Sunday, January 3, 2010

A Financial Tale

Once upon a time in the land of free markets, there was a street called Wall Street. This was the street where all the free marketers came out to play.
Playing, buying and selling in the market were many reputable and respectable financial firms and bankers. A number of these bankers and blue chip firms were engaged in selling debt packaged as assets. They had nice and impressive names for this debt. Structured Investment Vehicles (SIVs), Collaterized Debt Obligations (CDOs), and Asset Backed Commercial Paper (ABCPs).

This debt described as assets was given Triple A ratings by some of the respected rating agencies. These debt ridden assets were sold to other financial institutions, banks, pension funds, mutual funds, state governments and everybody and anybody who was gullible enough to believe these debts were really assets. The financial system pigged out on this useless paper and charged big fees for buying and selling it.

Some big reputable and respected financial firms were advising people to buy this useless paper, while they themselves were selling themselves out of it. Could this be called criminal fraud? Of course not; after all, these were the crème de la crème of Wall St. and Wall St. is the pillar of our free market society. So the people are in good financial hands.

In fact, some of these “clean” financial hands even run a government, so they are in great positions to advise and help with the massive bailouts; pardon me, I mean stimulus packages of taxpayers’ dollars to save the free market system from collapse after the massive fraud—oops, I mean massive mistakes selling useless paper disguised as assets. There were some cynical critics who complained that this was wrong to be bailing out those who had corrupted the financial system. But, this type of criticism was uncalled for. After all, one banker did say that they were doing “God’s work,” and surely there is no higher recommendation than that.

Anyway, we are now told that the financial system has now stabilized. Trillions or billions of taxpayers’ dollars were the antidote needed to save the free market. The bailed out bankers are receiving huge bonuses. The government is being advised and helped by those who corrupted, pardon me, I mean used the financial system to peddle debt. Profits made by some were sent safely offshore to tax-free havens; after all, you don’t expect smart financiers to use their own country’s banks, these are just for the ordinary people who pay the bankers’ bills.

Picking up the bills for all this financial chicanery will be the taxpaying public in the land of the free. After all, the free markets must remain free and the perpetrators of what some are calling financial fraud are still running the system, because where would we be without them?

Stephen J. Gray
January 3, 2010.