Saturday, December 8, 2012

We've Always Been Deadbeats

Iv and Oy debt collectors using camouflage.


http://chronicle.com/article/article-content/134146/

My father was a repo man. He did not look the part, which made him all the more effective. He alternately wore a long mustache or a shaggy beard and owned bell-bottoms in black, blue, and cherry red. His imitation-silk shirts were festooned with city maps, cartoon characters, or sailing ships. Dad sang in the car, at the top of his lungs, mostly obscure show tunes. His white Dodge Dart had Mach 1 racing stripes that he had lifted from a souped-up Ford Mustang. The "deadbeats" saw him coming, that's for sure, but they did not understand his profession until he walked into their homes and took away their televisions.

...

The story of my dad, Woolco's debtors, and the debts he collected is in some sense the story of America. Americans settled this nation by borrowing goods, land, and more abstract representations of those goods—land warrants, deeds, patents, concessions, and equities. They borrowed with the most optimistic assumptions about their capacity to pay. But when it became clear that Americans were not paying, banks began to doubt wholesalers and called in loans; wholesalers demanded settlement from retailers; retailers sent my dad and thousands like him out into the countryside to recall some portion of their property. I saw the downturn in 1973 unfold outside the window of a Dodge Dart, and in graduate school and after I became fascinated by many other slumps.

Not so much optimism but being blind in the Iv-B economy as it booms then busts.

...

In each case, lenders had created complex financial instruments to protect themselves from defaulters like the ones I watched from the car. And in each case, the very complexity of the chain of institutions linking borrowers and lenders made it impossible for those lenders to distinguish good loans from bad.

The complexity comes from the Iv-B mutual deception and the growth of the B roots and iv branches. In a game of bluff exposing reality gives your competitors an advantage. this was seen with the subprime crisis where everyone who knew the crash was coming didn't alert the regulators.

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Such economic models of financial health, however scientific they looked, tended to be abstract representations of an economy that was, in fact, more complex and more interconnected than they pictured. 

Also these models leave out the hidden parts of the economy, like watching a poker game and only having the bluffs and bidding as information without seeing the cards.

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If some historians focused on the temperature of the "real economy," economists were becoming obsessed with the money supply as the single factor explaining most American panics. Again, a certain kind of blindness to the history of debt and deadbeats ensued.

V-bi economists tend to see the economy only as V-Bi where everything important is visible.

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