The United States of Vegas

O.  My.  God.  Holy derivatives.  Although not surprising given the vacuous, moral state of affairs of our financial underpinnings, America is planning to weaken further the integrity of our financial institutions by expanding its role as a veritable betting parlor.  Not possible, you say?  Listen up.

First, you must read this article by Steven Pearlstein in the Washington Post today …. and read it very carefully:

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/11/AR2010031104794.html?sub=AR

I was dumbfounded when I read this .  Isn’t it enough that our great investment banking houses have securitized financial instruments such as derivatives, that nearly (and the possibility still very much exists because there have been no new regulations passed to curb derivative transactions) brought our nation to its greedy feet?  As Pearlstein notes: of course these banks had no qualms about selling mortgages to unqualified people.  The banks just lumped together all of these liens, good ones but mostly bad ones, into various pools of dung and sold them to even greedier entities looking to make a killing in the market.  No attention was ever paid to the individual debts that made up these portfolios of crap.

Now Hollywood wants to securitize the earning potential of movies.  Please, please tell me how this is any different from betting on who will win the Superbowl, where the next earthquake will hit and how strong a rating it will  merit on the Richter Scale, how many children and of what gender Malia and Sascha Obama will have and finally, when a comet will crash into the earth?

The investment banking firm of Cantor Fitzgerald, one and the same as the company that had a major presence in the World Trade Center when it went down on 9/11 and who lost hundreds of employees, plans on jumping into the Hollywood futures market by peddling these hollow investment opportunities.  Desperate times call for desperate measures.

America has turned its financial foundation, i.e. huge banking enterprises, into a casino.  The worst part though, is that there will be a market for these instruments.  As greedy as the bankers are, their customers complete the circle of avarice by purchasing these vehicles.   We are part of a world guided by a dearth of morals, seeking only the ego-fulfilling high that an immediate windfall, or in this case, the hope of a windfall, can provide.

How on earth can our economic structure survive when the most basic building block is the riskiest?  The concept of that good old “investment triangle” is based on the most secure investments filling up the larger, bottom third of investment strategy.  If this portion of asset allocation is composed of the riskiest investments, there is no foundation.  Our economic architecture then becomes a house of cards, ready to collapse at any moment.

The thought that fiduciary entities, whose primary instructions are to be prudent with their investor’s monies, will be buying these supposed “investment” vehicles, makes me sick.  Pension funds, unions, charities, and individuals will no doubt be powerless to deny themselves the chance of  higher returns.  Peoples’ hard-earned money may very likely go down the drain, along with their retirement funds and general well-being.  Just remember this: no more bailouts for stupid, greedy behavior whose dangers have been outlined at the outset.  Enough is enough.

It is not like we haven’t been down this road already.  But as I mentioned the other day, since America no longer makes any tangible goods (thanks to our infinite wisdom to send those tasks overseas where the labor is cheaper and, alas, the quality control practically nonexistent), we have had to design new “products” that can be sold.  These creative products, like derivatives, are often empty shells, offering returns only for the companies that sell them.

We are certainly the United States.  We are united in our stupidity and greed.  The United States of Vegas.  When will America wake up and smell the roses?  Forewarned is forearmed.

A MUST-READ: THE FINANCIAL REFORM SPEECH THAT WE’VE BEEN WAITING FOR

http://kaufman.senate.gov/press/floor_statements/statement/?id=aca5b91a-6e51-4d6b-a367-414ad9641500

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3 Responses to “The United States of Vegas”

  1. Natalie Rosen Says:

    FABULOUS blog. I hope it made it to the Daily Kos which some of the power brokers really read. The Pearlstein Washington Post article was chilling….betting on movies yet? Maybe someone would like to bet on my next dental visit? There are NO boundaries. There are NO boundaries on speech, there are no boundaries on bad behavior whether it’s sexual or violent, there are no boundaries on guns and no boundaries for the banks … it is a no boundaries society. I constantly try to figure out what the hell went wrong.

    We would not like to return to the days of yesteryear and yet this milieu is totally unacceptable as well. We are human anarchy in motion. We are a wild west nation but whoever thought it would turn into the near collapse a world economy? Who thought we would have no markets to make goods shipping those markets to China or wherever the cheapest labor can be found and who ever thought that we would be selling even more of the same derivative crap while the heretofore richest nation on earth stands on the precipice of bankruptcy if it continues as is. Not to bastardize Palin (good word bastardize for her) I can see revolution from my house!

    • yomamaforobama Says:

      Your comments, Nat, are better than my blog. Thank you.

      Your call for “boundaries” reminds me of my mother’s constant advice. Limits are essential to a moral, productive life. And even though our nation was founded based on the great notions of exploration, innovation and opportunity, there must be ultimate curbs on the behaviors that allow each and every American access to those principles. Access cannot be transformed into abuse. Thus, our Constitution. However, the morality versus the sense of “it is legal under the Constitution” is no excuse for pushing the envelope in areas of personal responsibility and human decency. Legal is one thing; values and morals are another. That is the disconnect that is afflicting people of all political persuasions. The Constitution would become virtually meaningless if it was not solidly built upon the expectation of moral individuals.

      And that is the crumbling phenomenon we are witnessing today. In all socioeconomic levels, in all of our political parties and in all of our personal and financial circles.

  2. sara bruce Says:

    Frontline did a brilliant piece on Blakeley Born. You can find it on PBS.org and watch it. Derivatives have been a known problem for a long time. On one hand it’s nice to know that there are always warning signs of looming crises. On the other hand, it frigthtens me that they are ignored.

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