Showing posts with label financial meltdown. Show all posts
Showing posts with label financial meltdown. Show all posts

Sunday, September 28, 2025

Wall Street Monkeys (revisited)

I found this posted on a now defunct blog called The Might Of The Pen....

If you have difficulty understanding the current world financial situation, the following story should help...

Once upon a time in a village in India, a man announced to the villagers that he would buy monkeys for $10.

The villagers, seeing there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at $10, but, as the supply started to diminish, the villagers stopped their efforts. The man further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.


Soon the supply diminished even further and people started going back to their farms. The offer rate increased to $25 and the supply of monkeys became so scarce that it was an effort to even see a monkey, let alone catch it!


The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now act as buyer, on his behalf.

In the absence of the man, the assistant told the villagers: "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for $50."

The villagers squeezed together their savings and bought all the monkeys.

They never saw the man or his assistant again, only monkeys everywhere...

Welcome to Wall Street.



[First posted 13 October 2008. Reposted 2 October 2014]


Saturday, August 5, 2023

Forrest Gump explains Mortgage Backed Securities... again!


Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors.

Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide.

Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $800 billion dollars until the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted.

Mama always said: "Sniff the chocolates first, Forrest."

Now here's another classic story illustrating the evils of gambling and betting...
An elderly woman walked into the Bank of Canada one morning with a purse full of money. She wanted to open a savings account and insisted on talking to the president of the Bank because, she said, she had a lot of money.

After many lengthy discussions (after all, the client is always right) an employee took the elderly woman to the president's office. The president of the Bank asked her how much she wanted to deposit. She placed her purse on his desk and replied, "$165,000."

The president was curious and asked her how she had been able to save so much money. The elderly woman replied that she made bets.

The president was surprised and asked, "What kind of bets?"

The elderly woman replied, "Well, I bet you $25,000 that your testicles are square.'"

The president started to laugh and told the woman that it was impossible to win a bet like that. The woman never batted an eye. She just looked at the president and said, "Would you like to take my bet?"

"Certainly," replied the president. "I bet you $25,000 that my testicles are NOT square.'"

"Done!" the elderly woman answered. "But given the amount of money involved, if you don't mind, I would like to come back at 10 o' clock tomorrow morning with my lawyer as a witness."

"No problem." said the president of the Bank confidently.

That night, the president became very nervous about the bet and spent a long time in front of the mirror examining his testicles, turning them this way and that, checking them over again and again until he was positive that no one could consider his balls as square and reassuring himself that there was no way he could lose the bet.

The next morning at exactly 10 o' clock the elderly woman arrived at the president's office with her lawyer and acknowledged the $25,000 bet made the day before that the president's testicles were square. The president confirmed that the bet was the same as the one made the day before. Then the elderly woman asked him to drop his pants so that she and her lawyer could inspect his balls.

The president readily obliged, anticipating an unexpected windfall of $25,000.

The elderly woman came closer so she could see better and asked the president if she could touch his balls.

"Of course," said the president. "Given the amount of money involved, you should be 100% sure."


The elderly woman did so with a small smile. Suddenly the president noticed that the lawyer was banging his head against the wall. He asked the elderly woman why he was doing that and she replied, "Oh, it's probably because I bet him $125,000 that around 10 o' clock in the morning I would be fondling the balls of the President of the Bank of Canada."

[First published 27 November 2008, reposted 6 August 2012]

Thursday, February 4, 2021

Monday, September 28, 2020

Meltdown: the men who crashed the world ~ from Al Jazeera (repost)

 

The crash of September 2008 brought the largest bankruptcies in world history, pushing more than 30 million people into unemployment and bringing many countries to the edge of insolvency. Wall Street turned back the clock to 1929.

But how did it all go so wrong?

Lack of government regulation; easy lending in the US housing market meant anyone could qualify for a home loan with no government regulations in place.

Also, London was competing with New York as the banking capital of the world. Gordon Brown, the British finance minister at the time, introduced 'light touch regulation' - giving bankers a free hand in the marketplace.

All this, and with key players making the wrong financial decisions, saw the world's biggest financial collapse.

In the first episode of Meltdown, we hear about four men who brought down the global economy: a billionaire mortgage-seller who fooled millions; a high-rolling banker with a fatal weakness; a ferocious Wall Street predator; and the power behind the throne.

[First posted 1 October 2011]


Monday, July 23, 2018

Forrest Gump explains Mortgage Backed Securities... (repost)

Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors.

Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide.

Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $800 billion dollars until the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted.

Mama always said: "Sniff the chocolates first, Forrest."

Now here's another classic story illustrating the evils of gambling and betting...


An elderly woman walked into the Bank of Canada one morning with a purse full of money. She wanted to open a savings account and insisted on talking to the president of the Bank because, she said, she had a lot of money.

After many lengthy discussions (after all, the client is always right) an employee took the elderly woman to the president's office. The president of the Bank asked her how much she wanted to deposit. She placed her purse on his desk and replied, "$165,000."

The president was curious and asked her how she had been able to save so much money. The elderly woman replied that she made bets.

The president was surprised and asked, "What kind of bets?"

The elderly woman replied, "Well, I bet you $25,000 that your testicles are square.'"

The president started to laugh and told the woman that it was impossible to win a bet like that. The woman never batted an eye. She just looked at the president and said, "Would you like to take my bet?"

"Certainly," replied the president. "I bet you $25,000 that my testicles are NOT square.'"

"Done!" the elderly woman answered. "But given the amount of money involved, if you don't mind, I would like to come back at 10 o' clock tomorrow morning with my lawyer as a witness."

"No problem." said the president of the Bank confidently.

That night, the president became very nervous about the bet and spent a long time in front of the mirror examining his testicles, turning them this way and that, checking them over again and again until he was positive that no one could consider his balls as square and reassuring himself that there was no way he could lose the bet.

The next morning at exactly 10 o' clock the elderly woman arrived at the president's office with her lawyer and acknowledged the $25,000 bet made the day before that the president's testicles were square. The president confirmed that the bet was the same as the one made the day before. Then the elderly woman asked him to drop his pants so that she and her lawyer could inspect his balls.

The president readily obliged, anticipating an unexpected windfall of $25,000.

The elderly woman came closer so she could see better and asked the president if she could touch his balls.

"Of course," said the president. "Given the amount of money involved, you should be 100% sure."


The elderly woman did so with a small smile. Suddenly the president noticed that the lawyer was banging his head against the wall. He asked the elderly woman why he was doing that and she replied, "Oh, it's probably because I bet him $125,000 that around 10 o' clock in the morning I would be fondling the balls of the President of the Bank of Canada."

[First published 27 November 2008]

Sunday, August 14, 2011

DAN HIND ON THE UK RIOTS

EPA
Nothing 'mindless' about rioters
Dan Hind | Al Jazeera.net


Although riots are complex social phenomena, the recent unrest in England has inescapably political roots.

Civil disturbances never have a single, simple meaning. When the Bastille was being stormed the thieves of Paris doubtless took advantage of the mayhem to rob houses and waylay unlucky revolutionaries. Sometimes the thieves were revolutionaries. Sometimes the revolutionaries were thieves. And it is reckless to start making confident claims about events that are spread across the country and that have many different elements. In Britain over the past few days there have been clashes between the police and young people. Crowds have set buildings, cars and buses on fire. Shops have been looted and passersby have been attacked. Only a fool would announce what it all means.


We can dispense with some mistakes, though. It is wrong to say that the riots are apolitical. The trouble began on Saturday night when protesters gathered at Tottenham police station to demand that the police explain the circumstances in which a local man, Mark Duggan, had been shot dead by the police. The death of a Londoner, another black Londoner, at the hands of the police has a gruesome significance. The police are employed to keep the peace and the police shot someone dead. This is a deeply political matter. Besides, it is conventional to say how much policing in London has changed since the Brixton riots of the early eighties - but not many people mouthing the conventional wisdom have much firsthand experience of being young and poor in Britain's inner cities.


More broadly, any breakdown of civil order is inescapably political. Quite large numbers of mostly young people have decided that, on balance, they want to take to the streets and attack the forces of law and order, damage property or steal goods. Their motives may differ - they are bound to differ. But their actions can only be understood adequately in political terms. While the recklessness of adrenaline has something to do with what is happening, the willingness to act is something to be explained. We should perhaps ask them what they were thinking before reaching for phrases like "mindless violence". We might actually learn something.

The fierce conflict remains ahead

The profusion of images that modern technology generates makes it even more difficult to impose a single meaning on a complex event. Those who live in terror of a feral underclass and those who are worried about the impact of fiscal austerity on vulnerable communities can find material online that confirms their world-view. There will be a fierce conflict in the weeks ahead as politicians, commentators and others seek to frame the events of the last few days in ways that serve their wider agenda. The police, for example, will call for increased budgets to deal with the increased risks of civil disorder. In this sense, too, riots are inescapably political events.

There are signs too that technology is allowing individuals to intervene in the process by which meaning is assigned to social events. When disorder broke out in France in 2005 in somewhat similar circumstances the political right was the major beneficiary. Sarkozy's rise from interior minister to president owed a great deal to his role in expressing the anxious aggression of a mass constituency that often lived far away from the burning cars and public buildings.

In London today people were on the streets tidying up the damage. The hashtag #riotcleanup on Twitter is being used by councils and residents to coordinate the work. The decision to act in this way, to make the streets a little more safe, to reclaim them for peaceful sociability, steps away from the temptation to condemn the violence or explain it in terms that inevitably simplify or distort it. Those who come together like this will be less likely to conclude that the country is on the verge of chaos, less likely to call for harsh measures and the further erosion of liberty in the name of security. It is the one shrewd thing one can do in present circumstances and it is to be celebrated.


So there is no single meaning in what is happening in London and elsewhere. But there are connections that we can make, and that we should make. We have a major problem with youth unemployment. There have already been cuts in services for young people. State education in poor areas is sometimes shockingly bad. Young people cannot afford adequate private housing and there is a shortage of council-built stock. Economic inequality has reached quite startling levels. All this is the consequence of decisions made by governments and there is little hope of rapid improvement. The same politicians now denouncing the mindless violence of the mob all supported a system of political economy that was as unstable as it was pernicious. They should have known that their policies would lead to disaster. They didn't know. Who then is more mindless?


The global economic crisis is at least as political as the riots we've seen in the last few days. It has lasted far longer and done far more damage. We need not draw a straight line from the decision to bail out the banks to what's going on now in London. But we must not lose sight of what both events tell us about our current condition. Those who want to see law and order restored must turn their attention to a menace that no amount of riot police will disperse; a social and political order that rewards vandalism and the looting of public property, so long as the perpetrators are sufficiently rich and powerful.

Dan Hind has worked in publishing since 1998 and is the author of two acclaimed books: The Return of the Public and The Threat to Reason. He is this year's winner of the Bristol Festival of Ideas Prize. Follow him on Twitter: @danhind



Saturday, August 14, 2010

THE CURSE OF BAKUN (REVISITED)

Bakun dam to be much worse than PKFZ scandal

Kua Kia Soong
Malaysiakini | September 22, 2009

Nearly 50 years after independence for Sarawak, we see a comparison with the 'Highland Clearances' in Scotland during the 18th century when the highlanders were driven off their lands for capitalistic sheep farming.

The English did it with brutality and thoroughness through “butcher” Lord Cumberland and even obliterated the 'wild' Celtic mode of life.

What we have seen in Sarawak recently has the same capitalist logic, namely, to drive the indigenous peoples out of their native customary lands so that these lands can be exploited for their commercial value and the indigenous people can be “freed” to become wage labourers.

Thus, even though the accursed Bakun dam had been suspended in 1997 due to the financial crisis, the government still went ahead to displace 10,000 indigenous peoples to the Sungai Asap resettlement camp in 1998.

Well, there is a reason for this - the contract for the Sungai Asap camp had already been given out to a multinational company. After all, the whole Bakun area, which is the size of the island of Singapore and home to the indigenous peoples, had already been thoroughly logged.

All this happened while Dr Mahathir Mahathir was the prime minister. Wasn't he a liability to the BN government then?

I was part of the fact-finding mission to Sungai Asap in 1999 and even then we could see the destruction of so many unique indigenous communities and their cultures, including the Ukit tribe.

There was only one word to describe what had been done to these indigenous peoples and their centuries-old cultures... wicked!

Banned from my own country

As a result of my concern for the indigenous peoples and the natural resources of Sarawak, I was told at Kuching airport in August 2007 that I could not enter Sarawak. So much for 1Malaysia! So much for national integration! So much for nearly 50 years of independence! I was not even welcome in my own country.

But the contracts for the resettlement scheme and the logging are chicken feed compared to the mega-bucks to be reaped from the mega-dams. Even before the Bakun dam ever got started, Malaysian taxpayers had to compensate dam builder Ekran Bhd and the other “stakeholders” close to RM1 billion in 1997.

How much does it cost to pay our 'mata-mata' (police) to investigate the alleged scandalous rape of our Penan women?

The contracts from building the Bakun dam and the undersea cable run in excess of RM20 billion. Malaysian taxpayers won't know the final cost until they are told the cost overruns when the projects have been completed.

But if the Port Klang Free Zone (PKFZ) scandal is anything to go by, the leaks and non-accountability all along the line will result in Malaysian taxpayers paying billions for the same kind of daylight robbery.

In the early 90s, when the government was trying to assure us that there would be no irresponsible logging in Sarawak, I pointed out in Parliament that if the government could not monitor the Bukit Sungai Putih permanent forest and wildlife reserve just 10 minutes from Kuala Lumpur, how did they expect us to believe they could monitor the forests in Bakun?

Likewise today, if the government cannot monitor a project in Port Klang just half an hour from Kuala Lumpur, how can they assure us that they can monitor a project deep in upriver Sarawak and through 650km of the South China Sea?

How can we be assured that we will get to the bottom of politically-linked scandals when the Sarawak police tell us they don't have the resources to investigate the rape of Penan women and girls?

How can we be assured that the Sarawak state government cares about its indigenous peoples and its natural resources when NGO activists are banned from entering Sarawak to investigate a part of their own country?

It makes no economic sense

In 1980, the Bakun dam was proposed with a power generating capacity of 2,400MW even though the projected energy needs for the whole of Sarawak was only 200MW for 1990.

The project was thus coupled with the proposal to build the world's longest (650km) undersea cable to transmit electricity to the peninsula. An aluminum smelter at Sarawak's coastal town of Bintulu was also proposed to take up the surplus energy.

In 1986, the project was abandoned because of the economic recession although the then PM Mahathir announced just before the UN Conference on Environment and Development (Earth Summit) in Rio de Janeiro, Brazil that this was “proof of Malaysia's commitment to the environment.”

So what happened to that commitment, Mahathir?

In 1993, with the upturn in the Malaysian economy, the government once again announced the revival of the Bakun dam project. To cushion the expected protests, then Energy Minister S Samy Vellu gave Parliament a poetic description of a “series of cascading dams” and not one large dam as had been originally proposed.

Before long, it was announced that the Bakun dam would be a massive 205-metre high concrete face rockfill dam - one of the highest dams of its kind in the world - and it would flood an area the size of Singapore island.

The undersea cable was again part of the project. There was also a plan for an aluminum plant, a pulp and paper plant, the world's biggest steel plant and a high-tension and high-voltage wire industry.

Have feasibility studies been done to see if there will be adequate local, regional and international demand for all these products?

Six years later, after the economy was battered by the Asian Financial Crisis, the government again announced that the project would be resumed albeit on a smaller scale of 500MW capacity.

Before long in 2001, the 2,400MW scale was once again proposed although the submarine cable had been shelved. Today we read reports about the government and companies still contemplating this hare-brained undersea scheme which is now estimated to cost a whopping RM21 billion!

More mega-dams to be built

The recent announcement that the Sarawak government intends to build two more mega-dams in Sarawak apart from the ill-fated Bakun dam is cause for grave concern.

Malaysian taxpayers, Malaysian forests and Malaysian indigenous peoples will again be the main victims of this misconceived plan. We have been told that some 1,000 more indigenous peoples will have to be displaced from their ancestral lands to make way for these two dams.

Apart from the human cost, ultimately it will be the Malaysian consumers who pay for this expensive figment of Sarawak Chief Minister Abdul Taib Mahmud's wild imagination. Indeed, enough taxpayers' money has been wasted - Sarawak Hidro has already spent some RM1.5 billion on the Bakun dam project.

Right now, the country is being fed conflicting reports about energy demand. There is supposed to be a 43 percent oversupply of electricity capacity in peninsular Malaysia. Experienced Bakun dam watchers will tell you such conflicting and mutually contradictory assertions have been used by the dam proponents to justify every flip flop of this misconceived project.

Apart from the economic cost and the wastage, how are investors supposed to plan for the long-term and medium term? What is the long-term plan for Bakun? Can Bakun compete with the rest of the world or for that matter, Indonesia?

The suggestion for aluminum smelters to take up the bulk of Bakun electricity have been mentioned ever since the conception of the Bakun dam project because they are such a voracious consumer of energy. Even so, has there ever been any proper assessment of the market viability of such a project with the cheaper operating costs in China?

Does it matter that the co-owner of one of the smelters is none other than Cahaya Mata Sarawak (CMS) Bhd Group, a conglomerate controlled by Taib's family business interest?

Sarawak's tin-pot government

Clearly, Bakun energy and Sarawak's tin-pot governance do not give confidence to investors. First it was Alcoa, and then Rio Tinto - both giant mining multinationals - had expressed second thoughts about investing in Sarawak.

Concerned NGOs have all along called for the abandonment of this monstrous Bakun dam project because it is economically ill-conceived, socially disruptive and environmentally disastrous.

The environmental destruction is evident many miles downstream since the whole Bakun area has been logged by those who have already been paid by Sarawak Hidro.

The social atrophy among the 10,000 displaced indigenous peoples at Sungai Asap resettlement scheme remains the wicked testimony of the Mahathir/Taib era. The empty promises and damned lives of the displaced peoples as forewarned by NGOs in 1999 have now been borne out.

The economic viability of the Bakun dam project has been in doubt from the beginning and the announcement to build two more dams merely reflects a cavalier disregard for the indigenous peoples, more desecration of Sarawak's natural resources and a blatant affront to sustainable development.

When will Malaysians ever learn?

Dr KUA KIA SOONG is director of Suaram. He was member of parliament for Petaling Jaya from 1990 to 1995.