Posts Tagged ‘toxic assets’

The Narrative of the Ancient !con

February 20, 2016

Statu!con

In this episode

we find  PMUnicomm inquiring among the projection heads as to what is going to happen next and how should we proceed from this point and what strategy should we devise to beat the numbers because they be indicating correction ahead and NIRPy deadends between buyin dips and sellin peaks and rockofdebt and hardplace of reality, so Arioch chiefofstaff say to PMUniCom:

BLS-BS say UnEmp be way down and thats good but LabrPart don’t match up to historical precedental expectations so we brought in DaProphit to make recommendation for FEd shells to be moved thus and such so game can go on and broncos can beat panthers and bulls chase bears off into sunset. So here be DaProphit and he say:

You, O PMUnicomm, were dreaming and behold there was a single great !con on your !phone, which was large and of extraordinary splendor and it was standing in front of you and its number of followers was awesome, like in datrillions.

And you saw, O PMUnicomm, the head of the !con was made of silvergold, its breast and arms of ironsteel, its belly ass and thighs of assets, its legs of stokbond, and its feet partly made of toxi and partly made of asset.

You were like this is awesome what the hell is it and while you were grokking it a rock was cut but not with human hands because the hand was busy writing on the wall and the rock suddenly smashed the feet of the !con to smithereens and the toxi and the assets and the stokbond and the ironsteel and the silvergold came tumblin down and humpty couldn’t put the dumpty back together again. But the rock that struck the !con became a great mountain and filled the earth.

And as you watched, PMUnicomm, the credits began to roll on your !device and it was time to find another fluffup.

Glass Chimera

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Through the kindling glass: Uncle Ben in ’08

November 22, 2015

History is fascinating when you get into it.

Today I’m remembering the fall of 2008–that perilous time when the financial crash was pummeling down all around us. The reason I’m remembering this is: I’m reading on kindle Ben Bernanke’s book Courage to Act:

http://www.amazon.com/The-Courage-Act-Memoir-Aftermath-ebook/dp/B00TIZFP0I

So I’m remembering.

My day job during that time was working with students at a local elementary school. The workday began every morning at 8 a.m. I have vivid memories of sitting in my old Subaru wagon in the school parking lot each morning, catching the latest financial news before going inside to punch in. I’d be sitting in the car during the last ten minutes of the 7 o’clock hour while listening to Marketplace Morning on NPR.

Not that I had any real money or assets to work with, mind you, just a little nest-egg house that wife and I had just about paid for, and a little spare change we had after the three young’uns had finished college, etc. just like most folks our age.

But here’s why the memory of those news reports clings to my unfettered mind so tenaciously. Those fateful September days of seven years ago released megalithic destructive financial forces of mayhem and immense complexity that changed forever the economic world as we kno(e)w it.  Perilous WallStreet cluster-fuds suddenly opened a flood of financial and fiscal confusion unprecedented in the history of the world. The only thing that compares to it would be the crash of ’29, but of course that was then and this was now.

In Uncle Ben’s book, Courage to Act, through which he strives to shine a light of transparency into the workings of the Fed and its relationship to the financial powers that be, he explains, in chapter 12, the demise of one particular entity (the AIG insurance conglomerate) that fell during that month’s frantic rearrangement of dominoes. He describes the problem this way:

 “AIG FP’s risk was compounded by the difficulty in valuing its highly complex position, in part because the securities that the company was insuring were so complex and hard to value.”

This universal fragility about value (or sudden loss of value) of toxic assets would be something akin to a global computer-virus, but in the financial world. Nobody knew how, when, or where, the infection of overnight falling  asinine asset prices could obliterate the richness of previously fat portfolios. It was like Ebola on WallStreet.

During that third week of September of 2008, the bankruptcy of investment bank Lehman Bros, and then the unraveling of worldwide cluster-fudded AIG, damn near brought the whole house of WallStreet et al etc cards of down.

I guess US Treasurer Hank Paulson and a few other arm-twisting high-flyers later put the fear of dog into Congress and into whomever else was in charge of this country at the time, so that the gov-softened crash landing of worldwide money tranches wasn’t nearly as bad as when something like that happened in ’29 and the whole dam American economy fell apart.

As I told you before, I was just a detached observer at the time, September 15 2008, a regular guy with no skin in the game trying to figure out what the hell was going as I heard about events on the car radio.

Now reading Uncle Ben’s memoir, I see a little more clearly what was going on behind the scenes. I guess his transparency mission is being realized; at least it is on me.

I see the light. I think I understand. Fear, as Joni Mitchell once sang, is like a wilderland.

Fear is a big part of this whole things fall apart deal that we see in life sometimes.

In the case of the investment banks and Wall Street and all that derivative-induced shenanigans that came unwounded in fall of ’08, it was fear of losing value on a massive scale, fear of diminishing assets on a global scale, and hence fear of metastasizing money-loss on a megadential scale.

But hey, there are worse fears in life. . .fear of dying?

Speaking of death, we could say that old folks are generally closer to it than young ones. But the fear of death can be, I feel, softened somewhat by the sense that one has lived a fulfilling life, or maybe an adventurous life, or perhaps a prosperous life, whatever attribute of the good life floats your boat.

Here’s something Uncle Ben wrote in his memoir about the old-timers on Wall Street during that fateful fall of ’08:

“For Wall Street old-timers, the events of the (Lehman weekend) weekend would evoke some nostalgia. Two iconic Wall Street firms that had survived world wars and depressions, Lehman (Bros.) and Merrill (Lynch), had disappeared in a weekend. I felt no nostalgia at all. I knew that the risks the two firms had taken had endangered not only the companies but the global economy with unknowable consequences.”

Unknowable consequences. That’s what you get when a bunch of old (or young) wise guys play fast and loose with a world-class pile of other people’s money.

But hey, that was then and this is now; it could never happen again.

At least not the same way.

 

Glass Chimera

Toxic shock syndrome

March 26, 2010

I had heard that the Federal Reserve has been buying mortgage-backed securities, many of them the so-called “toxic assets” that poisoned our financial system during the great recession. Now I hear that next week the Fed will quit buying these sketchy securities, and many of us are wondering what effect that will have on the money supply and economic conditions.
I had spent most of my adult life working as a free-lance, uninsured carpenter–although a relatively educated one, since I had earlier been a wandering English major. I had watched the housing industry inflate fairly steadily over twenty-five years or so.  Like many other folks in America, I and my family were direct beneficiaries of that housing bubble, and the “securitized” financial bubble of false prosperity that exponentially inflated it until the whole damned thing burst in 2008. The construction industry was my source of wages during all those years, as well as being the source of economic fodder that fueled our steadily-growing home equity.
When the crash happened in fall of 2008, I was hearing from the free-market gripers that the socialist dems were responsible for the whole mess with their force-fed federal attempts to get unqualified buyers into houses. And I was hearing from the controlled-economy crowd that the unregulated greed of wallstreeters was the main cause of our downfall.
However, it’s obvious to me that the culpability for our financial woes is widely dispersed. In a perfect storm of economic destruction, everybody did their part one way or another–including me, who earned, as a hapless carpenter, steadily-increasing wages during the 25-year filling of that hot-air balloon. When the shit hit the fan, the air was thick with theoretical accusations flying from both directions. The free-market crowd blamed the bleeding heart dems for having laid a sandy foundation of unqualified consumer mortgage debt with their overactive pie-in-the-sky housing policies. The liberals blamed the gaming wallstreeters for having built their derivitized, credit-default-swapped house of cards on that shakily-mortgaged foundation until the weight of it brought the entire structure down.
Everybody’s right and everybody’s wrong. Last time I checked, we were all still members of the human race, and that explains a lot about this whole damn situation. Deal with it.
And realize we still have the same problem that our grandparents had back in the ’30s: their ain’t no free lunch.
Anyway, now I’m hearing again about these infamous mortgage-backed securities–the ones that nobody knows how to assign value to. They didn’t just, you know, go away. The tooth fairy didn’t just remove them from beneath our dreamy, media-puffed pillows while we slept. Turns out, ole gentle Ben was quietly buying them, to remove them and their destructive effects from the system, although their toxicity seems  now to have hopelessly polluted our political civility and even, perhaps, the integrity of our republic itself.
It’s nice to know, Ben, that you were out there attempting to clean up our mess. But now what happens?  I suppose we’ll find out after next week.
Fasten your seat belts, folks; we could be in for a rough ride, and our national vehicle is in need of some pretty serious repair. It reminds me–not that I’ve ever seen one, mind ye–of a runaway train.
Or the situation described by C.J. McCall in his old country song hit from back in the day: “…Wolf Creek pass, way up on the great divide, trucking on down…the other side,”
with worn-out brakes.