Posted on December 17, 2008
According to the AP, “The world economic crisis might mean fewer Christmas presents, but Pope Benedict XVI says that tough times can give back simplicity and solidarity to holiday celebrations. Benedict has expressed hope that the financial crisis will help people focus on the spiritual meaning of Christmas, when Christians worldwide mark the birth of Jesus.”
Of course, if you invested with invested with Bernie Madoff, you probably don’t celebrate Christmas anyway, but if you did, you are really out of luck.
Old Bernie looks like he is trying to stay out of jail, but all of the friends who could bail him out has lost all of their money. The SEC Chair, Chris Cox, is upset that nobody in his organization looked into the Madoff business plan, but then it turns out that one of the SEC lead investigators married a Madoff daughter. Talk about an inside job!
It turns out that nobody has any clue how Wall Street really works. If they did, they would notice that Madoff’s accountant was a joke, Madoff’s huge trades had no impact on the market (thereby begging the question did he really trade) and Madoff’s guaranteed returns were a big joke.
Credit default swaps, derivatives, complex trading instruments, it was all based on fraud. And now the American people are getting screwed, and worse, future Americans (those who aren’t even born yet) are really getting screwed. Of course, they don’t get a vote, so they are easy pickings.
It is hard to garner much sympathy for the big fat cats who lost all of their money with Old Bernie. They should have known better, but they wanted a sure thing, and there is no such thing as a sure thing.
Hank Paulson now says that the banks have been stabilized. They may be stabilized, and I suppose that is a good thing, but being stable and being a bank that loans money to keep the economy going is completely different.
Ben Bernanke has decided that if the banks don’t do their job, the Fed will do it for them. They will take over the bad debts, the unpaid credit cards, the bad loan mortgages, and they will pay the bill. It is if your dad would come to your college and pay off all your bar tabs, and then stick you with all of his credit card debt when he dies. Nice idea, but doesn’t really cure the problem and actually makes it worse in the future.
Nobody really knows where the money is coming from and where the money is going. Nobody really knows what Wall Street is up to, and nobody really knows where the TARP money is going.
What we all need is transparency, simplicity, honesty, and frugality. What we have been getting is fog, needless complexity, dishonesty and whatever the opposite of frugal is.