Well, the economic collapse that we’ve all been talking about for years is finally upon us. Sheaves of massive investment banks are falling before the scythe of insolvency, unfulfilled debt obligations, and obscure financial practices. It’s sort of stunning to watch.
At the root of the current crisis is credit. The population of the USA spent a goodly portion of the 1990’s taking out loans to buy houses, and then putting those houses up as collateral to take out more loans to spend on gimcracks and geegaws. Americans, as is their wont, overspent themselves and ended up in trouble, unable to meet the loan repayment schedules on any of the mortgages they held on their various properties and toys etcetera. Nothing so dramatic in and of itself.
The problem was that cabals of financiers, in the rarefied atmosphere of pure capitalism, had done strange things with those mortgages and loans. They had bundled them together and sold them to each other, as investment properties, hoping to scoop in the profit from the mass of people who were scheduled to be paying off their loans for the next twenty years, with substantial interest into the bargain. Other occult financial trickery had suddenly taken center stage, and like kids watching a magician on the midway, everyone wanted in on the action.

The upshot is that almost all of the most massive financial institutions in the USA ended up acting like penny-ante shell game pushers, shuffling the coin from cup to cup, guess where it is and win big! BIG!
The magic, however has worn off. In the immortal words: Keg’s dust, Party’s over, Cops are here.
The people who took out all those loans are unable to pay them back. They’re defaulting at record rates, in a great throwing up of hands. That means there’s no money coming in. And the artificially inflated value of those loans, buoyed by myriad bets and counter-bets on their expected performance, is collapsing back on itself. That’s why they call it a bubble. The economy is over-extended and has sprung a leak.
What’s particularly impressive in this situation is the degree to which HUGE financial institutions are being hit. Many of the largest institutions of their kind have all been playing the naughty game with the arcane symbols out behind the gym, and now demons have rent the fabric of reality that enveloped their little game and are pursuing them with every intent of eating their souls. AIG, the largest insurer in the USA. Lehman Brothers, one of the world’s largest investment banks. Merrill Lynch. Bear Stearns. Fannie and Freddie. Big names.
Really big names! Names written in the sky in letters of pink neon, with a little cocktail glass next to them!

And the reverberations are going out around the world. Britains largest mortgage lender, HBOS, is going down. Banks are failing in Japan and Russia, and probably in Kyrgyzstan too. The slide looks like it’s going to continue for a good while yet, as housing prices drop back to a more realistic level and and the fake money leaks out of the world economic system back into the ether. Snap! It disappears. Money is extraordinary in the way it mutates to respond to human manipulation. It takes strange, incomprehensible forms, an arcane language that only the priest-scientists can read. We wait with bated breath for them to pronounce an augury of good or evil from the entrails they’re digging through. For all we know, our souls may be lost too.