What a week. There is almost too much news to go through, but with a herculean effort I might just make it.
Which is why I am not going to bother. Rounding up the latest and greatest financial news is done elsewhere by people a lot more competent than I am. Why am I telling you this?
Mostly because I got an email asking me why I don't cover the day to day stuff.
It does however throw some questions up about what's going on right now. Remember what I said about cartels?
They don't last very long. There is just too much profit to be made by fleecing the weaker members or merely badly placed members of the cartel for any cartel to last for very long. There are some things all members can agree on, however - namely the integrity of the system which feeds and houses them so lavishly continuing. As there is much to be made from being in a cartel, they keep forming and breaking in a natural cycle.
Let's change tack totally at this point and have a look at some of the confidence tricks the last week threw at us.
First of all - Lehman Brothers "bankrupcy." You'd think that in this case some bills didn't get paid, wouldn't you?
Nope. Never happened - the debts were handed over to someone else and a bailout occured. You might have missed that from bubblevision, you will have certainly missed it from the nightly news. Pictures of employees loading cars up, disgruntled workers filing out of the offices etc etc This is a banker special, a wrong foot move. This is one set of cartel members (probably unpopular) getting chucked out. The FED actually backstopped the whole thing anyway - but the employees got fired.
Expect to see more of these mergers and acquisitions as the "chosen ones" get their place at the table and everyone else gets various forms of treatment from not being paid at the end of the month to being handsomely golden handshaked. Most interesting in this regard is the news that goldman sachs (or the US treasury as it should be known) looks under pressure.
Everyone is going into the hopper, lets see who is the right shape to fall out of the hole.
Next up let's talk about AIG. A massive insurance company, with a licence to print money via coercive insurance on everything that moves from the legislative class...they still mucked it up. Apparently. When it failed, the government reluctantly...and after some brinksmanship took control of it.
Brilliantly, they got around various forms of legislation and contracts related to other things by calling it "conservatorship" and not a nationalisation or default. Conservatorship is usually done with mental incompetents when their legal affairs need to be looked after.
This was the plan all along.
Problem, reaction, solution.
Problem - worlds largest insurer can't find small pieces of paper to give to other people.
Reaction - Oh no! It's going to not be able to insure the banks/orphanage/nuns' hospital.
Solution - Government reluctantly takes it under it's wing.
All bollocks of course. This financial crisis is all about profit taking and control via the mechanism of debt and seizure.
The general trend is still there - bankrupt as many people as possible by denying them credit and then seize as many of their assets as possible with hyperinflation later on.
People who think they have lost out due to their own fault do not fight, they do not resist. People who think their fellow men are poor because they had bad judgement or were greedy do not band together, they shun each other.
Underlying all this of course, is the actual economics - the partial rump of free market activity that makes the rest of it all hang together. The financial sector has been stealing too much and they have gotten too fat, are expecting even bigger meals in the future and this is dangerous for all.