Dear George,
For those of us who get off on chaos, confusion, misery and suffering, these are glorious days indeed. One of the factors feeding our euphoric high is that Wall Street is once again a sheltered workshop for financial retards.
The moment you deregulate banks and the stock market, they plunge into a suicidal ascent. We saw this with the Saving & Loan debacle, and its encore is waiting in the wings.
Driven by tunnel vision that is obsessed with adding a fractional profit point to the bottom line many brokerage houses are now holding $50 of debt for every dollar in assets. Of course, their assets are not really assets because they are borrowed money.
The engine driving this fiasco is the Yen Carrying Trade where investors can borrow yen at zero percent and use them to buy up U.S. debt that yields a return of 4.5%. It’s a real moneymaker, all things being equal—which they never are. We’re talking trillions, George, major big bucks.
This is possible because Wall Street has eliminated the distinction that once separated debt from assets, which is tantamount to a consumer calling his maxed out credit card an asset. Our vaunted prosperity is riding a tsunami of red ink and it is only a matter of time before any tsunami crashes against a distant shore. For Wall Street, that shore is reality.
Deregulating investors is a sure-fire recipe for disaster, just as deregulating football would reduce every game to a brawl. In a perfect world, no investor would leave his house without adult supervision. Thank God, the world isn’t perfect.
Your admirer,
Belacqua Jones
4:58:21 AM 
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