Tuesday, July 29, 2008

Financial Tooth Fairies, Ex Machina!!

Zooming out to work on the guinea run before the sun gets hot, still I couldn't resist sharing this bit of astonishing fiscal humor with you before I go.  From the New York Times: "A New Tool Announced To Support Home Loans."

The boys in The New York Stock Casino have come up with a new game!!  (that's what a "tool" is-)  it's called- "covered bonds".

Oh, be still my heart!  Finally, the magic wand is waved, and the mortgage collapses all go away.  If you're not cackling and rolling on the floor in helpless laughter yet, you really should be.

They're all chanting "I DO believe in "tools"! I DO! I DO!"- and hoping, praying, the rest of the world will join them.  Puffing new hot air into the housing bubbles- which just don't hold air anymore.  There's no such thing as housing expansion.

It's a short article.  If you can see anything besides smoke and mirrors in these "covered" bonds, by all means, let me know.  It's pure, pure, puerile fantasy.  This is what our financial leadership has been reduced to.  What they're really showing us is that their entire system of air castle builders has no idea- none- what real wealth is; or real value.  All they know is: money; and if I sell you my pile of money, and charge you interest on it, you can sell me the same pile of money back, and charge ME interest on it; then I have a big pile of money again, and I can sell it back to YOU, and charge YOU interest on it; and we all get bonuses at the end of the year!  Forever!  Really!

Then, look at the list of who's going to be selling these new covered bonds "secured by pools of assets like home loans" - and then read this little bit in the article: "Unlike mortgage securities, which pass all the risk to investors, covered bonds collateralized with mortgages would continue to perform even if the mortgages backing them default — as long as the bank remains solvent."


I'm going to run right out, and bet that Wells Fargo is going to remain solvent!!  Sure I am.

oh, dear, tears of helpless laughter in my eyes.

What fools these mortals be.


Update-  OMG!!!  And it just gets better and better!  A followup article, NYT- has a little more discussion about what the heck a covered bond is, and what it might do-  and contains this gem:

"Covered bond markets exist in many European countries. In some of them, laws make the legal standing of such bonds clear, but Mr. Paulson and the other agencies concluded that no legislation was needed, and that policy statements by regulators would suffice."

My god, why aren't these guys writing for Saturday Night Live! ???  I mean- just look where running our entire financial system based on "policy statements by regulators" has gotten us so far!  By all means- we need more of that!  

Tears in my eyes!!

You can see it: in "Blazing Finances" --  "Legislation?  We don' need no stinkin' legislation!"  Mel Brooks, I hope you're taking notes.  Or Broadway could really use "Springtime For Paulson"; coming soon.

"Springtime, for Paulson, and Bernanke.  Winter, for Congress, and hope."  It even scans.


And the Washington Post chimes in! "Executives from four banks -- Bank of America, J.P. Morgan Chase, Citigroup and Wells Fargo -- stood shoulder to shoulder with Paulson at the news conference and issued a joint statement saying they would consider issuing covered bonds, although they were not specific about their plans."

Guys, you're killing me!!  "Shoulder to shoulder!!!"  forsooth!!  Our brave, brave little soldiers in pinstripes!!! - and all committing to- oh, wait, they didn't actually commit to anything at all.

I'm gasping for breath here!!!

Thank god the "Financial Sector"  (gasp!  choke!  cackle!)  is good for something these days; I haven't laughed this hard in years!


Anonymous said...

Geez, Greenpa! Please don't hurt yourself rolling on the floor like that!

I do agree, though- it's funny. In that mordant, gallows humor, kind of way. ha ha ha, they said, swirling in the toilet...

Anonymous said...

ok, Greenpa, so why aren't YOU writing for Saturday Night Live? I did get some laughs here. Ow.

Anonymous said...

I think NYT is right on the money here :
A new "TOOL" to "SUPPORT" ...

this is hilarious in itself - those homeowners are getting tooled but with a NEW tool

Precious, brilliant

- not so much my dirty thoughts as the crowd that I work with ;)

sorry, could not help it