Banking Crisis Financial Jargon. The Language of Bullshit

Did you know what toxic assets were before last week?  No. Neither did I, but I do now.

You see, if somebody owes you money, that’s an asset on your balance sheet.  A paper asset.  A theoretical asset.  If you’re a bank, you can have huge assets on paper, depending on how many people owe you money.  You lent them this money against the value of their houses, and on the assumption that they can pay you back with interest.

Well and good.

Now, suppose you lent stacks of cash to buy houses that are worth nowhere near what you thought?  Well, that might not be the end of the world if the people you lent the money to are able to pay you back, but supposing they can’t?  Supposing these people you lent all this money to are shit poor and should never have been borrowing that amount in the first place?  And suppose the houses they bought are heaps of crap, in shit areas, with a value nowhere near what was claimed?  Or alternatively, supposing you lent the money to property developers on condition that they wouldn’t have to pay you until they sold the new houses, but now they can’t sell them.

What then? You can’t get your money back from the borrowers because they have nothing, and you can’t sell the houses because they’re worthless.  Where does that leave you?

Well then you’re fucked, aren’t you?  You’re one screwed bank.  And all those shit loans on your balance sheets are still counted as assets, but they’re worse than useless.  They’ll drag you down.  They’re fucking toxic.

That’s toxic assets.

How about short selling?  Well, I didn’t know what that was until last week, when somebody kindly explained it to me.  Short selling happens when you own a load of shares, and I borrow them from your broker.  Yes.  I can do that.  I can borrow your shares without your permission, and then I can sell them, let’s say for a million.

Why would I do that?  Well, you see, I’m hoping their price will go down over the next few days, and then I can buy them back for let’s say 900,000 and return them to your broker.  I have a hundred grand in my back pocket, and you have a big pile of devalued shares.

That’s short selling.  Isn’t it great?

I think we’re getting the hang of this financial jargon.  Before you know it, we’ll be Masters of the Universe, just like Dick Fuld, the Gorilla of Greed, who got $480 million for crashing Lehman Brothers into the ground.

Now, derivatives are something else again.  I don’t know what the hell derivatives are.  I tried to figure it out, but my brain started to hurt, so I stopped.  With derivatives, you don’t actually have to sell or buy anything at all.  You deal in futures, options and swaps.  You might be dealing in something based on maybe a thousand of those horrible toxic mortgages, that might be worthless, but haven’t been exposed for what they are yet.  Let’s say they’re worth a hundred thousand each, strictly on paper and you have a thousand of them bundled together.  You can claim they’re worth 100 Million and issue some kind of a security or whatever it’s called.  The trick is to get rid of it as fast as possible to some other fool, or some other shark who realises perfectly well that what he’s bought is a load of shit, but hopes he can find a fool to buy them.

Right?  It’s toxic pass-the-parcel.  No different from the Albanian pyramid schemes, except the suits are sharper and the faces on TV more earnest.

Moral hazard is another new one on me.  I never heard of it until last week, and neither did anyone else I asked.  We saw an example of moral hazard the other day when an egregious little shit working for Irish Nationwide took advantage of the government’s guarantee to try and drum up business for the bank his revolting Daddy runs.  Moral hazard is when I pick you up off the road and you kick me in the crotch for thanks.


I’m getting a worse pain in my brain than I already had so I’m going to stop soon, but let me ask you a question first.  Do you notice anything all these terms and practices have in common?


All right then, perhaps it’s the fact that the people behind them contribute absolutely nothing to this world, add no value and produce nothing.

Parasites every one.  Useless bloodsuckers who still have the gall to refer to their schemes, policies and accounts as products.  Products my arse.  A product is something produced by a craftsman from the honest labour of his hands.  The world would not miss a single one of the people who dream up these so-called products if they were all herded into a rocket and fired off to Mars.


By the way, feel free to correct me if I got any of this shit wrong.  And while you’re at it, feel free to correct the world’s leading financial experts for getting everything wrong.


Previously on Bock:

$480 Million for Lehman Brothers CEO

Irish Nationwide Building Society Send Out Begging Email. What a Crowd of Shits!

Banks Are Safer in Small Corrupt Countries
Bankrolling a Bank. Ireland’s Government Guarantees Liabilities of Credit Institutions.
Economic Mismanagement — The Irish Experience
Banking Crisis, the Free Market and the Media
Irish Economy Fucked — Official!

Elsewhere: Web Economy Bullshit Generator

41 thoughts on “Banking Crisis Financial Jargon. The Language of Bullshit

  1. holy fucking shit, that short selling malarky is just fucked!

    If anything good comes from all this I hope its puts a stop to all this shady fucking shit.

  2. Great stuff.I hadn’t the foggiest what all that crap meant until now.
    It’s great to see Fuld getting grilled but the rotten bastard doesn’t even flinch.

  3. Everybody seems to be blaming the banks left, right and centre for loaning to people who would go on not to pay it back. This is daft. Why did these people go looking for huge loans in the first place if they weren’t going to be able to repay? Where’s the sense of individual responsibility gone in this mess?

    Large numbers of people took out huge loans from banks on expensive houses. These people now can’t repay, and the banks are left with dodgy balancesheets due to these ‘toxic assets’.

    Joe Soap fucked the banks here. The banks didn’t fuck Joe Soap.

  4. What??

    Joe Soap is at fault? Not the unregulated financial institutions?

    Fucking hell, and there I was, thinking that the experts were in charge when all along, the whole thing was controlled by Joe Soap, the evil bastard.

  5. Reading your post, I’m reminded of a of a man I knew here in Lyon. Fifi had at one time been a very rich man, in a very rich city. He knew and had rubbed shoulders with all the big-wigs here. Then, little by little he lost it all. And you know why? Cause he didn’t give a fuck.
    You see Fifi had trained as a butcher in his youth, and was by all accounts fucking good at it, then he joined the foreign legion and travelled the world. After that, he bought a shit hole of a building and reforbished it himself. Everything, from roof to walls, floors to heating and electricty. Then he sold it and bought another, and did the same. He worked and worked and built his fortune through grafting.
    But that’s not how I remember him. When I knew him he was helping my mate fix up a restaurant that my mate and his wife had bought. He never really went into detail about why he let it all go. The only things he said to me about it were along the lines of this;
    “it’s their ball. they decide who wins, who loses, and how many goals are scored” and the thing that stuck the most in my mind, and which brings us back nicely to the point;
    “They’re selling you sunshine boy, nothing but sunshine”, although now I would have to say they’ve diversified into grey clouds

  6. I thought it was Joe Sixpack…
    It’s a bit rich to blame Joe whatever when, as you say the Banks portrayed themselves as the experts.
    I know that when I bought my first house I would have taken whatever the bank or mortgage broker offered in the knowledge that they knew the market better than I

  7. Heres a list of ceos and their buyouts/severance/pension pay.
    Alan fishman-washington Mutual, $19 million ceo from from 9/8/08/9/25/08

    Stanly O’Neal-meryill lynch,$161,million 10/07/08 left after $8 BILLION loss write off.

    Charles Prince-citigroup$77.million 11/07/08 after $11.BILLION loss write off.

    angelo Mozillo-countrywide$56.million 7/1/08 after bank of america buyout.

    Kerry Kelligan-Washington Mutual$44.million FIRED 9/8/08

    Ken Thompson- Wachovia $42.million FIRED 6/1/08

    Richard Fuld-leheman brothers $24.million after brankruptcy 9/15/08

    Richard syro FANNIE MAC $16.million 9/8/08 AFTER THE GOVERNMENT TOOK OVER

    James Cayne -BEAR STEARNS $13.million stepped down after he collapsed it.

    John Thain-merrill $9 million less than one year after the bank of america buyout


    One honorable mention.
    Robert William-AIG he declined $22million after the government still offered it even though they gave AIG a $85.million federal loan.

    Thats whats wrong with the banking industry in America, corporate welfare.

  8. Indeed, KB. That was my experience too, many years ago.

    I don’t know if John has bought a house yet or needed to put a roof over his family.

    Joe Soap doesn’t tend to think of great issues when he’s trying to shelter his children.

  9. -John

    Putting aside the fact that no one has ever fucked a bank besides Jesse James and other bankers, how did Joe’s shit-hole council house ever end up being so grossly over valued that he was obliged (if he wanted to live in it anyway) to get said huge loan? And who profited, besides the developer, from the sale of said over priced shit-hole council house?

    Thank you very much Mr. Bock. An honour coming from such as yourself

  10. @C’est: The banks clearly don’t profit from mortgages on overpriced houses, judging by the current climate. I think the only ones who profit are the developers.

  11. @Bock: I’m not saying the banks made no errors, I’m just pointing out that we seem to have lost all sense of individual responsibility in this climate and jump to blame the bigwigs, fat cats and [choose-your-own-scapegoat].

  12. Its legit they can all be googled and verified .The only difference would be the two fired would be “removed” asked to step down .

  13. @Bock: Also, do you not agree that it’s morally wrong to take money on the condition of repaying it with the knowledge that you won’t be able to pay it back? (Even if you’re borrowing from a large financial institution)

    P.S. Apologies for the messy replying, I’m just replying to posts as I see them.

  14. John — I have no problem with the concept of personal responsibility. Just look through this site and you’ll find countless rants on the subject.

    However, in the current case, there seems to have been no personal responsibility among those who purportedly run the world’s financial systems. Furthermore, there’s a fiduciary obligation on lenders to satisfy themselves that a loan is reasonably secure, and that obligation seems to have been ignored in the interests of short-term gain.

    I just saw your other comment and of course you’re right, but there’s a well-established concept in law concerning the extent of a person’s expertise vis-a-vis his liability, and when I find the formal term for it, I’ll come back. Esentially, what it means is that the more expert you are, the greater your responsibility.

  15. Its not just that people borrowed more than they could afford! The market was overbloated. Property value was exaggerated. Joe soap doesnt have any control over that. BUT MORE importantly bad loans were made by the bank 100% mortgages on an overvalued house puts you in negative equity. If your house in raheen appraised for 250, and you bought it for that exact amount with no money down and the property value dropped to 200 (because it was never up there in the first place) you are negative 50.
    Joe soap walks away he can’t win ever. BTW you will have paid the bank for their professional fees appraisal evaluation. Financial LTV loan to value this will have been rolled into the loan because you couldn’t afford it or it may have made you think twice. You will have sat at a bank desk and been reassured that this is well within your reach! Big ass house with the shiny kids and the happy wife.
    I have not been personally affected by this but many many in the blue collar middle income my people bracket have. These were not always first time buyers but my group 40 somethings looking to upgrade before the kids left home an investment for retirement.

  16. -John

    I beg to differ. The banks did indeed profit while the going was good. But what became of all the digits on the computer screen? They gambled and lost. And not just their own corporate profits. Other peoples money too. Joe’s fucking pension scheme.
    And what will Joe do? Move his assets to a tax haven (other than Ireland) and then declare bankruptcy? No, Joe’ll keep on working and hand over half his pay to the bank to pay the interest on his debt and keep the wolves from the door. Joe’ll keep watching his kids go without, to pay the bank and keep a roof over theirs heads.
    Joe’ll pay more tax, cause the government had to borrow more money to underwrite the banks bad deals. Joe will spend sleepless nights every time his kids are sick cause Joe’s health care, that he pays for, isn’t worth shit.
    Bottom line is that whether the banks go under or not, the only person who has a real physical world risk is Joe. The bank manager keeps his house, the developer keeps his yacht in Malta, and Joe gets fucked in the ass. And if not Joe, then Joe jnr or Joe III
    sorry for the aggressive tone

  17. not sure if anyone heard the matt cooper show on monday. but this is a great example of the way banks splashed money around.

    a new book called “the builders” ( or something like that) was being discussed. one of the sections dealt with sean dunnes involvement in purchasing land in ballsbridge. his mountbrook group bought the land at 56 million an acre. while that is a large figure, what amazed me was how he got the money.

    when he went to get the loan, he was on holidays in thailand.
    he rang the bank of ireland from his hotel room. he was advised to come home and discuss in person, especially as the sum of money needed was around 256 million. he arrived home on a tuesday and spoke to a few banks. that friday at 9 in the evening, a representative ( or maybe a courier) from the ulster bank arrived at his office with the necessary funds!

    considering all the forms and details i had to fill out to get a mortgage, all i can think of is, it must have been one hell of a pitch he made to those banks. quarter of a billion within 3 working days!

    now with planning objections, difficulties in raising funds to build on the site, i wonder what is the value of an acre in ballsbridge? little wonder that the banks refused to evaluate their assets.

    by the way has anybody heard of a loan in the states referred to as a granny loan? loans given to people who would not have to pay anything for maybe 7-10 years. when repayments start the interest is very high.

  18. Never heard of a Granny Loan, but it sounds appalling.

    I think the example you give is exactly what I’ve been talking about. The Ulster Bank executives turn out to be the same as the rest of us: completely ignorant. Why did we ever take these dopes seriously?

    What’s worse is this. On the word of a bunch of jumped-up office-boys, we’ve built a false economy, and if Dunne doesn’t get his thousand-storey tower, the entire economy is fucked.

  19. Luckily for me I have a tidy mortgage, having been offered more if I wanted, and wisely refused. Prior to this, I lived in the UK for some years, saved hard and had a nestegg of €29k. I came home and applied for Planning permission to build. I went to my Bank with my money and put it into a deposit account. They contacted me and said “why leave it there when it could make money for you?” I said it was for a deposit to build a house. They said “come in and see us”, so I did. A young lady advised me to invest my €29k in some kind of bond (can’t remember now which type it was), but the point is, I clearly told her that I did not want to risk losing money, as it was all I had in the world, I had worked hard to make a bit of money, even though it isn’t much to some people. She reiterated that this option was the best thing to do. I asked her what was the maximum I could lose. She said no more than 10%. But he said I could increase my savings by 40%. So I signed the form. It was tied up for 3 years. In that time I got a letter to say my bond was losing money. Then another statement, and another. I went into the Bank to speak to the Manager. I told him that I had made it quite clear I did not want to risk my savings. He looked at me blankly. I asked him what was the maximum I could lose. He said “there is no maximum”. I had read the form I had signed, and could not find a sentence that said this. In other words, everything. I didn’t lose everything, I came out with €12k out of my €29k. The highly experienced lady in the Bank, had since left. What a shower of crooks.

  20. A “Granny” loan although I have never heard it in that term,Maybe a reverse mortgage elderly people that have paid off their homes and other wise would be on a tight fixed income can reverse the mortgage process! they can arrange a monthy payout of a fixed amount for a fixed # of years based on the value of their home.Once the person has passed the estate owe the bank that has the house note/title the interest is usually higher than a conventional loan because these elderly people are usually not in the best bargain seat.For older people with huge medical cost remember we pay for everything here no socialized medicine its an option.Handled well its not a bad option it allows them to again have quality of life and to stay in a home they may otherwise not be able to afford.

  21. perhaps that is what a granny loan is. however i got the impression it was aimed at younger people. sorry for not knowing the correct term, but at the time i heard, the place i was in was very noisey. the commentator ( cal thomas i think) was of the opinion that it would be way worse than the sub prime lending issue.
    one thing that really got me about the efects of the lending system in the states was an interview with a home owner. she showed the tv crew around a lovely house.well fitted out, nice garden out the back. told how her husband had worked hard and paid of the house. she then led the crew to the front of the house. again a well kept garden. it looked a nice neighbourhood. until you realised that practically all the houses around were boarded up. only 3 families now lived in that street. and because so many houses are boarded up, that poor lady can not afford to sell her house and move. her house ,which is paid for is practically worthless.
    or another lady, whose husband passed away.advised by the banks/lenders to sell the house she owned, get a loan to buy a smaller house and invest the sale value of her house in a product that would pay off the loan and provide her with an income as she got older. needless to say, her investment is gone, her future income is gone and her small house is almost gone. she can not afford the repayments. the lady was in her late 50s early 60s.
    one point of interest from the presidential debates last night, was that most of the banks and lending houses are based in delaware. apparently because the regulations are “loose” there.

  22. Morgor: Yes, I went home, sat down and had a large brandy. No doubt she got a good commission out of it, these “highly experienced” staff don’t have a clue. When I applied for my mortgage, I was put in contact with some spotty teenage Dublin boy who basically read out the figures to me like a robot, and then said I couldn’t have the mortgage. Couldn’t!! I have the cleanest record on file!! I asked to speak to a higher level and was told that this spotty little boy was it. There was no reviewing the figures or anything else. So I went to a different building society, who I do no business with, and they threw the money at me. Interest rates were no higher than would have been with the bank, and they couldn’t wait to give me the money. From one extreme to the other. Now my money is in a bug-proof/water-proof/bank-proof bag buried at the bottom of my garden.

  23. Gilly, sorry to hear of your experience at the hands of these thieves. I remember an alleged friend of mine, who was employed by TSB at the time having being given some title, asking around our then rugby team for us to join a fail-safe 10 year Savings plan. “Save only x per month and you’ll get a nice bonus on top of all the interest” bullshit. Sure, my little greed gene perked up the same as everyone’s and we all signed up. Numerous soothing letters telling me I now had more money in this Plan than Rockefeller. So 10 years later I go to cash the fucker and find out that the bank had “sold on” the savings policy to Hibernian. Off I go there to be told that it had somehow lost over €2000 (of what I had put in ) on the way down. When I tried to get an explanation of how a “risk-free savings plan” could lose money I was treated and looked upon as a simpleton. From that day ’til this I’ve never touched any of their pension/savings/loan “products” and mercifully have whatever dosh I have stashed with my local Credit Union. who employ human beings in contrast to those useless robots in suits at Theft Central.

    As for the financial mess these pimply pricks have managed to inflict upon the world. If I understand this, we tax payers are asked to bail out banks ! When, if ever, did any bank bail us out of dire straits when we as individuals got into trouble ?

    We`ll bail them out thanks to their buddies in power, they’ll jump on our backs and ride us to hell until we do – but then it`ll be back to the status quo. Fatcat traders being paid millions and the rest of us having to work to the bone with banks still on our backs, this time demanding payments at extortionate rates to cover their losses of the 2008 Crash no doubt !!. They just want a blank cheque to continue their greed !

    Incidentally I just hear that Irish banks won’t be passing on the ECB cut to lenders, thereby pocketing another few million a day. What a collection of boils on the arse of society.

  24. Hm.

    Lend me some money to go gambling.

    I lose said money.

    I come and ask for more.

    I lose it again.

    I ask and receive still more.

    And lose it again and again.

    To me, this is investing.

    And…credit default swaps and bundling and securitization are the worst. At the advanced age of 35 I find myself taking a finance class and yelling at the professor (who has a phd) for the invention of bullshit mathematics. Something either exists or it doesn’t. Money is either present and invested and accruing interest or it does not. You can’t have ninety owners of one mortgage.

    And this ALL Is brought about because of bullshit mathematics.

    Oh, and let’s not forget greed.

    Did you see the hearings and Fuld’s brilliantly embarassing performance? Doesn’t he look like the embodiment of an out of touch greedy corporate robber baron ala that bad Michael Douglas movie from the 1980’s?

    And on an unrelated note…a trip to a Halloween store reveals you too can dress like “Dog, the Bounty Hunter” for Halloween.

  25. What you describe is not mathematics. Just bullshit dressed up.

    Fuld is straight out of Central Casting. Send down a standard bad guy! He’s Gordon Gekko made flesh.

    By the way, I’d be interested in your view on this: what exactly is money?

  26. I was looking at the pre-foreclosures on and tried to tie our current events into historic events. I came across these famous old quotes;

    This (Federal Reserve) Act establishes the most gigantic trust on earth. When the president signs this bill, the invisible government by the monetary power will be legalized. The people may not know it immediately but the day of reckoning is only a few years removed, the worst legislative crime of the ages perpetrated by this banking bill.” – Charles A. Lindbergh, R-MN

    “We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. Some people think the Federal Reserve Banks are U.S. government institutions. They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people of the United States for the benefit of themselves and their foreign customers. The Federal Reserve banks are the agents of the foreign central banks. The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board.” – Congressman Louis T. McFadden, Chairman of the House Banking and Currency Committee, addressed the House on June 10, 1932. 75 Congressional Record 12595-12603

    “Capital must protect itself in every possible way, both by combination and legislation. Debts must be collected, mortgages foreclosed as rapidly as possible. When through the process of law the common people lose their homes, they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under leading financiers. These truths are well known among our principal men who are now engaged in forming an imperialism to govern the world. By dividing the voter through the political party system we can get them to expend their energies in fighting for questions of no importance. It is thus by discreet action we can secure for ourselves that which has been so well planned and so successfully accomplished.” – 1924 US Banker’s Association Magazine

  27. Bock –

    You know, really, money is nothing. It’s paper based on some shite we all agreed eons ago has some representation of some kind of value. It’s like the deficit. How in the fuck, and now, I’m a bit dense here, but how in the fuck can I owe myself money?

    “Here, Eliza, I’m going to borrow $20 from the emergency cash fund.”

    “Well, alright, Eliza, if you really need to, but you have to pay it back, with daily compounding interest, by Friday, and the rate shall be prime plus ten percent”

    And to the earlier poster questioning “granny loans”?

    These are called reverse mortgages and they are tricky things indeed. Banks solicit elderly people who own their houses in full, and in essence persuade them to take out “deferred” mortgages on their homes for any amount they choose. It is deferred in that a payment is not due for a certain period of years – the bank pitches it to the homeowner rather suggestively “you own your home, you need some cash, take out a reverse mortgage to smooth out your cash flow worries until you pass away, and when your heirs settle your estate, it will all come out in the wash!”. My grandmother has asked about this several times, and I have discouraged her from doing so. She owns her condo – free from any liability – for $300,000 easy (even in this daft market, condos for the elderly are hard to come by) – and has contemplated taking out a reverse mortgage when her finances are tight. Thus far, she has been persuaded to sit tight and not take out such a loan – those are often not fixed rate loans, but variable, and are subject to fees and termination fees for early payoff that are outlandish and IMO robbery of the elderly who most often do not understand the legalese that comes with such a deal.

    Back to the money thing – we went from trading food for food, to labor for food, to food for goods, to goods for goods, to words for bullshit, and this is what you get. Now we live in a world where bullshit is currency. Let’s go back to trading cowry shells and call it a damn day.

    Sorry for the long post.

  28. Bock:If you shoot them to Mars,there is a miniscule chance of survival,I would say maybe the Sun would be a better destination.Far more expensive but worth every penny I’m sure you’ll agree?

  29. Well we could trade the potential Dollar value of the positive energy released when these fucks died in a screaming firey ball of justice…
    Should be worth a few quid?

  30. We could create a derivative based on their predicted calorific value, short sell it and set up a reverse swap option that we can sell to a charity for disabled astronauts. No downside. Everyone wins.

  31. Well if the disabled astronauts lose their homes then you have a deal!

    Someone ALWAYS has to lose…Thats Capitalism for you…

  32. My Bank ceased/suspended trading with Iceland. However they have now ,graciously ,
    Recommenced only in Danish Crones DKK on a “best effort basis“ My Bank? N.I.B.
    National IRISH Bank Now owned by Danska Bank. Shelly sprang to mind.

    “I am Osimandius, king of kings:
    Gaze on my works, ye mighty, and despair!”
    Nothing beside remains: round the decay
    Of that colossal wreck, boundless and bare,
    The lone and level sands stretch far away.

    Percy Shelley

    How the mighty have fallen! But the good ol’ Bank still need a few bob.

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