[SGVLUG] OT Bear Stearns & Housing Bubble (was: This is at least tangentially Linux related)

[Chris Louden]

On Wed, Apr 2, 2008 at 8:47 PM, David Lawyer <dave at lafn.org> wrote:
> On Wed, Apr 02, 2008 at 10:20:43AM -0700, matti wrote:
>  > [snip]
>  > What's next!?!? Bears Stearns back to $150 a share??
>
>  I wrote a critical review of James Kunstler's book: The Long Emergency.
>  See http://www.lafn.org/~dave/energy/long_emergency.html
>  But I can't seem to get any response from him.  He writes an

Recently I began listening/watching various TED talks
(http://www.ted.com). I have been getting them from iTunes as they are
available for FREE.  There are a lot available and even more that have
not been made available yet. I've listened to about 100ish of the
300ish I have downloaded. James Kunstler has been one of my favorites
so far. He totally ripped into the architectural aspects of a city
building in Boston.  I noted from his talks are that he is definitely
an "east coast" personality. I think he is from Albany but don't
recall at the moment. In any case I highly recommend his and all of
the TED talks. It is great to hear people speak in detail on issues I
care about but may not fully understand. However I have listened to
some speakers I completely disagree with and I must say it was nice to
hear another point of view.

As a side note I would like to hear "off list" from anyone who may be
interested in participating in a book review website.

Chris


>  interesting blog about current economic and energy conditions.  Here's
>  what he had to say about the housing bubble and Bear Stearns when it
>  fell:
>
>         Now, apparently, we'll also opt for a bail-out of all those who
>    tried to become rich by getting something for nothing at both ends of
>    the Ponzi scheme called the housing bubble -- the "little guys" who
>    signed mortgage contracts they could never hope to pay off, and the
>    Wall Street playerz who bundled these hopeless contracts into
>    fraudulent securities (and their enablers in the ratings agencies, plus
>    the hedge fund smoothies who tried to cash in by using recondite
>    algorithms to dissolve the risk associated with imprudent lending.) The
>    bail-out is likely to accomplish nothing except the more rapid
>    bankruptcy of government at all levels and a second Great Depression at
>    ground level (worse than the first one).
>         Over the weekend, the Federal Reserve engineered a $30-billion
>    dollar Saint Paddy's day present for the JP Morgan bank by handing them
>    the corpse of Bear Stearns. The object of the game is to prevent the
>    "assets" of Bear Stearns from going to the auction block, on which they
>    would be discovered to be nearly worthless, which would instantly
>    render all similar assets held by the other big banks to be similarly
>    worthless, and would result in a universal margin call that would
>    pretty much unwind the hallucinated "wealth" acquired the past ten
>    years.
>          Despite the heroics around the fate of Bear Stearns, it looks
>    like the financial system is tottering anyway. Perhaps the last trick
>    left in the rescue bag will be the 100-basis-point drop in the Fed rate
>    rumored to be announced tomorrow. It won't help any of the big banks,
>    since their problem is holding liabilities in excess of assets. Almost
>    certainly it would crater the US Dollar.
>
>  In my review I accuse him of hyperbole, and the above certainly is an
>  example of this.  But if things are even half as bad as he states (and
>  I think they are), we're in very deep trouble.  I got a laugh out of
>  his describing what's left of Bear Stearns as a "corpse".
>
>                         David Lawyer
>