Nothing more than a con

 

Subject: Nothing more than a con.





Many years ago I had been inveigled into driving to Sun City, a two hour drive from Johannesburg, a glitzy project  
dreamt up by sol Kerzner to soften the extraction of many millions of Rands locked up in the individual bank accounts of South Africans who had been subject to the tenants of a  Calvinistic State, ruled by an Afrikaans church dominee who’s reading of the good book promised “hell and damnation” to those who transgressed Its teaching on the biblical story of Sodom and Gomorrah. Sol’s plan was to build a Gomorrah in one of the artificial states, Bophuthatswana which had been created during the days of Apartheid to substantiate the independence of the tribal African living outside the white shibboleth of South Africa proper. Bophuthatswana was reached by a drive through a scrubland of semi desert, a road flanked by boulder strewn  dirt,  populated by cactus and proteas, an unappetising aperitif before the jeweled  extravaganza named Sun City but colloquially, Sin City a glitzy marketing man’s dream where hyperbole was taken to extreme. From a pristine golf course, a green oasis in the desert to the concert auditorium for the stars who wouldn’t risk soiling their names by appearing in South Africa but happy to take the rands of those who lived their lives working in a country mired in global opprobrium. The piece de resistance was the gambling casino. This was the kicker for Sols money making dream since the Calvinistic life style decreed by the Afrikaner Church was one of abstinence and after 20 years of abstinence the people of Jobug simply wanted to party. 

The gambling casino was huge and looking down from the balcony running around the casino, backed by every conceivable restaurant and exclusive shop the punters were at play glazed eyed intent on the rolling numbers of the ‘one armed bandit’ the obsessed gambler feeding in next months mortgage payment on the mechanised spin of the wheels inside the machine pre-programmed to give a large return to the casino. The black jack tables, the roulette wheel, all designed to fleece the optimistic muppet who strayed down into the mob and threw his or her money onto the baize tables. 

I remember the dizziness and the nausea watching, the sense of feeling alienated from my fellow humans who incidentally included family.  It was a perilous moment of semi  insanity but it was my sanity which was being challenged by the sight of perfectly normal hard working people under the thrall of winning and winning big.

The Yorkshire adage “that you don’t get awt for nowt” rose in my throat and made me gag with apprehension. An old teaching that has stayed with me all my life was inoculating me from the mayhem below which was brought home in my second reading of the ‘Big Short’ written by Michael Lewis in 2010 where he exposed the absurdity of the financial markets, particularly the derivative market and the sub prime mortgage market. To enter this market first of all required the marketing and sale of house mortgages to people who couldn’t afford them and who were sure to default. This almost criminal act of persuading the poor to buy a mortgage was best illustrated by the open comment under interrogation by a Senate Hearing from Lloyd Blankfein the CEO of Goldman Sacs who declared the market was between “consenting adults” forgetting that one side of the trade was backed by glossy advertising material in which the poor punter was no adversary. 

The charade of financial probity was shot through by mathematical models which at the time were the load stone of financial investment. According to the financial practitioners, the way to avoid the risk of loss was to slice the bonds sold on the open market into a merry old mix of good, bad and downright awful so that the good carried  the awful in a disguise that even the traders didn’t know what they were selling.

Added to this deceit the traders were encouraged to bet against the bonds they were selling (shorting) and to add infirmary to a corrupting process they bought insurance on the bond if and when it became recognised for the valueless asset it was. So one piece of corruption was piled on another until the markets were awash with bonds of dubious value and the banks, who became in one way or another the final repository of these sub prime bonds weakened the banks valuation on what it thought of the value it held on its books.

No one has been prosecuted other than a few lowly traders, no big shots who’s main  defense was that they didn’t understand the mechanism of the sub prime market. 

The real tragedy lay in those who were co-opted into believing that they were buying their house only to discover ‘it was nothing more than a con’.