Vol. 2 No. 72 Sept 29. 2007
The Bogus Economist
Betray Us?
After three weeks, I'm beginning to see the head of the line.
The queue started about a minute and a half after a full-page ad in the New York Times, sponsored by the supposedly progressive MoveOn.org, unloaded on General David Petraeus with the now-infamous “General Petraeus or General Betray Us?” headline. What the muddled brigade at MoveOn was thinking about, I don't know. I do know the line in front of me featured some of the brightest lights and dimmest bulbs in the Washington establishment, all armed with verbal harpoons.
In front of me, I glimpsed President Bush, who denounced the ad as “disgusting.” Right behind him was noted liberal columnist David Broder, who called it “disgraceful” and “juvenile.” The U.S. Senate, generally a sober bunch, stood behind them, foaming. It seemed the entire congressional membership was competing to find new adjectives to call MoveOn except for the leading Democratic presidential candidates, who seemed to be waiting for their minds to be made up. As the dust settles, there abideth stupidity, insensitivity and lameness, but the greatest of these is stupidity.
The Bogus Economist agrees with MoveOn that some of the figures in General Petraeus' report didn't exactly square with other generals' assessments, nor the eye-witness accounts that have come from the field. However, the sheer dumbness of accusing Petraeus of “betraying” his trust boggles Bogus' supposedly progressive mind.
General Petraeus, as his title implies, is not only a soldier, but a highly successful soldier. One does not get to wear a bunch of stars on one's lapel by ignoring a primary rule of soldierhood: “Never make your commanding officer look bad.” In industry, the same rule applies. The vice-president in charge of marketing who tells the Board that the CEO caused the company's best customer to switch accounts will probably end up carrying a signboard at freeway exits.
Given the gigantic hype generated by the White House, had General Petraeus reported all the negatives from Iraq, including the casualties and the monetary cost, it would become even more glaringly obvious his commander-in-chief has engineered the biggest policy train wreck in American history. Good soldiers do not do this. As for those who remember another good soldier, General Colin Powell, they will recall that Powell went against his own instincts to rely on the “facts” given to him by his Commander-in-Chief. General Petraeus reported positives – like Anbar Province - and soft-pedaled the negatives. So what's the beef? When was the last time you shafted the boss?
It's only speculation what the general would have said if his testimony had come after the Iraqi government became so publicly irked over the private security firm, Blackwater, that it threatened excommunication. Iraqi legislators didn't approve of private American contractors going around shooting unarmed civilians, especially when the shooters were immune from prosecution. Since there are more contractors in Iraq than soldiers, this threat might have slightly muted General Petraeus' claim of “success.” By the way, anyone who has gone camping knows the meaning of “blackwater” (Hint: it's not the stuff that comes from the sink).
Using devices like “Petraeus/Betray Us” is the kind of behavior one associates with third-graders who are developing slowly or right-wing talk-show hosts who haven't developed at all. To discover this virus on the left is a genuine shock. We aren't supposed to buy this kind of thing. After all, those who recall the Right's swiftboating of John Kerry or the attack on the patriotism of veteran and triple amputee Max Cleland, had made it clear they thought American politics had hit a new low. Democrat Cleland, who had dared to vote in 2002 for an amendment aimed at expanding U.N. inspection teams in Iraq, incurred the wrath of his congressional opponent, Republican Saxby Chambliss, who had never been in uniform. Cleland was called unpatriotic, having given only two legs and an arm to his country. Karl Rove was thought to be behind the campaign.
By adopting Rovian tactics, MoveOn established its own rationale. The organization's own site says the ad was “catchy” and would induce discussion, which it most certainly did. In addition, according to my own Backlash Theory, Democratic stimuli provoke rabid Republican reactions, which provoke Democrats to reach for the checkbook. As we're constantly reminded, it's all about money.
Watching person after person in the line lob descriptive verbal brickbats, the supply starts getting pretty thin. I could call MoveOn “frumptious” or something like that, but nobody would understand what I meant, including me. So, after careful consideration, I'm throwing in the towel. Instead of standing in line, I've decided to sit down and write columns like this, ticking off some of my friends, who may disagree with MoveOn, but feel anything attacking President Bush is OK, including rhyming “Petraeus” with “betray us.”
I respectfully disagree. I don't want to share Mr. Bush's blame for the war with General Petraeus. If you want some brush burned and hire Pete to set the fire and the town goes up in flames, it isn't Pete's fault. Especially if you neglect to check the wind conditions. Or don't listen to the fire marshalls. Or don't understand fires.
-30-
The Bogus Economist © 2007
Thursday, September 27, 2007
Friday, September 14, 2007
Vol. 2 No. 71 Sept. 14, 2007
The Bogus Economist
Lessons
School is starting and the air is full of lessons. For one, the Muslim Holy Month of Ramadan and the Jewish High Holy Days begin at the same time this year, which may mean Somebody is trying to tell us something. Americans learned a lesson from Senator Larry Craig of Idaho: tapping your toes doesn't necessarily make you a dancer. There will still be Snow jobs after Tony. Lots of lessons.
The Bogus Economist, for one, realized with a start that the first Christmas merchandise is appearing in stores. Learning this lesson meant he should get busy looking around at the stuff marketers have decided we can't, or shouldn't, live without this season.
Whereas in the past, I have concentrated on The Sharper Image as headquarters of supreme triviality in the gift department, this year I've expanded my horizons, thanks to a catalog I picked up on a plane trip from Boston to Portland. This catalog, called Sky Mall, couples Sharper Image with other competing stuff-mongers producing a compendium of merchandise anyone with a bundle of money and a small warehouse would die for. I have selected only a small, representative sample.
I shall begin with stuff for dogs since our furry friends have been in the news a lot lately. Football mega-star Michael Vick , for instance, loves dogs. Dead or alive. Another dog-lover was hotel magnate Leona (“Only the little people pay taxes”) Helmsley who managed to die with four to eight billion dollars, twelve million of which went to her dog, Trouble. The catch is the dog will eventually have to be buried in Mrs. Helmsley's 1300 square-foot $1.4 million mausoleum. Spending eternity with Leona, who was widely known as the Queen of Mean, might not be worth it.
Sky Mall also loves dogs. I saw several ads for spray-on products to prevent dogs from jumping on beds or couches and vacuums to get rid of the dog hair when those sprays fail. However, I also saw a Pet Staircase that “helps pets to climb to furniture otherwise difficult for them to reach” and another device that will “make it easier for your dog to get up on the bed.” Up, Rover. Down, Rover. Or Fido, especially when spelled Phydeaux.
An ad for the “Million-Germ-Eliminating Travel Toothbrush Sanitizer” (Page 42) claims this tool will get rid of “up to 99% of the millions of germs that can accumulate on your toothbrush.” Don't even think about buying it. Anyone who knows math can tell you if a billion or so streptococci or listeria happens to land on your bristles, there will still be several million getting away scot-free and they'll be the ones who really have it in for you.
The Voice Recognition Grocery List Organizer, on the other hand, can handle “over 2500 food, beverage, household, beauty and office items and recognizes words as specific as swordfish, emory boards and lawn bags.” Anything that could allow a person to shop for, say, a lawn bag full of swordfish filing their nails can't be faulted as missing a thing.
What really struck me as puzzling in the catalog is the flying alarm clock. For those who don't believe anybody would actually spend time inventing anything like this, I shall quote from page thirty-eight: “This digital alarm clock launches a rotor into the air that flies around the room as the alarm sounds, hovering up to 9' in the air and will not cease ringing until the rotor is returned to the alarm clock base, compelling even the most stubborn sleepers to get out of bed on time.” If someone ever gave me one of these, I should probably sneak into his home and put itching powder in his underwear drawer. Why any sane human being would want flying rotors in his bedroom eludes me. I might be tempted to keep a loaded shotgun under my pillow so I could shoot it down.
Another brainstorm (page 41) is “an alarm clock that rolls away and hides when you hit its snooze button, and it continues to emit a random pattern of beeps and flashes, encouraging drowsy sleepers to seek it out in order to shut it off.” Just to make the point unmistakable, the copy assures us the clock has “two rubber wheels that allow it to roll off your nightstand from a height of 2' when it sounds its alarm, so there is no mistaking that it is time to get up.” There will also be no mistaking the language used in describing the product. If you don't mind finding yourself in an embarrassing position trying to find a clock that's hiding under the bed, you shouldn't miss this one. I'd give a week's pay to see Dick Cheney looking for his. Make it two weeks'.
I envy kids learning lessons this year. I hope most of them will be in school. I hope they think up incredibly hard questions to ask their teachers and the teachers go home and realize how lucky they are to have kids asking them. Above all, I hope they'll learn to be good citizens.
Maybe the kids will pass it on to our leaders. They need all the lessons they can get.
-30-
The Bogus Economist © 2007
The Bogus Economist
Lessons
School is starting and the air is full of lessons. For one, the Muslim Holy Month of Ramadan and the Jewish High Holy Days begin at the same time this year, which may mean Somebody is trying to tell us something. Americans learned a lesson from Senator Larry Craig of Idaho: tapping your toes doesn't necessarily make you a dancer. There will still be Snow jobs after Tony. Lots of lessons.
The Bogus Economist, for one, realized with a start that the first Christmas merchandise is appearing in stores. Learning this lesson meant he should get busy looking around at the stuff marketers have decided we can't, or shouldn't, live without this season.
Whereas in the past, I have concentrated on The Sharper Image as headquarters of supreme triviality in the gift department, this year I've expanded my horizons, thanks to a catalog I picked up on a plane trip from Boston to Portland. This catalog, called Sky Mall, couples Sharper Image with other competing stuff-mongers producing a compendium of merchandise anyone with a bundle of money and a small warehouse would die for. I have selected only a small, representative sample.
I shall begin with stuff for dogs since our furry friends have been in the news a lot lately. Football mega-star Michael Vick , for instance, loves dogs. Dead or alive. Another dog-lover was hotel magnate Leona (“Only the little people pay taxes”) Helmsley who managed to die with four to eight billion dollars, twelve million of which went to her dog, Trouble. The catch is the dog will eventually have to be buried in Mrs. Helmsley's 1300 square-foot $1.4 million mausoleum. Spending eternity with Leona, who was widely known as the Queen of Mean, might not be worth it.
Sky Mall also loves dogs. I saw several ads for spray-on products to prevent dogs from jumping on beds or couches and vacuums to get rid of the dog hair when those sprays fail. However, I also saw a Pet Staircase that “helps pets to climb to furniture otherwise difficult for them to reach” and another device that will “make it easier for your dog to get up on the bed.” Up, Rover. Down, Rover. Or Fido, especially when spelled Phydeaux.
An ad for the “Million-Germ-Eliminating Travel Toothbrush Sanitizer” (Page 42) claims this tool will get rid of “up to 99% of the millions of germs that can accumulate on your toothbrush.” Don't even think about buying it. Anyone who knows math can tell you if a billion or so streptococci or listeria happens to land on your bristles, there will still be several million getting away scot-free and they'll be the ones who really have it in for you.
The Voice Recognition Grocery List Organizer, on the other hand, can handle “over 2500 food, beverage, household, beauty and office items and recognizes words as specific as swordfish, emory boards and lawn bags.” Anything that could allow a person to shop for, say, a lawn bag full of swordfish filing their nails can't be faulted as missing a thing.
What really struck me as puzzling in the catalog is the flying alarm clock. For those who don't believe anybody would actually spend time inventing anything like this, I shall quote from page thirty-eight: “This digital alarm clock launches a rotor into the air that flies around the room as the alarm sounds, hovering up to 9' in the air and will not cease ringing until the rotor is returned to the alarm clock base, compelling even the most stubborn sleepers to get out of bed on time.” If someone ever gave me one of these, I should probably sneak into his home and put itching powder in his underwear drawer. Why any sane human being would want flying rotors in his bedroom eludes me. I might be tempted to keep a loaded shotgun under my pillow so I could shoot it down.
Another brainstorm (page 41) is “an alarm clock that rolls away and hides when you hit its snooze button, and it continues to emit a random pattern of beeps and flashes, encouraging drowsy sleepers to seek it out in order to shut it off.” Just to make the point unmistakable, the copy assures us the clock has “two rubber wheels that allow it to roll off your nightstand from a height of 2' when it sounds its alarm, so there is no mistaking that it is time to get up.” There will also be no mistaking the language used in describing the product. If you don't mind finding yourself in an embarrassing position trying to find a clock that's hiding under the bed, you shouldn't miss this one. I'd give a week's pay to see Dick Cheney looking for his. Make it two weeks'.
I envy kids learning lessons this year. I hope most of them will be in school. I hope they think up incredibly hard questions to ask their teachers and the teachers go home and realize how lucky they are to have kids asking them. Above all, I hope they'll learn to be good citizens.
Maybe the kids will pass it on to our leaders. They need all the lessons they can get.
-30-
The Bogus Economist © 2007
Saturday, September 01, 2007
Vol. 2 No. 70 Aug. 31, 2007
The Bogus Economist
Iraq, Again
Ramadan, which begins on September 13 this year, is the holiest month in the Islamic calendar. During Ramadan, pious Muslims are required to abstain from eating, drinking, sex or anything else that might distract them from their most important task – worship. From sunup until sundown, followers of the Prophet are told to concentrate on those less fortunate, meditate and pray. So why is a paragraph on Ramadan showing up in a column like this one?
Funny you should ask. The Bogus Economist has had his knickers in a twist over Iraq ever since we were presented with the Al Qaeda/WMD fairy tale over four years ago. Now, America generally has ceased to believe anything coming out of Washington, more than 3600 American lives have been lost and a half trillion dollars has streamed down a gleefully profit-infested rathole. Congress, finally awakened from its perk-induced slumber, is asking annoying questions and at least a dozen resolutions are brewing aimed at getting us the heck out of where we shouldn't be in the first place. As I write, almost everyone who is running for President – and many who are not – are presenting their ideas for salvaging what we can from the wreckage of Mr. Bush's foreign policy.
To assure my place in line, I herewith present another of my Bogus Solutions (BS) , this time to the dilemma over ending our participation in the Iraq civil war (which didn't exist until somebody finally informed the White House) and concentrate instead on fighting Al Qaeda (which wasn't there when we invaded, but is now present in force).
I suggest it might be time for us to take advantage of the holiday when ALL Muslims are called upon to unite – Ramadan – by presenting a plan in which, while followers of the Prophet observe the Holy Month, American troops begin an orderly process of withdrawal.
In return, with the cooperation of devout religious figures from both the Sunni and Shia factions, a nation-wide cease-fire would commence on the first day of Ramadan. Medical supplies and emergency food would remain in place as an offer of humanitarian assistance to Iraq's duly elected government. If the Iraqis couldn't provide such a government, we could offer the supplies to the Red Crescent, the Islamic equivalent of the Red Cross. Violence against the redeployed troops would stop the withdrawal. Since virtually everybody in the region has indicated a preference for us to go home, most people might be more than happy to stop killing anybody until we left.
The advantage of this scheme should be obvious. Since we are currently regarded not just by Iraqis, but by almost all residents of the Middle East, as anti-Islam, withdrawal during Ramadan would indicate a respect for Islamic tradition. The gifts of food and medical supplies, furthermore, would show us to be in accord with the Islamic duty to provide for the poor and needy.
As for the possibility that chaos would descend if we pulled out, it's unkind but true to point out since Mr. Bush decided to shift our attention from going after bin-Laden in Afghanistan to bringing democracy to oil-loaded Iraq, the number of Iraqi civilians seeking shelter in other countries has swelled to over two million– the third greatest exodus of refugees in history. An entire generation of Iraqi children has been deprived of education. Some estimates give the number of Iraqi dead as half a million. Electricity and power are only occasional. Medical care is scarce and getting scarcer as doctors and nurses flee to other countries. The Iraqi parliament took August off. And we're worried about “chaos?”
It was our near-total ignorance of this part of the world that partially resulted in how we're regarded by our “friends” as well as our enemies today. A bumper sticker I saw recently said, “What a shame stupidity isn't painful.” If it were, the screams from our Washington leadership might have alerted us before this mess started.
Sure, my idea about Ramadan may be silly, but it's better than some. I think the best plan so far is Senator Joe Biden's proposal to partition Iraq into Kurdish, Sunni and Shia “states” with a loose central government to bind them together, much as some of our Founding Fathers envisioned the United States. Our two political parties, however, are too busy carrying on the vendetta we call politics to worry about little things like stopping the war until they can figure out a way to get credit for it.
So the Bogus Solution (BS), among many, will sink into the quicksand of obscurity and we'll be treated to lots of speeches, denunciations, posturings, resolutions, counter-resolutions, proposals, counter-proposals, filibusters and accusations until we either come to our senses by ourselves or elect some genuine leaders who will knock our heads together until we do.
When the history books are written – as I hope they will be – the Iraq invasion may stand as the greatest boo-boo America ever made. I feel sorry for the next person we put in the White House who has to try fixing it. As our hardly mourned former Secretary of Defense Donald Rumsfeld once said, “It's going to be a long slog.”
And this, readers, is no B.S.
-30-
The Bogus Economist © 2007
The Bogus Economist
Iraq, Again
Ramadan, which begins on September 13 this year, is the holiest month in the Islamic calendar. During Ramadan, pious Muslims are required to abstain from eating, drinking, sex or anything else that might distract them from their most important task – worship. From sunup until sundown, followers of the Prophet are told to concentrate on those less fortunate, meditate and pray. So why is a paragraph on Ramadan showing up in a column like this one?
Funny you should ask. The Bogus Economist has had his knickers in a twist over Iraq ever since we were presented with the Al Qaeda/WMD fairy tale over four years ago. Now, America generally has ceased to believe anything coming out of Washington, more than 3600 American lives have been lost and a half trillion dollars has streamed down a gleefully profit-infested rathole. Congress, finally awakened from its perk-induced slumber, is asking annoying questions and at least a dozen resolutions are brewing aimed at getting us the heck out of where we shouldn't be in the first place. As I write, almost everyone who is running for President – and many who are not – are presenting their ideas for salvaging what we can from the wreckage of Mr. Bush's foreign policy.
To assure my place in line, I herewith present another of my Bogus Solutions (BS) , this time to the dilemma over ending our participation in the Iraq civil war (which didn't exist until somebody finally informed the White House) and concentrate instead on fighting Al Qaeda (which wasn't there when we invaded, but is now present in force).
I suggest it might be time for us to take advantage of the holiday when ALL Muslims are called upon to unite – Ramadan – by presenting a plan in which, while followers of the Prophet observe the Holy Month, American troops begin an orderly process of withdrawal.
In return, with the cooperation of devout religious figures from both the Sunni and Shia factions, a nation-wide cease-fire would commence on the first day of Ramadan. Medical supplies and emergency food would remain in place as an offer of humanitarian assistance to Iraq's duly elected government. If the Iraqis couldn't provide such a government, we could offer the supplies to the Red Crescent, the Islamic equivalent of the Red Cross. Violence against the redeployed troops would stop the withdrawal. Since virtually everybody in the region has indicated a preference for us to go home, most people might be more than happy to stop killing anybody until we left.
The advantage of this scheme should be obvious. Since we are currently regarded not just by Iraqis, but by almost all residents of the Middle East, as anti-Islam, withdrawal during Ramadan would indicate a respect for Islamic tradition. The gifts of food and medical supplies, furthermore, would show us to be in accord with the Islamic duty to provide for the poor and needy.
As for the possibility that chaos would descend if we pulled out, it's unkind but true to point out since Mr. Bush decided to shift our attention from going after bin-Laden in Afghanistan to bringing democracy to oil-loaded Iraq, the number of Iraqi civilians seeking shelter in other countries has swelled to over two million– the third greatest exodus of refugees in history. An entire generation of Iraqi children has been deprived of education. Some estimates give the number of Iraqi dead as half a million. Electricity and power are only occasional. Medical care is scarce and getting scarcer as doctors and nurses flee to other countries. The Iraqi parliament took August off. And we're worried about “chaos?”
It was our near-total ignorance of this part of the world that partially resulted in how we're regarded by our “friends” as well as our enemies today. A bumper sticker I saw recently said, “What a shame stupidity isn't painful.” If it were, the screams from our Washington leadership might have alerted us before this mess started.
Sure, my idea about Ramadan may be silly, but it's better than some. I think the best plan so far is Senator Joe Biden's proposal to partition Iraq into Kurdish, Sunni and Shia “states” with a loose central government to bind them together, much as some of our Founding Fathers envisioned the United States. Our two political parties, however, are too busy carrying on the vendetta we call politics to worry about little things like stopping the war until they can figure out a way to get credit for it.
So the Bogus Solution (BS), among many, will sink into the quicksand of obscurity and we'll be treated to lots of speeches, denunciations, posturings, resolutions, counter-resolutions, proposals, counter-proposals, filibusters and accusations until we either come to our senses by ourselves or elect some genuine leaders who will knock our heads together until we do.
When the history books are written – as I hope they will be – the Iraq invasion may stand as the greatest boo-boo America ever made. I feel sorry for the next person we put in the White House who has to try fixing it. As our hardly mourned former Secretary of Defense Donald Rumsfeld once said, “It's going to be a long slog.”
And this, readers, is no B.S.
-30-
The Bogus Economist © 2007
Vol. 2 No. 69 August 17, 2007
The Bogus Economist
Con Me(n)?
It 's a good thing The Bogus Economist gave up his garden (inside joke here). If he were still battling moles and dandelions, he couldn't explain to his countless readers the intricacies of the sub-prime market and the resultant worldwide semi-meltdown or the ins and outs of what victims call “Ponzi Schemes” and what the bunco squad calls Ponzis. Let's start with these.
In a front page story, the Willamette Week recently regaled readers with the tale of Wes Rhodes, an affable 63 year-old who is accused of separating roughly sixty investors from over twenty-four million dollars over a seven-year period. The method was tried and true, according to the Securities and Exchange Commission: Mr. Rhodes allegedly ran a classic Ponzi scheme.
For those who have never heard of Ponzis, they were named after a charming Italian immigrant named Charles Ponzi, who later earned a reputation as one of the great swindlers of all time. The way it works is getting lots of people to “invest” money, which is then used to pay dividends to those who have already “invested.” The operator uses the excess to have fun. By the time the money runs out, the last people on board get zilch and the operator is sunning himself on the Riviera.
“Sub-prime” loans, as opposed to Ponzis, are legal, although God knows why. Sub-primes come about when avaricious lenders, using a novel approach to free enterprise, make money available to folks whose credit-worthiness depends upon their ability to inhale and exhale. The lenders get the signatures on the dotted line, sell the loans to banks and mortgage companies and use the proceeds to make more pixie dust loans. Since for a long time home prices were going up, up, and up, people who didn't believe in gravity fueled the frenzy. Now that Newton is chuckling, “See, I told you so,” the frenzy is going in the opposite direction. Billions of dollars have vanished and lots of people don't have homes anymore.
Sub-prime borrowers and Ponzi victims have one major thing in common – for one reason or another, something overwhelmed good old common sense. Maybe they were conditioned by the number of “free” items being hawked in grocery stores, furniture establishments, magazines, media, electronic advertising and billboards. Everybody has been trained to think in terms of Something For Nothing. Whether we're talking about toilet paper rolls or national politics, we are told not to think in terms of what something costs, but of what we can get FREE if we just sign (or vote) here. Another factor is our growing inability to distinguish between what's real and what we want to think is real. Many folks refuse to believe John Wayne never served in the military or Saddam Hussein didn't attack the World Trade Center. We look for the pros, but not the cons. We see what we want to see.
Look at the “investors” who trusted their savings to Mr. Rhodes. These are not stupid people. They are primarily middle-class businessmen and women who wanted to feel their money was safe while earning incredible dividends, which were duly reported to them in monthly statements, says the WW. As long as the totals kept rising nicely, few “investors” asked questions about where the money was being parked. They saw the pros – not the cons.
As for the folks who thought they could get a 110% loan for a house while only having to fork over a small monthly payment after putting nothing down, we might reflect when people have been conditioned by million-dollar ads to think in terms of Something for Nothing, it's not unnatural to apply this to the American dream of owning a home. Regulators who were supposed to guard against excess were out to lunch. This is not to excuse buyers ignoring the cons. When you play the slot machines to win, you've got to realize you can also lose. For every person who bought what they hoped would be a secure future, there was a person who thought he was going to make a killing and become another Donald Trump. American dream or American greed, the rewards- and penalties – turned out to be the same.
Right now, the biggest difference in outcome is between the people who took the bait and the people who set the hooks. Some of the companies that profited most handsomely from “sub-prime” deals have already ducked into Chapter 11 bankruptcy protection. It's not unusual to want the scammers to feel as much pain as the people they scammed, but I'm not going to be terribly surprised if some of the greediest CEOs end up with a golden parachute and a house in Bermuda.
I keep talking about greed. What's greed? Upon consideration, I think the test is the word “enough.” When “enough” no longer has any meaning, we cross the line. Unfortunately, many individuals and many more companies have already crossed it.
This doesn't apply to me. I have enough moles. I have enough dandelions. I don't buy hedge funds. All I want to do is stretch out and have a little nap.
Better prone than conned.
-30-
The Bogus Economist © 2007
The Bogus Economist
Con Me(n)?
It 's a good thing The Bogus Economist gave up his garden (inside joke here). If he were still battling moles and dandelions, he couldn't explain to his countless readers the intricacies of the sub-prime market and the resultant worldwide semi-meltdown or the ins and outs of what victims call “Ponzi Schemes” and what the bunco squad calls Ponzis. Let's start with these.
In a front page story, the Willamette Week recently regaled readers with the tale of Wes Rhodes, an affable 63 year-old who is accused of separating roughly sixty investors from over twenty-four million dollars over a seven-year period. The method was tried and true, according to the Securities and Exchange Commission: Mr. Rhodes allegedly ran a classic Ponzi scheme.
For those who have never heard of Ponzis, they were named after a charming Italian immigrant named Charles Ponzi, who later earned a reputation as one of the great swindlers of all time. The way it works is getting lots of people to “invest” money, which is then used to pay dividends to those who have already “invested.” The operator uses the excess to have fun. By the time the money runs out, the last people on board get zilch and the operator is sunning himself on the Riviera.
“Sub-prime” loans, as opposed to Ponzis, are legal, although God knows why. Sub-primes come about when avaricious lenders, using a novel approach to free enterprise, make money available to folks whose credit-worthiness depends upon their ability to inhale and exhale. The lenders get the signatures on the dotted line, sell the loans to banks and mortgage companies and use the proceeds to make more pixie dust loans. Since for a long time home prices were going up, up, and up, people who didn't believe in gravity fueled the frenzy. Now that Newton is chuckling, “See, I told you so,” the frenzy is going in the opposite direction. Billions of dollars have vanished and lots of people don't have homes anymore.
Sub-prime borrowers and Ponzi victims have one major thing in common – for one reason or another, something overwhelmed good old common sense. Maybe they were conditioned by the number of “free” items being hawked in grocery stores, furniture establishments, magazines, media, electronic advertising and billboards. Everybody has been trained to think in terms of Something For Nothing. Whether we're talking about toilet paper rolls or national politics, we are told not to think in terms of what something costs, but of what we can get FREE if we just sign (or vote) here. Another factor is our growing inability to distinguish between what's real and what we want to think is real. Many folks refuse to believe John Wayne never served in the military or Saddam Hussein didn't attack the World Trade Center. We look for the pros, but not the cons. We see what we want to see.
Look at the “investors” who trusted their savings to Mr. Rhodes. These are not stupid people. They are primarily middle-class businessmen and women who wanted to feel their money was safe while earning incredible dividends, which were duly reported to them in monthly statements, says the WW. As long as the totals kept rising nicely, few “investors” asked questions about where the money was being parked. They saw the pros – not the cons.
As for the folks who thought they could get a 110% loan for a house while only having to fork over a small monthly payment after putting nothing down, we might reflect when people have been conditioned by million-dollar ads to think in terms of Something for Nothing, it's not unnatural to apply this to the American dream of owning a home. Regulators who were supposed to guard against excess were out to lunch. This is not to excuse buyers ignoring the cons. When you play the slot machines to win, you've got to realize you can also lose. For every person who bought what they hoped would be a secure future, there was a person who thought he was going to make a killing and become another Donald Trump. American dream or American greed, the rewards- and penalties – turned out to be the same.
Right now, the biggest difference in outcome is between the people who took the bait and the people who set the hooks. Some of the companies that profited most handsomely from “sub-prime” deals have already ducked into Chapter 11 bankruptcy protection. It's not unusual to want the scammers to feel as much pain as the people they scammed, but I'm not going to be terribly surprised if some of the greediest CEOs end up with a golden parachute and a house in Bermuda.
I keep talking about greed. What's greed? Upon consideration, I think the test is the word “enough.” When “enough” no longer has any meaning, we cross the line. Unfortunately, many individuals and many more companies have already crossed it.
This doesn't apply to me. I have enough moles. I have enough dandelions. I don't buy hedge funds. All I want to do is stretch out and have a little nap.
Better prone than conned.
-30-
The Bogus Economist © 2007
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