"You don't know it yet but you are the NINJA generation -- No Income, No Job, No Assets, No Income ... You've got a lot to look forward to. Someone reminded me the other evening that I once said, 'Greed is good.' Now it seems to be legal.
But folks, it is greed that makes my bartender buy three houses he can't afford with no money down. And it's greed that makes your parents refinance their $200,o00 house for $250,000 and take that extra $50,000 down to the mall and buy a plasma TV, cell phones, computers or an SUV. Hey why not a second home while we're at it ... because gee whiz, we all know the prices of houses in America always go up. Right?
And it's greed that makes the government of this country cut the interest rate to 1% after 9/11 so we could all go shopping again.
They've got all these fancy names for trillions of dollars of credit ... CMOs, CDOs, SIVs, ABSs. You know I honestly think there maybe only 75 people in the entire world who even know what they are. But I'll tell you what they are ... They are WMD's ... Weapons of Mass Destruction. When I was away, it seems like greed got greedier with a little bit of envy mixed in.
Hedge-funders were walking home with 50-100 million bucks a year. So, mister banker, he looks around and says my life looks pretty boring so he starts leveraging his interests up to 40:1 even 50:1 with your money! Because he could. You're supposed to be borrowing, not them. And the beauty of the deal is that no one is responsible ... Cause everybody is drinking the same Kool-Aid.
Last year ladies and gentlemen, 40% of all American corporate profits came from financial services ... not production, not anything remotely to do with the needs of the American public. The truth is that we are all part of it now. Banks, consumers all moving money around in circles. We take a buck and shoot it full of steroids and we call it leverage. I call it steroid banking!
Now I've been considered a pretty smart guy when it comes to finance and maybe I was in prison too long. But sometimes it is the only place to stay sane and to look out through those bars and say HEY! Is everybody out there nuts?!?
It is clear as a bell to those who pay attention ... the mother of all evil is speculation ... leveraged debt. The bottom line is borrowing to the hilt. And I hate to tell you this but it is a bankrupt business model. It won't work. It is systemic, malignant and its global ... like cancer. It's a disease and we've got to fight back. How are we going to do that? How are we going to leverage that disease back? Well, I'll tell you. Three Words: Buy My Book" [only in America can this happen ... trying to make a buck off perhaps the greatest financial crisis in world history ... note that the only other time unemployment in the United States exceeded 9% for this long was the Great Depression ... which we still might yet be facing again anyway].
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