Toxic Debt and Jay Walking

I expect that by now you have all heard of ‘Toxic Debt’ the scourge of the economy in the late ‘Naughties’, i.e 2000 to 2009, all brought about by naughty, cheeky and greedy ‘Financial Planners’ who were too busy lining their own pockets to worry too much about the ‘Real World’. As usual, their pockets got too heavy and they were caught with their pants around their ankles.

As a trained Economist, I know a bit about these things, which paradoxically insinuates that I know a lot about these things, in my case it should be taken literally, because I actually know sod all about them.

This is also true about 99.9% of the rest of the so called financial experts, who are as stupid as the rest of us. There is of course an exception to the rule and in this case it’s a certain gentleman named Warren Buffet (W.B.), he also happens to be the world’s richest dude (W.R.D.), for obvious reasons.

Not being W.B. back in April I predicted that interest rates were going to skyrocket and locked my Mortgage in a fixed interest rate of 8.0% for three years, dumb move! Interest rates are now at their lowest rate since 1666 and the Great Fire of London.

Here in Aus. they are falling down as low as 2% and in the US of A they have gone so low they are in minus figures. What this means is that if you deposit money in a bank, they will charge you brass for holding it for you. By the same token, if you borrow money they will pay you for borrowing it and the more you borrow, the more they will give you. Neat eh?

Now, even Investment Bankers aren’t that silly, so now nobody lends anybody anything, thus resulting in the much feared ‘Credit Crunch’. In these troubled times, I figured out that everyone who had a few shekels to spare would want to hide it in a sock and put it under the mattress, just like the Chinese, right?

With a touch of the W.B.’s I thought I would search the backs of the chairs and couches and invest any capital I discovered in shares in sock-making and mattress-making companies. Luckily for me, my son and heir had already beaten me to it and invested it in grog. As I was perusing the business section of the newspaper, I discovered that the main sock/mattress makers in Aus. are moving offshore to Asia because of massive losses. You don’t have to worry W.B. your position as W.R.D. is under no threat from the Skull.

To get back to ‘Toxic Debt’ my own Mortgagor is laughing his socks off (I hope they’re Aussie made) so my debt isn’t toxic to him, only to me. To make matters worse is the debt/equity problem, as a trained economist I know a bit about this (do you have a sense of deja vu about this?).

Six months ago, my humble Chateau was worth A$450,000, if you convert this to US$ or Sterling, which I won’t, this doesn’t sound very much at all. If however, you convert it to Yen or Lire, it sounds like a hell of a lot. I won’t go into Zimbabwe Dollars, I’m a bit embarrassed about being a multi-trillionaire.

To get back to Aus. Dollars, I have a toxic debt of approx $45,000 so six months ago I had equity of A$405,000 in my Chateau. After the credit crunch and general economic turmoil, my Chateau is worth A$100,000 less. That means I’ve lost A$100,000 equityin six months. Cor! bugger me! and bless my cotton socks! (Aus. made of course) I’ve lost $100,000.

I was about to throw myself off the window ledge outside my office, until I realised that I write this crap in my garage. What to do? This catastrophe needed a dramatic response. I thought about throwing myself off the roof of the Chateau, but realised that, even though it’s a single storey brick veneer in Melbourne’s West, my ladder is knackered.

So, I did what any rational person would have done and took a walk. I decided to throw myself off the pavement into the gutter. As I walked along the pavements of Albion, I suddenly realised that due to the proliferation of motorised wheel-chairs (don’t mess with those suckers, if you value your life? No! none were racing as I walked) all the bits between the path and the road have been squished down, to facilitate access for the geriatric Fangios.

Which brings me back to the title of this blog ‘Jay Walking’, if I wanted to throw myself into a gutter, I had to walk to a place where pedestrians are not supposed to walk, I did this and jumped. You’ll be happy to know that I survived the drop and although a cop car was passing at the time, I scurried off before they caught me.

I shall have to look into the origin of the term Jay Walking, as to the best of my knowledge a Jay is an English bird that chats a lot (don’t they all) but doesn’t walk across roads, surely that’s chickens!

Cheers,

SkyBlueSkull

http://keith-skellern.blogspot.com