Hero the Zero (with apologies to Daevid Allen)

So after placing blind, unwavering faith in sub-prime debt brought about the credit crunch and with it the biggest global recession since the Great Depression, Americans chose to pick up this same blind, unwavering faith and place it in the lap of a former investment banker who’d run an institution that’d been involved in, err, sub-prime debt.

The result, judging by these magazine covers, was that mainstream American opinion got to reaffirm its jack-off fascination with individuals as opposed to institutions, complex analysis, anything that might run counter to existing prejudices etc., to an unbelieveable extent.

Thats why I think all these pics need gathered together for posterity's sake; it's my wee attempt at making sure any history of what’s happened has a clear sense of how ridiculous things where and how deluded so many people turned out to be when it came to choosing a white knight (Yeah sure hindsight is a wonderful thing, but c'mon theres laying it on a bit thick and then theres the images presented here).

Even better with Paulson is the extent to which he totally, utterly, totally, utterly, totally fucked up. I mean there he was in the hot seat and whoops-a-daisy, turned out to be an utterly glakit, useless bastard.

It’s like in the Autumn of 2008 when the only thing holding the global financial system together was a belief that big banks wouldn’t be allowed to fail, Secretary Paulson said “Fuck that, let Lehman BURN muthafucka!” or words to that effect.

Here I’ll digress for a mo’ - a polite interpretation would be Paulson took a dealmaker approach to the credit crunch and in so doing displayed a flexibility, creativity and ability to devise bespoke solutions to specific problems of the highest order. Except, given this was a systemic crisis all that shite was completely beside the point.

Rather, what was needed was a contextualised strategy wherein the issue wasn’t so much should Lehman Bros be allowed to fail as it was what would the possible consequences of it’s failure be. And lets not even discuss the progressively more generous terms (for banks at the taxpayers’ expense) on which deals where reached.

Digression over - at this point you could go on about the extent to which Goldman Sachs, which King Henry used to run, overlaps with and even controls the US state in a big, vampire squid stylely. Or you could be a bit brighter and broaden this to include investment banks and Harvard MBAs more generally. But, given that’s essentially straightforward left-wing views of the ruling class and it’s formation I’d rather not waste my time (Very rich and powerful people have a disproportionate influence over government policy, taxation and public spending? Really? You've got to be shitting me. Really? No way, etc.)

Rather, it’s more fun to imitate the all-American cult of personality type thang. I mean yer man Hank (rhymes with ….) obviously posed for these photos indicating he chose to have himself represented in ways that leave me with the impression that Hanky boy clearly has more than a wee bitty of an ego.

Like when the magazine said Secretary Paulson may we call you ”Mr Risk”, he presumably said “yes” and when they said whaddabout “The Persuader” he said “YES” and when they said “King Henry”?, he said “yes, yes, YESSSS!!!!! Jezuz fuckin’christ YESSSSSSSS!!, I AM King Henry Muthafucka!”

Turns out (ignoring the however many seats on the boards of however many private equity houses and financial boutiques he'll take in the future or has already been offered), yer man was a useless bitch, byatch.

WANKER!!!!!!!!!!!!!!!!!!

“Is Sovereign Debt the New Subprime? That’s a question many on Wall Street are asking as 2009 comes to a close.” (or you could also click here)

Anyone interested in this would be advised to ignore the previous links and instead read Willem Buiter’s blog posts from (off the top of my head) a lot of 2008/early 2009, although doing so would raise a number of bloody obvious points (1) its not a new risk (2) seriously, its not a new risk, (3) I’m not joking, its not a new risk and (4) I’ve no idea why Buiter wasn’t cited in Prospect’s list of the 25 people who’ve contributed the most to public debate over the financial crisis other than the fact political economy really is Prospect’s gaping big whole of a weak spot.

Government borrowing and the concerns it's creating are already prompting clear responses. The Irish government, fer instance, has announced the following 2010 cuts in public spending –

• Public servants pay cuts ranging from 5% on those earning 30,000 euros to 15% on those earning more than 200,000 euros
• 760m euros on social welfare
• 980m euros on day-to-day spending programmes
• 960m euros on investment projects.
• A 16 euros per month cit in child benefit

So describing sovereign debt as the new sub-prime as if the discussion was about hemlines is an offensively off-hand way of referring to a situation that's already damaging the finances of millions of people. I mean whats so fashionable about cutting child benefit?

And for a phrase that’s being used so knowingly it’s actually a piece of shit comparison. Sub-prime was regarded as triple A by the exact same people now doing down sovereign debt. It's subsequent implosion highlighted the rating agencies’ deeply rooted technical inadequacies and the ignorance of the vast majority of the financial system (including “many on Wall Street”) what with a credit rating being a measure of probability of default i.e. an assessment of what is likely to happen in the future as opposed to the codification of a retrospective kneekerk. And because allova sudden no one had an utter scooby what the risk sub-prime posed actually was, the resultant uncertainty and associated crisis of confidence was what caused much of the credit crunch's damage to the global economy.

By contrast, people comparing sovereign debt with sub-prime typically trot out a list of countries that may or may not include Greece, Spain, Ukraine, Austria, Latvia, Ireland, Argentina and Mexico as evidence to substantiate their argument. This is all very well except the fundamental point about sub-prime was there weren’t any meaningful, direct comparators. Hence being able to cite relevant examples and historical episodes by definition makes clear sovereign debt defaults are nothing new nor particularly unquantifiable. Or to get all Donald Rumsfeld on your ass sovereign debt defaults are a known-unknown whereas sub-prime was so destructive precisely because it was an unknown-unknown. And just don’t talk to me about the fact that with this wee thing called the IMF there’s already a clear, if painful, safety net in place for national economies and their debt, another factor which didn’t apply to sub-prime (after the monolines went phut anyway).

So why make the comparison if it's spurious and poorly thought out? For one thing it’s catchy enough to comply with the media’s goldfish memory and bad news fetish. For another it's a product of underlying prejudices about government borrowing and spending. And finally, it reflects the position and associated ignorant arrogance of those making it; they’re not going to be affected by child benefit cuts so as a rule don’t give a fuck. Hence this post's title, which I’m putting forward as the universal response to anyone ghastly enough to call sovereign debt the new sub-prime.