Here’s an article (Fortune Magazine) from my stock broker days that details explains the crisis/Recession of the past two years. Remember, this came out in November 2007, ONE MONTH before eveerything went bonkers. (You don’t have to read the whole thing — the highlighted parts on the second page explain all.)


So basically, Stock Brokers, Real Estate guys, and the whole country were riding high, since profits were INSANE during the early part of ‘07. I remember many, many companies making bigger profits than they EVER had before. The DOW was at 14,000 (it’s now tinkering at 10,000). An air of invincibility permeated the atmosphere, and nobody could be touched. Banks and real estate brokers were making so much money, they began lending out loans to people that couldnt afford them (you remember the commercial – “No credit? No problem!”)
All forms of debt — credit card, mortgages, little johnnie’s college fund — are sold as ’securities’ (think of it as a piece of stock) — to investors. So a bank would take a bunch of loans that people owe them, and use that money (which they don’t technically have, even though it’s owed to them), to invest in others stocks. Or they would sell it (as a bond), to other investors. Now this happened millions and millions of times over, in both the credit card and the real estate loans.
Eventually, people couldn’t afford to pay their mortgages (which they weren’t ready to afford in the first place. But remember, we were all ‘Supermen’). So all those stocks that YOUR bank bought with money that was owed to them, but they didn’t really have? Now they can’t afford it. But the thing is, the deal’s already been made. So the guy they bought the stocks from (or whatever it is they buy), wants his money. But he can’t get it, cuz the bank doesn’t have it, cuz the guy they loaned money to buy a house can’t afford his payment, since he never should have bought such an expensive house in the first place.
Now the banks fires employees to save money…people have less money to spend (since they have no job), so they buy less stuff. Now, video game companies, Disneyland, porn shops — everybody’s making less money.
Remember when I told you that these bad loans were being sold off to investors? Well, the investors aren’t only just people like you and I. ‘Investors’ also means big companies — companies like Morgan Stanley, JP Morgan, YOUR bank — they bought it. These are the people that handle the investments of regular Joe’s like us. Your pension, your investments — all go up in smoke because the guy you trust with your money buys some crap loans, in the form of stocks.
Now your dad has to work until 75, cuz his pension’s gone. And Bush wants these companies that I just mentioned to handle ALL of your retirement money, because that’s what a good democracy does. But what happens if stocks decide to fuck up, like they did the last two years? It’s easy for Bush and the wealthy stomach losses, but not so easy for us.
(Never mind the fact that during this time period, coincidentally or not, the Saudis decided to play up-fuck with the price of oil.)
With less money in your pocket, you (naturally) will spend less of it. Now, the company that makes milk isn’t making as much money, since people are buying less milk, so they jack up the price, since they still have to cover costs. Costs such as the cost of transport, which is directly related to the price of oil (duh).
And the cycle continues, becoming a downward spiral of financial losses, job losses, home losses, human losses. It’s vicious, takes no prisoners, and leaves otherwise good people beckoning at the will and call of those with disheartened hearts. Their demonic sense of greed, their bloodlust knows no bounds. You can’t afford milk? Fuck you, pay me. Your kid can’t go to college? Fuck you, pay me. Oh, this is my fault, is it? FUCK YOU, PAY ME!!
And how did this happen?? Was nobody watching?! Well, truthfully — No. Thanks to Reagan, our entire financial system was ‘de-regulated’ in the 80’s. So there’s no real regulatory body that has any real force behind it. I mean, if you say ‘Fuck’ on national TV, or show a tit, the FCC’s on your ass. But if, god forbid, you’re a broker, and make a mistake by investing SOMEONE ELSE’S MONEY into some crap stock– since you never did any research in the first place — it’s Ok…just call for a bailout!!
So, let me get this straight. When it comes to ethics, the insurance companies, real estate & stock brokers, they DO NOT want the government interfering in their business. This is America, a free market, laissez-faire, blah blah blah. But when they fuck up, they want taxpayer money to cover their losses. Losses based on deals that were insanely ludicrous in the first place.
In a culture of idiocy, pride, and greed, I find it appalling that no one wants to take responsibility. These men that boast of their superiority, how they can move mountains (read: markets), can’t even admit when they’re wrong. If the price of milk and oil double, to them, it’s basically ‘Oh Shit, I made a mistake…damn..’
But to the plumber down the street, or the struggling writer, it’s ‘Damn…how will I pay my rent? My kids won’t be eating as much?’ And it’s all because of no fault of their own.
These behemoths of modern economic warfare, with their chests pounding, and war cries of ‘Four more years!‘ and Ivy-League-approved-but-never-went-to-class educations. For all their power and greed, they lack one thing — smarts. They lack the smarts to see the human element of their applications of their farce of an economic theory, they lack the smarts to see that Machismo is great for the schoolyard in 3rd grade and for Razor Ramon, but it’s not practical in running a fuckin’ country. They lack the smarts to see the karmic effect of their transgressions…forcing their profound economic will on the pure powerless.
‘We’ll see what happens when the have-nots turn to Sasquatch’ — who ever though a 50 Cent line would be so applicable.
Ya gotta love it!
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