Tuesday, March 13, 2012

I Find It Intellectually Offensive

I have a bad habit of disparaging this country's esteemed institutions of higher learning and many of the financial psychopaths it spawns out year after year. This habit has been directed particularly at the Ivy league schools which have become a farm system of sorts for Wall St.

I get ridiculed, via email, by some of these faux genius's that I am jealous, couldn't get in academically, blah, blah, blah. Now I admit I was not the best student but I probably could have maneuvered my way thru to graduation had I hired a quality SAT surrogate to get me in the club's front door but I digress.

Anyway, there is a great piece today courtesy of Bloomberg detailing the inner workings of Ivy league high finance (code for leverage using debt) in this Great Ponzi entitled Carlyle Owners Took $398.5 Million Payout Before IPO.

Now at first blush a sober person might say "What's wrong with that? That's how free market capitalism works. You bust your ass, you make a profit you and get to enjoy the fruits of your labor." Well, that might be how a room temp IQ possessing, simpleton blogger might think it happens but not in this great Ponzi of ours, Noooooo. In this great ponzi of ours, known by fancy econometric models, statistical ratios, computer generated algorithms, and complex formulae oh and did I mention the most important ingredient debt, debt, debt and more debt piled on top of that debt. Not to mention the bought and paid for regulator agency oversight, ratings agencies and politicians, in this ponzi you have no need for profits or cash flow. You simply march into any lenders office and borrow whatever amount of money you desire telling them you'll use the funds to broaden the product lineup, expand into untapped markets, hell make anything up, you have an Ivy league MBA and when you do 2+2=whatever you say it does. Once complete you then distribute 80% of the borrowed funds to you and your partners leaving the company saddled with the financial herpes known as debt.

You see when you have an Ivy league MBA, work on Wall St. and have been a guest on CNBC before, (which means you're not a hack right Cramer?) you can tell everyone that 2+2=6. Now some idiot bloggers may dispute your claims that it equals 6, much like an 8 year would if you told him or her it does.

Quite frankly, I find it intellectually offensive when you and your expensive Ivy league MBA tell me:
  • a 30K/yr fruit pickers can carry a $500K home with no money down and no skin in the game.
  • that the above note is AAA rated,
  • that a county (Jefferson) can carry more sewer debt than even Harry Potter could imagine using hocus pocus derivatives, not to mention the grease money needed for local officials.
  • that Greece is in compliance with EU debt:GDP requirements while offshore entities are used to hide more debt.
  • that $1.2 billion in purported segregated customer funds vanished into thin air, when investigators spend more time on damage control PR campaign than interrogating persons of interest or when your lackeys in the media you manipulate via ad dollars tell me the case has gone cold.
  • when you borrow $398.5 million and payout 80% prior to the IPO saddling the newcomers with the debt.

Yes I am intellectually offended by all of this. I am offended when a fancy Ponzi scheme masquerades around and is pawned off on the public as sophisticated finance. Ahh, but the math never lies and all ponzi's come to an end.

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