A business that makes nothing but money is a poor business. ~ Henry Ford
One doesn’t have to look much further than the contrast between Henry Ford and Bruno Iksil, aka the London Whale to fathom exactly what it is that has gone so terribly wrong with America and the world. Lets’ simply think of it as the difference between old money and new money.
As the quote above suggests, the real wealth of America sprang from an exceptionally fertile soil, enriched by much, much more than the want of money. The gardeners were men of great character and vision, who built tangible things to solve tangible needs. When we think of any of the titans of old money, we may see the image of a car or train or factory in our mind. But what are we likely to see when we think London Whale besides money, greed and jail? I know that none of us can visualize a derivative or credit default swap!
This is in no way a slam against the financial services industry. There has probably never been a product created more useful or beneficial to society than the life insurance contract. But a life insurance policy contains provisions and a leverage component I am able to explain to you. Who can explain the intricacies of the instruments involved in the trade that brought down the Whale? His boss Jamie Dimon couldn’t! Hedging is one thing, limitless re-hypothecation is quite another.
Where old money fueled the marvelous advances of western civilization, new money is the $800 Trillion with a T Sword of Damocles hanging over its very decimation! There is no great mystery here. There is only the growing light of truth for those with eyes to see. We are in the late acts of a classic play my friends. A good man writes to me this very morning, “The acceleration of evil is engulfing the planet…” While many seem willing to ignore, who among us can argue this fact?
Are we to believe that because no one can explain the trade, there is no intention behind it other than the self-interest of one very large person? LOOK and see the dominoes falling around the world! Who benefits from insolvencies from Athens to Stockton? Who in our great “Land of Laws” arrogantly operates above them? Here’s a clue…It is not God who sits on the throne casting your lot and determining your fate in Brussels! In this light, for us not to see, I am left to surmise our willingness to bow.
I’m not sure how this play will end, but I would suggest that if our fate lies in the hands of the new money…this fake wealth, like some drought-resistant corn with the nutrient of morality bred out of it…then dear friend, you and I are surely doomed!