The Death of Ponzi

In the December 9 issue of the San Francisco Chronicle (link 2) there is a great article by Sean Olender. It pointed out that none of the administration proposals has anything to do with keeping families in their homes. In fact according to Olender

"The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth."

I have only two little observations.

First, the subprime problem is a fall guy for the real criminals and a distraction from the real story. Make no mistake Mr. Olender is right on, if you are thinking mortgages and freezes you are short of the point, but it's bigger even than the entire mortgage market as Mr. Olender says. The true culprit is the credit crack addicted system of Ponzi finance and it's Wall Street enablers while the REAL story is about collapse of that American way of finance. The truth of the matter is that this had to happen no matter what, subprime was just where the bubble finally burst, where the scam finally ran out of steam. No Ponzi scheme can continue indefinitely, whether the dot bomb, the subprime or the next scam sooner or later in a Minskey moment is was bound to fail. It's no different than the Ponzi finance scheme of credit card roll over. A construction worker can live in a palace, sail a huge yacht and flying around from one to the next in a private jet purely on credit for only so long. So, now the American Ponzi system is dead. Shot a million times like Sonny at the toll both then kicked in the head.

So, that's my first point, Ponzi finance is at it's end, my second point is that the lawsuits have just begun(Link 1).

Link 1:http://www.smh.com.au/news/national/subprime-stoush-head-to-court/2008/01/14/1200159363493.html

Link 2: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/12/09/IN5BTNJ2V.DTL&type=printable