In the Economist magazine, there is an
article about how UBS, the big Swiss bank, acted
like idiots (the article humorously reports that
the latest nickname for UBS is "Used to Be
Smart"), and now they have lost oodles of money
with this whole collateralized-debt obligation
(CDO) thing, which is the ultimate in stupidity,
in that grown adults, in responsible positions,
most of them with college and post-graduate
degrees, believed that you could literally
eliminate risk by breaking it up into pieces and
selling the pieces!
In other words, these
nitwits thought that 100 divided by 1,000,000
equals literally zero, Hahahaha!
You can
see how I am despondent and angry that I am the
one
who is
wearing a stupid nametag that says "Trainee" and
getting hot grease spattered all over me, while
they make the big money by being so freaking
wrong!
I laugh at the arrogant eggheads
with egg all over their faces as their stupidities
blew up in their faces and got egg all over them,
which is funny enough, but the comedic effect is
ruined by the prospect of taxpayer bailouts of
their stupidities, which is altogether too, too
much because of the gross economic impact of that
much money being created to subsidize the
financial sectors of the economy, which takes all
the fun out of it.
I guess the only funny
part is that UBS, like all the other banks in the
world, only acted like a greedy group of crooked,
corrupt, inbreeding halfwits, as that is the
nature of banks and bankers, which is why, here in
America, they are supposed to be kept in check by
the Glass Steagall Act, which prevents banks from
speculating in the markets and playing risky games
with depositors' money. Glass Steagall was enacted
after the Crash of '29 (caused by the boom of the
Roaring Twenties, which was created by the banks
doing all of this money-and-credit-creation thing,
only to a marked lesser degree, which only
indicates how much we are freaking doomed!).
The crash of course led to the failure of
so many banks, which were found acting like the
aforementioned greedy group of crooked, corrupt,
inbreeding halfwits. So much so that it bankrupted
the banking system along with everybody else,
which led to the Great Depression. And Senators
Glass and Steagall said to themselves, "Hey!
Apparently, when left to their own devices, banks
act like a greedy group of crooked, corrupt,
inbreeding halfwits! We need to pass a law, which
we will name after ourselves, and thus the world
will forever know who saved America from another
crisis caused by speculation by the banks!". And
it was a good law that worked perfectly fine,
until a creep named Bill Clinton perversely
repealed it during his embarrassing presidency,
and look what happened; his wife wants to be
president! Hahaha!
The Economist magazine
is, apparently, not interested in my personal
opinion of Bill Clinton, his loathsome Marxist
wife or the Glass Steagall Act of 1933, and they
get back to the point that UBS, like all banks
that act like a greedy group of crooked, corrupt,
inbreeding halfwits, tried to "emphasize revenue
at the expense of risk." Hahaha! Exactly!
Anyway, the interesting part is that the
Economist had this little chart they titled "The
Lost Half-Decade", showing how the prices of the
shares of the bank are exactly back to where they
were in 2003, having recently lost over half of
their value.
So, investors in the bank's
shares have either lost up to half of their money,
(if they bought at the top) or have not made any
gains (if they bought at the bottom) in five
years! Hahaha! Five years without making a nominal
dime! Hahahaha! Probably "investment management
professionals" at work! Hahaha!
And notice
that this is all in the strictly nominal terms of
"Swiss francs per share". When you subtract the
losses in the buying power of the Swiss franc as
inflation in prices has surged around the world,
and which is currently running at 2.6% in
Switzerland, I derive some Bad, Bad News (BBN) for
UBS shareholders; you will almost certainly never
break even in terms of buying power by owning UBS
shares. You will always get back less buying power
than you invested! Hahahaha! Suckers!
Of
course, being an American, it could have been
worse; wait until you see what happens to American
banks! And then to American shares of all kinds!
And houses! And bonds! And governments! Hahahaha!
We're so freaking doomed!
Richard Daughty
is general partner and COO for Smith Consultant
Group, serving the financial and medical
communities, and the editor of The Mogambo Guru
economic newsletter - an avocational exercise to
heap disrespect on those who desperately deserve
it.
(Republished with permission from
The Daily
Reckoning .
Copyright 2008, The Daily
Reckoning.)
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