Thursday, January 17, 2008
Is that the question? Who is recession? You is, for starters. And me am.
Actually, this is a hell of a lot more than just a recession. This is the sound of the other shoe dropping. The first shoe was called "communism" and that one dropped in the late 80's -- early 90's. And we congratulated ourselves then, because we thought we were the winners. Ha ha. Funny how things turn out. Now it's our turn.
Some winners we turned out to be! Look! There's Konstantin, waving good-bye to us. Now it's our turn to wave good-bye to him. Bye, Konnie.
I don't know if you saw them, but Bernanke and some other high priest of the Finance Sector were on MSNBC or one of those vesches this morning, and I didn't listen to what they were saying, but I noticed they were shaking like a couple of dogs shitting peach pits.
So later on I read that what he was saying was that he expects "slower growth in 2008, but no recession." Uh-huh. That Ben is such a kidder. Meanwhile, as he's saying this cal, the Dow drops another 300. Oy!
Here's the thing about it boys and girls, brothers and sisters; this isn't just the end of the most recent "boom," this is the end of the line. The pattern of housing that's developed since the end of WWII, heavily dependent on the growth of new suburbs and strip malls and highways, that's all over. See the Jeremiah who's been right for years (but few have listened to him) who predicted this very collapse I don't know how many years ago.
And as Kunstler is at pains to point out, it's not just the pattern of housing that's in ruins, but the lynchpin of economic development and growth that's gone as well.
Unregulated free-enterprise, long touted-by Republicans, economistitos, and other challenged types as the answer to all life's problems has now produced nothing but the biggest stinky corpse since the Union of Soviet Socialist Republics expired. And this one's even bigger than that one was.
The thing is, you know the pooch is screwed when you can't insure yourself against disaster, because the money is just not there to cover that magnitude of disaster. Atrios points out in a couple of posts today that the major bond insurers may be out of business.
Atrios pulls an item from Bloomberg News Service: Jan. 17 (Bloomberg) -- The risk that bond insurers including MBIA Inc. and Ambac Financial Group Inc. will default rose to a record after ratings firms increased their scrutiny of the companies as the value of mortgage-linked securities they guarantee plunge.
Ambac may lose its AAA credit rating after reporting larger losses than the company previously indicated, Moody's said in a statement yesterday. S&P is examining all bond insurers after increasing its predictions for losses on subprime mortgages.
Then he comments: Ambac and MBIA are the two Jenga pieces which will pull the whole shitpile down. They insure all of the shitpile, allowing everyone to pretend that all of the risky stuff they own isn't risky at all. But that insurance is most likely a complete fantasy as it seems Ambac and MBIA don't have the cash to pay out claims. I should've gotten into the bond insurance business. Lower their ratings, you destroy their businesses. More than that, you wipe out the insurance fantasy, forcing everyone who insured with them to admit they have all this risky stuff on the books. Recognizing, of course, that in this context "risky" is just a euphemism for "shitty."
Ambac is currently down 64%. MBIA is down 26%.
Looks like the way we've been living our lives the past 62 years is coming to a screeching halt. But don't worry, all you hard-core Republicans and free-enterprisers out there. This isn't the end of the world, just the end of a bad business. There is a future, and some parts of the world are already in it. If you want to see what the future looks like, take a European vacation.