0707 - Waniand

Our ever-informative Forgotten English Calendar provides the title for today. To be "In the waniand" is to be in the time of the waning moon, which is unlucky. We are sorry to inform Readers that the U.S. Administration as well as the U.S. financial markets are clearly in the waniand. A copy of that fine English magazine The Economist arrived yesterday, and once again every page castigated the Administration for incompetence and stubbornness. That's not unusual (it's what Time and Newsweek say a lot), but it was, well, cast in surprisingly blunt and insulting terms. The pitiable U.S. Attorney General gave pitifully unconvincing testimony to the Senate and was called a perjurer – and if he isn't he gave a good imitation. Then, the generals in Iraq started talking about a two, four, or eight year residency in Iraq, which didn't go over well. And to top it off, the stock markets took fright at the rather, well, sloppy mortgage lending practices, several hedge funds collapsed (one cost the Harvard endowment over $300 million – Harvard!), and a mortgage bank went down. We have summoned our expert Staff to assist uneasy Readers.

This column is proud of its position against invading Iraq, and even prouder of our reasons why. What we said, and what history teaches, is that the government of a country is the responsibility of its own citizens. Saddam was cruel and vicious, good riddance. But he was running Iraq. What we now have, much to the distaste of a huge majority of Americans, is an Iraqi Government that cannot govern, that can't supply water and electricity, and is composed of groups that are "As stubborn as W" (another old Iraqi phrase) and will concede nothing and agree on nothing except a month's vacation. Americans are being killed daily and monthly. Iraqis are cruelly blown up several times a day, two million have fled, two million are displaced. It is a big mess. As we have predicted, September is the month of decision for the U.S. The voters want out.

We have asked our Revered Investment Guru (The R.I.G.) to report what is happening to the markets. For several years U.S. mortgage lenders have been offering no-money-down mortgages for 100% of the cost of homes, with low "teaser" starting rates, and many lenders did not even examine whether their borrowers could bear the debt. [Aside: we are happy to report that in Anguilla the biggest bank constantly offers mortgages at what their TV ad calls "A low, low nine and one-half percent". Now that's a bank.] The old model of the stingy and conservative banker was forgotten. Then, the lenders would sell off their loans in a complicated way, where the chanciest loans, including the "subprime" were sliced up into levels of supposed risk. All sorts of fancy financial "derivatives" were designed around this game. Sensible Readers will understand why the house of cards fell down in the last weeks. The borrowers began to default – not surprising – the hedge funds that played with such paper began to fail, and the mortgage banks, asked to post more collateral for the money they borrow, are beginning to fold. There are months worth of unsold houses in inventory, and who is going to buy without getting a mortgage, which is now not going to be either easy or cheap? The stock market is, as they say politely, "volatile".

All the news organizations take polls and report that the U.S. public wants out of Iraq, thinks the President isn't doing a good job, and doesn't think better of what the Congress is or is not doing. The predictions for the next election, [which has somehow sneakily been advanced a year or more for the benefit of the TV news] are: the Dems win big. And the R.I.G. says that if you believe that is good for stocks, he wants to sell you some mortgage bank paper. So, we're clearly in the waniand. Debuccinate [trumpet forth] the news. Like that word too?

Next time: Eccentric [OO #708]

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