Last Updated on August 23, 2020
Stock market investing is not the best shoot.
But I am diffident about any global conspiracies. In the 2007–2008 crisis generally blamed on a conspiracy of greedy “banksters”. I saw other factors at play. The government abolished racial and other restrictions on lending. Rather than get sued, the bankers made loans to many unqualified borrowers. Mortgage brokers had a heyday in distributing easy money to deadbeats for juicy commissions. Individual Bank mortgage lenders got big service charges and commissions for helping financiers put together complicated but worthless loan backed packages for sale to “investors” in other countries. Insurance companies like AIG stupidly guaranteed packages of bad loans. Why? Because there was also a guarantee from big stockbrokers like Lehman Bros to guarantee their guarantee. Foreign banks and their investor groups picked up huge “bundled packages“ of guaranteed loans.
There was more to it than that, but when the worthless packages of paper obligations were made up of a lot of $50,000 loans to unemployed homeowners living in $10,000 hovels anyone could see trouble ahead.
Bottom line is as Jay Wright pointed out, you can’t trust paper no matter what it is “backed” by. Paper gold and index funds for instance are backed only by paper promises of potentially unreliable counter-parties.
Nothing wrong with a little gambling. Diversification is probably good — but having your own business or profession is best — in my view.