I started this blog eight months ago when it became glaringly obvious that the global economy was becoming hooked on the high-potency drug of debt-financed asset appreciation. It was like dozens of dope bubbles were emanating from bongs all over the world to create one huge hallucinogenic balloon passed around tens of thousands of speculators who rolled their eyes ecstatically with each "hit" and maniacally kept pushing the BUY button over and over again.
It was a throwback to a Miami Beach college spring break, a lifetime ago. Pinching pennies, I had chosen to travel from NYC by charter bus, packed with other college students. The trip was to last a full 24 hours. The moment the wheels got rolling everyone lit up joints, bongs and paraphernalia such as I had never seen before. What can I say, I had a sheltered childhood and besides, grass smelled to me like dried cabbage leaves on fire - ugh.
Before the bus was out of Holland Tunnel it was so hazy inside you could hardly see two rows back - and it stayed that way as we all floated down South on I-95. It was freezing cold and opening a window was out of the question - until North Carolina, anyway. I was the only one on the bus that did not smoke - but boy, was I forced to inhale... When I pleaded with my seat-mate to at least not fire up his monstrous Cheech & Chong special, he gave me such a dirty look that I shut up for the rest of the trip. I suffered in silence and a week later I took the plane back.
Likewise, for months now it felt like I was inside the Bong Bus all over again, forced to inhale clouds of second-hand dope about "huge liquidity", "innovative finance", "risk and volatility attenuation", "paradigm shift", etc. The window was opened a couple of times and a bit of THC was let out, but it was quickly shut again and the party got even heartier. Everyone was stoned out of their mind and I think I even spotted the driver passing nickel bags around.
But the party is now most definitely over - zooming CDS spreads are evidence the hash bag is nearly empty and that everyone had better sober up before the cops raid the joint. All who are caught with their pupils (and portfolios) dilated will have to spend a few years in speculator slammer, where exposed assets get severely violated.
P.S. I was going to write a "serious" post today, recapping what happened this week and connecting to my original posts several months ago - early warnings about CDS's, CDO's, etc. Then I figured...what's the use? I can pat myself in the back all I want and feel vindicated, but that is of (dubious) value to myself only. So, being the weekend, I thought a bit of levity was in order. The bong bus story is absolutely true, by the way. Isn't it amazing how even the looniest experience eventually becomes useful?