Thursday, January 10, 2008

With Apologies to: Ayn Rand

"The last six months have brought American finance to the edge of the abyss. ... Either structured finance [SF] will recoil from the abyss and find its own-most soul, or else it will simply collapse back into the feudal regime known as corporate finance [CF]. ... The transition from corporate into [SF] is analogous to prior revolutions; it cannot be accomplished without a painful re-adjustment, in this case to the dynamic framework essential to a proper understanding of [SF] as opposed to the static model at the heart of [CF]. ... On the contrary, they are a formal liberation of the creative powers that lie concealed at the root of any commercial endeavor. Far from the problem it is now thought to represent, [SF] is rather a solution to the apparently unsolvable dilemma pitting borrowers against lenders since time immemorial. ... The power unleashed by the dynamics of [SF] is like any other force. Properly handled, which only means understood, it can only lead to prosperity and countless blessings to the common man. Mishandled as it has thus far been, it can wreak havoc on a monumental scale, at the very moment we thought it was safe to go back to the trading floor, How we move forward from here onwards is how others will judge our character. ... We are now standing on the surface of the atomic sphere, forced into a decision point, a choice that must irretrievably determine the future of American finance for its own sake, i.e., for the sake of deal making. So far, we have chosen not to choose, but time is quickly running out on our self-determination. Soon, someone will choose for us, and we won't like it for sure", Sylvain Raynes (SR) at http://www.creditspectrum.com/, 31 December 2007.

Wow! Where do I begin? This post was excerpted from "Structured Finance: the Unknown Ideal", which title I assume was borrowed from Ayn Rand's Capitalism: the Unknown Ideal, 1966. "[F]ind its own-most soul ... collapse back into the feudal regime known as [CF]", what does that mean? J. Robert Oppenheimer said on 16 July 1945 upon seeing the Almogordo, NM, Trinity test, "We knew the world would not be the same. A few people laughed, a few people cried, most were just silent. I remembered the line from the Hindu scripture, the Bhagavad-Gita, ... 'Now I am become Death, the destroyer of worlds'." That's demonstrating power. "Properly handled [SF] can only lead to prosperity and countless blesssings to the common man". Wow. SF is now at least as important as the discovery of fire.

As serious revolutionaries, we study the masters, "To take such an attitude is to seek truth from facts. 'Facts' are all things that exist objectively, 'truth' means their internal relations, that is the laws governing them, and 'to seek,' means to study. We should proceed from their actual conditions inside and outside the country, the province, county or district, and derive from them, as our guide to action, laws that are inherent in them and not imaginary, that is, we should find the internal relations of the events occurring around us. And in order to do that we must not rely on subjective imagination, not on momentary enthusiasm, not on lifeless books, but on facts that exist objectively; we must appropriate the material in detail and, guided by the general principles of Marxism-Leninism, draw correct conclusions from it", Mao Zedong, Little Red Book, Chapter 23. "Idealism and metaphysics are the easiest things in the world, because people can talk as much nonsense as they like without basing it on objective reality or having it tested against reality. Materialism and dialectics, on the other hand, need effort. They must be based on and tested by objective reality. Unless one makes the effort one is liable to slip into idealism and metaphysics. ... The way these comrades look at problems is wrong. They do not look at the essential or main aspects but emphasize the non-essential or minor ones. It should be pointed out that these non-essential or minor aspects must not be overlooked and must be dealt with one by one. But they should not be taken as the essential or main aspects, or we will lose our bearings", Chapter 22. My opinion: the SF community should seek the Chairman's wisdom. Alternatively, we will have to send them all to reeducation camps.

As good revolutionairies, we study "painful re-adjustment". "You can't make an omelet without breaking a few eggs", Lenin. "Break eggs? I can help break eggs", Stalin. What are SF's "broken eggs"? Countrywide, Citigroup, the US dollar ... ? "All right, I can see the broken eggs. Where's this omelette of yours"?, Panait Istrati, a Romanian writer, and supposed "Trotskyist" on visiting the USSR in 1928-29.

"Mishandled as it has thus far been, it can wreak havoc on a monumental scale", says SR. Yes, SR, read the Brezhnev-era joke at my 10 November post about the three economists.

No comments: