Thursday, 28 May 2009
Snow Whiter and the seven shades of pale
Do you believe in a fairy tale, like the winner of the latest Eurovision Song Contest? Then you may believe in a pundit's tale too, like home prices on the rise again, unemployment statistics dropping, banks lending, and consumers spending, before Santa Claus is coming to town.
Let me tell you, I heard the very tale myself, and I don't buy it. I think we've let things slip out of hand. We've been too complacent of late, and now the bogeyman is coming to strip us of our treasured trinklets, and of our life savings into the bargain.
We had no money to start with, but we took out liar loans to buy MacMansions we couldn't afford. We saw our friends driving Porsches, and prayed to the Bank for a Mercedes Benz. After all, we had to make amends. As our home equity kept rising, the Bank obliged. And then we prayed for a flat-screen TV, and a cappuccino machine, and toys and gadgets for our kids.
And the Bank refinanced our debt for a nice fat fee, of course, but who cared?
After a while we got bored stiff in our over-sized house, sipping latte from the cappuccino machine, and watching the late show on the home cinema. Now we would go for some real fun, and we went to the Bank for the third time, and prayed for a night on the town.
We got it all, and we spent it all, up to the last line on our last maxed-out credit card.
As you may know, in a fairy tale the third time is final, so, after this triple debt orgy the piper suddenly changed his tune. At first, we didn't even notice. We loved to live so pleasantly, live this life of luxury, lazing on a sunny afternoon. But the Bank giveth, and the Bank taketh away. By then, we'd quite forgotten about the second phrase of the sentence.
There were things going on in the world, things we'd been busy zapping away from with the remote of our flat-screen TV. Big banks going bust, car makers dropping by the roadside, the value in our 401K's halving, malls emptying, housing getting into a tail-spin, oh, the horror! And we started to get mail, snail mail, obscene letters from Repo Man. And every month half a million of us are getting a pink slip out of the blue.
We called the Bank, praying for a refi, and we found the lines clogged. Save me, we cried, save me, save me from this squeeze. I've got a big fat mortgage trying to break me! But this time the Bank was adamant. It couldn't spare the money. It needed all the dough it could lay its greedy hands on to shore up its balance sheet, to write off the tsunami of loans going bad. In its turn the Bank now was praying for a bail-out itself to the even higher powers.
These Higher Powers feed on emanations of arcane science, and generate insights, which by their very nature are beyond the realm of human comprehension and accountability. Moreover, these Higher Powers are in possession of a magical contraption, by which, if they so decide, they can evoke credit from thin air. In a world that is living and breathing by credit alone, the word from their lips is considered in awe.
And so it came about, that these Higher Powers, seeing credit crunched, and swirling around the black debt hole in an ever quickening fashion, against all human reason and free-market values, decided to wave their magical wand, and open the credit spigots full tilt to beat the sucking force of the black debt hole to it.
As far as debt holes go, the depth of this one is estimated at north of US$600 trillion. The Higher Powers together, so far, have washed away the as yet unimaginable sum of US$3 trillion in bail-out money for the ailing Bank, a mere half percentage point of debts outstanding, and we, credit-strapped as we are, will pay dearly for their folly in terms of a lower standard of living for decades to come.
Here the fairy tale popped. We're left standing in a waste land, on a road before an ancient porch, bearing on its frieze a vaguely familiar inscription: Lasciate ogne speranza, voi ch' intrate.
You may say I'm a doomer, but I'm not the only one. Maybe one day you'll join us, and the world will be a brighter one.