Garbage In Garbage Out (March 24, 2008)
GIGO may be the only acronym one needs to know today. There are now daily cautionary tales about the CEOs and other ‘Os who created CDOs (collateralized debt obligations) while the OTC (Office of Thrift Supervision – one of the putative regulators) played dominoes. The details and new concoctions (CLOs, CDSs, ABSs, SIVs, etc.) are intriguing and revealing and depressing.
The simple truth is captured in the old expression: “Garbage In Garbage Out.” No alchemy can convert a bad loan into a good loan as it slithers through the economy. There is no way to “make a silk purse from a sow’s ear.” Putting “lipstick on a pig” does make the pig a swan. Rating something as “AAAAAAA” does not make it any safer than something rated “AAAAAA.”
This economic downturn is a small “d” democratic phenomenon. Many Americans (ordinary citizens; realtors; appraisers; loan officers; bundlers; butchers; bakers; candle stick makers, etc.) actively participated in the fraud in broad daylight with their eyes sufficiently open. Only those deluding themselves could have missed the inevitable Meltdown that is taking place and will get worse. Those on “Wall Street” not only should have known about the fraud they knew that everything was junk in gilded garb. Everything that glitters is not gold.
Bumper stickers of the week:
“Sir, ’Margin’ is holding on line 2”
Pigs get fed, hogs get slaughtered
[As many police as demonstrators took to the streets in DC on March 19. So few care or believe that anything can be done about the “Forgotten War.” The police did not don riot gear; a riot did not break out. The police let the demonstrators take over a few intersections without major incident. The demonstrators made a statement without making any major disruptions. A bad day for America and the world, yet a good day for the First Amendment.]