by-line: this story is more profound than funny. My apologies; it's an important subject and my brain hurts.
I've never accepted the wisdom that we must pay the banks a trillion dollars of borrowed money or else the economy will crumble. Nobody's explained exactly how this can be. So, I'm working on a theory and watching umpteen documentaries.
The derivatives market was nothing but gambling, with hot air as collateral. This fake market imploded, like a dead star, into a black hole and sucked in the real stock market. Real money and money-on-paper just started disappearing because of a lack of confidence and because people were plugging financial holes caused by this first crisis.
Unfortunately, that money was thought of by many as a stock portfolio, 401k, or my nest egg, or my company pension, or my private pension. So, what I understand is that a lot of this money is gone, at least on paper. These are the vicissitudes of investments. Too bad. So, the banks, mostly the casino banks, pumped up a fake market, took real money home that somehow had come from the real market,
and left the common man holding the bucket.
So they ate discretionary savings. Some people will not be able to retire, but so be it. Not many countries were at risk of going bankrupt. Most countries would still be viable because they didn't invest in crazy derivatives, right? Just let the losers lick their wounds and learn their lesson. Right?
So, why did governments give money, hand-over-fist to the banks?
Well, I believe that, if certain countries, particularly the US and UK, had not given masses of money to normal banks and even casino ones, then those banks, before declaring bankruptcy, would have eaten our government pensions as well, by fatally weakening the bond market that most countries (and some other institutions like private pensions) rely on to provide a modest profit on deposits.
[hand over the money or your pension gets it!]
At the same time, other countries (bond sellers) need the bond buyers so that the these bond-sellers can fund their debt. So China, Japan and the Oily Kings buy bonds and fund our governments as we spend like drunken sailors.
Those banks, like I said, were about to eat up this massive market as well i.e. destroying everything from savings, to state pensions to bond values, money for expected government services like health-care, everything! chaos, anarchy, no news at 6pm.
now serving: NOBODY
That's why our governments are only telling us half truths that don't make sense. They had to make it look like it's business as usual. So, no more bankruptcies, and no more admissions.
The robber says: Stay cool. Just hand over the money and nobody gets voted out of office.
No politician had to raise the spectre of a centrally-controlled economy, at least not visibly, because that would be communism. Still, governments couldn't admit that they had let the financial system go into real meltdown (as opposed to the kidstuff in today's news). My guess is, if the majority knew the full truth (if it's anything like what I've figured out) we would have all freaked and run into the streets screaming for blood.
Everything we and our forefathers have ever worked for may have disappeared. Well, actually I think it has disappeared, and it's the work of our descendants that will pay to "bring it back." Where does that leave you and me?
Update: an economist named DeSoto was on channel 4 news today and says that the toxic derivatives are tentatively valued at least 600 trillion dollars. (Why's he the only one who's said this?)
The only other explanation has our governments placing us (i.e. the stakeholders & final payers of government debt through our taxes) into virtual slavery to those rich countries, for the sole purpose of giving money to the same rich guys who ate/lost the other pile of money, the real one. In other words, we're funding the lifestyles of the rich and famous. This would be the cynical conclusion and yet I have seen some convincing evidence from the US (see GritTV below).
So either way, no mobs, no blood, business as usual, well, except for the unemployment, foreclosures and bankruptcies. But the common man has had cataclysmic fate at his doorstep throughout history (plague, pestilence, war, religious conflict, lack of justice or democracy).
It's only in the last century, the one we'll be praising as heaven on earth, where hard work, planning, saving and intelligence could lift the common man out of penury and drudgery; where democracy might have meant something other than corruption, subterfuge and magic tricks. We had even largely stopped killing one another.
Poof! All gone.
That's all, folks.
I hope I'm wrong, but I can't see any other theory that works yet.
Please, prove me wrong.
Now, for your entertainment:
pictures royalty-free from fotosearch.com
