GeekLaw (96.73)

Nature abhors a vacuum - Real-estate and High finance being sucked into the void.

October 06, 2008 – Comments (0) | RELATED TICKERS: BAC , XOM , WAMUQ.PK

As painful as this recession has been on my personal net worth, I have to say that I have watched with nearly unbounded glee as those in "high finance" and real-estate have been taken like lambs to the slaughter.

The populous has watched the finance and real-estate industries fleece our country men by charging percentage based commissions rather than fee-based services.

As real-estate prices nearly doubled over the past decade, those in the industry benefited from a doubling in salary despite failing to add any additional value (I’ll refrain from making jokes about failing to add value to begin with).

Similarly, those in finance benefited from massive increases in compensation owing to a steady percentage of ever increasing transaction amounts. The same work yielded more than a doubling of compensation, thus creating a massive imbalance or a vacuum if you will.

Nature abhors a vacuum, and now these industries will learn first hand how nature deals with such imbalances. It won’t be pretty. It will be painful. But, equilibrium must be attained.

I like to think about my losses in the market (standard fair boring index funds) as the price of admission. I’ve lost a lot of paper wealth, but its worth every penny to see the suffering of those who caused the problem.

Bwahahahaha.

PS: If you think big oil is going to recover, take a step back and think about the concept of "regression to the mean." Even if the breakeven point of harvesting natures black gold has increased over the past decade, nobody can make a compelling argument that it has increased 500% (e.g., from $30 ten years ago to the $147 peak). Even at $90.00 bbl, the average cost of production would have to essentially have trippled in ten years. That swooshing sound you hear is big oil, along with finance and real estate, being sucked back toward reality. Unfortunately, these industries have managed to take the rest of the economy down with them.