “… in only two short years, 2009 and 2010, as much new Treasury debt will be auctioned off to the public as was outstanding in 1995. Since government borrowing never gets paid down, at least in modern history, it means that the last two years have seen as much borrowing as happened over the period in which electricity was strung to every house, the highways were built, and our population tripled. What can we point to that was created over the last two years to rival those accomplishments?”
What we got was a situation which offers virtually no hope of recovery in the short term and perhaps in the long term. Again, if you haven’t gone through Chris Martenson’s Crash Course*, you ought to spend the time and then try to figure out what it means for you personally. You will then begin to understand why preparation for some kind of change is prudent and necessary.
*See link to The Crash Course at the top of this page.