Our economy is mirrored by the slow motion disaster we have watched the last 100 odd days in the Gulf. The financial world and big rig banks were drilling deep into the dark, little understood world of derivatives sludge, pumping out credit to an artificially heated economy like light sweet crude. Then something went wrong. The line kicked in a massive burp of sub-prime gas, and one of our rigs went up like a firecracker, sinking into insolvency faster than you can say “Deepwater Horizon.” The financial blowout preventers failed, and the markets sank as fast as the rig. Lehman died and the whole system damn near froze in a self-imposed drilling moratorium of fear. CEO's bumbled about with one news gaffe after another, and were replaced. Then the “credit event” began to gush non-performing loans—40% sub prime methane and the rest spewing out the toxic ALT-A and option ARM petrol until our financial world was soon awash in a glistening sheen of failing portfolios.
Predictably, the tarballs of bad debt began to soil beaches from one end of our financial gulf to another. Some said they would migrate into the loop currents of international trade and kill the whole ocean. But like the liberal use of Corexit dispersant applied to hide the problem and keep the oil from rising to the surface where everyone would see it and be forced to deal with it, we applied liberal doses of FASB accounting rules changes, and Fed Programs as fat as “A Whale” to skim off any bad loans that did surface to the top of bank balance sheets. Most of the real damage was just shunted away in the limbo accountants call “Level 3,” an off balance sheet water column where most of the widely dispersed bad debt now still hangs in vast plumes. Then we pumped in billions of freshly printed TARP dollars like heavy mud in an effort to staunch the flow of debt. The ROVs of the formerly brain dead SEC have been hovering over the wreckage of the great firms that fell in the explosion, Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac, AIG, Chrysler, GM and all the rest. The public watched it all like a bad summer disaster movie, noting the seeps of oil and gas from one location after another.
The Fed skillfully positioned an array of financial vessels above the gushing hemorrhage of toxic debt, drilling deep into its portfolio to try and stem the flow. They siphoned off as much as they could through the risers of acronym laden programs aimed at sucking up the bad paper, but there was just too much toxic sludge in the financial waters, and the whole ecosystem began to choke on the methane soup of swaps, trades and securities. But eventually they engineered a multi-trillion dollar “cap” and lowered it over the wellhead of insolvency, pretending the problem was solved while they figure out how to kill the damn thing once and for all before something else blows out. They tinkered with the pressure in little "stress tests" and finally decided it was safe to call the show a "recovery." All the while the media ROVs have been beaming images of potential new leaks from the mangled BOP, and the tortured sea floor of the financial world has been seeping from one fault after another. Now they're wondering just how much more bailout mud they'll have to pump in to bolster the markets through the dog days of summer, and then finally seal off this blown out depression of an economy once and for all.
In the meantime, the oil and gas of credit that once greased our world has dried up and all but vanished. And like the carefully underestimated numbers put out by BP as to how much oil was really leaking and how much dispersant they really used to hide it all, no one actually knows just how much more bad debt is out there in the oil dark Gulf of insolvency, and how long it will take us now to clean it all up. All the while bloggers have been barking like Matt Simmons that the whole show was a sham and that there was another leak, (commercial real estate?) just a few miles off that was even bigger and threatened to create a lake of bad debt so big that it could poison the entire financial sea. Nobody listened ... They said he was off his rocker. The BOP was still there. The cap was holding. The recovery wells at the Fed were drilling and, in just a few weeks time, we could forget this moratorium of financial reform and get back to the deep water derivatives drilling again.
Meanwhile, unemployment skyrocketed and people lined up at the government trough like all the ex-shrimpers and oyster men of the Louisiana coast. The price of seafood went up and up, and the folks who lost their jobs and gave up looking have just been quietly removed from the "labor force" so we can continue to pretend unemployment is only 9.5%.
We fixed nothing; learned nothing. We just capped off the well and dispersed all that toxic debt to hide the problem. In the meantime, the banksters are gearing up for the next election in their too big to fail platforms, and when the cameras on the ROVs are finally turned off they can rub their palms in bonus money and get back to the long lost mantra of “Drill, Baby, Drill.”
Predictably, the tarballs of bad debt began to soil beaches from one end of our financial gulf to another. Some said they would migrate into the loop currents of international trade and kill the whole ocean. But like the liberal use of Corexit dispersant applied to hide the problem and keep the oil from rising to the surface where everyone would see it and be forced to deal with it, we applied liberal doses of FASB accounting rules changes, and Fed Programs as fat as “A Whale” to skim off any bad loans that did surface to the top of bank balance sheets. Most of the real damage was just shunted away in the limbo accountants call “Level 3,” an off balance sheet water column where most of the widely dispersed bad debt now still hangs in vast plumes. Then we pumped in billions of freshly printed TARP dollars like heavy mud in an effort to staunch the flow of debt. The ROVs of the formerly brain dead SEC have been hovering over the wreckage of the great firms that fell in the explosion, Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac, AIG, Chrysler, GM and all the rest. The public watched it all like a bad summer disaster movie, noting the seeps of oil and gas from one location after another.
The Fed skillfully positioned an array of financial vessels above the gushing hemorrhage of toxic debt, drilling deep into its portfolio to try and stem the flow. They siphoned off as much as they could through the risers of acronym laden programs aimed at sucking up the bad paper, but there was just too much toxic sludge in the financial waters, and the whole ecosystem began to choke on the methane soup of swaps, trades and securities. But eventually they engineered a multi-trillion dollar “cap” and lowered it over the wellhead of insolvency, pretending the problem was solved while they figure out how to kill the damn thing once and for all before something else blows out. They tinkered with the pressure in little "stress tests" and finally decided it was safe to call the show a "recovery." All the while the media ROVs have been beaming images of potential new leaks from the mangled BOP, and the tortured sea floor of the financial world has been seeping from one fault after another. Now they're wondering just how much more bailout mud they'll have to pump in to bolster the markets through the dog days of summer, and then finally seal off this blown out depression of an economy once and for all.
In the meantime, the oil and gas of credit that once greased our world has dried up and all but vanished. And like the carefully underestimated numbers put out by BP as to how much oil was really leaking and how much dispersant they really used to hide it all, no one actually knows just how much more bad debt is out there in the oil dark Gulf of insolvency, and how long it will take us now to clean it all up. All the while bloggers have been barking like Matt Simmons that the whole show was a sham and that there was another leak, (commercial real estate?) just a few miles off that was even bigger and threatened to create a lake of bad debt so big that it could poison the entire financial sea. Nobody listened ... They said he was off his rocker. The BOP was still there. The cap was holding. The recovery wells at the Fed were drilling and, in just a few weeks time, we could forget this moratorium of financial reform and get back to the deep water derivatives drilling again.
Meanwhile, unemployment skyrocketed and people lined up at the government trough like all the ex-shrimpers and oyster men of the Louisiana coast. The price of seafood went up and up, and the folks who lost their jobs and gave up looking have just been quietly removed from the "labor force" so we can continue to pretend unemployment is only 9.5%.
We fixed nothing; learned nothing. We just capped off the well and dispersed all that toxic debt to hide the problem. In the meantime, the banksters are gearing up for the next election in their too big to fail platforms, and when the cameras on the ROVs are finally turned off they can rub their palms in bonus money and get back to the long lost mantra of “Drill, Baby, Drill.”
