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You can spot people working in the investment sector more easily these days because of that tell-tale bulge from their adult diaper.
As the subprime mortgage crisis expands ("from beneath it devours"--yes, now it's clear) to implicate ratings agencies ("The risk is sliced so thin it actually vanishes!") and banks' off-book SIVs (more powerful but prone to rollover in accidents), people who had no idea they held risky investments are finding that out at about the same time they hear they used to have investments.
That's you and me and everyone we know, as the P-I reports:
King County officials placed $207 million in investments that were subsequently undermined by the subprime mortgage crisis and expect to see proposals soon for a bailout.Citizens, that mewling, groaning noise is the sound of King County officials straining to hold it in.Taxpayers could lose up to $83 million, county officials say, but the state treasurer thinks the county should write off the entire $207 million.
There is no credible bailout on the table, certainly nothing that local trustees are going to conjure up. The wonderfully quotable state Treasurer Mike Murphy puts it best: "The alleged 'work-out' is unlikely to occur. There's too many billions floating around that's got this junk and nobody's got the cash to cover it."
Murphy's in an enviable position because he restructured the state's position in the commercial paper market "years ago," suspecting the underlying loans weren't worth the paper they were written on (so to speak). He's got "told you so" cred to spare, and he dumps on King County (and by extension the rest of the world) for not seeing this coming.
This leads to this absolutely awesome quote from Ken Guy, King County's finance director: "These were the very highest-rated assets prior to August 2007. ... In August, there was this unprecedented turmoil in the credit markets. The county did its homework on this. We feel that we've actually managed this extremely well."
Extremely well, Ken? Is there some way of parsing that so it means, "We were completely freaking blindsided and we lost our shorts and now we don't want to admit it and oh lord Jesus, I've never asked for much but I'm on my knees here"? After all, Guy is only talking about four "impaired" investment programs (with $10.5 million from the Seattle Public Schools)--we're not betting people but if we were, we'd suspect that is just what they are (almost) willing to cop to losing. The really nasty news should be along shortly.
Art by Tom Ledin.
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