Friday, September 19, 2008


Many of the world's richest lost some pretty good dough this last five days. Based on the universal law of conservation of wealth though, when one gets poorer, another gets richer. There was this dude, ex-CEO of AIG, Greenberg's the name, who last Sunday was still worth on paper 1 point somethin' Billion dollars. Then, Monday came, followed by Wednesday; he saw his entire billion and change evaporate from his personal portfolio. Just like this... he's been probably losing millions by the sec. I saw the poor bastard on a CNBC interview and I must admit, he seemed pretty cool. It's only money, you know, like my good ol' friend John Y. used to say. I guess, for the few years he's left to live (he looked pretty senior) Greenberg's several millions leftovers can still save him from begging on a sideway in uptown Manhattan. How sorry I feel for this dude! Nooot?

Anyways, the point is this. As long as average Joe's were losing their houses to foreclosures when they failed to meet their monthly installments, we saw the US Administration watch from the sidelines. From time to time, George W, an Economy genius, would show up to 'calm' the public sentiment (election year that is) by stating that the Administration was 'on top' of things and despite the 'mild crisis', the American Economy's fundamentals were sound and Strong! How convincing! Until this last 'Bloody Monday'. The New Economy's hound dogs (aka hedge fund managers) went after some big names in the Financial Markets, the likes of Goldman and Morgan Stanley, whereas Lehman Bros kicked the bucket and saw its share drop to mere cents. Internationally, news were talking about potential failure pressures on the likes of UBS, who, poor greedy bastards, already declared write-downs in the range of 42 Billion dollars and were about to add another 5 Billion and change in a month or so. For the first time ever since 80 years ago, the Big Depression, a real risk for a deja-vu has been knocking on our doors. Was it that bad? I mean, Ike and Katrina were just fairy tales. 9/11 was a pussy in comparison.

Let me tell you something. UBS and Credit Suisse put together manage a volume of dollars of the world's wealthiest that is seven times larger than Switzerland's GDP! Yep, you heard well, not Ghana's or Botswana's but of Switzerland's! Yes, Sir! Search the net for that GDP figure and multiply by seven. Sounds like the distance from earth to the Magellan clouds in plain miles! Simply A-stro-no-mi-cal! Do the math! Let a Bank like this go down and it will be felt in the pockets of any given village shopkeeper in the outskirts of Kabul! So, Bloody Monday was a real shake up. Good ol' George started gettin' calls from his Oil friends and Dickie Cheney: Gee, George, do somethin' for f*cksake! All we stole in the last 8 years will end up in the pockets of those motherf*ckers Street boys, freakin' shortsellers! Cut-off their peckers for Chrissake! Heeeeelp! And Georgie woke up to help his friends this time. And most probably his very own money as well. And the impossible happened. Good ol' libertarian Republican ideology went down the toilet within millisecs. Shortsellers were constrained to 'play' with Financials... and Government, like a Good Father, nationalized AIG, the largest Insurance company in this Galaxy, and whoever else was in need of liquid bucks in the Financial Industry. Ronnie Reagan has been turning in his grave at the news...

I personally think that Treasury Secretary Paulson's move to 'save' whatever is still left to save in a googol of Bush disasters, the worst in living memory, was eventually the right thing to do. Maybe it still is too little too late. In any case, there are limits to being a libertarian. If the average person was born good (like Socrates claimed) we wouldn't have this abuse taking place. The markets would be efficient and run by honest people. But people are not honest. They pretend they are but each one of us, admit it or not, are out there to grab whatever lies in our plate. People are intrinsically opportunistic and evil! Church goers are the worst. In a world like this, you need some form of regulation by some form of a central institution. Otherwise, the greed of some will turn upside down the entire planet! Like a world war!

American taxpayers have been complaining though. I heard quite an emotional woman declare on NPR: Profits are 'private' but when losses come among the big boys then suddenly we all become 'social' and the taxpayers need to rush to bail out those who are guilty of this mess in the first place. It's not fair! I agree... with a caveat, if the US Government keeps watching this from the sidelines without some form of intervention then that pretty NPR lady won't have milk, eggs, flour and sugar to buy from her local store in less than a month and will see her own savings evaporate too, from her little small-town bank as all of this mess is so bloody interconnected that even the web would be jealous of its links!

Anyways, we got to get used to it and be vigilant. Unless McCain wins the election. Because, as he claims, he'll bring about the long awaited solution to the problem: He'll fire a few top heads from SEC and will probably send to jail a few others from Wall Street and 'fix' the problem. My Gosh... and we thought George was a cowboy. Good ol' John still lusting for revenge from his North Vietnamese hole forty years later, and as there are no VCs around to suck their blood anymore he'll start kicking whoever shows up in front. Good ol' Yankee macho! C'm on kiddo, save the planet! Go show them bow-tie freaktards!

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