Yesterday afternoon in a surprise decision, Congress voted to reject the bailout intended to save Wall Street. Despite stern warnings about the possibilities of massive economic disruptions, members from both political parties couldn’t bring themselves to support a plan that effectively ships a big crateload of money to Wall Street banker types, because seriously, fuck those guys.
Although this attitude is understandable (seriously, fuck them) it reflects a misunderstanding of just why we have banks in the first place. What is it that banks do you ask? Cocaine parties, sure, but what else? As it turns out, the primary function of the banking system isn’t to afford young men the opportunity to impress shallow women with their Ferraris. Somewhat boringly, the point of banks is to move money around to where it can do the most good. An example: You run a really promising young company that’s managed to get a toehold in the market for, let’s say, anatomically correct dolls. But to expand your business and build more doll factories you’ll need money. That’s where banks come in. They can either lend you that money directly, or go to all the rich people they know and get them to give you money. Naturally the banks take all sorts of fees off the top of these transactions, which get funneled almost entirely into their noses, but so long as you can start making more unsettlingly realistic dolls, who cares?
But what happens when banks stop lending money to people (that’s this credit crunch you’ve heard so much about) or if they go out of business entirely? Then you can’t expand your business, and you’re the poorer for it. And the same goes for your employees who work so hard stitching together genitals. And again with your suppliers of flesh colored felt. And all those people themselves will now start spending less money on groceries, trips to the waterpark, and gas turbines. Which affects everyone in those industries. That’s why bank failures are such nasty business. It affects us non-dickish folk as much as it affects the dicks.
The explanation of how we got into this mess is long, and honestly not that funny. You can read a good general primer on it here. (Just imagine the word “testicles” is inserted throughout if that helps.) But really really briefly, here’s the main problems:
1) Banks own a huge volume of crap that no-one wants to buy, because no-one knows what it’s worth. The value of this crap is fundamentally tied to the value of mortgages. In turn, the value of a mortgage depends pretty much entirely on how likely it is the home-owner is going to pay it off, which is itself hugely dependent on whether his mortgage is worth more than his house is. And when you realize that the housing prices are probably nowhere near their bottom yet, you realize that all the dominoes are poised to collapse onto the supports of this financial house of cards, which is itself built on a foundation of shaky metaphors.
2) As the price of this crap drops, it forces some of the stupider banks who owned the most of it into bankruptcy.
3) Thanks to some clever new derivatives invented quite possibly by Satan, every financial company in the world is now extremely tightly tied together, so that if one bank goes under, every other bank may have to write down huge chunks of their own assets, pushing them closer to bankruptcy.
4) Banks then stop lending money to each other. This is partly because those other banks have recently developed a nasty habit of exploding messily, and partly because each bank is trying to keep as much cash on hand themselves to stop themselves from exploding.
5) When the banks stop lending money to each other, they stop lending it to us, which impacts our yacht purchasing power amongst other things.
What this last version of the bailout intended to do was take all that crap off the hands of banks, and put it in the hands of the government, who are of course adapt at handling fecal matter. It was hoped that would stop, or at least slow down some of the above chain reaction. Men and women in suits are going to argue about the failed bailout for the next couple days and try to hammer together a new version of it. But whatever form their efforts take, the ultimate goal of all this is to get a bunch more money into the hands of the banks, who, let’s not forget, remain fuckers. And it’s because these guys are such fuckers that this first bailout failed: no-one wants to give their money to these guys.
I have a solution however, based largely on the financial expertise I’ve accumulated from having read cnn.com for much of yesterday, and also my third year of college, where I watched just a ton of Win Ben Stein’s Money. If no-one will give money to the banks, where will it come from? From the banks themselves. And how you ask?
Identity theft.
The single largest asset every bank owns is their customer database. The banks can solve all of their capital problems easily by simply selling that information to the right people in the right places. Here I’m pretty sure that the “right people” are Eastern Europeans, and the “right places” are any number of shady laundromats across the country. You know the ones I’m talking about. Can 15 billion dollars fit inside a laundry bag? I don’t know.
I know there will be nay-sayers out there, and quite frankly, they disgust me. They’ll call my plan “unworkable” or “short sighted” or “the fevered dream of an opium addict.” And although all those things might be true, the thing of it is, no-one has any better ideas.
And that’s how fucked we are.
Last 5 posts by Chris Bucholz
- The 20 Stupidest GI Joe Vehicles Ever - November 25th, 2008
- How To Train An Army of Animals To Do Your Bidding - November 18th, 2008
- Everything I need to know I learned from He-Man - November 11th, 2008
- Campaign 2008: The Year in Pictures - November 4th, 2008
- The Scouts are offering a Merit Badge in Boning - October 28th, 2008
October 27th, 2008 at 12:11 am
Here’s an idea…. legalize marijuana. We’re sitting on an instant success here people! It would create jobs AND cash flow.
Not to mention, it would be the first step for California to secede from the Union. Let’s make it happen!
October 16th, 2008 at 10:22 pm
A chain of events:
Is that lady behind the huge cock naked?
Is she wearing…socks?
(Zooms in MS Paint)
OH GAWD A DUDE!
October 9th, 2008 at 11:55 pm
its just a damn good thing they loaded the bill with more of our money so it would pass since the all-wise Bush insisted WE HAVE TO DO THIS NOW! FUCKERS DO IT NOW!! NOW!! they all said no, and we said yay! then they said, oh yeah fuck you guys and passed it. otherwise, the market might not have continued to collapse the way it has in the days since it passed and… um… well, luckily for me i’ve been unemployed for months and drained all of my money out of the market BEFORE it tanked! woo hoo! now, im broke, but it took me almost a week longer to go broke because my $700 was in my wallet and not on its way to being worth $400 in mutual funds… somehow i think i’m still fucked here… if i wasn’t so fucking worried about cleaning up to get a job i coulda bought pot instead of beer and at least i’d be stoned and horny instead of being drunk and impotent. speaking of impotent, the speaker of the treasury admitted that they pulled the $700 billion number out of their asses, then she said “FUCK YOU IMPOTENT DRUNK BROKE MOTHERFUCKERS” if the government has done one thing well in our lifetimes, it’s keeping marijuana out of the hands of responsible unemployed adults and in the hands of middle school kids everywhere.
October 3rd, 2008 at 8:46 pm
What would I do with $4,597?
Give it back to the government in the form of paying off some of my school loans.
October 3rd, 2008 at 12:04 pm
$700 billion is a lot of money. Especially when you’re giving it away. But why should we? Is saving large corporations the way to save the economy? I have a better way.
According to the US Census bureau
(see here: http://factfinder.census.gov/servlet/STTable?_bm=y&-geo_id=01000US&-qr_name=ACS_2006_EST_G00_S2301&-ds_name=ACS_2006_EST_G00_)
there are 234,243,963 Americans above the age of 16. Out of that potential workforce, only 65% are actually workers. The rest are retired, disabled, or unable to work for other reasons. This leaves 152,258,576 Americans who are either working, or looking to replace the job they just lost.
Now, divide that $700 billion amongst our 152,258,576 work force in whole dollars and what does each American get? I’ll tell you.
$4,597.
That number should be the rallying cry that goes up around the country. “Where’s my $4,597?” we should say. It is, after all, my money. I’ve already paid it to the government, who now wants to hand it over to AIG and the like. Why can’t I have it back? Show me someone who says that each working American getting $4,597 would not help our national economy as well as the global economy, and I’ll show you someone who is lying to herself.
What would you do with $4,597?
October 2nd, 2008 at 3:44 pm
Fuck wall street and fuck the guv’ment. Our tax dollars should not be spent to make all the rich fuckers lives easier.
Maybe we should just change the rules to monopoly and call our friends who aren’t playing with me and aunt ruthie and ask them for a loan when Ruthie forecloses on my hotels. This is America and we can get through this without giving any more power to the guv’ment and without bailing out wall street. We are still the largest, richest nation in the world and every one talks shit about how crappy we are. Go live somewhere else and make your life better if you don’t like it here, but don’t try canada or mexico… their immigration laws are way to tough, you might never get in.
October 2nd, 2008 at 3:12 pm
Conspiracy Theory: I assume this crash has been instigated so that many banks can be purchased by the few strong ones, thereby further consolidating the powers of the illuminati-style world rulers.
Fucking reptoids.
October 2nd, 2008 at 1:35 am
OK, now I’ve read the post, and it was great. The now page layout still sucks though.
October 2nd, 2008 at 1:26 am
I haven’t even read this post yet, I’m just commenting to say “WHAT THE FUCK HAPPENED TO THE PAGE LAYOUT!?”
I know you bloggers are almost certainly not in any way responsible for this, but I still demand that you change it back. This is shit.
October 1st, 2008 at 10:45 pm
Why don’t we just take all the bankers into the back alleys of the nation, and shoot the hook-nosed, pork avoiding bastards? (Half my family is jewish. That makes it ok for me to advocate another holocaust.)
October 1st, 2008 at 4:40 pm
great!
October 1st, 2008 at 4:32 pm
this is a great article!
October 1st, 2008 at 3:54 pm
Hell we all are, sometimes we just adapt to being adept at fucking Ariun’s mother.
October 1st, 2008 at 3:51 pm
I’m adept at fucking Ariun’s mother.
October 1st, 2008 at 12:36 pm
He spelled “adept” as “adapt”.
October 1st, 2008 at 7:58 am
Unfortunately, it seems that the bailout is the only (viable) option left. While it helps out rich prickish bankers, it is not intended for them specifically, but rather all the people who need to take out loans….real people. So while hating on bankers is fun, all the fuss over the bailout is actually the country shooting itself in the foot. Scary stuff
October 1st, 2008 at 2:11 am
But changing the legislation that limits the borrowers liability is hardly going to solve the immediate problem.
I wouldn’t worry too much about the $700 billion bail-out, you already have $6.5 trillion in foreign debt.
It amused me when considering the scale of this bail-out that someone even bothered to think about ensuring the execs don’t get any money. To me it is almost unavoidable due to the money improving the performance of certain investment products. Basically it would be almost impossible to police. Unless all these companies were socialised and that seems unlikely.
Something that appears not to be addressed by the proposed bail-out is the actual mortgage defaults. Stop the defaults, it’ll reduce the supply of houses for sale and presumably house prices will increase and losses on defaults decrease.
I vote a two-pronged approach. I believe it is called The Shocker. Close your eyes, America.
September 30th, 2008 at 11:51 pm
It’s “Adept” not “adapt”.
Fine, I’m being anal.
BUT IT APPEARS SOMEONE ON THE STAFF WASN’T!
So, yeah.
September 30th, 2008 at 11:33 pm
Here here America, lets pick up the Austrailia system. It’s heartless and evil (and it works).
September 30th, 2008 at 10:56 pm
In America:
You default. Bank seizes property. Bank sell property and any difference between mortgage amount and sale amount is the banks loss.
In Australia:
You default. Bank seizes property, gets money from the sale of property and then comes after the borrower to recoup any difference between loan and sale amounts.
The Australian system may seem rather evil, but it does result in accountability from the borrower. In particular if the borrower buys a property for one amount then two years later the house is worth less than the mortgage it makes sense for the borrow to stop paying and walk away leaving the bank to pick up the tab. In Australia, that shit don’t fly.
September 30th, 2008 at 10:33 pm
Bucholz, for your clear and concise explanation of your economy, not hindered by the fact that you are a resident of a different country (I think..), the American people all owe you a complimentary ball fondling.
So drop your pants and unlimber your testes.
September 30th, 2008 at 9:04 pm
I love how you used the madison avenue advisor from “America The Book” as the asshole of the banks!
September 30th, 2008 at 7:34 pm
Dear Chris:
Though what you “do” is intended as “comedy,” I also happen to find it “educational.”
Keep up the good “work.”
Sincerely,
Jadore
September 30th, 2008 at 6:52 pm
I concur with Olenski2 and Onodera. Those fucking executives who are still riding around in their yachts and motor-scooters and flying Segways (I assume that’s what they all ride, for some reason) should be forced to use their own fucking money to bail their own fucking banks out instead of fucking forcing normal fucking taxpayers to fucking pay for their own fucking mistakes.
(I’m a bit irked at the whole situation.)
I can just imagine those executives parroting Marie-Antoinette and, when informed that normal Americans are unable to pay for bread, saying, “let them eat cake.” And then I can imagine the beheading of every rich executive from the companies that U.S. citizens have had to bail out. I can’t put it better than Bucholz: “seriously, fuck them[.]“
September 30th, 2008 at 5:59 pm
I completely agree with DonGiovanni. I’ve been reading all the articles I can get my hands on about the economy and none of them make any sense. This article does. And that is just sad. (And yet, so funny.)
September 30th, 2008 at 5:44 pm
Bucholz, your idea sounds perfect. The last line sums everything up so neatly.
September 30th, 2008 at 4:57 pm
I’d just say nationalise all the banks. If the losses are going to be public, then so should the gains. Be. Public.
September 30th, 2008 at 2:27 pm
crack should create a new TV show were the execs of these failed companies get to spin the wheel of severance. Who knows you could get 20 million dollars, you could get slimed, you could get a bucket of scorpions dumped on your head, or even better yet you face 10-20 with Jamal the donkey puncher for trying to pass this pile of bile on to the American tax payer
September 30th, 2008 at 1:14 pm
Is it bad that I read The Economist every day, yet still find this article to be clearer and more concise than theirs ever are?
September 30th, 2008 at 11:57 am
This is why I’m voting Wolinski in ‘08, so I don’t have to read any more about this.
September 30th, 2008 at 11:49 am
Great as usual, Chris.
September 30th, 2008 at 11:46 am
And just to drive the point further, Abbie, how can you not have seen the adept/adapt switch in the paragraph above the smug banking fucker’s head?
Great analisis Bucholz! What with all the incisive political and financial comment going on, cracked.com is the new Reuters, but better.
September 30th, 2008 at 11:20 am
I’m glad there is somebody else who agrees that bailing out the banks is a bad idea. It’s all about confidence in the system, and I think in Ireland we’ve made a pretty good move. Today the Government guaranteed ALL deposits in Irish owned banks for the next 2 years. This way people aren’t gonna be freaking out and moving their money around (to spread the risk since before this the minimum guaranteed amount was 20k per customer per bank) and the banks can hold onto the much needed capital, providing security for banks and peace of mind for investors.
Also @Abbie: haha
September 30th, 2008 at 10:17 am
I like the gag going around about how the government should just give every American citizen a million dollars. I mean, what the hell, right?
September 30th, 2008 at 9:46 am
This article was funny and sad at the same time. The funny part was the article itself, the sad part was those last two sentences. cause their true.
September 30th, 2008 at 8:48 am
I don’t know who that smug looking douchebag in the photograph under the list of problems is, but he, and people like him are to blame for everything that is wrong with the world. I mean, honestly, just fucking look at him. Would you trust him with anything valuable? Let alone the whole goddamn economy?
September 30th, 2008 at 8:42 am
I agree with Olenski2. If I mess up at my company and cost them millions, perhaps even force them into bankruptcy, I’m out on my @$$ with possible litigation in my future (as a defendant). Meanwhile, these futtbuckers send a well-to-do company down the toilet and then get a huge bonus as they’re asked to never come back to work. That sounds like a great job.
September 30th, 2008 at 8:35 am
Maybe if they took the multi-million dollar salaries and bonuses they paid their top execs and used that money to pay off their debts, these banks wouldn’t be going under.
September 30th, 2008 at 8:29 am
Now I won’t be able to handle looking at my other comment because it’s severely lacking in closing quotation marks.
September 30th, 2008 at 8:28 am
Sounds just as good to me as what the Administration proposed.
September 30th, 2008 at 8:23 am
I never thought “that’s how fucked we are could be so oddly poignant. On the negative side (the OTHER negative side, I suppose, since the whole bank situation is a tad negative), I didn’t immediately notice any grammar mistakes to whine over, so I’ll have to find something else to arbitrarily complain about today.
September 30th, 2008 at 8:23 am
Tis a sad day when a canadian gives an acurate asessment of american politics and economy.
September 30th, 2008 at 8:12 am
This is probably because I’m Canadian too . . . but Bucholz, you are my hero.