Feeling depressed

..delighted
by him doubling his bets to cover his losses, as they profited by the eight
billion dollars that he had lost. This increased the bonuses, the eventual sale
of Porsches, floating gin palaces, excessive dinner, divorce settlements etc.
of the very few people who tended to sit in front of trading screens for far
too long.
As they did last time, the Australian corporate watchdogs may eventually get
around to charging a few token players, add a few minor bits of ineffective
paragraphs to the regulations, but they will change nothing fundamentally. It
serves them too well. Twenty years from now it will happen again, and another
generation who have failed to learn from the past four hundred years of exuberant
capitalism, will throw up their hands in horror as the next perfect storm takes
them completely by surprise.
Strangely, little of this immense implosion has been caused by the failure of
enterprises generating real revenue from real activity; the problem is caused
from derivatives trading, that vast and inverted financial pyramid balanced
precariously on the 10% of the economy actually doing something useful.
So, a partial explanation of how one particular thimble and pea trick has lead
us to where we are. Not all of you have heard of CDOs – collateralised
debt obligations – an allegedly investment-grade security backed by a
pool of bonds, loans and other assets – but an understanding of their misuse
may lead you to feel that there are a number of people out there whose organs
of generation should be removed with a rusty knife.
Banks, mortgage brokers and other lenders, sell their debt (mortgages, loans
etc) onto other companies in exchange for more money to lend to other borrowers.
Otherwise there wouldn’t be enough money for banks to loan, as, surprisingly,
they don’t have licenses to print money. Because the riskier the loan
the more money you can charge, the number of dodgy loans is rather higher than
you would hope. The classic are the low document or, my favourite term , Ninja
loans (No Income, No Job Americans), who have been persuaded to take out a honey
moon term loan, where the payments are bugger-all initially, but then suddenly
escalates after a few years to the shock and consternation of the trailer trash
who have put their ‘x’ on the dotted line. More catastrophic is
the balloon loan, that has one large payment (the balloon payment) due upon
maturity. The major problem with such a loan is that the borrower needs to be
self-disciplined in preparing for the large single payment, since interim payments
are not being made
Now, financial institutions tended to look away, as the housing market was good
and prices were rising, so they had confidence that the money would eventually
be repaid, even it the loan was defaulted. But, what happens if the housing
bubble bursts and houses are worth less than they were? Oh consternation! Oh
lack a day!
And what was happening to all this doubtful debt – where was it going? Strangely,
it was being bought as good debt by superannuation funds, even Australian Councils
who had been persuaded that it was in fact going to provide a stable return
on the money they invested – perhaps to pay your pension or go towards a new
bridge.
They were persuaded that this was good paper as an outcome of the fine work
done by financial engineers wrapping up the debt, good, average and appalling,
in such a way that the overall package got a good debt rating. ‘AA’
it said, and you can trust AA. As it happens, some of it was poison, but nobody
knew which bit. Rather like a spaghetti marinara with one live blue ring octopus
in it. Suddenly a lot of money just seemed to evaporate.
Now, to me, this debt packaging is really a criminal act, deliberately designed
by major and apparently reputable companies to deceive people: To date there
have been a few ‘tut, tuts’ but that is all. Part of the rich and
fertile necessity of capitalism, this is the way it all works. No real outrage
any more, just numbed indifference. They lied, the government lied, what can
we do?
Well, as far as governments go, not voting for them is a valid option – if you
have an opposition. But how do you not participate in our general economy, where
corporate leaders have a much larger hidden vote than you do?
Which leads me to Southern Cross railway station, where I now arrive and depart
every day, having moved workplace to the Rialto in Collins St, which is a nice
building indeed.
Not so Southern Cross station which is hot, noisy and smelly. The only time
it looks good is driving past it at night when it’s empty. Did it not
dawn on the designers that there were a large number of diesel engines using
the station, all of whose fumes are trapped under their beautiful billowy roof
to be baked into carcinogens of such intensity that people mutate before your
very eyes into sweating fat people from Broadmeadows? Natural airflow wasl also
meant to occur as a result of the curvaceous panels, resulting in an oasis of
coolness distinct from the Sahara of Spencer Street.. In a word ‘bullshit’.

The most irritating part, apart from the fact that escalators only work intermittently
and the video screens with the train times don’t work or are being coded
in Sanskrit, is that the integration of design is appalling. They seemed to
have forgotten that electric trains, with all their attendant wires and cables,
signals and paraphernalia were going to be in there. They left bits of crap
from the 19th century side-by-side with Fred the Welders’ free form welding
improvisation devised so that a high tension lead doesn’t suddenly defribulate
the suffocating commuters who are now having a heart attack from the lack of
oxygen. Oh well – it probably looked really good on the computer.
One more thing: it was built as a result of a PPP, a private public partnership,
where we paid a company to build a railway station so we could rent it from
them. The results of this is that it will actually cost the people of Victoria
more, as the company made a profit out of this and they borrowed money to finance
their building of it at a higher cost than the government could borrow money.
– apparently because private enterprise is better at managing risk. How risky
is building a railway station for the government?
In summary: there are too many people, too many thieves and too many charlatans
. AND it’s hot.