limbo Posted October 28, 2008 Report Share Posted October 28, 2008 Why the Wall Street Collapse is like a stroll on Soi Cowboy By CHRISTOPHER JOHNSON Published on October 28, 2008 The Nation IT'S easy to understand why the world economy is collapsing, if you think of Wall Street as Soi Cowboy: bar girls are the banks; their customers/boyfriends are their investors/shareholders; a Cabinet minister swindles them using credit default insurance scams; the generals are the regulators; the Treasury Secretary is a former bar girl. Here's what happened: Lek, a bar girl on Soi Cowboy, convinced her foreign boyfriends to lend her money to buy a farm for her family in Si Sa Ket. The boyfriends agreed: they could profit from the interest when Lek paid them back. Land values were rising, so other bar girls borrowed money to buy farms in Isaan, too. Seeing an opportunity for easy money, a Cabinet minister took Lek to a love hotel and offered to sell her insurance. "You can't lose," he promised. "Even if you can't pay your debts, and default, you'll be covered by my special credit default insurance. It's just like car insurance." "Is it legal?" asked Lek. "Do we have to pay off the generals?" "Yes, it's legal. Never mind the generals. It's an over-the counter deal." Excited about this deal, Lek told the other bar girls, who soon bought the minister's credit default insurance. Having won their trust, the minister convinced the girls to pool their debts together into a single unit - "collateralised debt". "It's like having a communal chicken farm," he told them. Then he sold them insurance on that bundle of debt. "This way, we spread around the risk. It's safer for each one of you." He also hooked them on other financial products like interest rate swaps. "Derivatives are just like gambling on football. You can bet on goals, corner-kicks, red cards, etc." The value of the trade exploded. The minister expanded to Nana, Patpong, Pattaya and Patong. He got so rich, he bought a house in London, and a dozen race horses. Soon the whole cabinet was selling insurance to bar girls. Since the generals were doing nothing to stop him, the minister made deals with everyone: pension funds (mamasans), endowments (ladyboys), foundations (go-go dancers), insurance companies (cops), hedge funds (hi-so minor wives), money managers (pimps), high-net-worth individuals (khunyings), municipalities (government officials), sovereign wealth funds (Middle Eastern government officials) and supranationals (expat writers). Financially intertwined, everyone assumed they couldn't lose, because land prices were only going up. (Everyone except Warren Buffett, who called these derivatives "financial weapons of mass destruction"). There was one problem. The minister didn't actually have enough money to pay out insurance claims. "Never mind," he thought. "The bar girls will keep getting rich off foreigners, and they'll never default on their loans. I'll never have to pay out insurance claims." The girls did get rich, but they spent their money on drink, drugs, cell phones and implants, instead of paying off their farm debts. Noticing the girls' declining health, some foreigners asked the generals to investigate. But the generals only saw the girls playing cards and watching TV - because the minister had bribed them to keep their mouths shut. This only hid the problem, and made it worse. The foreigners, who feared losing their investments in the girls' farms, complained to Khun Yai, the Treasury Secretary. Problem is, Khun Yai was in fact Miss Nong, the older sister of Lek, and had worked at the "Goldman Bar" before her sex-change operation. So Khun Yai acted behind the scenes to protect his sister and the girls. At a shareholders meeting, the foreigners demanded the truth. Lek, drunk, blabbed to them: "Don't worry about me defaulting on the farm. I have an insurance policy with a minister. He will pay for everything." "Are you crazy?" the foreigners shouted. "What if he has no money to pay you." When they confronted him on the soi, the minister said, "Don't worry. If you don't trust me, you can sell my wife's body at your bar." The foreigners panicked. They pressured the girls to sell their land. But with everyone trying to sell, nobody wanted to buy. Land prices, and the economy, spiralled downward. Everyone was losing their shirts. Mii from Mukdahan (Bear Stearns) and then Fon from Ubon (Lehman Brothers) collapsed. The Treasury Secretary didn't help them because he favoured the girls at the bar he frequented. He moved Lek and her friends (investment banks Merrill Lynch and Morgan) to upscale hostess lounges protected by generals, and put uniforms on them (to dress them up like regular deposit-taking banks). But many bar girls and customers went broke. Everyone wanted to find the minister, who had taken their money. Lek finally tracked him down, in exile in London. She showed him the insurance policy. "It says here, you have to pay!" "No I don't," said the minister, laughing. "I sold the insurance policies to another Cabinet member." Christopher Johnson is a former Nation staffer and the author of "Siamese Dreams", which takes a high-hearted and romantic look into foreign-Thai relations. Link to comment Share on other sites More sharing options...
cavanami Posted October 28, 2008 Report Share Posted October 28, 2008 All so true! Link to comment Share on other sites More sharing options...
Julian2 Posted October 28, 2008 Report Share Posted October 28, 2008 Nicely put. Link to comment Share on other sites More sharing options...
colorwolf Posted October 28, 2008 Report Share Posted October 28, 2008 ...another one of these expat "writers" who just don't have the imagination/experience to look an inch beyond sc/nep/pong... Link to comment Share on other sites More sharing options...
Faustian Posted October 28, 2008 Report Share Posted October 28, 2008 Indeed, kind of embarrassing really...I presume he thinks he's funny/talented. Lame and uninspiring. Link to comment Share on other sites More sharing options...
samak Posted October 28, 2008 Report Share Posted October 28, 2008 i wonder that this nonsense was published in the Nation! any Trink column was better! Link to comment Share on other sites More sharing options...
limbo Posted October 28, 2008 Author Report Share Posted October 28, 2008 Very surprising indeed. Link to comment Share on other sites More sharing options...
Flashermac Posted October 28, 2008 Report Share Posted October 28, 2008 Unless one is a regular with The Nation these days, one does not get paid! I imagine this was done for free. If I weren't getting paid, I wouldn't try very hard either. Link to comment Share on other sites More sharing options...
samak Posted October 29, 2008 Report Share Posted October 29, 2008 Flash if you got paid for writing on this board, would you try harder? Link to comment Share on other sites More sharing options...
Flashermac Posted October 29, 2008 Report Share Posted October 29, 2008 Damn right I would. I might even make sense once in a while. Link to comment Share on other sites More sharing options...
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