Economics 101--How Is Your Piggy Bank?
Posted: October 10th, 2008, 12:25 pm
http://nixonisinhell
Economics 101--How Is Your Piggy Bank?
for release 10-10-08
Dallas, Texas
by Lightning Rod
I don't pretend to understand economics. Economists don't even understand economics. As a science, economics rates right up there with astrology and parapsychology.
Most of us grasp the rudimentary principles of micro-economics. We know how to balance a checkbook; we know that our salary needs to exceed our mortgage; we vaguely understand supply and demand and know how to swipe a credit card.
But few of us understand complex mortgage based securities or how world money markets operate. I certainly don't. So in the area of macro-economics, we leave the magic to the witch doctors. But often witch doctors are charlatans dedicated to their own greedy purposes.
The Poet's Eye sees that stockbrokers and securities traders are simply glorified bookies. Bookies are the only players who have a guaranteed outcome in gambling. They just broker the bets and don't care who wins the game because no matter who wins, they get their vigorish.
You don't need to understand pari-mutuel betting in order to buy a two dollar ticket. Pari-mutuel betting resembles our securities markets and our stock market mutual funds. The risks and profits are distributed and the only assured winners are the house and the government (in taxes.)
When a bookie takes more bets than he can cover or when he needs to balance his odds, he will 'lay off' part of his bets to other bookies. In essence he sells the bet. This is also what happens when a bank repackages mortgages into securities and sells those securities to another bank or a broker.
This system works quite well until someone can't cover their bet. The foreclosure process in the gambling business is a little more lively than in the banking business and usually involves pain in the fingers or knees, but the outcome is the same. Someone gets hurt.
The Poet's Eye watches as the stock market sheds trillions of dollars worth of imaginary wealth. All the bookies are trying to lay off their bets. Some of them are going south because they know that someone's knees are about to be broken. My guess is that those knees will belong to you and me.
Mother Jones put Dow Jones to bed
With a sleepy bedtime story
A song of the twentieth century
Hackin' out a road to glory.
---Barry Gremillion
---
.... THIS MUCH I'VE LEARNED
In these five years in what I've spent and earned:
Time does not finish a poem.
Upon the old amusement pier I watch
The creeping darkness gather in the west.
Above the giant funhouse and the ghosts
I hear the seagulls call. They're going west
Toward some great Catalina of a dream
Out where the poem ends.
But does it end?
The birds are still in flight. Believe the birds.
-- Jack Spicer, Imaginary Elegies, 1950-55