Tuesday, November 25, 2008

Unexpected Catastrophe in Fox Trusted With Henhouse Case

The NY Times has an article today that comes to some unsurprising conclusions, namely that all of your money is, has been, and will continue to go to your wealthy banker superiors until they're happy again and you have nothing. From the article:

With the red ink deepening, other banks may eventually turn to the government to soak up some of their losses. Taxpayers could end up guaranteeing hundreds of billions of dollars of banks’ toxic assets. Indeed, Treasury Secretary Henry M. Paulson Jr. is expected to announce a new plan on Tuesday to bolster the consumer-finance market.

“When all else fails, government does come in,” said David A. Moss, a public policy professor at Harvard Business School.

Yay! This is a concept called private profit, socialized risk. It's like a magic trick where no matter what happens your money disappears. Essentially, a bunch of bankers got around and said to each other, "hey guys, the more we RISK, the more money we can make." And the bankers nodded their wise heads in agreement.

But one banker wasn't convinced, and he said, "yes, but with risk comes the possibility that we'll lose all of our own and our clients' money." And again, the wise bankers nodded. But then Gordon Gekko stepped forward and said, "what if we risk all this money, but we risk so goddamn much of it that when things go horribly wrong the government and those filthy taxpayers will come in and cover our bet?" And the wise bankers agreed that this was the greatest idea ever conceived of by man or god, and then they did a lot of cocaine, and it was good. Again, from the NY Times article:

Before long, anxious investors may start wondering which banks will be vulnerable next. If confidence fades, other big lenders will probably seek deals like Citigroup’s, in which the government has pledged to pick up potentially $290 billion in additional losses.

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