The Credit Crisis Explained... Mostly
Posted on
Wednesday, March 19, 2008
by Gary A. Ballard
I thought I'd link to this enlightening article in the New York Times Business Section. It's a very good, mostly layman's explanation of the credit crisis that is leading our economy down the shitter. I'm no economist, and most of the times I can't make heads or tails of the stock market and investing. This article clarifies the problem a little bit more.
As a bitterly cynical layman with bad financial sense, I've always viewed the stock market as a legally-blessed form of casino gambling, where the house is actually the shareholders of the company you are investing in. It's a crap shoot that somehow the religious right doesn't have any moral issue with, despite the fact it has more in common with gambling (a SIN! ZOMG!) than mid-week Bingo games. I find that a bit of startling moral ambiguity bordering on outright hypocrisy, especially when those self-same members of the church objecting to the lottery.
Investing is gambling. The only difference is the lack of cards or dice or equestrian spectacles. It's gambling that gives accountants a stiffie. And unfortunately, it's what all modern economies are based on. The primary fuel for the investment market is perception... not money, not effort, not production, not profit. Perception. An investment is only as good as the market's perception of its worth, and that perception can be driven by greed or fear. Fear is what is gripping the market now, and it's a well-founded fear based on the idea that a gigantic ultra-metric fuckton of investments are utterly and completely worthless.
Follow my chain of thought. Investors buy someone else's debt. Kinky, but according to the accountants, that's a bit of acceptable kinkiness. Now, those investors bundle up all that debt (which may or may not ever be repaid, and if it's not repaid, that debt becomes worthless) and sell it to someone else, who goes into debt to buy the first bits of debt. Let me repeat. These investors get themselves further into debt to buy debt. Somewhere down at the bottom of this endless rabbit hole of people owing other people they've never met money, somewhere down there lies the mortgage to my house. And if I can't pay, not only do I lose my house, but a shitton of people up the chain probably lose theirs as well because they are betting on me to finish this horse race and pay off the 30-year mortgage.
If you bitches are relying on me, you are fucked. And as a result, we are all fucked. Proper fucked.
Don't ever tell me that investing my money is any more sound than plopping down my life savings on the 3rd at Belmont, or on 7-Black or in the pull of a lever. The person that says that is full of shit, just like our credit market is right now. But hey, at least the rich fuckheads who started bundling this shit together will get to retire from all the bonuses they made over the last 10 years. When I'm mowing their lawn to pay for my 1-bedroom hovel in Crack Town, I'll be sure to thank them for their long-term outlook on the economy.
As a bitterly cynical layman with bad financial sense, I've always viewed the stock market as a legally-blessed form of casino gambling, where the house is actually the shareholders of the company you are investing in. It's a crap shoot that somehow the religious right doesn't have any moral issue with, despite the fact it has more in common with gambling (a SIN! ZOMG!) than mid-week Bingo games. I find that a bit of startling moral ambiguity bordering on outright hypocrisy, especially when those self-same members of the church objecting to the lottery.
Investing is gambling. The only difference is the lack of cards or dice or equestrian spectacles. It's gambling that gives accountants a stiffie. And unfortunately, it's what all modern economies are based on. The primary fuel for the investment market is perception... not money, not effort, not production, not profit. Perception. An investment is only as good as the market's perception of its worth, and that perception can be driven by greed or fear. Fear is what is gripping the market now, and it's a well-founded fear based on the idea that a gigantic ultra-metric fuckton of investments are utterly and completely worthless.
Follow my chain of thought. Investors buy someone else's debt. Kinky, but according to the accountants, that's a bit of acceptable kinkiness. Now, those investors bundle up all that debt (which may or may not ever be repaid, and if it's not repaid, that debt becomes worthless) and sell it to someone else, who goes into debt to buy the first bits of debt. Let me repeat. These investors get themselves further into debt to buy debt. Somewhere down at the bottom of this endless rabbit hole of people owing other people they've never met money, somewhere down there lies the mortgage to my house. And if I can't pay, not only do I lose my house, but a shitton of people up the chain probably lose theirs as well because they are betting on me to finish this horse race and pay off the 30-year mortgage.
If you bitches are relying on me, you are fucked. And as a result, we are all fucked. Proper fucked.
Don't ever tell me that investing my money is any more sound than plopping down my life savings on the 3rd at Belmont, or on 7-Black or in the pull of a lever. The person that says that is full of shit, just like our credit market is right now. But hey, at least the rich fuckheads who started bundling this shit together will get to retire from all the bonuses they made over the last 10 years. When I'm mowing their lawn to pay for my 1-bedroom hovel in Crack Town, I'll be sure to thank them for their long-term outlook on the economy.
Labels: Corporate Corruption
posted by Gary A. Ballard @ 10:44 AM
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