Words of Advice:

"Never Feel Sorry For Anyone Who Owns an Airplane."-- Tina Marie

"
If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

"
Flying the Airplane is More Important than Radioing Your Plight to a Person on the Ground
Who is Incapable of Understanding or Doing Anything About It.
" -- Unknown

"There seems to be almost no problem that Congress cannot, by diligent efforts and careful legislative drafting, make ten times worse." -- Me

"What the hell is an `Aluminum Falcon'?" -- Emperor Palpatine

"Eck!" -- George the Cat

Tuesday, November 25, 2008

Holy. Fucking. Shit.

I have no real idea how all of the credit default obligations and credit default swaps and other stuff worked. I still don't.

But when I read this article, by the author of Liar's Poker, I came away with the understanding that the games that Wall Street was playing with mortgage-backed securities were not a house built on sand. Sand is far too stable a terrain; Wall Street was building castles on semi-liquefied dog shit.

The more I read about what was going on with mortgage-backed securities, the more it seems to me that spending by our $700 billion to bail out the banks is the fiscal equivalent of using a garden hose to put out a forest fire. I have a gut feeling that things are going to get worse, a lot worse, before they get better.

1 comment:

Anonymous said...

I heard a clear description of credit default swaps on This American Life a few weeks ago. It blew my mind. All that real wealth that people walked away with was built out of air. Words. Promises. Nothing really backing it, but complex concepts and an arrogance that they wouldn't be caught.

It was bound to come crashing down.

Now the house of credit cards is about to fall. What a mess.