Acid Heroes

June 20, 2014

Backwords Economics – 101

 

This morning a bunch of us were discussing the state of the economy on my Facebook page.  Somebody mentioned how the government bailed out the banks a few years ago.  And I was all set to chime in with my opinion when I realized I had no idea what I was talking about.  (Usually that doesn’t stop me from shooting my mouth off, but occasionally I catch myself in time.  Ha ha)

I admit I’m way over my head when it comes to discussing economic issues.  Most of my economic transactions involve simply stuffing my hand into my pocket and pulling out a wad of bills and change.  And my thinking on economic theory doesn’t go much deeper than that.  But on a gut-level, my gut keeps telling me we’re headed in a seriously WRONG direction, economically.

One of my favorite books about how our economic system works (or doesn’t work) was “Den of Thieves” by James Stewart.  That’s the book about Michael Milken and the Junk Bond crooks on Wall Street in the 1980s.  Basically raping and pillaging our economy left and right.  And I was trying to figure out exactly how them Junk Bond crooks made all them millions.  And as far as I could tell, they’d basically set up these mazes of financial transactions — these long and complicated series of buying and selling and loaning and borrowing.  That were so complex and convoluted, it was almost impossible for an outsider to follow what the hell they were doing.  And then, when nobody was looking, they’d just add a couple of extra zeros to their bank accounts.  Ha ha.

The other trick these Junk Bond crooks would pull:  They’d set up these hostile take-overs of these other companies.  Again, with a series of incredibly complicated financial maneuvers.  And they’d be able to buy these companies without putting up hardly any of their own money.  Once they owned the company, they’d completely gut it — sell off all the assets and fire all the employees.  And then sell off what was left of the company to the next sucker.  Almost pure profit.  Ha ha.

I think all this economic stuff is incredibly complicated on one level. But it’s very simple and basic on another level.  It’s the same basic scams we pull on the street level.  Just on a grander scale.

Some of the financial maneuvers these Junk Bond crooks pulled were fascinating.  Like they’d set up all these dummy, “front” corporations.  And they’d be able to borrow millions of dollars from the banks on behalf of these dummy companies.  But they’d keep themselves insulated — like a Mafia Don —  three or for steps removed from being held responsible for actually having to pay back the money.  Ha ha.

What basically fueled all the crookery — as far as I could tell — was the banks eagerness to loan these crooks millions of dollars.  I guess because the banks made huge interest on the loans.  That money was sort of the “ante” that they’d use to get their card games going.

And they had all these complicated entrance and exit strategies.  For getting in there and getting their hands on all the money.  And then getting out of there before they were held accountable for the money.  Ha ha.  Like I said:  simple but complex.

 

 

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