People seem a little confused by my previous explanation of the current financial crisis. Sometimes I forget that not everyone has spent the last fifteen years studying macroeconomics, and I forget to use layman’s terms. So, once again, here’s my attempt to explain what’s going on:
Basically, this is a crisis of overleveraged stagflationary liquidity. The GSEs were overleveraged while the MMAs were staglated. And the ZQLs were illiquidated (an astonishing 52% were ranked “lukewarm liquid” or “lumpy liquid” by Monday’s closing bell.) In other words, all the money that was in the banks’ unincorporated mortgage-backed assets is now being drawn into 1.) the portfolios of the Treasury bonds — except for those certificates that are still indexed to the regional banks’ ATMs and WKRPs, and 2.) the portfolio of one Tony “Zazz” Zazzles, a hot new banker on the scene.
What does this mean for you? It means you better come up with motherfuckin’ ONE TRILLION DOLLARS or your house may get trapped in a bubble — AN IRON BUBBLE OF DEATH.