17 September 2008

Wall Street's Tower of Babel

The financial elite of the United States have
sacrificed the system’s survival
by Parker Eales| September 15, 2008


Once men break with tradition, venturing upon colossal financial experiments, they lose the ability to navigate. They lose their sense of proportion, their sense of the fundamental rules that govern finance. They abandon the sense that the system may be at risk. It is always dangerous to mistake where you are, to lack the means for recognizing error, to believe that immediate success – or successes earned to date – indicate some newfound path to financial success.

The modern alchemy experiment ,among many things, was to turn clever packages of loans blessed by the priests of ratings into gold. The truth might be that an experiment, successful for some, is nonetheless an ultimate disaster for all. Perhaps there is something inherently unstable in the assumptions, in the people, in the situation of unprecedented success and credit. Perhaps the victor is spoiled by his victories; perhaps planet Wall Street that innovates cannot grasp the consequences of so many innovations piled one upon the other without regard for the system that mother’s it.

The financial elite of the United States were willing to do a “winner take all” and the hell with the unwashed. They were making so much money selling packages of make believe to market valuations, that they really did not care if the fiasco of jungle high finance destroyed the entire system as long as they made “theirs”. The feral, ruthless and sophisticated salesmen created and sold weapons of mass financial destruction so complicated that the only money in the confusion was their fees. The blood lust of knowing buyers would have their faces ripped off was elation.

We are falling into a kind of chaos. This chaos appears in our economic behavior – in our indebtedness and failure to observe the traditional rules of economy. We have also ignored the warnings of our forefather’s money and credit. And we have lost our common sense in matters of money and finance. We fought a war on drugs but did not realize that the devil’s most powerful drug is credit. Is there any doubt that human beings cannot resist its addiction? We are now beyond the point of no return.

Even the most expert economists very poorly understand the causes and the effects of the tumultuous recent financial market events in the world. Financial engineering and new financial products have become so astronomically complex that the very complexity itself is the death of the stability of the entire world financial community. The instruments themselves are the tower of Babel. It has become clear that the entire world’s financial system is in financial breakdown to due enormous, complex, and poorly understood linkages that can collapse an entire chained structure creating shocks that cause enormous contagion from one economy to another and creating accelerations of fear and panic that further complicate and bring about enormous destructive forces. Financial liberalization has led to an enormous creation of credit that has literally been pushed to the collapse of the system. Nations, corporations, and individuals are so debt ridden that it represents a profound fragileness in and of itself.

The problem is that what is occurring in terms of birth pangs are not fully appreciated. At some point Americans will realize what has happened to them and their financial system.
So here is the executive summary:
The perversity of money and the financial system to do the very opposite of what all reason indicates should not deceive us from understanding reality. The fact that so many people do not see the tremendous peril we are in does not change reality. Over time people have lost touch with the great truths of economic life. The consequences of this insensitivity to these truths are to be unperturbed, irrational, and indifferent to signs of imminent disaster.
We are blind to enemy identification. We cannot see clear and present danger.
The new financial alchemy has created a complexity , a deception, and a structure which exceeds what is humanly manageable.
A single event could cripple our economic life and collapse our financial system. It is only a matter of time.
The Ten Sigma Event is like the ten plagues of Egypt. The plagues are happening again in a different form but the message is the same. The truth will be set free. I think we are at the stage of “tomorrow about this time I will cause it to rain a very heavy and dreadful fall of hail.” Those who got their servants and livestock into houses and shelters were not destroyed. Some ignored the message and did not believe it and they lost everything. It is hard to hear a message of counterculture financial warning.
Money has become so complex that it has been confusing. So many new forms and extensions of money have flooded our lives. Debt has been confused as wealth and has been an addiction unto itself.
There is a reason that gold is called “precious” metal.
The financial elite of the United States have sacrificed the system’s survival for the greatest financial gains of all history. The system itself is dead and it is all theater from here on.

As the financial plagues unfold may I suggest you “urgently ask for gold and silver”.

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