Re: our economy explained!

[David Farber <dave () farber net>]

Begin forwarded message:

From: Charles Brown <cbrown () flyingcircuit com>
Date: April 4, 2009 12:10:42 PM EDT
To: inventor () rentaninventor com, David Farber <dave () farber net>
Cc: Charles Brown <cbrown () flyingcircuit com>
Subject: FW: our economy explained!

George, a good metaphor, but it is incomplete.  Unfortunately, our  
situation is much worse.

There is also a members-only "casino room" at the back of Heidi's bar  
where betting between and among the players takes place 24x7.  The  
betting is on the various features of the AAA-DRINKBONDS;  interest  
rate, creditworthiness, term, anything that can be bet on.  It isn't  
like "insurance" at all, as the MSM stooges tell us.  It is one-on-one  
gambling, by and among the members of the casino room.  Here's how it  
works.

One party might bet on the creditworthiness, interest rate, or even  
the color of DRINKBOND, as being fairly-valued, increasing or  
decreasing in value, etc.  It didn't matter if a "counter-party" to a  
bet owned the DRINKBOND, he/she could still bet with anyone who would  
take the other side of the bet on any of DRINKBONDS features and  
terms.  If a 3rd party purchased the bond, the casino would sell them  
a CDS contract to cover their downside risk;   the 3rd party would buy  
a CDS contract DIRECTLY from member of the casino, like AIG, Goldman- 
Sachs, Morgan Stanley, Merrill Lynch, Lehman, et al.  The players in  
the casino might issue  these CDS's, "counterparty obligations", to  
each other or 3rd-party investors on this basis.  The might even  
resell them and hedge them several times, thus increasing the overall  
betting on that single DRINKBOND.   The casino members could bet on  
nothing more than the fluctuating value of the interest rate on the  
bond.  They were making fortunes, and marketing the game worldwide.   
Year after year hundreds of billions in bonuses, "profits", and other  
compensation flowed to Wally and his friends.

Heidi and the other bar patrons were just "feeders" for these  
transactions.  The casino room had a separate entrance and exit and  
never mingled with Heidi's regular patrons.   But the underlying  
securities that were created at Heidi's, and were later packaged and  
sold by the casino members, are the very same "counterparties" you  
hear about - the investment banks, who are now, most conveniently,  
commercial banks.  How did former investment banks like Goldman-Sachs,  
JP Morgan Chase, Morgan Stanley become commercial banks?  Was it  
convenient for them to avail themselves of new rules and government  
largesse?  And do it over one weekend - a Saturday and Sunday and were  
commercial banks on Monday?  Answer:  A corrupt Treasury Dept. and  
Congress.

Wally has managed to masterfully spin the MSM.  Most of the salient  
information is coming from blogs and other sources, not the MSM.   
Why?  Because Wally and the MSM are partners too.  The same is  
certainly true of our fearless leaders.  Another brief example is Rahm  
Emanuel.  He used to be the "bag man" for Congress over at Freddie  
Mac, where  he served on the Board of Directors.  He brought truck- 
loads of cash to the Dems congressional political campaigns, courtesy  
of Freddie - a corrupt nexus tool.  Repub or Dem, doesn't matter.

Let's review:  Wally + Congress = corrupt nexus.  The MSM as a corps  
of dumb-waiters doing the bidding of the corrupt nexus.  The nexus  
serves-up the menu for consumption as instructed, more or less, the  
MSM serves it to you and I through Wally-controlled distribution  
channels.  There are only a few exceptions left in the 4th estate, who  
have abandoned any pretense of performing under their constitutional  
imperative.  This may help to explain how it is that we find ourselves  
in this bizarre, public dialogue.

We are picking-up the tab for the toxic securities issued via Heidi's  
and the bets made in the casino room.  What remains a fantastic fact  
is that we still don't know how much it is!  Wally and Congress don't  
want us to know and are pulling out all of the stops to prevent that  
from happening, and to keep the casino open.  Wally, Geithner,  
Summers, MSM, all tell us that there are just problems of perception  
regarding the value of these instruments;  and yes, we also have  
"serious problems."  That the market has just overreacted in the  
spiral of downward pricing and liquidity on these instruments.  In  
fact, we have massive fraud (wealth transfer) and criminality in our  
commerce and government.

I stand in awe of Wally's spin-machine and power to control Congress  
and the media.  I never underestimate Wally in this regard, but this  
is surreal.  Over one year later we have thousands of Wally's and  
hundreds of Congressman and Senators framing the debate over  
"entitlements" of all sorts, still in their positions, still  
practicing obfuscation, and still operating the casino, when justice  
demands nothing less for them than a permanent residence in a cell at  
Leavenworth and closing the casino, forever.

Charlie



Begin forwarded message:

From: "George Margolin" <inventor () rentaninventor com>
Date: April 1, 2009 3:26:52 PM EDT
To: "'David Farber'" <dave () farber net>
Subject: FW: our economy explained!
Reply-To: <inventor () pobox com>


Dave – I have NEVER sent a broadcast email before. But THIS one is
clever, and sadly – probably accurate in explaining our financial
meltdown.

And having been born in Detroit – and having worked my way through
college in many of the auto plants – it has ‘AHAA!” – written all
over it.

IF you haven’t seen it I thought you’d enjoy it and do with it what
you will.

Best regards from an appreciative recipient of your list.

Regards,
George Margolin
inventor () pobox com


Subject: our economy explained!


It all makes sense now,

Subject: Derivative markets, an understandable explanation

Heidi is the proprietor of a bar in Detroit . In order to increase
sales, she decides to allow her loyal customers - most of whom are
unemployed alcoholics - to drink now but pay later. She keeps track of
the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's drink now pay later marketing strategy
and as a result, increasing numbers of customers flood into Heidi's bar

and soon she has the largest sale volume for any bar in Detroit .

By providing her customers' freedom from immediate payment demands,
Heidi gets no resistance when she substantially increases her prices
for wine and beer, the most consumed beverages. Her sales volume
increases massively.

A young and dynamic vice-president at the local bank recognizes these
customer debts as valuable future assets and increases Heidi's
borrowing limit. He sees no reason for undue concern since he has the
debts of the alcoholics as collateral. At the bank's corporate
headquarters, expert traders transform these customer loans into
DRINKBONDS, ALKIBONDS and PUKEBONDS.

These securities are then traded on security markets worldwide. Naive
investors don't really understand the securities being sold to them as
AAA secured bonds are really the debts of unemployed alcoholics.
Nevertheless, their prices continuously climb, and the securities
become the top-selling items for some of the nation's leading brokerage
houses.

One day, although the bond prices are still climbing, a risk manager at
the bank (subsequently fired due his negativity), decides that the time
has come to demand payment on the debts incurred by the drinkers at
Heidi's. Heidi demands payment from her alcoholic patrons, but being
unemployed they cannot pay back their drinking debts. Therefore, Heidi
cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better,
stabilizing in price after dropping by 80 %. The decreased bond asset
value destroys the banks liquidity and prevents it from issuing new
loans.

The suppliers of Heidi's bar, having granted her generous payment
extensions and having invested in the securities are faced with writing
off her debt and losing over 80% on her bonds. Her wine supplier claims
bankruptcy, her beer supplier is taken over by a competitor, who
immediately closes the local plant and lays off 50 workers.

The bank and brokerage houses are saved by the Government following
dramatic round-the-clock negotiations by leaders from both political
parties. The funds required for this bailout are obtained by a tax
levied on employed middle-class non-drinkers.

Finally an explanation I understand .....




-------------------------------------------
Archives: https://www.listbox.com/member/archive/247/=now
RSS Feed: https://www.listbox.com/member/archive/rss/247/
Powered by Listbox: http://www.listbox.com