While the last seller for cash retains value, the buyer of something like a CDO has exchanged money for near money. In a crisis like this the near money simply disappears. Is this right (I'm no expert though I hope to play one on TV)? Terry Message: 27 Date: Tue, 11 Nov 2008 00:23:35 -0500 From: Shane Mage <[EMAIL PROTECTED]> Subject: Re: [Pen-l] Where is the money? To: Progressive Economics <[email protected]> Message-ID: <[EMAIL PROTECTED]> Content-Type: text/plain; charset="us-ascii"
On Nov 10, 2008, at 10:34 PM, Jim Devine wrote: > ravi wrote: >> ... where did the money go?... > ...A lot of the "money" (i.e. financial wealth) was simply "on > paper." It represented a situation where "the market" attached an > unsustainably high price to paper promises (stocks, bonds, etc.) and > various businesscritters (so-called "entrepreneurs") and finance guys > naively counted this high value as adding to their assets... > ...In sum, a lot of this wealth was merely on paper and disappeared as > the paper lost market value. Actually, all this "paper wealth" was recorded as profit over the last six-seven years by the FIRE firms. The salaries and bonuses and options of their executives and managerial employees, plus a lot of their dividends and taxes, were based on those "paper profits," but they were paid in real money, tens--maybe hundreds--of billions of it. The salaries, bonuses, and dividends remain in the pockets of those swindlers, as do the proceeds of those options that were cashed out. The taxes have now been more than returned to the swindlers' firms. Shane Mage
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