And They’re OFF! The Race to the Bottom

In case you’ve not noticed, only Divine Intervention will save us from the coming Global Recession. The sub prime mortgage defaults are the beginning of the end of the public financial meltdown, though privately the drama has been going on for a long time. The Bush Administration didn’t want Joe Public to find out how bad things were until Hillary Clinton took the “throne.” Bush, who desperately wanted a positive legacy for himself, really really really hates the internet right now. There are very few secrets anymore.

These economic disasters brought about by fractional reserve banking have been taking place since German banker Mayer Amschel Rothschild realized he could get rich by loaning the same money over and over again to different people, just by printing more bank notes. The Central Banking business model is akin to those old Doritos commercials: “Don’t worry; we’ll make more!” Never mind that there wasn’t enough “real” money for his clients had they all decided to cash out their savings accounts at the same time.

Mayer Rothschild is now known as a founding father of international finance. The Rothschilds collected interest from their borrowers and prospered while their customers had no idea they were involved in a big Ponzi scheme with an ever-increasing money supply. They barely noticed how fast their paper money declined in value until it was too late. When they all tried to close their accounts at the same time there wasn’t enough money to return to them since most of the “money” only existed in theory, “on paper” if you’ll pardon the pun. This is why “Bank Runs” are very bad for banks, and when consumer confidence disappears it is very very very bad for the economy.

Countries don’t always survive crises of confidence in their currencies. Some countries recover eventually, the way the U.S. did during the late 1930’s, while other vulnerable populations dissipate or are conquered by stronger armies and/or economies. See, “recession” is the term used by optimists. Banks coldly repossess client assets while wealthy elites enjoy the “fire sales” that take place everywhere an industry or economy fails. Central Bank shareholders buy companies, real estate, stocks and bonds at fractions of their “real” worth and enjoy hefty profits when/if the markets bounce back. As an extra kick in the shorts, ordinary folks go bankrupt, food and employment become scarce, the local economies fall apart, and life takes on a Grapes of Wrath quality.

I wonder what will happen to us?

I’m starting to get a little bit addicted to The Big Picture, a blog where banking and finance insiders find their gossip important information. A recent post about the sub prime fraud debacle made me whoop with laughter:

Let me make sure I understand this:

1. Moodys (and S&P and Fitch’s) labeled a bunch of horrific junk — RMBS, CDOs, CDS, and other stuff — high quality AAA.

2. The banks and brokers all shoveled this crap to their clients around the world, many of whom then promptly blew up.

3. Once the music stopped, these banks and brokers got caught holding loads of this AAA rated shit paper, leading to $130 billion — and counting — in write downs.

4. The banks then saw their credit ratings get downgraded by the same companies that rated the original crappy paper AAA.

AND NOW THE SOLUTION PROPOSED BY THOSE SELF SAME RATING AGENCIES IS TO PUT A WARNING LABEL ON THEIR RATINGS?

Are you shitting me? Words fail me . . .

I’m thinking water boarding the entire staff is the way to go with these criminal idiots, and instead, they think a mattress tag is a solution?

Well that’s just fine. I’ll write the warning for them:

WARNING: THESE BONDS HAVE BEEN RATED AAA BY A MAJOR RATING FIRM. THESE RATING FIRMS HAVE PROVEN THEMSELVES TO BE CLUELESS, MONEY-LOSING INCOMPETENTS IN EXCESS OF A TRILLION DOLLARS IN LOSSES. THEY WERE PAID HANDSOMELY BY THE BOND UNDERWRITER, AND ARE HOPELESSLY COMPROMISED. PURCHASERS OF THESE BONDS ARE ADVISED TO IMMEDIATELY KILL THEMSELVES, THUS SPARING THEIR LOVED ONES EMBARRASSMENT IN THE FUTURE. ALSO, THESE BONDS MAY LOSE VALUE. I JUST WET MYSELF MERELY THINKING ABOUT THIS PAPER. WHILE PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS, YOU SHOULD BE AWARE THAT PAST PERFORMANCE ALSO SUCKED. DON’T BLAME US IF YOU LOSE ANY MONEY, AS WE HAVE NO IDEA WHAT THE F$#@ WE ARE DOING ANYWAY. REALLY, YOU ARE ON YOUR OWN.

(We might as well laugh at our fates since we’re all in the same boat!)

More than ever I am glad I stayed out of the private financial sector, never mind that I could have done very well. This Taurus loves her routines and her security and would suffer daily panic attacks if I were a financial broker of any kind today. Citibank, Bank of America, Merrill Lynch, and Morgan Stanley are the ENRONs of the financial and banking communities. Decent people who work at commercial banks are being laid off in droves, and I foresee anger and bitterness that will give ENRON employees flashbacks when the ugly truth finally tumbles out.