Slowing leaks versus total inundation

THE CENTURION CHRONICLE
Vol. III – Issue #26 – Sept-2008

(slowing leaks versus total inundation)

The great dikes of our capital market have all sprung leaks. Some more than others. And which ones get plugged, or which ones are just allowed to leak on till they collapse, depends on the size and scope of the inundation their collapse would cause.

So, Lehman Bros. is allowed to collapse, Merrill Lynch is given over to the maws of Bank of America, but Bear Stern’s, Fannie Mae’s, Freddy Mac’s, and now AIG’s leaks , are all “plugged” for fear their collapses would have us all treading water in full fathom five.

You can bail a leaking hull till the cows come home (or the sharks are ready to board it), it’s still…a leaking hull. You can only hope the bilge pumps can keep working faster than the rate of leakage. If not, sooner or later, it’s yo-ho-ho-and-the-bottom-of-the-sea-for-you-mateys, and welcome to Davey Jones’ locker!

This nautical analogy is perhaps as simple an explanation as any for what the government is doing with our tax dollars in this current financial crisis. Essentially it’s just short term selective emergency measures, hoping that doing so will give all those financial smartasses, who brought things to such a sorry pass, the time to come up with new ways and means to actually patch those leaks, and keep everything afloat and more or less on an even keel.

It’s a tough call for the government to make. We’re literally between the devil and the deep blue sea in this situation, and whatever shore we can see….is a very distant shore. Reaching a safe harbor so the hull can be properly fixed will be a close call.

So, the big question is: Never mind the leaks we’re able to plug up, is the damn hull still sound enough for us to make it to that shore? And, do we have enough paper money to stuff into any more leaks that might pop up? As to the first, the answer seems to be…yeah…but it ain’t as solid as it used to be, so be careful how you haul on those oars. As to the second, the answer is…of course….why the hell do we have all those printing presses at the ready for!

Well, it’s way too soon to think about abandoning ship. Our best bet, right now, is for everyone to put on their personal life vest, and pray to Jesus any surrounding sharks out there have already been….well fed!

CENTURION