By Cory Doctorow at 8:48 am Wed, Sep 17, 2008
“The Market” is just the world’s biggest, fanciest milking machine.
My deepest sympathies to those who worked hard and saved for a lifetime and who’s “just paper” was purchased with years of their precious lives.
ChunkyMonkeyBrain @ #14
If you’d like some responses to those talking points, here are two.
The first (and much less important one) is simply that data doesn’t support that conclusion. The expansion of lending to the poor doesn’t match with the subprime crisis, in duration or size. It’s a small contributor at best.
The second, and far more important one: do some Googlin’ on Senator Phil Gramm and the Commodity Futures Modernization Act of 2000 (Senate Bill 3283). It was going nowhere until it was quietly attached as a rider to an 11,000-page appropriations bill which was President Clinton then signed into law.
It’s informally known as the Enron Loophole. It deregulated the market for energy futures. But it also deregulated a whole slew of financial instruments including various derivatives and the collateralized debts that caused the mortgage crisis…which in turn caused the events of the past month or so.
In short: Phil Gramm. One guy. He broke the system by removing the regulatory walls that kept financial institutions from engaging in the reckless speculation that’s now collapsing on all of our heads.
Yeah, that Phil Gramm.
John McCain’s economic policy advisor.
Wow. Although given that the US economy has long had it’s value propped up by wishful thinking- how else can you have the largest deficit in the world and still be thought of as the richest country?- I wonder just how much of this is simply adjusting for reality.
precisely… the banks and salesmen were making like bandits selling loans but hit a brick wall in the regulations which limited how much loan they could make against their current deposits… some one managed to change the rules so that they could bundle up the loans and move them “off book” so that they could start making loans again… that is the problem in a nutshell… they were making money like bandits on the commission and not thinking about what would happen when people started defaulting on the loans. Their reasoning being that they wouldn’t be there to carry the can and it would be someone else’s problem.
see the great big pool of money
download it and listen carefully… then you’ll know precisely who to lynch
weird, I could download it for free not so long ago…
so who got the Trillion dollars then? must have gone somewhere
Yeah! Where does that money go? Did they just lose it? Is it in a box somewhere?
well if i”m right, the money never existed to begin with. Akin to calculating that you put a nickel in the piggybank every week whether or not you actually did so.
We blogged the same graphic this morning. What’s interesting is that Lehman Brothers is so small compared to others, AND THAT CITIBANK IS OWED $138 BILLION IN BOND DEBT by its smaller cousin.
Check out the actual bankruptcy filing of Lehman Brothers here:
I’m seriously starting to succumb to the centipede’s folly here. Thinking too much about all that money and where it came from and where it went to now that it’s gone.
I’m having an exetential economic meltdown.
Yup, the money never really existed (although a portion of it could have been materialized up until a few months ago by someone smart enough to cash out).
Ah well. What goes down must come up.
Holy shit, that graphic really hammers home that WaMu is completely fucked. At 90% loss, it has by far the highest loss in capitalization of any bank that hasn’t gone under yet.
(Good. I hate them.)
(Bad. My GF still uses them.)
Enjoy that sky-high 5% while you can, guys, ’cause soon it will be 0%.
Actually, manicbassman, the trillion needn’t have gone anywhere. This is market cap we’re talking about.
It’s based on the public concensus of the value of a stock. If that concensus changes, the “capital” can evaporate without anything real having to change hands.
It is a consensual hallucination. Paper with numbers on it only has value because alot of people agree to treat it as if it has value. Once that agreement is over, you’re left with pretty paper.
Thanks for that.
I know next to nothing about financial markets, but when some of the local watercooler stiffs started yelling about congress interfering with the banks (who only want to do what’s best for their customers…RIGHT?!?) and making them process loans that the banks NEVER would have approved, I smelled bullshit.
You gave me a good starting point to read through to this week’s market madness.
I’m not in favor of the folks who’re organizing flash-mob bank-run for the day after thanksgiving. But i do plan to withdraw enough cash the day BEFORE Thanksgiving to last me through new years just in case it catches on.
Just to play devils advocate here, i do think that as a consumer in a free market, flash-mob bank-runs are as legitimate as boycotting the sponsors of TV shows you don’t approve of.
I’m sure Pat Robertson or “Focus on the Family” won’t have qualms about using bank-runs as a pressure tactic now that the idea is out there.
I sincerely hope someone on the left perfects the strategy first.
So the Federal Reserve buys out the struggling Wall Street Companies. We think that’s the government helping out, stabilising things. But who owns the Fed Reserve? A few ultra-rich bankers!
Let’s say I win the lottery tonight….I win $150 Million…give or take…..in 2 weeks when the check clears, suppose I want to go to my bank and SEE MY MONEY. I won’t be greedy….let’s just say I want to take out $100 Million…I want to take the cash with me to the hotel for a weekend…just to see it, touch it, feel it. Would/could the bank let me do this? Or is all that money just so much 1’s and 0’s in a machine somewhere?
Yeah, losing a trillion dollars in market cap is just an adjustment in “value,” similar to thinking “27 Dresses” was really good when you saw it in the theater, but now…not so much.
The only people it has been ‘real’ for, are those whose 401k and retirement funds evaporated.
@#10 – your local branch doesn’t have that much cash on hand at any given time. I’m not sure every branch of a single company in a 1,000,000 person city would have 10 million sitting around.
Your local branch does not the entire bank make, and can’t be expected to teleport bills in just to satisfy your demands.
Never mind how much actual physical money that is… at a gram a bill, assuming you get it drawn in 100 $ bills, that’s a METRIC TON of American 100$ bills (2204.622622 lbs in your silly units).
So shipping that much physical money IN for you is going to take time, and then you have to figure out how you’re getting a TON of little pieces of paper to that hotel room.
I’ve heard through the neo-con talking points grapevine that the entire housing bubble, crash and subsequent market wreck are entirely the fault of (some members of) congress and the government’s involvement in “forcing” the banks to give loans to unqualified people.
As in, “with a gun to their heads.”
Watch for it. All the conservo-pundits have it worked out and will soon show us how to follow the money and blame.
Seriously – some super-conservo friends around the office have suddenly been blathering on and on about it today. It’s like…they’re all reading the same emails or something.
Your right that IS a lot of cash to haul around for a weekend of silliness. It got me thinking though…a thought experiment if you will. Could the next 6 people posting in this thread pick a number between 1 and 42. I’ll play those numbers tonight and let you know how it goes tomorrow. Harnessing the “internetesp” doncha know….
It’s already out of date! AIG is now one of the tiny boxes in the top right. Goldmans market cap is 45B, down from 61B in the graphic!
I want it to update in real time!
As someone who has written treemap creation tools, that is a pretty screwed up treemap. There is no way AIG should be in the upper-left, which is the spot for the biggest company. It should be lower left. Who wrote their treemap anyhow? I’ve got one to sell them if they’d like.
Well that money is just a real as the 750k crackhouse in Compton. The HOUSE is exactly the same a last year but nobody is willing to pay that much. Most of the companies are the same as last year. Most of the assets that they hold, like the 750k mortgage on that crackhouse in Compton are exactly the same. But they can’t find anybody to willing to pay the same amount for their assets, or their stock.
This is nothing.
If you want to see a market downturn, imagine wallstreet filled with animated corpses.
Of course, this would explain why there was an unusually large number of volunteers to clear out the zombie infestation.
Wouldn’t you want to shoot a reanimated stockbroker, or fund manager?
imagine wallstreet filled with animated corpses
Why would that require imagination?
I didn’t like that the bottom box was activated at first. Took me a while of staring at it to realize I could click the top-left box to get the thing to change the graphic.
Has anyone heard about the flash mob planned for Friday Nov 2008?(day after thanksgiving)
The plan is to withdraw all cash from all bank accounts and sit on that cash without spending or redepositing it until after January 1st 2009.
Some suggest locking said cash in a safety deposit box or investing in foreign currency, but the main concept is to JUST DO IT see what happens.
Apparently the Feds have already issued a statement indicating that anyone participating in this flash mob will be prosecuted.
But how will they know who’s a participant?
Many people DO normally tend to withdraw money on the day after thanksgiving after all.
The money became McMansions that nobody wants, that are sitting empty and slowly rotting away in places like Vegas and the edge suburbs of various cities.
This is part of what kunstler called the “greatest misallocation of resources the world has ever known”.
Yeah sure, make a run on the bank and sell all your stock. It’ll be 1929 all over again.
What a fantastically stupid idea.
nehpetsE, the plan you talk about, if carried out on a large scale, would result in the bankrupcy of many banks and major financial crisis. Since banks loan money they have on deposit, they cannot give all of it back on demand (they keep some of it for normal withdrawals, of course). Lots of people withdrawing their money from banks was an element that forced many banks to go bankrupt in the crisis of 1929, making the crisis worse.
Why should we “just do it”? I really don’t see how participating in this flash mob would be a good idea for anyone. Unless you consider financial meltdown fun, I guess…
If you win that $150,000,000 the best thing you could do right now is to buy gold with it and keep it in a big vault Scrooge McDuck style.
Gold, yes. And guns, lots of guns.
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