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Another Place To Die
by Sam North
Next Great Flu Pandemic is coming.
Are you prepared?
will keep readers in suspense, laced with gritty-gallows humor'
plausible, and sickeningly addictive, this will terrify
you and thrill you.'. Roxy Williams - Amazon.co.uk
'Fascinating, frightening and compelling read'.
Another Place To Die
International Writers Magazine:
Emperor's New CDOs
Dean Borok explains all
you need to know about sub-prime lending
there was a king who told his tailor, Sew me the coolest suit
in the world.
The tailor said, Yes, Your Highness.
The king said, You better, otherwise I will have my priests
rip out your still beating heart and feed it to the piranha fish
I keep in the royal aquarium.
The tailor went
home and racked his brains, trying to come up with something that hadnt
already been done. In desperation, he called his son, who had
an MBA from the Wharton School of Business. His son suggested
sewing a suit composed entirely of bank notes. Nah,
said the tailor, thats already been done by Jay-Z.
Well, then, said the son, How about a suit composed
of collateralized debt obligations?
What are those?
CDOs are the hottest new structured finance instruments.
Theyre taking the world by storm. They are securities backed
by the future proceeds of sub-prime mortgages issued to high-risk homebuyers.
Since these mortgages are bad credit risks, the interest rates are a
lot higher. Its a real cash cow!
Thanks for the tip, son. You saved my life.
So the tailor sewed a suit composed of CDOs and presented it before
the king. Looks cool! exclaimed the king. In
fact, I think Ill put it on and take a little stroll down Wall
Street. Show the people on the street what real class looks like.
So the king, attired in his new finery, marched in a procession through
the financial district, accompanied by trumpets and heralds and bankers
throwing rose petals at his feet. All the financial analysts swooned.
Omigod, the king looks fantastic! Quick, call my tailor
and tell him to whip me up one of those suits!
The next day every banker on Wall Street was wearing a suit made of
CDOs. It was like a new financial era had dawned. As it
happened, though, a little girl walking with her mother asked, Why
are those men walking around dressed like that?
Why, those are the smartest men in the world, said her mother.
Then why are they walking around naked, dressed in worthless paper?
asked the little girl.
And all at once the bankers realized that the little girl was right.
They were walking around dressed in suits that were composed entirely
of PURE SHIT!
A generation ago President Ronald Reagan reinvigorated a depressed and
demoralized financial establishment by pronouncing his revolutionary
axiom, Greed is good. This dictum has been updated
by George W. Bush, who has put into practice his own improved version,
Stupidity is Heavenly.
What can the Republican administration and the Republican congress have
been thinking when they enabled the banking community to put into place
the mother of all ponzi schemes, otherwise known as sub-prime mortgages?
Broken down into bite-sized pieces that even I can understand, this
is how the racket was set up: a mortgage broker unloads a house on somebody
who cant afford it for $250,000. The first year the mortgage
is set at a low rate, but thereafter it fluctuates according to much
higher market rates. This first year window of opportunity allows
the mortgage holder to sell off the debt to a consolidator and cash
out at the original $250,000, while the consolidator gets a deed worth
upwards of $500,000, which is what the deal would be worth if the mortgage
was carried out to term. The consolidator then flips the mortgage
again to an investment bank at a discount off the $500,000. The
investment bank bundles thousands of these mortgages together and issues
securities backed up by the future income to be generated by all these
All of these transactions take place in the window of opportunity period
while the low teaser rate is in effect and the mortgagee is still able
to make his payments. After the initial low mortgage rate expires
and the interest rate doubles, the homebuyer craps out and the ultimate
holder of the worthless paper is left holding the bag.
Theoretically, the scam should have been short-circuited when the bond
rating agencies like Standard & Poors and Moodys reviewed
the transactions for purposes of rating the bonds, but these agencies
are funded by the investment banks, and they didnt do their due
diligence. They passed the bonds with top ratings of AAA and AA.
Once these worthless securities went into the investment pipeline with
AAA valuations assigned to them, they were snapped up by financial institutions
around the world. Most brokers are idiots who play video games
and watch The Simpsons, and they enjoy having their thinking done for
them. Their job is to invest money, and a triple-A rating on a
bond ensures that the placement passes muster with their manager, which
is all they care about.
The ratings agencies subsequently admitted that they had based their
valuations not on any kind of independent research, but on criteria
supplied to them by the bond issuers themselves, and its irresistible
to suspect collusion between the issuers and underwriters of these securities
and the rating agencies. They all would have a lot to gain, and
the oversight system of checks and balances in the securities industry
is flimsier than Paris Hiltons nightie. If a congressional
committee were to shine a spotlight on this mess and force the managers
who signed off on these fictional ratings to testify under oath, then
the whole sordid truth would eventually emerge.
In China these guys would be shot for economic sabotage, the same as
they shot the head of their Food and Drug Administration for taking
bribes. With the European and American central banks having been
forced to spend close to five hundred billion dollars to maintain liquidity
in the banking system to prevent a total collapse of the world economy,
this scandal dwarfs Enron and World Com by a country mile. The
worst is yet to come in September and October, when trading starts up
in earnest. There is going to be some serious jail time handed
down to these wiseguys when the whole thing gets adjudicated.
The curse of Cassandra in ancient Greek mythology was that she could
prophecy the future, but that nobody would listen to her. I write
for purposes of entertainment, and I sure dont want to get caught
up in a thing like that. But it sure looks as though these collateralized
debt obligations are just the latest in a long series of rackets devised
by overreaching accountants to enrich themselves by playing fast and
loose with the world financial system. The obvious next question
is: how many other worthless punchboard schemes are currently in circulation
and, when we get through peeling away the onion layers of accounting
shenanigans, what is at the core?
© Dean Borok August 20th
Dean Borok - real power revealed
No amount of money can induce a French woman to go along with the program
if its against her nature.
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