http://www.nytimes.com/2008/09/07/busine ss/07ltcm.html?pagewanted=1

I’ve been reading about the potential blow-up of RMBS dervatives and CDS for the last couple of years.

These are all poor excuses by, apparently, overpaid frat boys deflecting the blame at our expense.

How could anyone see a 1000 year return period event coming? What a bunch of hooey.

Rubin might have added that nobody can see any particular fire breaking out in California at any particular place at any precise moment in time. Or any particular earthquake occurring at any particular time. Or any particular person getting killed in an auto accident at any particular time on any particular road.
So why don’t we just abandon fire departments and traffic laws and anti-earthquake building codes? No need for regulation particularly when there is so much money to be made as a result of those “disasters.”
Getting rid of the regulations would make various people billions of dollars and that’s just good business! And when “low probability” events happen on a regular basis? Hoocoodanode? I was too busy pack ratting away my profits.

But Mr Rubin and his ilk need to be reminded that with those higher incomes comes responsibility - both good and bad. Very few managers, directors or CEO’s appear to have accepted that responsibilty for the destruction of wealth in both their client’s portfolios or indeed their own firms by resigning or at least offering to resign.

This applies to all leaders. Instead you and I, the taxpayer, are being asked to wear that pain so that they can survive intact.

No ,Mr Rubin, this is your fault and you should resign with your reputation damaged as it should be. Greed and avarice are forever present. Those who succumb to its charms must now pay the piper.

Angela Merkel the Federal Chancellor of Germany doesn’t like “Cheap Money” and ” re-flation ” either. She thinks that the re-flation only will last for 5 years before another crises emerges. I think she’s even more on the more positive side than I am. I expect three years max.

Bernanke already admitted himself that he does like dog food; ” such as buying Treasury securities “. Lower interest “certainly feasible”. “Quantitative easing”, no problem! A very chique word for “Who can blow the biggest bubble” .“ Longer-term Treasury or agency securities”; what a illuminating idea, that I didn’t think of this myself. Now we can not only bankrupt a first generation but with 100 years loans we bankrupt the second generation as well.

All these companies bought mortgage backed securitues, securiteis and bonds backed by student loans and credit card balances. Where did all that money go.

They act like somene burned huge piles of money in the streets. If you gave a mortgage loan and sold it as a security then you got your money back. Only the companies that gamble on a security increasing in value lost money. Why are we bailing out AIG who is gambling off people’s insurance policies and retirement accounts on risky assets with little or no assets to back them. We are staking the compulsive gambler so they can continue business as usual.

American Express became a bank because it is the first year they could not sell bonds backed by payments due. So they are selling a bogus asset that if you dont make your payments the bond is worthless. This should not be legal and the companies that risk millions on such assets need to lose this money so they will stop risking it on this crap.

Rather than give the FHA the Billions to give mortgage loans and refinance mortgages and give the small business administration money to loan, and issuing hybrid vehicle loans we give the money to these gamblers that buy and sell risky assets, this is a heist.

It is so unbelievable that the world is suddenly broke. This is a scam.

The context that I offer is “The End” by Michael Lewis at Portfolio.com. If the name seems familiar, it’s because he wrote a book, Liar’s Poker, about the games on Wall Street in 1989. The situation then was pretty much the same as it was 20 years later but much, much worse.

http://www.portfolio.com/news-markets/na tional-news/portfolio/2008/11/11/The-End -of-Wall-Streets-Boom

If you’re not terrified by Lewis’ brief article, I would be surprised.

My 83 year old father has been selling real estate for over 50 years and predicted this 10 years ago. As a result got out of the business because of he perceived as a syndicate of real estate brokers + appraisers + mortgage brokers all in “cahoots” to inflate the price of homes; and bankers for easy money. In his day, the CalVet loan program in California was the only way to get a home loan…or perhaps FHA.

When he got out of the business he asked me; “Son, Why would anyone in their right mind put their $400,000 investment in the hands of lightly trained real estate brokers, mortgage brokers and bankers?, after being in business for over 50 years its time to get out - there are too many amateurs in a high dollar business and that spells trouble - greed!”

So this is nothing new. Perhaps the decision makers have poor memories.

Phillp Wolfe
MBA