Wall Street Woes
Beware the Ides of March.
Today’s NY Times reports a Depression era like run on the bank at Bear Stearns. JP Morgan Chase and The Fed step in and stop it, but how many others can they possibly save?
Is this an isolated incident or a harbinger of things to come?
In this particular incident, JPMorgan will borrow the money from the Fed and lend it to Bear Stearns, but the Fed will ultimately bear the risk of the loan. That’s really me and you. The taxpayer bearing the brunt of these massive failures, massive failures caused by not a handful, but thousands of greedy, enterprising, opportunistic pricks trying to get rich with risky schemes.
I’m largely immune because I’ve never really bought into the whole wealth building way of life. I have friends that do, and I frankly feel sorry for many of them. I get sick and tired of hearing about their investments, investments that often derive their profit, at least to some degree, at the expense of habitat and the voiceless. It’s like eating meat without ever having to visit the slaughter house. Out of sight, out of mind. Very few follow the trail all the way down stream to see how corporations really make their money. Where the materials come from, who makes the goods and how all that crap is shipped from point A to point B. What had to be mowed down to make room for the new factory. Where the trash goes, where the effluent goes, how they treat people, etc.
Some are simply ignorant and apathetic. They don’t understand how the world really works and honestly believe they are completely innocent with their investment schemes. Others know damn well what the real cost is and don’t give a shit.
Other than the shares I have in my own small business, I don’t own other stocks, bonds or trade in commodities. Never really understood or cared for economics, although I’ve come to realize that economists rule the world. Economics is an odd discipline, one, that has Hayduke says, isn’t even real because it ignores all the things that important in life. It ignores biological and geophysical reality, and its adherents seem to believe that it exists in some sort of vacuum. Boy do they have a big surprise coming!
But who’s really innocent? I’m not. I don’t want to wag my finger at people without examining my own life. I still own a car. I still drive it more than I should, and I purchase data communications equipment and services from companies that mostly likely do some pretty horrendous shit. But at least I’m trying. I at least think about who I buy from and who I align myself with. I try to make informed, socially acceptable decisions. And I cycle, as much as I can to work and back, although I’m putting my life at risk every time I do it.
I say I’m largely unaffected, but not totally unaffected. None of us are completely unaffected. Three bubbles are about to burst: stocks, real estate and commodities, and when that happens, the banking system will have to write off major loans, exponentially contracting the money causing deflation and the next great depression. There will be a domino effect that affects everyone. Non-profits will find it much harder to raise money. Small, family owned businesses will lose revenue while costs escalate. There will be layoffs, more foreclosures, homelessness, lost health coverage. A pretty ugly scenario but an avoidable one and therefore a hard but necessary lesson.
As Abbey said “It’s hard, but it’s fair.”