#867 Faith in the Cards

People have asked me what my spin on the Wall Street apocalypse is and I’ve told them I figure everything will come back sooner or later. Don’t panic. Keep the faith.
Money is pretty much just a social agreement anyhow. It’s only mutual faith that allows us to exchanges pictures of our dead presidents for goats and bushels of potatoes instead of the goats and bushels of potatoes themselves.
They call it a stock market because it used to involve trading actual cows.
It’s funny that the genuine crisis behind the crisis, the tightening of credit markets, is where the real fear of panic is driving the push for an unprecedented bailout.
Banks and other institutions lend each other money every second. If one institution is no longer trustworthy, as evidenced by all the exploded companies that have now been revealed to be hiding billions in toxic mortgages, then other institutions don’t want to lend them money.
So they can’t pay their obligations to a third institution who then can’t pay his to a fourth and so on.
A house of cards often collapses if it’s just made up of jokers.
Selling the bad mortgages to the feds supposedly makes the institutions trustworthy again and other banks will lend to them and so on.
Kind of like giving the house of cards a new coat of hairspray to hold it up.
It’s funny that the panic is panic within the system of folks who always tell us the system is so good.
“The market is always right. Leave us alone. Deregulate us, have faith in the market.” So the first people to lose faith in the market are the same people who were always selling us on how we should have faith in the market.
Joe Schmoe out in the real world is scratching his head, using his Visa card to buy unaffordable gas and hoping his toxic adjustable rate mortgage doesn’t adjust up and throw him in the street.
Faith, yeah he’s got faith. He was using that faith when he bought that “real estate always goes up” “the market always works” snake oil the Wall Street card sharks sold him.
America, ya gotta love it.