Micheal Cobley

Interstellar Tactics

 

 

 
 
 
 

Saving The Rich From Their Own Greed

Well, that`s about the size of it – insane, almost psychotic speculators and other species of vermin prowled around the world’s stock markets, buying and selling with the self-deluding rapacity of someone selling bricks out of a dam so that people can build houses further downstream. And then the UK and US governments come along and, instead of banning or at least freezing the operations of these hyenas subject to criminal investgations, they buy all the bad loans and crummy debt caused by the fabrications of the Mickey Mouse economy…AND THEY DO IT WITH PUBLIC MONEY, IE THE TAX DOLLARS AND POUNDS OF ORDINARY PEOPLE!!! And, unsurprisingly, the stock markets give a big cheer and go off on another buying and selling and profiteering binge with OUR money. That is what it amounts to.

Sickening is too mild; enraging only begins to cover it.

postscript – yes, you`ll notice that the last few posts have been about politics when this is supposed to be the blog of a SCIFI guy working on his new book. So I`ll turn my attention back to these matters for a while, but in the meantime you should keep tabs on developments in the US election by looking in at The Young Turks website, http://www.theyoungturks.com/ and go via the Youtube tab to get their uptotheminute vlogs. Highly recommended.

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  1. David Reilly Says:

    September 20th, 2008 at 4:46 pm

    Hi Mick

    Just popping by via Stewart’s blog and noted your tirade against so-called speculators.

    You probably know the story of the Emperor’s New Clothes, where a ruler’s greed and folly and the madness of crowds are punctured by the naïve and pure honesty of a young boy.

    The moral of the story is – “the truth will out”.

    But there’s something about that that doesn’t quite ring true.

    There’s a similar folk tale in Singapore.

    In it, a similar young lad takes the rulers and the local population to task over a clearly deluded scheme to boost the local economy.

    Instead of thanking him heartily and running the rulers out of town, the crowd chucks him off a cliff into the sea.

    The moral of that story is – “no one likes a smart-arse.”

    And the world’s short-sellers are rapidly finding out to their cost, which of the two tales is the most accurate reflection of human nature.

    Short-sellers aren’t to blame for the current problems

    It’s time to “clean up” the City, says Gordon Brown.

    He’s going to rush forward better rules to protect whistleblowers, apparently and crack down on “irresponsible behaviour” in the financial markets.

    After all, he says, “we don’t want these problems occurring in the future.”

    The FT reports how his noble words have roused the party’s left-wing.

    Labour MP John Cruddas said:

    “In the wake of casino capitalism and with the onset of recession, the state is the only means society has of protecting itself from the destructive forces of global capitalism.”

    It would be hilarious if it didn’t make you want to weep.

    Bankers may well have acted as if they’ve been sitting in the casino during the boom years.

    But it was a state-owned casino, with governments as the croupiers, and central bankers behind the bar giving out free booze.

    This Government built its reputation for so-called economic “stability” on soaring house prices and nothing else.

    It was happy enough to point to this growth in “wealth” (not “debt”) as evidence of its competence all through the boom.

    And the reason that banks were able to lend as freely and as stupidly as they did, was because central bankers pushed interest rates so low.

    And who were central bankers working for?

    The Government.

    A Government who set the inflation target too high, at a time when prices were being pushed lower across the world by globalisation – a healthy development by the way.

    But of course, it can’t be the Government’s fault.

    So now we have a witch-hunt against the nearest available target – short-sellers.

    Yet, if you really want to protect whistleblowers, you should embrace short-sellers.

    Here’s why.

    Short-selling’s a risky business. When it goes right, you can make a lot of profit.

    But when it goes wrong (as it clearly did yesterday, given the rapid surge in the FTSE 100 and elsewhere), you can end up owing far more than your initial stake.

    So it’s not something to be done lightly.

    Unlike many ‘active’ fund managers, who just buy what everyone else is buying, a short-seller has to pick their targets carefully.

    So when a short-seller takes an interest in a company, you can bet it’s got problems, or that it’s about to run into problems.

    It’s no coincidence that the most shorted stocks in the run-up to the UK recession have included retailers, newspapers, and of course, banks.

    The point is that the shorts are just taking advantage of the underlying problem.

    The banks made wildly irresponsible loans all through the property boom, and now that the bubble has popped, they are in serious trouble.

    In a perfect world without politicians, there’d be no problem with short-sellers taking advantage of that –
    in fact, the banks are only getting their just desserts.

    If Alex Salmond and the like want to attack ‘spivs’, how about the spivs who were cheerily selling young couples interest-only mortgages at six times their joint income?

    “Don’t worry about interest rates, love, you’ll be able to remortgage to a better deal in a couple of years’ time.

    And don’t worry about the capital – you can always start paying that back once you can afford it.

    Besides, the house’ll be worth a lot more by then.”

    Those unlucky homeowners are now staring negative equity and rising mortgage payments square in the face, and the truth is it doesn’t matter a damn to them who owns their debt, because they can’t pay it anyway.

    Banning short-selling won’t help them.

    But then, all that dodgy dealing was going on back in the good times.

    And when times are good, no one wants to hear the warnings, or to let anyone spoil the party.

    And unfortunately for short-sellers, when times turn bad, most people would rather throw the smart-alecs off a cliff, than admit that maybe they got it wrong.

  2. rockitboy Says:

    September 20th, 2008 at 5:51 pm

    ah hah! – mistah Reilly, as I live and breev! I agree with most of what you say, with the caveat that the latest round of Lets-All-Play-Trainwreck-Opoly really began with Thatcher and Reagan, who believed those geniuses, those economic wondermen who said `slip off the brakes and let the magic of the market take control`. And so you get waves of financiers working like busy beavers, coming up with new ways to magic money up out of nothing. Creating illusory financial products out of debt then devising a market around those illusory objects. And the economy begat Mickey Mouse money, and Mickey Mouse money begat Goofy money until Daffy said ‘hey, you fellers are just sitting in a circle, giggling and passing a parcel full of fekk-all’, and LO! for how the heavens quaked and the whole system of Disnae money came a-crashing down. Until governments stepped in with some REAL money and made it all better. The End (which is really just another beginning).

  3. CBQ Says:

    September 23rd, 2008 at 4:32 pm

    Sorry Mick but it’s the Central Banks (i.e. Governments – Clinton followed by Bush in the US and “New” Labour in the UK) and their inability to face the reality of “Boom and Bust” (the natural way of economics) who provided money to the banks which was far too cheap and who have for years covered up the real levels of inflation.

    If you leave yourself open to be trousered, you will be trousered and our fine Governments have well and truly had their pants taken down and received a damn good thrashing – of course it’s everyone who will pay the price, not just Gordon Brown (who will still end up a multi millionaire despite completely fucking up the economy in the time he was the so-called Iron Chancellor).

    The man is a dick as I live and breathe – I’ve always said that about him but no-one listens when we’re in a property boom created on cheap debt. Note his speech today and darling’s yesterday – not one iota of blame lies at the feet of these morons.

    Blah blah etc etc – you get my drift – we’re all fucked and it’s the Governments fault because they are political.

    Markets are not political – they are markets and, if they are left without government interference they do indeed work perfectly – if you tinker, they wobble and fail and boy oh boy does Gordy love a tinker…

    The current tinkering is an attempt to reflate the economy – the downturn we were facing last week was going to be very bad indeed, because it was a downturn which has been staved off for years by the stupidity of our Governments..

    The downturn we will face after this latest round of tinkering will be fucking monu-fucking-mental – with the emphasis on mental!!

    Cheers

  4. rockitboy Says:

    September 23rd, 2008 at 6:50 pm

    So if markets are left alone without government interference they work perfectly? – er, but the last 30 years have been a process of moving towards a hands-off, deregged market and here`s the result – a financial structure whose inhabitants behave like crack-addicted teenagers whose only concern is the source of their next fix, which they call short term profits. I agree that this sorry pass is entirely the fault of Bush and Clinton, and Brown and Blair (and Thatch and Reagan), and they all without exception believed the horseshit peddled by the Chicago boys, those self-promoed geniuses. Complete economic freedom is nothing but freedom for the rich to enslave the poor; what power do the people have to restrain the rulers who want to buy up all that rancid, rotten debt? None as far as I can see.

    We need regulations and we need rules in the marketplace, and whats more we need companies of a sane size; if a corporation is too big to fail, it`s too big to exist.

  5. Ray Says:

    September 24th, 2008 at 12:52 pm

    Here’s a quote from a CNN article:
    “The government will likely buy the assets at below-market rates and hold onto them until the market recovers. Ideally, the loans could then be sold at a gain.”
    “The government could make a profit, a substantial profit,” said Jaret Seiberg, a financial services analyst at the Stanford Group, a policy research firm. “The pricing mechanism is going to be central.”"

    This is ridicules!!! A neighbor of mine filed bankruptcy and had 15 properties foreclosed in the process. The mortgages for the rental properties were written for over 100% of the value of the houses. It will be years until those properties attain those values. The 14 rental properties were all Sec 8 and when the mortgages interest rates went up the cash flow went down. The personal residence had a 2nd mortgage over 100% the appraised value. ROI WON”T HAPPEN IN 2 YEARS, MAYBE NOT FOR 10 YEARS ONCE WE FACTOR IN THE COST OF THE DEBT INSTRUMENTS!!!!

    Anyone who thinks the government is going to make money on this is foolish. All that is happening is our tax dollars are being diverted to financial institutions that should have never made the loans in the beginning. These institutions are being paid billions of dollars for making bad business decisions. I wonder how well these same institutions will manage their newfound wealth. Maybe higher bonuses for the CEOs since they figured out a way to reduce losses by having Americans make non-tax deductible contributions?

    After Mae, Mac, and AIG bailouts and the lack of public outrage in response to them the Republican administration figured the country would roll over again and allow more of their friends to get rich. I can’t wait for the auto bailout.

    It’s amazing how quickly we went to war based on inaccurate data from this administration. Now we are giving away our future base on the opinion of a couple of guys who will probably become very wealthy after they are run out of public service.

    Will someone who has some influence please stand up?!!! The present administration told us the previous bailouts would steady the markets, they haven’t. Stop it now before the cupboard is gone (not just bare).

  6. David Reilly Says:

    September 24th, 2008 at 9:49 pm

    Sorry Mick

    Moving towarsds is a very pertinent phrase – moving towards means there is still intervention and it’s exactly the rules and regulations which have skewed the market .

    The “spivs” you talk about I despise as much as you but they have been able to do what they’ve done precisely because giovernments can’t leave the economy alone because they need a feel good factor to be re-elected – and that’s governments of whatever hue – you’ll find though that “right wing” governments tend towards less interference but unfortunately will still do so to gain an electoral advantage…

    It’s now becoming tedious day after day to hear Brown and Bush andf their cronies whining on about short selling when those people were only betting that sooner or later everyone else would realise too that the banks were vastly overvalued based on the stupid lending practices they’d been following since just after 9/11 and their values were bound to fall – but those practices were fuelled by Greenspan and Blair and then Bernanke and Brown keeping interest rates artificially low (see my first comment) whilst lying about inflation.

    If inflation were set at the correct rates, interest rates would be much higher and the practices which have led us to where we are today would not have been possible.

    Governments shirting themselves about feel good factors – there’s your proximate cause of this meltdown…

    Love ya by the way!!

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