Toxic assets are simply bad loans--at least there was a time when that is what they were called. The English language gives us this kind of slight-of-hand, to avoid the more accurate term: propaganda.
Before we do some numbers, let's see how we arrived here and where we stand.
- Relative to inflation, housing prices rose twice as fast over the last decade or so.
- Freed from New-Deal controls, banks competed all-out for the market. Part of their strategy was to buy and sell mortgages. Some even emulated a Ponzi scheme. Others dared unfamiliar territory out of sheer exuberance.
- When the law of supply and demand asserted itself, the whole phony edifice came crashing down.
History repeats Itself--sort of like reincarnate. The old man remembers-- having lived through several cycles.
In conversations with his great granddaughter on her twelfth birthday, he realized he was and still is part of the shell game. He sill gets suckered by the smarter, faster and more-up-to-date. By the plutocrats of course.
It went like this.
Lakota: "Gee Gee Pa, what do you remember when you were twelve?"
Compared with just four years ago, the Bush Administration has basically imploded from its own inherent contradictions.
The only way from here is up, and the American people seem to have sensed that just days ago. The mentality that got us into Vietnam and then into Iraq (contrived intelligence in each case) is behind us, at least for awhile.
The organizational ability we first glimpsed when Barack Obama won the Iowa primary is now emerging in a way that will affect the world.