THE CURMUDGEON CHRONICLE ©
AN IRREVERENT VIEW
Time Line:
Date Line: Flemington New Jersey
A great writer doesn’t need flowery language, tricks of exposition, excessive description or poetic symbolism. Great writers can make the reader’s imagination change his living-room into a Suq in Marrakech: its sounds and smells are the here and now; the printed page is the reader’s world.
I know this and yet I continue to write the Chronicle. The Chronicle won’t take you beyond Jersey City NJ. Its only redeeming grace is the conviction with which it states its themes.
We are living in times that force us to relearn lessons taught by greed and neglect. Solutions that “fixed” similar problems in the past have been emasculated and we have to pay the Piper again.
The stock market’s swings and declines, “bubbles” in segments of the economy that spread like a plague, Governmental hubris and accompanying debt are back. They have been at the doorstep and on our hearths many times. Sadly, only the generations that solved those problems are wary of them. The current crop of managers and savants only know the history, not the reality of depression and unemployment. Those people find it hard to believe that without vigilance and controls, we are vulnerable.
Speculative excess fed by greed created the great South Sea Bubble. That duet has caused one or more major economic upheavals in every century that followed, Speculation, greed, chicanery and gullibility are not the exclusive property of our ancestors. They follow the human animal regardless of the “ism” of his government. Whether in the old USSR or the USA of today, the standards of a few govern the lives of all.
Who in his right mind would pay $6,000 per square foot for noisy and cramped apartment space in New York City and consider it a bargain? The guy who was your schoolmate or someone like him who is intent on potlatching to the nth degree.
I bought a three bedroom apartment on Park Avenue in New York City in 1961 at a cost of $60,000 and sold it in 1968 for $65,000. It is “valued at $3,900,000 today. The building was constructed in 1926 and the apartment (in today’s dollars) would have cost $ 2,500,000 in 1928. From 1929 to 1958 its value was below $60,000. Why is it worth early $4,000,000? The short answer is that it is not. Leverage and easy credit are the foundations of realty “bubbles”. That was true for Rome in 300, Florida in 1929, Japan in 1970, and the US at large in 2007.
Similarly, the “sub-prime” meltdown is mirrored in the Investment Trusts of the 1920’s. The assets underlying the Trust Certificates were only worth a fraction of the price fixed by the dealers and the Trusts. They marked the prices up beyond all credible values and sold them as if they were Government bonds. The parallel to no money down mortgages was 95% margin loans.
In both instance the securities were unregulated, easy to buy, and sponsored by the leaders of the banking and investment communities. Money was cheap and Government saw that it was readily available to the banks and brokerage firms who blew the bubble into being. Any bubble gets bigger when filled with hot air. Eventually it breaks under pressure.
When the dust settles after every debacle, some people have gone broke. Legislation is adopted, speeches are made and some economist promises hope. In the end, things stabilize when in the absence of puff sanity is restored. People figure out what to do in order to survive until the next round of madness overtakes us.
There has to be a better way. If I were a great writer I would take your mind to a world where sanity prevails. A place where chicanery and greed have been bred out of the gene pool and Government cannot be bought;
Alas, this is the Chronicle, not Hamlet.
Howard Stamer
No comments:
Post a Comment