FORECAST 2008 by James Howard Kunstler

Cross-post from: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3122815&mesg_id=3122815">LBN: STOCK MARKET WATCH, Thursday January 3

For the tiny fraction of people who actually pay attention to real events – those, for instance, who know the difference between Narnia and Kandahar – the final hours of 2007 leading into the fog-shrouded abyss of 2008 must induce great racking shudders of nausea. Has there ever been a society so exquisitely rigged for implosion? The whole listing, creaking, reeking edifice stands like one of those obsolete Las Vegas pleasure palaces awaiting a mere pulse of electrons to ignite a thousand explosive charges perfectly placed to blow away the structural supports.

The inertia holding everything together that I described in last year’s forecast finally melted away at mid-summer and events began spooling out of control. Specifically, the massive tonnage of debt-backed securities circulating through the financial sector stood revealed for the mostly worthless bales of paper they truly are, and the investment community was left suspended in mid-air, grinning unconvincingly, like Wile E. Coyote thirteen yards beyond the edge of the mesa, with a sputtering grenade in each hand and an anvil tied to his ankles.

The whole second half of 2007 in the ranks of finance was a desperate rear-guard action to stave off the inevitable work out. The fiasco over at Bear Stearns was instructive. Not long after two of their hedge funds blew up in August, the company announced that the funds had been chartered in the Cayman Islands and were therefore beyond the reach of official U.S. legal machinery – meaning, forget about lawsuits, you losers, chumps, and suckers who bought into our jerry-rigged scams...submit your complaints to the Tough Noogies desk and begone with you! This dodge might have benefited Bear Stearns in the short term, but in the long term it’s hard to see why anybody would ever after cast one red cent in Bear Stearns’ direction (in the life of this universe or several like it).

The summer’s blow-ups were followed by truckloads, boatloads, and helicopter loads of rescue “liquidity” delivered through autumn by the Federal Reserve and other central banks in a continuing effort to allow investment houses, mortgage originators, reinsurance firms, and other companies trafficking in suspect paper to avoid declaring greater losses. Then the foreign sovereign wealth funds jumped in with five billion here, ten billion there, coming away with big chunks of ownership, but of what? Of companies with liabilities in excess of assets? Mostly, these desperation moves worked to paper over virtual bankruptcy through the crucial Christmas holiday, when yearly bonuses are doled out, which spared the boards of directors from having to explain why executives were lined up at the loading docks filling their Lincoln Navigators with stupid dope piles and knots of the shareholders’ loot.

More at link: http://www.dailyreckoning.com

I think the limit for quoted sources is four paragraphs max.

take the money and run. Apparently the Boards of Directors and the CEOs are in collusion to steal as much money from shareholders as possible.