Monday, July 12, 2010

A nice clean description of Predator economics

Need to explain to someone what's REALLY wrong with the economy.  Well this guy summarizes things quite nicely.
Ain’t No Money in Being Productive
There ain’t no money in being productive. The only money to be made is in feasting upon the carcass of this once great nation.
Seriously. Think about it. What sector of the economy is making serious money right now? The banking industry. And how do they make money? By taking funds from the fed at near 0% interest rates and then doing a couple of things. They can lend it to the Federal Government at interest and make money on the spread. They can trade in the stock market for their own account; a rigged game with their nano second front running at the expense of their retail & wholesale customers. All of the majors had a perfect quarter last quarter meaning they had no trading day losses. Easy to do if you know in advance what everyone else is going to do.
Let’s take it back a step in time. Let’s take it back to the vulture capitalists. Do you know they make their money? By being a brilliant capitalist? That’s what they would want you to believe. No, they make money by using borrowed money to buy family owned businesses, saddling the company with debt, taking a multi million dollar fee from the borrowed money for doing so, operating the company for a while and then selling it on for a larger amount to someone else using borrowed money saddling the company with more debt, and taking out a profit in the transaction. Brilliant, right? Depends. If you are the vulture, you get a nice check. If you are the worker at the company, you eventually lose your job as the company closes because the company could no longer service the debt payments. In other words extracting money from the carcass of productivity. Geniuses, all and they are worshiped as gods of capitalism.
Step forward to the world of mortgage securitization. It is clear from the SEC’s complaint against Goldman Sachs and the Magnetar case out of Chicago exposed by the NY Times and Pro Publica that the brilliant ones came to the conclusion a long time ago that it was more lucrative to feast upon destruction than it was to be constructive. In both those cases, securitized loan trusts were set up designed to fail and then the very ones who created those securitized pools bet against their investors for those vehicles to fail. They made billions by selling credit default swaps based upon their known, guaranteed failure while screwing their customers with their foreknowledge. more


  1. Hey Jonathan: Thanks for posting the link to this article. Very worthwhile. Do you know who this guy is? The author of "Ain't No Money In Being Productive", I mean.

    His website doesn't have a working link to "About"; there's just his picture, from which it can be seen that he's a middle aged white guy with unusual glasses. Who is he?

    Perspiring minds want to know. :)

  2. Never mind; I tracked him down through the "Newsletter" link :

    According to this, his name is Vermont Trotter but he is apparently known by the sobriquet "The Logger".

    ..Vermont Trotter? Is that something like an Old Maine Trotter?

  3. Thank you for tracking this down. I must say that except for favorites like Ellen Brown, I pretty much don't care who the author is IF the article makes sense. I have discovered that the world of the producers usually involves something mind-boggling difficult, it is unlikely someone in that world can step back and get the big picture. But what they have to say about their own speciality is usually SO interesting, it doesn't really matter if they aren't generalists or that they only have a tiny number of REALLY interesting things to say. I mean, if this is the only interesting thing Vermont Trotter has to say, I would say he has lived a pretty useful life already.