The New/Old Sting

Auction-rate securities resemble the rest of the financial securities mess, as explained in this article by Morgenson. The fundamental problem was that people placed their faith in brokers, individuals totally consumed by Sales, from which they received their own Income. There is an old adage that you learn about the business, or take a more-protected route. People wanted in on the Good Times, but had never heard about the Bad Times; brokers probably included within the ignorance bracket. Everyone wants their high Profits back, totally ignorant still to the nature of markets. Every Winner in the market are matched by Losers to absorb the Cost of the Win, the normal course of market transactions. The only people who could have understood the Risk involved in such securities was the Issuers, and it is debatable if they understood the degree of Risk involved. What is known is that no one with accrued Profits from the transactions have any intention of returning those Profits, let alone the entirety of the Principal; the later a probable impossibility, except through a Government intervention which would be totally Inflationary.

Here is a Case of an honestly dishonest Seller of Blue Sky, settles Suits without repayment, and continuing to sell bad Paper for Hard Money. He will continue until placed in Prison, and may even continue to sell from there, if he can get Cell-phone access. He managed to achieve his Chain-Letter sales throughout the Period when there were good, safe Investments available, unlike the current fed funds rate trailing the Inflation rate, and failed only when Investors found that they needed their money. Manipulators utilize the innate Greed within Us, assuring their ability to spend Our Money in high Living, which We know that We could never afford. Every Generation has to learn that the glitter of Gold has adorned every fraud ever devised; i.e., anything which seems too good to be true, will eat your Money!

This is a priceless Gem with which to end Today’s Post. Restaurants are three times as expensive as kitchen service, but all they need do is maintain Quality, and they can survive Hard Times. Speakeasies and Restaurants did prime business in the Great Depression, and manages success during most Recessions. There is the Social Appearance involved, plus the lack of culinary skill apparent in the kitchen; but the great element of the ‘Denial’ factor may be one of the greatest assets of Restaurants, where People blow the last of their Paychecks in going out to Eat, simply to prove to themselves that they can. They wish to scream at the World, but cannot; therefore, they insist on showing Flash, when there is no Bang! So ends the lecture on Attitude, and its potential injury to successful Investment. lgl