Posted by: erichosemann | October 25, 2010

Tapping Against The Prison Wall

I came up with the title of this post a few years ago when the financial crisis hit.  I hadn’t read Darkness at Noon in full yet, or I read excerpts of it somewhere, or maybe I was thinking back to comic books about POWs that I read as a boy.

At the time I came up with this title the dominant theme amongst armchair theorists was why are derivatives and mortgage backed securities so darned complex?  As bad as it sounds to admit it now, I wasn’t surprised.  I really wasn’t surprised.  What surprised me was how incredulous people were about the complexity of those financial “instruments,” because when you think about it, if you take away everything a modern person has, clothe him in dishrags and leave him to rot in a moldy, damp 5 x 5 cell, he will still find a way to communicate to the outside world.  He’ll find out whether he has neighbors, and then he’ll set to talking with them, even if it means developing a way to translate “Today is my daughter’s fifth birthday” into a series of wall taps with tin cup or a finger nail.

If a person can learn to communicate with almost nothing at his disposal, why is it a surprise that a person can develop something with “tranches” that produces income from five hundred different mortgages of varying risk and value if they’re surround by four computer screens, a plate of half-eaten danish and a belly full of Starbucks?

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