Op-Ed: Obsolete finance, corporate failures, and economic meltdown – Are we happy now?

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The trouble with being a financial cynic is that you’ll always be 100% right. If there’s a slight flicker of realism anywhere, it’ll be a rare exception. The thunderous roar of out-of-control costs of living has obscured the catastrophic stupidity.

Continuous corporate failures, absurd business models, and variable degrees of very dubious delirious finance are the main components in what is looking very much like an economic meltdown.  

Those links hardly need explanations.

Let’s keep it simple:

Debt is killing everything one spreadsheet at a time.

The finance sector doesn’t have any idea how to manage debt on this scale.

Revenue is being exterminated by costs.

Old business models can’t and won’t work in this environment.

There’s a steady hurricane of corporate crashes.

Corporate crashes send shockwaves that affect their sectors which then hit the supply chains. These are happening about every 5 minutes now.

Picturesque, isn’t it? There are many reasons for these things, but you’d swear it was business as usual in the black hole. Useless executive trash pile on the chat shows and everything’s wonderful.

“This is how modern business is done”, said the coroner.  

The fact is that these methodologies, from finance to selling burgers, are very much parts of a former business reality. The caves are just next door. The debt cycle has long since turned into an incinerator of wealth. It’s a sort of La Brea Tarpit of evaporating values.

This is where it gets uglier in a less obvious way. Nobody’s being trained to dodge the bullets. Risk aversion is a tautology. Nobody’s avoiding risk.

Basic financial compliance never really happened. You get a commission for writing bad loans, too. So, the bad debts accumulate. You don’t have to look hard to find examples of “sudden” debt failures, dodgy numbers, and fictional balance sheets.

The sub-primes were the all-time classic cases of total failure of compliance. What happened was that everyone insured the bad debts, knowing they were going to fail. The crash was inevitable because that was the only way to cash in on these ridiculous, unpayable, loans.

The current version is perhaps even stupider. Silicon Valley bank was the canary in the graveyard. The company had $200 billion in loans just slightly off the main balance sheet. $200 billion? A lot for a rainy day, even for a mid-level bank.

These sorts of debt are “entrepreneurial”. People make huge amounts of money writing farcical loans. The original Third World loans went mainstream in the early 2000s.

Sure, I can lend you some money. It’s not my money. I’m taking no risk at all. I get a lot of commission for writing these loans. Therefore, I’m some sort of saint, and you get to hang yourselves in many interesting and “clever” ways. All you need to do this are morons who are prepared to sign off on the loans and lenders who are totally uninterested in anything but numbers.

There’s no difference between a bad loan and a good loan in this fecal wonderland. As long as it looks good, it is good. It’s better not to question the numbers supplied by borrowers. You’re God, remember? No, you’re not, but they don’t know that, and you don’t want to know that.  

The sheer monotony of the finance sector’s debt overkill isn’t news to anyone in the sector. It’s the weather. It’s also now physically destroying the real economy, but according to the finance sector, the real economy doesn’t exist.

Meanwhile, in those fascinating nearly 20 years of reluctant recognition of anything, the world has moved on. The retail sector has collapsed and reshaped itself. Corporate property portfolios are for masochists only.

When things go wrong, it’s market forces, or more aptly, market farces. Interest rates aren’t an issue if you can’t manage debt anyway. They’re excuses, not hard data.

This is where lousy business models kick in with a vengeance. Not only do these antiques have no way of making revenue they were never designed to make. They’re also hopelessly uncompetitive. Amazon and Ali Baba proved that years ago.

The entire retail sector, the last whimpering remnant of old business models, fell to bits. The malls, 90s super-icons, died out faster than the dinosaurs. Someone’s still holding all that property, and their capital is also extinct.

This will probably be called “Decline of the Middlemen”. In the past, you needed distribution to third parties. Now, you often don’t need those third parties. That’s what happened to retail. The services industries are equally more direct. If you need a service, more often than not you don’t need a third party.  

That’s particularly the case for high-end tech. Artificial intelligence will redesign the services sector overnight. That’s mainly in the holy name of cost avoidance, but it’s also far more efficient in many ways.

There’s a slight issue here. Most of the high-flyers you see cluttering up the finance news are middlemen. Do you need consultants, when you can get your AI to search multiple funding options for anything? Do you need lawyers, when you can recite a standard contract in your sleep? Can you cost something 500 different ways in an hour or so?

Inefficient parasites and diseases kill their hosts, and that’s what’s happening in finance. They’re even doing business with the wrong people, the ridiculously educated fools who think an executive summary is an encyclopedia. They also don’t understand the information, hence these debt-laden obscenities.

I don’t like writing doom scenarios. I spent years writing for businesses, and it’s hard to enjoy these constant disasters.

So let’s look at a different environment. Here are a few suggestions:

Distrust is your salvation. Why, and for that matter, how, do you trust people who make money putting you in dangerous business situations?

You can stage your financing in non-suicidal ways. Don’t take on uncomfortable situations.

You can’t be the nicest guy in the world if you’re the boss. You can, however, reposition people, keep your trained guys, and expand without going broke.

Numbers, schmumbers. You need trustworthy, reliable business revenue and you can always lose the sycophants and fictional accounts idiots.

Be a cynic. It’s more fun than being a corpse.