Dow Jones dips below 9000, drops 680 points today, down for eight straight days. No credit. No lending. No trust. No confidence. In the words of one financial analyst, Billy Ray Valentine:
"Okay, pork belly prices have been dropping all morning, which means that everybody is waiting for it to hit rock bottom, so they can buy low. Which means that the people who own the pork belly contracts are saying, "Hey, we're losing all our damn money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my wife ain't gonna f... my wife ain't gonna make love to me if I got no money!" So they're panicking right now, they're screaming "SELL! SELL!" to get out before the price keeps dropping. They're panicking out there right now, I can feel it."
First, the foreclosures on "subprime" (a euphemism for "bat sh*t crazy risk of default, no way this jester is paying, this bank is run by nutcups") mortgages - this all started with a single loan officer shaking the hand of a single home mortgagor with a 600 credit score and a fledgling career as a Subway sandwich artist, agreeing to lend purchase-money (all the purchase-money - asking for earnest money is so passe) for a $900,000 home.
Then the companies which purchased, repackaged and pooled these mortgages crash. Then the hedge funds creating and issuing mortgage-backed securities can't meet their calls. They crash. Next the monolithic, seemingly impermeable investment bank parents of hedge funds incinerate in a plume of mountainous debt, dead paper and "under water" home loans (Bear Stearns, Lehman Brothers, etc.). Next, insurance companies with financial product divisions and a weakness for $23,000 "rub-n-tugs" start to falter.
Free market weeps. Free market calls its nemesis - The Federal Government - and panhandles for a trillion dollars in loose change. The Federal Government acts quickly approving a 700 billion dollar bailout backed by the American taxpayer promise "we probably won't move to Canada and continue to pay taxes . . . probably."
Whoops, I misspoke - forgot about that $30 billion to prop up Bear Stearns. Well, come to think about it, there was $200 billion to Freddie Mac and Fannie May. And the $800 billion of liquidity pumped by the Federal Reserve this week.
Good point - the $80 billion to AIG too. That's pretty bananas, to handout so much . . . what's that . . . you are sh*ttin' me? . . . another $38 billion! Jesus Christ, they spent $445,000 in government cake on a filthy, hedonistic executive retreat, replete with hookers, drugs and dirty stroke massages, less than a week after receiving the first installment.
Note: I have not a shred of evidence that AIG threw the biggest, most indulgent bachelor party in history. I'm only saying AIG spent $23,000 on at the "hotel spa" and $10,000 on what was termed in the ledgers "leisure dining." For $33,000, I'm pretty sure that masseuse/chef gave a hell of a deep tissue rubdown, maybe Thai, cooked a fine meal, and then blew and sucked dry every AIG executive for the next 72 hours.
That's sort of sexist, Warm Apple Pie: How do you know the execs were all men? I don't. That's why I was using the genderless "blew and sucked dry" which encompasses "tongue flutters" and "finger bangs."
I digress.
The market plummets each day. There's no lending between companies, no credit approved, no movement of liquid assets for debt. The Fed cuts interest rates. The World Bank cuts rates. Still no confidence.
And that brings us to today's market debacle. Let's look to tomorrow. Sun will come out! Right? Tomorrow, right?
Credit is frozen and credit is the foundation of our economy. The financial sector is paralyzed with fear. Each major player holds onto its dwindling value with kung-fu grip. The spigot is closed so the crisis "trickles down" instead of a cascade of money. Now, blue chip companies, manufacturers, industrial outfits can't get credit. In turn, no credit means no operating capital, and no operating capital means payroll is unrealizable.
If they can't pay you, they can't employ you. The ominous reports of firm-wide layoffs begin. 1000 folks here and there. And familiar names too: General Motors, Ebay, Coca-Cola, maybe even supposed tech gems like Google and Microsoft. 1000 becomes 5000, 10,000. The unemployment rate ticks up: 6%, 6.3%, 7%. Unemployment means you cannot meet your personal obligations and the financial sector takes a second big hit on credit card debts (guess what? That debt was repackaged, sold, pooled and securitized as well by Wall Street drinking from its infinite wisdom well).
Now, unemployed Joe six-pack (drinking Coors instead of Stella now) is out of options. Once gainfully employed, he can't bring in income (it's unfortunate - a little "ancillary" treat is the 100,000 dollars his 401K coughed up in less than a year. At age 59, Joe six-pack had planned retirement in a few years. Try 20 years now, Joe, assuming you can get a job. 59 year olds are prime candidates for employers.).
Like the subprime buyers, Joe owns a home too. He's a mortgagor. Fairly, he wasn't classified as a subprime risk when he purchased his home. He even put some money down with a decent credit score. But he's going to default because there's no work. Here comes another round of foreclosures - this time for genuinely low risk borrowers.
And guess f**king what: these home loans were, again, repackaged, sold, pooled and securitized by Wall Street drinking from its infinite wisdom well.
Around and around the circle of distrust we go. The disastrous cycle begins again.
But dammit, We may go down. We may lose our jobs. We may lose our houses, our cars, our families, our American pride. However, with the timely help of John McCain, we will get to the bottom of the Ayers-Obama connection I promise you.
Which is it, Senator Obama???? Did you say "hello" to Ayers in your chance neighborhood meeting or did you say "hello, how are you." Which is it, Senator???? Why are you snickering??? What, because I'm wearing a barrel with suspenders and eating a cat? Well, I'm having some issues with solvency. It's none of your business, Barack Hussein Obama! What's that? You have a plan to help the economy! Quit trying to change the subject! Now, you served on a charitable board with Ayers. Hmmm, how big was the table you sat at during meetings? Were you next to Ayers or across the table? Was lunch served at the meetings? Answer the questions!
They say the band played on when the Titanic was sinking. We might as well laugh as we break ground on the future site of Barter Town, draft the "Laws of 8" and spray paint "12 monkeys" on the garage door of the house we just got evicted from.
I'm sure living underground will be lovely. I can't wait to my grandkids evolve into mole people.
No comments:
Post a Comment