Greenspan’s Monstrous Love Child: A Grim Bedtime Story

Once upon a time, in a land far, far away, there lived an old wizard named Greenspan. Great and mysterious power had he; love and fear he inspired in equal measure. His name was known throughout the land.

This great Greenspan had strange habits. He would slumber in his bathtub for hours at a stretch, dreaming of scrap metal and interest rates and other alchemical subjects. He hid behind enormous, uncomely glasses, so that his visage might be obscured. His speech was magical too. His words were like flying insects—right there before you, plain as day—but if you tried to truly grasp them with your mind, their substance disappeared and you found yourself with only questions. These charmed words seldom organized themselves into rational sentences. They were more like riddles, or nonsense, or spells. His deceptiveness should have been a clue and a warning, but it went unheeded.

Yet Greenspan’s era seemed, for a while, a largely good and quiet time, and all was mostly peaceful. But, as is often the case, things were deceiving. Evil was growing.

You see, it is true that during the height of his fame, Greenspan seemed almost ethereal; indeed, hardly made of flesh. Yet it was also rumored that long ago, while young and greedy of heart and mind, he had fallen deeply in love with a mad siren called Ayn. Those days seemed long ago, but somehow, through some terrible magic, Greenspan produced a monstrous child out of this love—a child clearly begat of this reckless siren.

The details are sketchy. This black magic is now mostly lost. The story which is strangest, yet rings true, is that Greenspan, while chanting incantations in the tub, somehow managed to animate a soap bubble, and then set it loose upon the world. This monstrous child was named in full: the Derivatives Bubble. But Greenspan fondly called him Derbub.

At first this Derbub was small and even comely. In fact, it is true that he did useful work on occasion. He helped those in need, if they had paid tribute to him first, and helped smooth out the bumps of life, as it were.

But Greenspan did an evil thing: he so dearly loved his Derbub, the bastard child of his beloved Ayn, that he could not help but spoil him. He fed him a liquid diet of credit and money, nourishing foodstuffs hardly known to us today. When Derbub threw a tantrum—when he was still small enough to be controlled—Greenspan did not guide him and teach him. Instead he reacted like a hysterical mother. He even encouraged Derbub’s tantrums by feeding him to excess. You see, even after he became fearsome, Greenspan long viewed his monster like a fragile and beloved child. Like the worst of parents, he bragged about Derbub’s smallest good points, and ignored all the rest.

Derbub grew large and monstrous indeed. Trillions and trillions, by the hundreds, were needed to measure him. In fact, he was so enormous that most people, even sophisticated people of the day, simply ignored him. Derbub was too big to grasp with either mind or heart. Still, Greenspan coddled him and fed him his liquid diet, and he grew yet larger.

The greedy in the world, and those who were both clever and without scruple, were drawn to Derbub’s power. Some, they say, even worshiped him as a god. If they pleased him, and learned his ways, they too could sup from the nourishing liquidity that fed him—he was too big to care or even to notice. This went on for a long time, and many of the wicked grew powerful indeed, building great palaces with ice rinks even, and flying private jets fueled by dinosaur bones, they say. Yet, though they loved Derbub, most of his worshippers had little deep understanding of his ways, and they saw not the danger he posed. Or they ignored it.

Some of the common people were worried. “Where will all this lead?” they asked. But they were hushed or ignored by the people in the jets and, really, their voices could hardly be heard. Derbub and his people were confident and brash, and they were noisy in their revels. Also, Derbub was just so out of scale with a mere woman or man that, strange to say, most people hardly noticed him. He was like a forceful ether. Everywhere and powerful, yet hard to make sense of. No wonder some worshiped him.

Indeed, this monstrous Derbub, at his zenith, had grown so large that he spanned oceans and tied the world together with his own body. His very appetite, his constant ravenous search for liquid food, tied the world together as though it were his own circulatory system. Even Greenspan himself could no longer fully comprehend Derbub’s power. Some say, before the end, Greenspan had begun to worry himself—despite his bewitchment by Ayn—about what might come of their horrific love child.

Still, a few of those mighty enough to be heard above the tumultuous revels did sound warnings. Especially, there was one named Buffett, who was a wise man and rich as Croesus—though still a flea in comparison to Derbub and his minions. This Buffett declared Derbub a weapon of financial destruction, and sounded the alarm. But very few heard. Certainly not Derbub’s worshipers, who by now were a multitude and powerful. And really, by this point, Derbub was so huge: could anyone have stopped him? They did not, at any rate. They did not.

So the problem should have been foreseen, but it was not. It is obvious now that this Derivatives Bubble, this Derbub, was not the efficient and rational god that both his father, Greenspan, and his worshipers believed him to be. Instead he was still a spoiled child, and his heart, such as he had, was full of deceit. Indeed, he was capricious and he loved games—especially cruel ones. Buffett had warned of this, but he was ignored. A little known science called game theory knew much of Derbub’s cruel and inefficient ways, but it was widely denied, if acknowledged at all. Soon there was neither rule nor regulation powerful enough to curb the caprices of this monstrous child. Both Greenspan and his worshippers still publicly maintained that Derbub was good through and through, and needed no hand to guide him. Though in secret, I think, they too must have quailed at his enormity. Trillions and trillions by the hundreds he loomed, until he eclipsed all the mighty of the world. And still he was ravenous.

The story of the end is curious and strange. At his peak, Derbub had few playmates who could join in his games. His hunger was too dangerous. But there were two named Fannie and Freddie who, while hardly equals, continued to play games with him. But before he played Derbub always demanded payment of a tribute of liquid nourishment. (You see, Derbub’s very existence depended on continual growth, so he himself was trapped, in a way, although I can find no sympathy for him in me.) Only if they fed him, would Derbub consent to play. But one day, Fannie and Freddie had caught a little flu themselves, and were out of liquidity to feed him. They, too, were addicted to liquid food by this time, and they needed it to survive their illness.

When they denied him, the massive Derbub was displeased. He was angry. He was terrible. In truth, he was desperate. Now, if Derbub had given his playmates a month, or a week, or even a day, perhaps the horrible end would have been postponed, inevitable though it was. But it was Fannie and Freddie’s insult that provoked the monster.

Derbub’s response was terrifying to behold. He was angered beyond reason. He punished Fannie and he punished Freddie, too. Derbub himself was panicking. Though indeed powerful, he was more fragile than he appeared. He was gorging on almost the whole world now, and yet hungrier every day. He had grown too big. He knew it could not last. He was in fear for his life.

So Derbub desperately tried to survive. By this time he was drawing liquid nourishment through pipes leading from every continent, every nation, even from pipes leading to dark precious liquid underground. When first he raged, the mighty, worshipers or not, actually tried to feed him more and placate him. But they did not have enough. He was wounded now, and cornered. In his fear and his hunger, Derbub devoured anything connected to him. And still he needed more. He ate stocks and bonds and houses and jobs. He ate years of work and hopes and dreams. Still he was hungry. Pity those who stood in his path. It must be true that even his worshippers had begun to fear him, for their reactions were quick. Some, against all their theories and pronouncements, tried, too late, to rule Derbub and curb him. But in vain, for without Derbub, they were nothing. He was the very source of their power. For the most part they simply ran and panicked themselves, which made the destruction all the worse. Indeed they were actually a part of Derbub’s body now, and feared perishing with him. His worshipers’ indulgences, which they had formerly swapped by the trillions—believing them to be like gold, the fools—were now worthless as Derbub raged. They saw his favors would never be redeemed. He became a slow motion maelstrom. So his priests sold everything else they had—even things of real value—in a vain attempt to salvage what they could. This just added to the storm.

In his death throes, Derbub began to rend himself into pieces, tearing off parts of his own body and devouring them, trying to survive. Anything connected to him—which was nearly everything—was ripped and torn, too. He ate them all, and he ate himself, but still he was not sated. For those who could reason at all, the only question was whether anything would be left when Derbub was finished and finally dead.

The common people of the land were caught in the terrible destruction. It is true that some of these folk had fed Derbub unknowingly, but they were little to blame otherwise, and did not deserve his wrath. It is also true that some commoners did panic during the destruction (some of the wicked even tried to pin the blame on them!), but they were not the cause. It was Derbub himself, and his worshipers who were part of him, who were the cause. Perhaps if Buffett had been listened to. Perhaps if the game theorists had been heard. But they were not. Something would survive, surely. But at the height of the maelstrom even the wisest knew not what. Though it is true that this Derivatives Bubble was, at core, a fraud and a figment—which is why it needed to grow to survive— still the destruction was quite real. Such times had never been seen before, not in living memory anyway.

During this dark time, reason had little value. The best one could do was to write fables, in the desire that, perhaps, the next generation would be wiser. So, for a time that seemed like eternity, everyone lived in fear, and waited for the storm to pass. People huddled in their houses, they cared for their children, and they hoped, as best as they could, that, when the destruction was finally over, there would still be a world to bequeath to them.

Comments

[investor88:]

The derivatives bubble has barely unwound so there is no telling how badly markets and economies would be affected. We have to recognise the problem in order to survive. This is a good article which draws attention to the root cause of the economic mayhem going on around the world.

2008 Oct 12 08:17 AM

[PK de C'ville:]

Timothy,

I salute your talent and compassion. Standing Ovation.

2008 Oct 12 08:30 AM

[4Annie:]

Can this modern day fairy tale ever have a happily ever-after story-book ending? Really nice job.

2008 Oct 12 08:56 AM

[svkoho:]

Tim, What a job you did with this fable. An instant classic. Greenspan has been coming and going here in in the kingdom of cheney for years. I have seen him and his scary goons at the jackson hole airport leaving on his iron bird many times.The good news is that he is banished. The bad news is that I am huddling in my cave like all the rest.

2008 Oct 12 11:44 AM

[john s. gordon:]

the dark side of the force ?
> jack

2008 Oct 12 01:28 PM

[Smarty_Pants:]

Wait. For soon comes the Knight in Golden Armor to the rescue.

2008 Oct 12 05:59 PM