In the early 2000s the Bush administration sent clear signals that regulations on mortgages would not be enforced. There followed every manner of scheme to fleece the unsuspecting—liars' loans, no-doc loans, and neutron loans were terms of art in the business—bundled together, rated and securitized, then spread through the world and left to fester until rising interest rates and crashing prices wrecked the system.
This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor. The borrowers were, of course, complicit in some cases, taking out mortgages they never had a hope of paying down. In many more, they were simply naive, gullible, open to pressure, credulous, and hopeful—something might turn up. They took the assurances of lenders that housing prices always rise, that bad loans can always be refinanced. They were attractive to lenders for all of these reasons, and because they had nothing to lose. A borrower with nothing to lose will sign papers that another will not. A government that permits this to happen is complicit in a vast crime.
As in 1929, the architects of disaster will form a rich rogues gallery to go shooting in. The Old Objectivist, Alan Greenspan, was intermittently aware of impending disaster and resolutely unwilling to stop it. The Liberal's Banker, Robert Rubin, had a reputation for fiscal probity eclipsed by catastrophic complacency at Citigroup, where he was paid SI 15 million and maintained silence, so far as we know. There will be Phil Gramm, of whom in April 2008 the Washington Post wrote that he was 'the sorcerers apprentice of financial instability and disaster.' There will be Lawrence Summers, impassioned advocate of the repeal of the Glass-Steagall Act in 1999, bounced from Harvard's presidency to Obama's White House—a man whose reputation remains to be rebuilt or buried by events. And Bernard Madoff."
James K. Galbraith, Foreword to the 2009 edition of The Great Crash of 1929, May 18, 2009
“The war is waged by the ruling group against its own subjects and its object is not the victory over either Eurasia or East Asia, but to keep the very structure of society intact. The war is not meant to be won, it is meant to be continuous.”
George Orwell, 1984
"By the end of the summer of 1929, the conviction that the market had become the personal instrument of mysterious but omnipotent men was never stronger. And, indeed, this was a period of exceedingly active pool and syndicate operations — in short, of manipulation. During 1929 more than a hundred issues on the New York Stock Exchange were subject to manipulative operations, in which members of the Exchange or their partners had participated.
The nature of these operations varied somewhat but, in a
typical operation, a number of traders pooled their resources to boom a particular stock. This buying would increase prices and attract the interest of people watching the tape across the country. The interest of the latter would
then be further stimulated by active selling and buying, all of which gave the impression that something big was afloat. Tipsheets and market
commentators would tell of exciting developments in the offing. If all went well, the public would come in to buy, and prices would rise on their own.
The pool manager would then sell out, pay himself a percentage of the profits, and divide the rest with his investors
While it lasted, there was never a more agreeable way of making money.
The public at large sensed the attractiveness of these operations, and as the
summer passed it came to be supposed that Wall Street was concerned with
little else. This was an exaggeration, but it did not discourage public
activity in the market. People did not believe they were being shorn. Nor
were they. Both they and the pool operators were making money with the
difference, only, that the latter were making more. In any case, the public
reaction to inside operations was to hope that it might get some inside
information on these operations and so get a cut in the profits that the great
men like Cutten, Livermore, Raskob, and the rest were making."
John Kenneth Galbraith, The Great Crash of 1929, 1954
“Religion used to be the opium of the people. To those suffering humiliation, pain, illness, and serfdom, religion promised the reward of an after life. But now, we are witnessing a transformation: a true opium of the people is the belief in nothingness after death, the huge solace, the huge comfort of thinking that for our betrayals, our greed, our cowardice, our murders, we are not going to be judged.”
Czeslaw Milosz, The Discreet Charm of Nihilism
Trading for the new year starts next week in earnest.
This week was for the junior traders who for the most part just following orders.
The commentary on the mainstream media, including financial television, is other-worldly.
It will be interesting to see how January goes this year.
I have been struggling with something that I now think is the norovirus. I had not even known about it until a few days ago.
Considering all the company we had for Christmas, including all the little ones, it is not surprising.
The symptoms of the norovirus are like a flu on steroids, but no coughing or congestion. Just a runny nose, epic gastrointestinal distress, and the worst body aches I can remember. I could barely walk.
I share this in case you too are experiencing mystery symptoms.
I am finally starting to feel better but am very fatigued.
Have a pleasant weekend.
