This story’s not very realistic, I’m afraid. In the real world, what John would have done is keep the cow, securitize her, move both the cow and the cow-backed bonds off his balance sheet and into a wholly-owned limited recourse special-purpose entity, buy insurance from an insolvent monoline cow bond insurer to get a AAA from the cow bond rating agencies, trade beef, milk and mad cow risk swaps as hedges, and then sell all of it to pension, mutual and hedge funds at 104 cents on the dollar after transaction costs. And then, realizing there’s high demand for fixed income bovine backed structured deals, John starts indiscriminately buying and securitizing additional cows without regard for either beef quality or milk production, artificially inflating the cow market until the cow bubble bursts and the cow finance market completely collapses, and most entities holding cow-backed assets and related hedges write down the value of their assets to near zero and need to raise new capital.
But I suppose it’s a bit tighter, cleaner narrative your way… ;)
Kudos Frank, as you seemed to have nailed it. In view of the now defunct, or severely injured Cow market, perhaps better said, Cow Industry, it would seem that we will now NEED governmental/regulatory intervention to ensure this never happens again. So what will they do? I can only hope to make this as clear as your well articulated points.
• Reinstitute the pay for not growing crops with farmers and have them plant some sort of perennial feed for the new cow which will be developed to invoke confidence by the American people and in that of the economy overall
• Add pork belly to all associated Bills in Washington DC, veiled in the multi-purposeful renewable energy outcomes which the cows will be providing through their very natural byproduct, thus supporting the fight against the transfer of wealth from the US to the Middle East
• Provide tax incentives for people to buy into cow pools for use with the non-traditional funding of retirement accounts
• Cut the costs of the middle man for all other feed, permitting the government to become the largest feed supplier, setting market prices, and putting the little guy in the Feed Industry out of business.
• Recognizing this, although too late to save most feed retailers, the government will be providing more tax credits and 0% interest loans to those involved in the industry in an effort to save the small business owner because they are what the US was founded upon
• Due to a strapped economy on several fronts, the US will seize the opportunity to look overseas for investment funds, as the over leveraged US Banks don’t have the balance sheets necessary to handle investments within our own economy, thus affording Asian and the Middle Eastern countries the chance to invest in this revitalized industry, backed by the United States of America MINT, whose value is largely unknown
• In order for the US to do this, they will need to sign new trade treaties which based on history, will likely worsen our existing imbalance of trade
• Further degradation of the dollar will occur, causing us to look once again at the Gold Standard, but having not kept up with the previously warranted reserves the US will be unable to do so
• The US Dollar will be scrapped and in order to maintain economic stability the USA will adopt the Euro as its primary currency, slowly phasing out the Dollar similar to Confederate Notes
• Due to a continued lack of stability within the economy, continued spirals caused in large part by the multiple cow pool failures, the US will agree to the use of its military as a World Peacekeeping Force (WPF) in an effort to bolster foreign relations and put more people to work, thus battling the double digit unemployment
• Most of the men and women in the military don’t want to be there, why? Because they were drafted. This will cause the highest lack of compliance with the reinstituted Draft. All conscientious objectors and dodgers are sent to the newly renovated and renamed Bastille in Cuba
• With parents, brothers and sisters pulled from their insignificant everyday lives in the US to now be overseas for extended military duty, protecting the interests of those which have never been true allies, there is mass chaos within the interpersonal relationships causing immoral behavior on several levels
• The US then begins to experience the highest levels of desertion in the history of the WPF, as they leave to build lives in new countries with loyal spouses, lower taxes, higher standards, stronger economies which are also void of any military responsibilities
• The US is put on the auction block due to Obligation Default, virtually on the steps of the previously known Capital in formerly known Washington DC
• Who buys the US? Well the “crude wealth” within those soon to known “United Petroleum Countries of the World”, (UPCW) will buy it for $1.00, but this is done through bartering. The soon to be former US barters with the new ownership just prior to the sale the UPCW agrees to reduce the price of a barrel of crude to allow the former US Citizens, now indentured servants, to serve them and drive their very large SUV’s to work in the service of the Sheiks
• The good news? For those that do manage their miniscule Euros and service well, They will be given Raman Coupons to provide the sustenance necessary to remain in the service of the Sheiks.
I forgot to mention that Wall Street will become known as the World’s Largest Food Court.
Oh, and what of the cows? Other than knowing that the collapse of the Cow Market brought the US to certain ruin, does it matter anymore? Sadly no.
But when you consider who you are going to elect in the fall, keep in mind the very sensitive balance within our economy and who has the ability to make the hard calls to keep the economy humming without the need for excessive tax increases, governmental involvement and would be a proponent of smaller government. Who will make people work for the money they get from the government? For able bodied Americans, consider Workfare in place of Welfare.
August 22, 2008 at 8:36 am
This story’s not very realistic, I’m afraid. In the real world, what John would have done is keep the cow, securitize her, move both the cow and the cow-backed bonds off his balance sheet and into a wholly-owned limited recourse special-purpose entity, buy insurance from an insolvent monoline cow bond insurer to get a AAA from the cow bond rating agencies, trade beef, milk and mad cow risk swaps as hedges, and then sell all of it to pension, mutual and hedge funds at 104 cents on the dollar after transaction costs. And then, realizing there’s high demand for fixed income bovine backed structured deals, John starts indiscriminately buying and securitizing additional cows without regard for either beef quality or milk production, artificially inflating the cow market until the cow bubble bursts and the cow finance market completely collapses, and most entities holding cow-backed assets and related hedges write down the value of their assets to near zero and need to raise new capital.
But I suppose it’s a bit tighter, cleaner narrative your way… ;)
August 22, 2008 at 5:33 pm
Kudos Frank, as you seemed to have nailed it. In view of the now defunct, or severely injured Cow market, perhaps better said, Cow Industry, it would seem that we will now NEED governmental/regulatory intervention to ensure this never happens again. So what will they do? I can only hope to make this as clear as your well articulated points.
• Reinstitute the pay for not growing crops with farmers and have them plant some sort of perennial feed for the new cow which will be developed to invoke confidence by the American people and in that of the economy overall
• Add pork belly to all associated Bills in Washington DC, veiled in the multi-purposeful renewable energy outcomes which the cows will be providing through their very natural byproduct, thus supporting the fight against the transfer of wealth from the US to the Middle East
• Provide tax incentives for people to buy into cow pools for use with the non-traditional funding of retirement accounts
• Cut the costs of the middle man for all other feed, permitting the government to become the largest feed supplier, setting market prices, and putting the little guy in the Feed Industry out of business.
• Recognizing this, although too late to save most feed retailers, the government will be providing more tax credits and 0% interest loans to those involved in the industry in an effort to save the small business owner because they are what the US was founded upon
• Due to a strapped economy on several fronts, the US will seize the opportunity to look overseas for investment funds, as the over leveraged US Banks don’t have the balance sheets necessary to handle investments within our own economy, thus affording Asian and the Middle Eastern countries the chance to invest in this revitalized industry, backed by the United States of America MINT, whose value is largely unknown
• In order for the US to do this, they will need to sign new trade treaties which based on history, will likely worsen our existing imbalance of trade
• Further degradation of the dollar will occur, causing us to look once again at the Gold Standard, but having not kept up with the previously warranted reserves the US will be unable to do so
• The US Dollar will be scrapped and in order to maintain economic stability the USA will adopt the Euro as its primary currency, slowly phasing out the Dollar similar to Confederate Notes
• Due to a continued lack of stability within the economy, continued spirals caused in large part by the multiple cow pool failures, the US will agree to the use of its military as a World Peacekeeping Force (WPF) in an effort to bolster foreign relations and put more people to work, thus battling the double digit unemployment
• Most of the men and women in the military don’t want to be there, why? Because they were drafted. This will cause the highest lack of compliance with the reinstituted Draft. All conscientious objectors and dodgers are sent to the newly renovated and renamed Bastille in Cuba
• With parents, brothers and sisters pulled from their insignificant everyday lives in the US to now be overseas for extended military duty, protecting the interests of those which have never been true allies, there is mass chaos within the interpersonal relationships causing immoral behavior on several levels
• The US then begins to experience the highest levels of desertion in the history of the WPF, as they leave to build lives in new countries with loyal spouses, lower taxes, higher standards, stronger economies which are also void of any military responsibilities
• The US is put on the auction block due to Obligation Default, virtually on the steps of the previously known Capital in formerly known Washington DC
• Who buys the US? Well the “crude wealth” within those soon to known “United Petroleum Countries of the World”, (UPCW) will buy it for $1.00, but this is done through bartering. The soon to be former US barters with the new ownership just prior to the sale the UPCW agrees to reduce the price of a barrel of crude to allow the former US Citizens, now indentured servants, to serve them and drive their very large SUV’s to work in the service of the Sheiks
• The good news? For those that do manage their miniscule Euros and service well, They will be given Raman Coupons to provide the sustenance necessary to remain in the service of the Sheiks.
I forgot to mention that Wall Street will become known as the World’s Largest Food Court.
Oh, and what of the cows? Other than knowing that the collapse of the Cow Market brought the US to certain ruin, does it matter anymore? Sadly no.
But when you consider who you are going to elect in the fall, keep in mind the very sensitive balance within our economy and who has the ability to make the hard calls to keep the economy humming without the need for excessive tax increases, governmental involvement and would be a proponent of smaller government. Who will make people work for the money they get from the government? For able bodied Americans, consider Workfare in place of Welfare.
Okay, you get the point… :-D