Stakes are high in this new game of life
Ante up, everybody. It’s time to play this latest hand we’ve been dealt. I’d fold and leave the table, but there is a silver chain from my ankle to the chair. We’re all forced to play these cards whether we like it or not.
I spent a couple hours on July 4 watching what I think was the most inspired bit of programming ever imagined for our Independence Day viewing. ‘Encore’ ran continuous episodes of that old gambling western ‘Maverick’ from noon on. Getting really tired of the talking heads hashing Obama’s ill-advised move to the center and also listening to the dismal world economy news on CNBC left me looking for escapism. I didn’t really find it.
What I did find was a charming metaphor for our current day-to-day modus operandi. We are a nation of gamblers. Hedge funds, the NASDAQ, NYSE, pill popping, Caesars and those lottery tickets are just a few of the games in town. Every thought, every conversation should begin with ‘I’ll bet … ‘ That is our new mantra.
At least with Caesars and the state-sanctioned lottery, you and the adversary, also known as losing, are face to face and the game is understood. You want something back with the idea of giving very little for it. The something-for-nothing fantasy game that we all play. The odds are against you, but at least there was no pretending otherwise. And that goes for the gaming institution, too. They invited you in and must pay off if required. You are both seated at a small table, so to speak, with eye-to-eye contact, and you can watch the dealer.
Not so in the subprime mortgage game. This is a hidden game with most of the action under the table. A new homeowner, when agreeing to a variable rate loan three years ago, placed a bet that they could make a doubled house payment when the rate went up. The lender probably imagined ‘I’ll bet I can sell off this loan before these people default.’
The lending institution sold off these mortgages again and again thereby dissolving the game table into the smoky room. No one knew who was accountable to whom. Both were gamblers and both lost.
Farmers bet that their crop next year will be worth this or that. Insurance companies bet that the farmer gets this or that, and they won’t have to pay off. But just in case of flood or drought, the insurance industry bets those premiums on new financial instruments of unknown origin. These new securities were the third or fourth cousin twice removed from those mortgage-backed loans discussed above. I guess they are all in the end betting on the weather. That’s a risky business these days.
When you take Lipitor for cholesterol problems, you are betting that your liver will not be affected. When you enter a hospital for surgery, you are betting on getting in and out without that staph infection getting a hold on you.
And, of course, the federal reserve is the outstanding poker player of all time. They have a monopoly on the cards and the bets. They stack the deck and then make up their own rules. They even print the money that they get to slap down whenever the stakes get raised. You’re raising my bet? Ho, ho, give me a sec and I’ll run off some hundreds in the back room. The big bluff right now is whether the finagling around with the interest rates is going to keep the game afloat. These fed guys may be hauling in their ante with a wheelbarrow if inflation continues unabated.
Not many of us can call ourselves professional gamblers like Maverick or Greenspan. We aren’t making our living at it, and the danger is that we may be addicted to this idea that there is a quick fix.
The price of food and gas is that silver chain I was imagining around my ankle brought on by anonymous bets placed in faraway commodities when the mortgage game folded. No one is free when they are dependent on forces beyond their control or if they are addicted to belief systems that aren’t working. I could have flipped channels on the Fourth of July between ‘Encore’ and ‘Bloomberg.’ I could have watched two men who gamble for a living take action: Brett Maverick sizing up his saloon players or Ben Bernanke reassuring his bankers that the fed is still in control of the game.
Since we’re talking about freedom on the Fourth of July, I’ll bet you can guess which one can get up and leave the table whenever he wants. Unlike the rest of us.