The Emperor is Naked...The Ugly Side of Leverage

The Emperor is Naked……
The Ugly Side of Leverage

“ A feast is made for laughter, and wine maketh merry, but money answereth all things.” Ecclesiastes 10:19


And The Treasury has printed some $814 billion this week, to be precise ~ so much that the tattoo parlors on Norwich Street have all gone bust for lack of ink.

For what use? Why “bailouts” of course ~ where’ve you been? Bailouts, as we’re seeing, are little more than the repetition of the knee-jerk theory by our “leaders” of the socialist policy of “privatization of profit and the nationalization of loss.”

The last such huge unwinding of leverage was the Panic of 1907 ~ some of you remember that, right? The promoter, one F. Augustine Heinze, attempted to leverage his way into a “market corner” of copper (it’d be oil or gold today!), his scheme abetted by loans from greedy banks in New York. The Hunt Brothers of Dallas tried this trick with silver about 20 years ago ~ the results were the same. Well, the hubris of the “greed-is-good,” theory has again evoked the envy of the “repetition-of-history” gods, though delayed. Yes, “there’s nothing new under the sun.”

The Oracle of Omaha, Warren Buffet, commented months ago, “When the tide goes out we’ll see who’s been swimming naked ~ and it will be an ugly sight.” His epilogue to that this week was, “…we now see, Wall Street is a nudist colony.”

And now, as the truth tickles down, our eyes are open and we see our Emperor ~ The Wall Street Machine that recently made us all rich ~ is actually naked, and we are screaming for our share of the newly-minted currency before the paper runs out.

You know the story about the Naked Emperor, right? He was conned by a couple of crooked clothiers who promised to array him in the finest threads ever. But, the Emperor, who surrounded himself with only “yes” people, was really naked. No one would risk upsetting the Emperor by telling him the truth for fear of ridicule and swift reprisal. In the Royal Parade a young, innocent boy shouted, “Look, the Emperor is Naked,” and the scales fell from the public’s eyes.

Slowly the illusion we’ve been living with since 1992 is now exposed to light, and it is indeed ugly. “Print more money,” orders the Emperor’s lackey, that very same person who examined Putin’s soul, declaring him trustworthy. New clothes for everybody shouts Congress ~ except for the taxpayers, who will foot the bill ~ Wal-Mart will do.

Who’s to blame for this Panic of 2008? The finger-pointing has begun. A roundup of the usual suspects is now occurring. They are many. But know this ~ when the final putrid forensic reports arrive, we will be quite surprised at just who the culprits are. For there, mingled with the culpable and deluded, will be fingerprints we recognize….our very own!

“A feast is made for laughter, and wine maketh merry, but money answereth all things.” Ecclesiastes 10:19

Enjoy the party ~ you’ll get the bill soon enough.


Bud

September 18, 2008