Saturday, August 11, 2007

Zen anyone?

One of the main ideas of Zen is simply this: Things Change.

And my haven't they changed?

Almost sad to see the Fed desperately helping (bailing out) the stuck bankers.

Read the biography of Charles Ponzi -- it's a great book.

Imagine a man who was paying interest using money from more recent investors. And as the money flows in and then suddenly all the early investors want their money back and the flow of new investors stops -- you know Ponzi is stuck. (It didn't happen that way -- the government shut him down.) But imagine instead if the banks kept giving Ponzi money to keep paying off the old investors...

With infinite credit, you could indeed run a Ponzi scheme forever.

What you're seeing is the attempt to keep a Ponzi scheme alive after the investors have seen the fraud.

The next few weeks will just a kind of whimpering half save that will actually probably result in a worse crash than it should be.

You can't rescue foolishness.

If you gambled away your life-savings -- should a bank loan you another 500k so you can try to get back to break even? Do you think they would?

Why should the credit crunch be solved peacefully? Why should banks be allowed to continue to lend money to degenerate gamblers / subprime lenders over their heads?

All these products, CDOs, MBS, junk bonds -- they are not worth what people think they are worth. This is not business. This stuff is nothing but paper. It's moneyland that creates money for the benefit of the brokers who buy and sell them.

Self-serving business is wasteful. There are about 9000 too many hedge funds in existence today.

I believe their elimination will only benefit the small and large investor. What will these people do instead?

Maybe get a job as a compliance officer for the SEC. God knows we could use a few thousand more...

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