1. Casino Capitalism — making money from money with other people's money
What financial toilet is our government trying to flush us out of? Here's the best explanation I've read of the cause of our trouble — toxic mortgage-backed derivatives — by independent trader Jeffrey Carter:
“The collateralized debt obligation that is talked about is like you selling your car to Joe, but not getting any money today for it. Joe is going to pay you next year. As soon as Joe gets your car, he rents it to Jim. Jim doesn’t pay him, but offers to pay him monthly for the use of the car. Jim sells the car to a chop shop. The chop shop pays Jim a commission, and sells pieces of the car at a profit to Tim, Tom, Dick, and Harry. Harry buys Dick’s pieces, and puts together a new car — but has an accident. How is Joe going to collect? Who really owns the car? Of course it’s more complicated than that, but you get the idea. The government is going to bail out everyone, or pick a person in the chain.”
Sounds like quite the merry malodorous mess, doesn't it? In fact, it's so stinky that Goldman Sachs, while they were selling these derivatives, were also shorting them — i.e. betting their own money that the poopscoops they were selling to trusting pension funds were bound to lose their value.
And they call Bernie Madoff a crook. “Casino capitalists” is the kindest, gentlest name for what Wall Street people have become. They don't produce anything, they don't back entrepreneurs, they don't start factories, they don't create useful products, they don't build stuff, they're not actual dinkum kosher capitalists. They just use other people's money to make more money out of money. In other words, they borrow-and-bet. The bottom-feeders of capitalism. Parasites. People who have decided that the best use of their entire lives is to make money off money with borrowed money.
And boy, have they coined it. The financial companies' share of corporate profits in 2007 was 40%. Think of that — 40% of profits came not from doing anything except play around with money. And now we know that what they bet on — and with — is mostly crap. How much ca-ca? In 2006, Wall Street earned $62 billion in bonuses. To earn that much, they parlayed derivatives or debt or crap all over the world to a degree that people say now starts at $85 trillion. The Iraq War will cost us around $1 trillion, so we're talking 85 Iraq Wars of debt here. (The derivatives market itself is supposed to be $500 trillion.) Poor Barack Obama: he thinks he's going to save us from $85 trillion of crap by printing an extra one trillion.
