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Laughing in the Face of Fiscal Annihilation

Richard Daughty
...the angriest guy in economics
The Mogambo Guru
Provided as a courtesy of Agora Publishing & DailyReckoning.com

Aug 16, 2007

"But although we are all in a good mood now, there is nothing funny about the current collapse of the mortgage derivatives mess that the damned banks got us into"

The world of economics is suddenly so unnerving that to get this week's MoGu into an upbeat mood, I will start off with my new all-purpose joke.

I respond to an idle comment of yours by asking, "You say the economy is bad (or the weather is hot, or those pants make your butt look big, or prices are high, or the derivatives mess dumped on us by the damned banks with the collusion of a corrupt, criminally clueless Congress is going to destroy us all)? Say! That reminds me of when I was playing golf last week; a guy on the adjacent tee hauled off and whacked the ball off the toe of his driver, see? Well, the damned ball shot off at an angle, came screaming right at me at 200 miles per hour and smacked me right in the nuts!"

You then say, "What does that have to do with the economy?" And I reply, "It was the first time in three months that I stopped thinking about the economy being bad!" Hahahahaha!

If you are going to try this at home, you will find that it is a lot funnier if everybody is drunk, especially you, and doubly especially about the thirtieth time you use the joke ("You say that pollution is bad today? That reminds me of when I was playing golf last week") and they unexpectedly go freaking bananas on you - for no reason at all! - just because they are suddenly "sick to death" of hearing the same damned joke about how every damned thing reminds you of playing golf last week.

And then when you ignore them and tell the joke a few more times, they threaten you with bodily harm if you ever use that joke again, and even THAT reminds you of when you were playing golf last week! Hahaha!

So even that is pretty funny, as you know for a fact that none of them has a concealed weapon of any kind on them, and none of them has even applied for a Concealed Weapons Permit, for crying out loud, and yet they are going to come after a guy with so many permits and so many concealed armaments that he has trouble just standing up under the weight of all that firepower? Hahaha! Their limp, wimpy threats ring laughable in my ears!

But although we are all in a good mood now, there is nothing funny about the current collapse of the mortgage derivatives mess that the damned banks got us into, or a Bloomberg report with the news that "The European Central Bank, in an unprecedented response to a sudden demand for cash from banks roiled by the subprime mortgage collapse in the U.S.," have loaned humongous amounts of euros "to assuage a credit crunch," as this whole "mortgage derivatives" thing comes unglued.

The Federal Reserve, also in a panic, waved its magic wand, too, and created enough money so as to jam a reported $38 billion of it into the repo market on Friday alone (Barb at 321Gold.com keeps a link to the repo market, and it shows over $40 billion [Barb's note: $38 billion + $2.433 billion seclend] last Friday), and this puts a huge, whopping, gargantuan amount of lovely, lovely cash into the hands of people and institutions who really, really, really needed it, as the ridiculous, insane, economic monstrosity - created by the horrid Alan Greenspan and the treacherous Federal Reserve - gets hit with a gigantic Black Swan/rogue wave event.

Then the Bank of Canada supposedly saw the European Central Bank creating and then loaning gobs and gobs of money, and probably afraid that Canadians will be left holding the bag with all the stinky losses in it, also rushed to say that it will "provide liquidity'' to support the financial markets for the purpose of "easing" a now-realized "credit crunch" that started with the U.S. subprime mortgage collapse, which is to say (as if I had to say it for the zillionth time) it really started with the damned slimy banks acting like the greedy, grubby trash that they are.

And since we are talking about it, and since everyone knows that I cannot ignore a chance to heap disrespect on the banks and the whole Federal Reserve system, I will bellow shrilly that, at the root, it is always the banks that are the problem, as it is they alone that can create the insane excesses of money and debt that can create a big, long boom, which creates the big, long bust, and now here we are again, facing another bust ("pop!"), with the same old culprits (the government and the banks) as we look at the same old economic punishments ("ouch!") for acting like such irresponsibly corrupt monetary and fiscal buttheads ("Duh, what?").

Well, scornful poetic imagery aside, we were talking about how much new money and debt the central banks of the world created, and the point I was trying to make is that it may be around $300 billion, all jammed into the banks in two lousy freaking days!

Aug 15, 2007
Richard Daughty

email: RichardSmithGroup@verizon.net
Daughty Archives
Provided as a courtesy of Agora Publishing and The Daily Reckoning

Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise the better to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.

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