Another fine article by Matt Taibbi about the bailout economy and how the banks are running a giant con game on the taxpayer. If you have the stomach to read it, that is. Here’s one excerpt about how the toxis asset bubble is now reinflating:
One trader, who asked not to be identified, recounts a story of what happened with his hedge fund this past fall. His firm wanted to short — that is, bet against — all the crap toxic bonds that were suddenly in vogue again. The fund’s analysts had examined the fundamentals of these instruments and concluded that they were absolutely not good investments.
So they took a short position. One month passed, and they lost money. Another month passed — same thing. Finally, the trader just shrugged and decided to change course and buy.
“I said, ‘Fuck it, let’s make some money,'” he recalls. “I absolutely did not believe in the fundamentals of any of this stuff. However, I can get on the bandwagon, just so long as I know when to jump out of the car before it goes off the damn cliff!”
This is the very definition of bubble economics — betting on crowd behavior instead of on fundamentals. It’s old investors betting on the arrival of new ones, with the value of the underlying thing itself being irrelevant. And this behavior is being driven, no surprise, by the biggest firms on Wall Street.