Bulls Make Money, Bears Make Money and Pigs ...

Go To The Slaughter House ... or do they?

Turns out that there were several sets of pigs in the story of the great depression of 2008 - the Street, the rating agencies, mortgage originators, Congress, the GSE's, law firms and the poor saps that were naive enough to buy into the single family cycle at the top and BTW, the only members of the list that went to the slaughter house.

This IS the last time that I'll summarize the reasons why the whole mess happened. Before I do though, wouldn't it be interesting to actually know if anyone, like one of the authors who have written about the causes, read this blog? We'll never know. Anyhow, here it is again; AVARICE! What? you can sum it up in one word? well, not quite but pretty close.

Here is what's in this blog and what can be built upon to set the stage for the meltdown:
1. The K Street Project opens Congress to a vast increase in donations and a shift in the way that legislation is drafted and by whom.
2. A paradigm sift in morality relating to the establishment of the rationality of the end justifies the means - Business Ethics, WMD, mushroom cloud, Carlyle Group & etc.
3. Off Balance Sheet Finance
4. Small Brains and smaller penises and the negative affect that one exerts on the other.
5. I've only alluded to this one but each and every American's right to get their shot at the big bucks.

Hold that thought. Here is my story - again - My shot was the CMO. It took several years and several machinations to refine to the point where it could be stolen from me and grown into the monster that it eventually became. In spite of that however, I still got my shot. With two friends, I started the first "private label" CMO issuer. We structured a deal with Lehman that would have paid me alone, $60 million 1984 dollars. When I brought the whole thing together, Lehman restructured the profit split and we told them, so long, (big mistake) thinking that we could replace them quickly. The market moved, I got one more chance with Morgan Stanley, but in the end, missed my shot at the easy bucks.

The point of the story is this this, we each deserve our shot. That it may be marginally illegal or built on a foundation of sand, matters little in modern US society.

Don't judge the people who did the Abacus deal - look at the name, do you know how to use an abacus? or even what one is? It wasn't supposed to be understood. That's the point. Paulson got his shot. Goldman did what investment banks are supposed to do ... they underwrote and distributed the deal and got paid a fee. The deal did what it was structured to do. It imploded and the firms that were naive or greedy enough to fund it lost money ... sorry.

Like most of what is written here, I've lost concentration.

Think about this though. We created a system and the system worked. It raised trillions of dollars for US and international housing finance. It worked so well that the players lost sight of where it was heading and, just like tulips and other financial fiascos, it fell apart. The problem, dear reader, lies in the system that created the atmosphere that enabled the whole mess to get out of hand.

Do you actually think that that same system is actually going to do anything about changing itself?

Too bad we can't legislate intelligence.