The Wizard of Odds

Carroll Straus June 1999/January2011

“I am the great and powerful Oz...” said the little man behind the screen. Oops! The curtain slipped, and it was--- a mere man! Oh, what a dreadful discovery! How much happier Dorothy was when she thought the wizard had the powers he pretended to have!

The moral of that tale, as we all know, is that although the resources Dorothy sought were not to be granted by the wizard’s awesome power, they were... within her.

What, you may ask, does this have to do with my favorite topic, the perils of COURT? More than I you may think, and far more than I thought! Follow me along the yellow brick road and I’ll show you what I mean.

Long ago, May 31, 1999 (six months left to that calendar year, six months until we awoke to survey THE NEW MILLENNIUM) as I drove merrily along a freeway in Southern California with my handy cell phone (no one in doesn’t have a cell phone these days you know!!) armed (so I thought) with technology which would keep me in communication with my destination in Tucson, AZ... I had a Dorothy-like experience. “Toto, we’re not in Orange County anymore!” No, Virginia, you couldn’t call Tucson from there... not even directory assistance, and no, no one could then tell me what that was about. Not Centennial Cellular, and not AT&T Wireless. (That was then—now cell coverage is better—and “Y2K” didn’t end the world as we knew it. That job was left to the mortgage industry and the Reserve banks.

I pondered this until it hit me-- the man behind the mask, in this case “the phone company” (whoever that is these days), is just a pitiful wretch, no more powerful than I am! This vast system of cell sites, customer support reps, and who knows what in between did not have the power to grant my wish to make that call-- no matter what I did or who I held (as in hold the phone while driving) to be connected to. Now the man behind the mask is still hidden-but the entire economy is in the ne meltdown at DIDN’T happen at the feared “Y2K” event. So often in human affairs what we fear does NOT happen…what we did NOT fear…does.

This set me thinking (most things do.) The wizard of technology is not so magical as we had supposed…! And so (being me) I began to wonder what were the odds that this great and powerful wizard –“Technology”--would NOT soon be unmasked for all of us-- as it had just been unmasked for me. Technology, you see, is also one of the “wizards” in the financial meltdown. The crazy securities which turned out to be “toxic” were called derivatives…which apparent means they were invented by mathematicians using formulas having NOT ONE THING to do with the realities of commerce. The were done electronically and no real money changed hands when they were signed, sealed and delivered. Sometimes no paper documents were provided to the investors who sucked them up… and kept the game going.

The once dreaded “Millennium Bomb” went off with a slow pssssssssst like air escaping from a tire-- as I expected it would—and now that the air has been let out of the debt and mortgage “bubble” (as I expected it would) only this is worse—because NONE OF US KNEW about the “CDO/CDF” Ponzi scheme. (see http://www.investopedia.com/terms/c/cdo.asp)

Will we all find out there is no magic? Will we discover, as Dorothy did, that who must sort the situation out, get home again, is... us??? Can this be??? I think it just might. But—10 years after my first pondering of this, alas, there is no sign of this awakening in the mainstream press … but if you dig deeper, there are some dissenters. Try, for instance, reading “Bad Money” http://www.amazon.com/s/ref=nb_sb_ss_i_0_24?url=search-alias%3Dstripbook...

Ah, that yellow brick road... It goes it forward and backward in time. Do come along with me, backward this time, to find the techno/economy-wizard and his story...

When I was a kid (hate to admit) we had dial phones and a party line. So the odds were not 100% that if you wanted to make a call to, say, the pediatrician (they talked to you in those days) you would be able to pick up the phone and do that. Up to 6 other families were on that same line, and, over time, there was absolutely certainty that some day, when you picked up that receiver, someone else would be using the line. Then came private lines and bingo! 100% of the time when you called, the other line would ring. (If someone was home the call would be completed-- still not 100% odds of completion, back then.) We had no personal debt to speak of. No credit cards. People put things on lay-away.

Then came the Next Big Thing. As teens, we boggled at the county fair, using demo models of-- I swear-- “mash button phones.” (OK, I grew up in the south, what can I tell you?) Soon, no more dials. It was so fast! We all loved it, and we loved Ma Bell. Technology was a kind god, which gave with both hands, asking little or nothing in return. Or so we thought!

Then “they” (in this case the government, who we also used to like) decided this monopoly was a Bad Thing. Ma Bell was busted up. No longer did she provide phone (leased) and service and regulated prices… Now we have a technology which does so much more than connect us to any telephone, anywhere in the world. It answers, forwards, pages, encrypts, decrypts. It sends text or voice over the air or through our PC--after it goes through innumerable other hi-speed on-off switches. (We call these mainframes or supercomputers, maybe a Cray or an Altus if you grok this geek stuff.) And do we notice? No, we don’t. Until some day, as I learned on that long ago Memorial Day weekend, somebody accidentally lets a glimpse of the mortal puppetmaster appear. Now technology has transformed Wall Street—and no one knows how to fix the mess of bad loans and bad paperwork.

Fast forward to 2007. Oops—mortgages are defaulting. (They turned cut to be mirages !) Now it is 2011, bankruptcy s still rising and some mortgages are being declared invalid. (But try to sell the house without the title cleared.) now we know mistakes were made. Documents were forged. Robo-signers swore to what thy had not read.

Somewhere in this vast sea of connected computers, somebody, some human, decided that no one would do the job of staying honest and tracking the vast quantities of documents which were generated in this feeding frenzy of fake commerce. Or, maybe someone just forgot to figure out how, or forgot to let anyone in the support division know, or... If I only had a brain!!!

Duh!!! The wizard is a sham. As fate would have it, for me all doubt wads removed by the next days’ Tucson Star. Ditto the man I read about, who was pinned under his car, fruitlessly dialing 911 all night. (Seems he lived in an area of Tucson which has had a history of problems with their phone service. Years of intermittent crosstalk and mis-routed calls -- none of which was anybody’s fault.) It is never anyone's fault...

How many of us knew that the mortgage industry was a gigantic Ponzi scheme, and have found ourselves dependent on a corporate giant which has failed in some mysterious fashion-- only to have everyone say the problem was elsewhere -- not their error, problem, fault? We call them. They say nothing—or “we can’t help you.”

Do you feel a sense of tech bubble “this is a new world” déjà vu as you read these words? I thought so.

Given this fact--and given how very few of us a clue about economics, would even know what might have caused this madness? How likely is it that things will go smoothly when all the unknowns all reach the zero hour of...gee, if we only knew! I don’t know how this debt system works. You don’t know how this debt system works. Ken Bernanke, the alleged expert, doesn’t know how the entire mess works. We are all just happy to see the wizard’s mouth move, and hope his magic will… gee if only we knew!

Until the curtain is drawn back.

Let’s just say this web of wizardry—read “smoke and mirrors-- does unravel just a wee bit as the current decade proceeds. The odds seem fairly high to me. Do you have a plan? Many things can disrupt this “comfort zone” of jobs, the value of the dollar, affordable oil (although we have to buy it—we don't sell it any more)... Scary--but maybe ultimately for the best. The wizard IS us after all.

The difference here is the odds are high that in 2011 and for many years beyond, many disruptions, none catastrophic by itself, will be taking place at the same time. (It’s sexy to paint ridiculous scenarios with rioting, because the news motto “if it bleeds it leads” is still the king here in America.) The news say we are in a "r4ecpoery" but we know we are underemployed and the costs of everything are way up.

There are those (I hear this is the “Austrian school” of economics) said this would all happen. What?—you never heard of the Austrian school? Maybe that is because this is hardly the stuff that sells American newspapers...

But to return to the court system. Think about it. We want magic solutions. But there are none. Now the filing fees (in California at least) are up to an outrageous amount—as incomes erode. 90% of cases have NO LAWYERS. Who can afford a lawyer right now?

Meanwhile, if you want a final divorce someone in a black dress (judge) has to say you can have it. S/he will also tell you how to live the remainder of your life…until all your kids are 18. Why? Because Big Brother says so. The same Big Brother who created, then “bailed out”, the Wall Street bandits.

But who gets to grasp the "magic" (power over our lives) here may be--IS… us. Who can “save" us is… us. How I am going to tie this to mediation and other OUT OF COURT methodologies? Well, consider this—until we kill-I mean fire-- all the divorce judges, mediation is still, first, last and always, the “one size fits all” solution which empowers US. Gives us the brain we always had, the heart we all carry everywhere, and the courage that only we can access.. Because it’s ours.

Amazing. We don’t need the wizard after all. THERE IS NO WIZARD!!!