I’m not an economist. And, despite all evidence to the contrary – my mailbox stuffed with offers of shiny new credit cards and cutthroat rates for refinancing my home, the glossy ads in the newspaper begging me to buy a shiny HDTV today and wait two years to pay for it – I’m not a financial Luddite, either. I can take it as an article of faith that, just because I see offers for credit every day doesn’t mean that there isn’t a global credit crunch, or that our financial system isn’t near meltdown. After all, who am I supposed to believe… Wall Street, or my lying eyes?
Wall Street has become, by most measures, a religion, so taking high finance as an act of faith seems appropriate, if a bit absurd. At the Church of Wall Street, worshipers embrace the doctrine that any stock – any asset — is worth precisely as much, or as little as the collective belief of the faithful, despite empirical evidence to the contrary. This willing suspension of disbelief has served the faithful well. It’s allowed them to create trillions of dollars of wealth, not out of thin air — not even out of water, or loaves — but out of debt. By golly, that’s a miracle, it is.
Now the high priests of Wall Street – Paulson and Bernanke, Greenspan and Gramm – have failed their faithful. The gods of finance are angry and demand a sacrifice – of $700 billion. No sacrifice? Financial Apocalypse!
I don’t know about you, but I’m not buying what they’re selling.
Of course good banks are holding onto their money and refusing credit to bad borrowers — especially when those borrowers are other banks who didn’t just swallow the poison pill of sub-prime loans — they gobbled them up like there was no tomorrow. And guess what? For them, there isn’t. Let them go bankrupt, and good banks — those with real assets — will buy whatever’s worth having at the fire sale. That’s how markets work, right?
Me, I’m going to go enjoy the autumn leaves. If you see the horsemen, send me an email.
Postscript: True to my word, I *did* go out and see some lovely foliage. Flickr photos have been updated, and you can catch the Autumn 2008 slideshow here.