A Blinding Insight or Did I Choose the Wrong Vocation?

March 19, 2010 at 5:11 pm 2 comments

I had a blinding insight a few weeks ago and then watched Jon Stewart a couple of days ago “steal” my insight and do a much better job of presenting it than I ever could. But, what the hell, this is my blog so, for those of you who haven’t seen the Jon Stewart show, I figured out how all of us insignificant tax payers could make a bundle. How? See, here’s the insight and it’s so simple…we act like corporations! The Supreme Court views corporations as ‘individuals’ from a legal point of view. Corporations have all the rights that you and I do (except they can’t be sent to jail). With this legal understanding of that thingy called a corporation as really a person, the people who run that corporation can’t be held personally liable or accountable when that corporation goes rogue like all those Wall Street financial corporations did as they set about bankrupting us and destroying so many lives so those corporate cats could make a killing. It wasn’t those greedy financial types who wiped us out, it was the corporations they worked for who wiped us out.  So those greedy financial types can’t be held accountable for their duplicity and greed, its their firms who are accountable.  Indeed, their firms will pay those greedy financial types large bonuses to keep them in the fold because they have “talent” that is too valuable to fire.

So this got me thinking…if corporations can be viewed as people then maybe the courts could be fair (the law is fair, right??) and view me as a corporation. Instead of just being Phil I could be Phil Inc. As Phil Inc I could head off to my banker and ask for a loan. Now when a financial wizard on Wall St. does this the banker would ask for collateral and that collateral would be, yes you guessed it, billions of dollars in financial vehicles based on worthless sub prime mortgages packaged as great investment products. What made these worthless investments worth so much? Well, the financial wizard has a buddy called a financial rating agency like Moody’s and they work hand in hand to support each other so they both can make enough money to choke a herd of horses. So the financial rating agency slaps an AAA rating on these worthless investment vehicles and this allows the financial wiz to unload them onto trusting investors as great investments. And so this worthless shit gets moved around by other financial wizs who recommend them to their clients as really solid investments (whatever happened to fiduciary responsibility? Oh well, what does fiduciary responsibility really mean if the financial wiz is making money?).

So here’s how Phil Inc could allow each of us to oink our way to the money trough. As Phil Inc I need something with which I can go to the bank to get a loan to get this money machine rolling – I need some collateral. As Phil the real person I really don’t have anything in the real world to use for collateral to get this money maker rolling but I do have a 2005 Yamaha Vino 125 cc scooter sitting in my driveway. Its gotta be worth something like $1000 which if I was Phil the person isn’t much but with which as Phil Inc I can be very creative. I call up my good friend Louie who has recently incorporated himself as a financial rating agency known as Louie’s. Louie comes over to my place and looks at my scooter, places a value of $500,000 on it and slaps a Louie’s rating of AAA on it as well. I take this on paper collateral of $500,000 and its Louie’s triple A rating to my banker who happily presents me with a $500,000 loan. I’m so happy with myself I pay myself a bonus of $250,000 to keep myself from moving across the street to work for someone else and give them the benefit of my financial acumen. Not bad for a Yamaha Vino, eh? But I’m not finished.  I need to make some payments on this $500,000 loan but I don’t want to use “my” $250,000 bonus money to make some payments to keep the bank happy – after all, I worked really hard to earn that money so its mine and I’m not parting with it.  I could create a Ponzi scheme like Bernie Madoff but, lets face it, he was really sleazy and I’m not – I’m a businessman who is doing everything legally even if it is just a wee bit ethically suspect.   So I need to come up with another way to keep this gold mine producing.   So the bank wants to see some payments on its $500,000 loan so I create another corporation, I’ll call it 2Phil2 Inc and I sell this worthless piece of shit (OK it is worth $1000) to 2Phil2 Inc for $2,000,000 and, of course, I just have to pay myself another bonus of $500,000 for increasing the worth of my original corporation, Phil Inc, by another $2,000,000. Now 2Phil2 Inc is selling this crap to its clients as a great investment and the clients, believing 2Phil2 really have their best interests front and centre, jump on board. A bit later these clients are looking for a return on their investment only to discover that maybe the ol’ Vino 125 at the heart of their investment portfolios isn’t really worth $2,000,000. Oh oh, trouble is brewing. Now in real life something like this did happen with Goldman Sachs placing its clients in these worthless sub prime based investments which the big wigs at Goldman knew to be worthless but Goldman covered its bases by taking out insurance on firm it didn’t own, AIG, and when AIG crashed and burned because of these worthless investments, Goldman collected lots of money. So 2Phil2 Inc has learned from the pros like Goldman how to play both sides of the same coin (sell worthless investments to its own clients and collect the commissions from those sales and bet against these same worthless investments they put their own clients into by taking out insurance to collect more money when those worthless investments inevitably do collapse). 2Phil2 takes out insurance on his neighbour for $2,000,000 and when his neighbour commits suicide because his investments, based on the Vino 125 which I of course steered him into because he trusted me, have crashed leaving him penniless 2Phil2 steps up to collect that insurance money.

Now here’s the real beauty of all this deceit. According to our courts I, Phil the real person, am not responsible for this mess. Legally, Phil didn’t do any of this. It was the corporate persons Phil Inc and 2Phil2 who did it. They are the guilty culprits but they have no money left in their accounts. I paid all that money to myself as bonuses for a job well done and to keep myself and my ‘talent’ from leaving Phil Inc and 2Phil2 to work for some other outfit.  As Phil the person I’m legally safe and sound lying on a beach in Tahiti while the investors who trusted me are left holding the now very empty bag (or, like my neighbour, dead). Geez, I should have gone to business school instead of studying philosophy and ethics and religions.  At the very least some MBA school should hire me as a professor to teach these ‘alternative’ investing methods to those aspiring students who dream of making their own killing once they graduate.  I could even teach their ethics course…no wait, that might be seen as a conflict of interest.  But I’m sure there is some ‘creative’ way around that dilemma too.

I wonder if it’s too late to jump on this money making bandwagon????  Praise the Lord for insight!

Entry filed under: banks, ethics, investments.

A Greek Tragedy or There’s a Sucker Born Every Minute What is a Hero?

2 Comments Add your own

  • 1. Patt  |  March 23, 2010 at 10:11 am

    Pure awesomeness! This is the first time I’ve really understood why so many of us (hard working, trusting, dumb?) lost their jobs and reinvented themselves. At least I can sleep at night, although the idea of sleeping on a 45′ Hunter anchored in the Caribbean is a very attractive idea.

  • 2. Philip Smith-Eivemark  |  March 23, 2010 at 1:15 pm

    You could incorporate yourself as a firm like KPMG and be my accountant and charge me huge fees which I could then write off as business expenses. Then you, as PattCo, could offer me an unlimited number of management services, again for huge fees, which I could, again, write off. Pretty soon you could park your yacht in a gated yacht club to keep the riff raff, like the pre-PattCo Patt, out and with their own, poorer kind. My God, I’m good!!!!


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