Friday, September 26, 2008

Let's not seek to make money!

It's going to be hard not to lose everything. As someone said this week in Asia Times, the thing now is not return on capital but return of capital.

These guys with their white knuckles and tight smiles know that the wheels are coming off and there's squat they can do about it. Those of us interested in history might notice that this month in the markets has looked a lot like September 1929. We're not supposed to remember that just as the best and the brightest securitized mortgages, they've done likewise with credit card debt, which is much softer than mortgages and which people can't pay anymore because they can't milk their houses to make the payments, and besides, they're losing their jobs now.

There's trillions of dollars of that crap lying around in everybody's books. And we read this afternoon that Wachovia is now tottering, looking for a buyer. If the economy is already drowning in mortgage defaults, what are they going to do now with that, with evaporating credit card securities, and other such news that is clearly on its way?

Look, when they all get together at the White House for a photo op to "restore our confidence," the way Andrew Mellon and the rest were doing in September 1929 after the Babson Break, and they fall to shouting at each other so they can't even hide it from the press, it's time for us to drink deeply from the cup of reality, if we want to minimize our losses.

As the Bible says, this is all uncertain riches, so we can't be sure just when the music will really stop, in the same way that we can never be sure things will get better and better - and then if we really acquire such wealth, does it indeed turn out to be real wealth? Still, financial ruin is a drag, and this seems an especially good time for those who hurry to get rich to fall in there.

For an instructive overview of the progress of the Great Depression, consider looking here.


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