Cyreenik Says
[[Singing to the toon of 70's country song Easy Loving]]
Eeeaasy Money... so sexy feeling. Life with you's like living in a beautiful dream.
Ahh... Easy Money... it feels like Easy Loving, and both feel really good.
We are in an easy money era. And, just like when you have a hot partner on your arm, it feels sooo good!
Easy money is also insinuative. It's like house dust. Give it some time, a few years, and it will start showing up in the deepest, darkest corners of the economy.
Sadly, it does come to an end. It's really a question of when, and what to do when it does.
One sign we are in an easy money era is record tall buildings. 1920's (Empire State, Chrysler), 1970's (World Trade Center, Sears), now 2000's (Petromas, Freedom Tower). When money is easy the tall building people can convince investors that tall is good and tallest is best.
Last month, the Cerebus Group group used easy money to convince DaimlerChrysler to cut bait on it's global car company dream by parting with it's Chrysler half. [singing Eaasy money...]
But some companies are now feeling the easy money hangover. The $3.2 billion of bailout that has been part of the Bear Stern Crisis reveals another place that easy money has insinuated, the sub-prime housing market. Now, we are seeing a large, risky class of investments go sour, and some worry about how far the crisis will spread. The Subprime Meltdown, as it is starting to be called, involves those lenders, borrowers, brokers and companies that made up the subprime housing mortgage market. For the last couple years there as been a lot of money looking for places to get invested. This spawned brokers and companies that reached out to find new customers for housing mortgages. As long as housing demand was high so that house values increased, these risky investments were winners. But when the US's housing market finally ended its unusually long boom, and housing values flattened and declined in 2005 and 2006, an increasing percentage of the mortgage risks went sour. This has produced a chain reaction of crisis leading back to Bear Stern... so far. The worry is: how much further back up the finance chain will the crisis move, and how wide will it become?
And yet... the Bear Stern bailout of it's shaky funds was financed by... easy money! Umm, it sure is sweet!
This crisis is interesting to Blunder Theory because it's a new kind of crisis. The hedge fund financial structure that allowed this kind of loan to become popular is new, and this is hedge funding's first big crisis. We need to watch how these new hedge funds weather this crisis, and because it is new, what surprise threats will evolve to older, more traditional parts of the financial community. Because it is a new kind of threat the potential for blunders in response is high.
Revolutions gain strength from unity, but revolutionaries are mostly discontented and argumentative people. As a result most of the time most revolutionaries are working nearly alone and pursuing lost causes because they are so alone. Once in a while, many revolutionaries can unite behind a single cause... and history is made... for a while. This describes the Intifada that has lead to the current condition of Israel, Gaza and the West Bank. But in June the older revolutionary habit of infighting gained upper hand, and the rift between the Hamas and Fatah factions of the Palestine Movement opened wide. Hamas took control of Gaza and Fatah retained control in the West Bank.
This signals the end of dramatic progress in the Palestine Revolution. Now the arguing will gain upper hand. There will be more splits in the future, and the well being of the average Palestinian will become less important as the revolutionary's standing in the growing crowd of breakaway Palestinian organizations becomes more important to the revolutionaries.
Internationally, this presents a big problem and embarrassment. The question for all those outside of Palestine trying to support the Palestine cause becomes... again, as it was before the Intifada... Who to support? Who is "Mr. Palestine"?
This question will become a major source of discouragement for all moderates concerned with Palestine, but the radicals will not benefit, either.
Over the next couple of years, I predict a general migration of interest away from Palestine, as people become more and more discouraged with the infighting and bickering. I predict Palestine evolving into a situation similar to Somalia, where the media will show interest occasionally, but on the whole it will find other crisis to spend more time on. It won't reach Somalia levels of disinterest because too many tourists swarm the area, but there will be more disinterest than now.
That's what I have for July,
Cyreenik
-- The End --