satire

14 Aug 2008

Your Days Are Numbered

By Ben Pobjie

Cheesy Family

You probably think the looming economic crisis isn't your fault. That's because you're a financially illiterate layperson in need of an attitude change, writes Ben Pobjie

In these heady days of singing breaststrokers and funky dead Scientologists, it can be all too easy to forget that the most important thing in life is money. There is a lot of economic "doom and gloom" around the place at present, and a lot of people have been "spooked" by all the "speculation" and the probability that they will lose their "houses".

The first thing to remember, when assessing the economic conditions facing us, is: don't panic. Don't lose your head just because it seems as if catastrophe and ruin are raining savagely upon you. Rather than spend our days in stress and worry, we should simply lie back and accept our economic fate with the same sense of calm and serenity we would bring to any other situation that is beyond our control, such as having our bedroom burn down around us, or being eaten alive by bull terriers. The great lesson to take out of economics is that you are going to be destroyed, and resistance is futile. Acceptance of this basic fact is the first step towards making the poverty-stricken misery of the rest of your life enjoyable.

The next important thing is to begin to understand the economic crisis. The economy can often be difficult and confusing to the average person, because the average person is extremely stupid, so what's needed is clear terminology and childish over-simplifications, which, fortunately, I am uniquely qualified to provide.

Why is the economy struggling? The global economic crisis was kicked off by the "sub-prime meltdown" in the US. Sub-prime mortgages are a special kind of mortgage that are very popular among American banks, who several years ago stumbled upon the realisation that they were missing out on a huge chunk of the potential home-loan market by only lending money to people who could pay it back. "Imagine how rich we'll become," the banks giggled joyously among themselves, "after we start granting massive loans to people who will never repay. Hurrah for finance, etc."

Now you, as an everyday financially illiterate layperson moron, might think there was something slightly askew with the banks' brilliant plan, but that is why you are not a financier and will soon be living in a cardboard box. If the banks weren't out there every day taking these insane risks on behalf of their investors, there is a very real chance that banking executives might not get the chance to be sacked with massive payouts, and nobody wants that.

Anyway, the sub-prime meltdown spread, as meltdowns so often do, following the old aphorism: "When the US sneezes, the world catches a cold", or to put it another way, when the US screws itself, the world gets herpes. At first it had seemed that Australia had dodged a bullet thanks to the commodities boom, as the Chinese eagerly bought up all our iron ore and coal as part of their secret plan to ruin the environment for the rest of us out of pure spite.

However, even Australia was not immune: having heard a rumour that Labor was in power, the economy became hysterical and weepy, and all of a sudden we have found ourselves beset by spiralling inflation, a plummeting stock market, escalating interest rates and a dull, uncharismatic Treasurer.

Now, some might say it's not all bad. After all, the stock market never made any sense anyway, and needed taking down a peg. And higher interest rates are only a real problem for those uppity types who have bought a house and think they're better than you. All the same, if the economy collapses completely and we all become homeless and destitute, it could be said to have what economists call a "downside".

For one thing, the plunge in shares has wiped millions off our superannuation savings, a major concern given that our population is ageing at such a rate that by 2050 the country will be made up of 30 million retirees being kept going by just one worker, who will be in tech support. The potential consequences are grim, particularly the thought of the massive caravan pile-ups on the Pacific Highway.

The worst thing is that while the Reserve Bank - a shadowy society of men who meet once a month to pull on various levers - has been raising interest rates, the big banks have been raising them by even more, and now that the Reserve Bank has suggested it may lower them, the big banks have suggested that they won't. It's pretty easy to paint the banks as greedy immoral fascists, not least because they are. But to be fair, they're hurting too. Not in the "we have to eat dog food" way the rest of us are hurting, but in their own way, a sort of "help, our profit is $1.2 billion and we thought it would be $1.4 billion why don't we just shoot ourselves in the mouth right now" kind of way.

They've been hit hard by the global "credit crunch", having to write down loads of bad debts on account of things like collateralised debt obligations. These are complicated financial products that allow an investor to purchase a bundle of mortgage-backed securities, which is to be opened later in private. The banks bought many of these bundles, only to find out, when they got home and opened them, that they were full of tiny styrofoam beans which scattered all over the carpet. And so the banks found themselves in dire financial straits, apart from the savvy ones who eschewed CDOs and put their money into uranium and cockfighting futures.

So, in a nutshell, that's why the economy is about to fall over and kill us all. What can you do to ease the pain? Basically, it's time to tighten our belts, pinch some pennies, and if necessary, steal some cars.

There are lots of ways to save money. If you have a child in private school, you can save by putting them in a public one. If they are already in a public school, you can save by driving out to the desert and abandoning them. You can save money on groceries by growing your own vegetables, or by breaking into strangers' kitchens. And of course, if you are the CEO of a major corporation, you can save money by sacking thousands of low-income workers. You see, there is always a way.

So don't panic. You'll get through this like you always have, my fellow Australians. It's only money. And food. And shelter. And given that within 30 years we'll have no water and all be dead from thirst anyway, a little economic trouble seems horribly petty.

So you know, chin up.

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Unveiled 14/08/08 3:25PM

ZanyHatter
Ben, you have taken the words out of my mouth by the skin of my teeth!
As a result, I have turned off the light at the other end of the tunnel until further notice!!!!!!!

Dr David Horton 15/08/08 8:31AM

Comparisons are both odious and invidious but here goes anyway. I think this is your best yet Ben. Cheers!

BPobjie 15/08/08 4:25PM

Thank you David, high praise!

Venise Alstergren 15/08/08 4:36PM

Brilliant Ben! May I add one last bit of advice please. Those of you who have invested in shares, not to gamble, but to live off the dividends; should, after a brief conversation with your financial adviser, avoid like the plague the financial pages. These are written by people who are no more knowledgeable than you, and should there be some grim news about a company you’re interested in, will, in order to earn their money, do a complete beat-up. ie: Babcock and Brown headed towards the ‘five cent mark!’. This is terrific when you purchased them at $15.00. Don’t flirt with insanity or suicide. Ring your broker, do what he tells you to do, then head for the nearest pub, or five.

Cheers :)

douglas jones 18/08/08 5:31PM

douglas jonesI wish you would extend your satire to economics and government, to the possibility that not only are CEO’s rent seeking individuals but that also capitalism in its current form leads to a rampant mass of money with no productive home providing interest levels acceptable to the fashion and thus is exposed in boom bust cycles. We have had a number, the latest still based on the idea of the market and its invisible hand. A hand whose existance some economists begin to doubt like Stiglitz, surely now considered an apostate by the chuch of economists. Governemnts saying added regulation is needed when for years business, the still current biblical version has said hands off and all will be well, even proposing, despite Iraq, global warming etc, international agreement on limiting at least the export of speculative gambling. The ganblers those who have profited are free to go their way Banks included whose credo of fiscal chastity is still repeated. The underinformed public suffers and finance if initially easier for business soon dries up, progrees is delayed the public assured it is all for the best just wait and as you say do not panic in time all will be well. The sun comes up each day and all past busts have been corrected, though few gamblers have suffered and fewer Goveernment pronouncement are shown as creatures of business.

blu-k 19/08/08 5:17PM

Champagne comedy! I laughed so hard I had to change my incontinence pad.