Tuesday, October 19, 2010

Mortgage Banking Meets Conan the Barbarian

Cancer Stage Capitalism:  
When the Mortgage Securities trade moves from 
Musical Chairs to Mortal Combat.

Don't worry.  
Just relax and watch the dancing monkeys
-- kill each other!

The classical parlor game of musical chairs was simple enough that even sexually repressed, half drunk 19th Century British socialites could navigate their way through it.  It began with, say, five chairs and six players.  The music -- at least in the beginning, provided by a chamber quartet -- began, and the participants commenced a slow circle around the furniture.

At some point, the music would suddenly cease, a sign that all the players should immediately take a seat.  Of course, one unlucky player was left, stranded with no place to sit.  That player was discharged, another chair was removed, and the music began again.

The calamitous global mortgage scheme amounted to little more than a thinly camouflaged version of the that innocent old parlor game.  Instead of music, the affair was to be timed by a strangely durable interludes of rising house prices and lubricated, not by the contagious laughter of the game, but rather by the unremarkable greed of the "chair holders."

The similarity of that term, "chair holder," and the corresponding term from the corporate world, "share holder" is not entirely coincidental.

The tempo of the "music" grew faster and faster as the bubble inflated.  The players moved ever more quickly as they plummeted forward around the circle.  Soon enough, there was little thought of just how accessible one of those chairs might be at any given moment.  The game was infatuating.  Hypnotic.

The mortgage market, inebriated by the carefully crafted rising prices for the homes which once supported the value of the mortgages, careened on beyond even the place of comfort originally devised by the culprits.  They had intended to quit before things got so far out of control.

However, they lost no sleep over the prospect of leaving one or more of the other dancers without a chair.  The psychopathology of the ponzi schemer did not rely on being "lost in the crowd" so much as being safely "gone" when it cratered.  

And, in our present, desperate, and newly encountered economic sobriety, we are enduing that cratering.  We see the tatters of that old "musical chairs" game in the wreckage all around us, except, unlike the cozy parlor of days gone by, there are hundreds of puzzled players who just now are realizing that there are only one or two chairs left in the center.

Happily, the market will still correct itself, not, however, in the staid, productive flow taught in economics class.

How are these desolate players regaining the prospect of one of those severely limited number of "chairs?"  An interesting proposition, indeed.

At Lehman, there were no chairs left.  At AIG a chair was provided for all the default insurance parties so brazenly protected by the autocracy.  Urban mortgage holders who had watched their home values halved, then halved again, simply stopped paying their mortgage payments while defiantly remaining in the houses.

Bank of America is "forced" to buy back all the billions in mortgages they had so quickly and conveniently written off under the cover of TARP.  Restless middle class folks are organizing outright militias to forcibly prevent foreclosures from being executed.

Here, we must make a conceptual choice.  Will we see this as a "market correction" or an economic and ideological, market insurgency.

The position of the bankers, bundled mortgage security holds and billionaire investors is starkly transparent.  None of them intends to be left without a "chair."  That unpleasantness was to be reserved for smaller people.

The monkeys are turning vicious.

These positions of power and wealth enjoy the remedy of foreclosure when payments are no longer being made, but the sword has two edges.  The more houses they foreclose, the more bloated the market becomes and the further home values descend.  Yet, even in this dire situation, their thoughts turn exclusively to orbit around their own fortunes.  If their previous colleagues and collegial competitors slide into ruin it will be no problem so long as there remains an existential path forward to finally recoup their own investments.

This is the "Mortal Combat" stage of the game.  Anyone with so much as a momentary weakness will be killed and eaten to keep the crazed survivors fed -- even if it for only another day.  A few of those with just a bit of discretionary cash left for play will spend it with corporate opinion makers -- each one equipped with a specially crafted title:  Freedom Works, Americans for Prosperity, American CrossRoads and the like.

After all, there can be no rational reason to let democratic politics insert itself in some complicating manner.  Thoughts of the country and of fellow man were among the very first casualties of this train wreck.  The opinion of the hill billies and bigots can be bent at will.  The prospect of a responsible government intervening in this meat festival will be swept aside, at least, swept aside for as long as possible, for as long as it is not too costly.

Capitalism-wise, this is the cancer stage.  No wealth is being produced by the creation of material things, manufacturing, invention, efficiency or innovation.  All that is left is for the great "Masters of the Universe" to savagely commence to feed on the bones of each other, weakest first.

Heh, heh.  Just like the Captain's Lizards of Aceh Bandhi.  All teeth, no manners -- just hungry.  NOW!

Now plump with Federal money, the banks have chosen to "wait it out," stopping all lending until what had previously been American small businesses become "low hanging fruit" with purchase prices to match.  Shopping time, piranha style.  Over stuffed corporations plump with TARP funds sit as if on a gigantic toilet, grunting, waiting for labor costs to collapse to a point where American workers will take any job at any price and never complain.  "Health Insurance" corporations are boosting prices 40% just to show "that punk black man in the White House who is boss."   

All this is not a simple coincidence.  Go ahead.  Think conspiracy, and spell it Bush Jr.

MeanMesa only wishes that some constructive idea might emerge at this point.  Perhaps the best advice is, for the time being, to get as far away from this economy as possible while remaining able to survive.

This isn't a sudden revelation, either.  Here, MeanMesa offers a posting from January, 2009, when all this was just getting started.

Savoring This Moment in Our Main Street Economy

We have been deeply acculturated not to be violently revolutionary for generations.  As far as MeanMesa is concerned, it's slipping...

Stay cool.
Stay informed.
Stay active.

Follow that vacuous, worn out tea party slogan:  "Take the country back."

1 comment:

  1. "MeanMesa is good for entertainment, but not as serious commentary."

    ~ Overheard on Cyberspace.