An Explanation

10/23/2008 05:12 am ET | Updated May 25, 2011

A lot of people and their derivatives have wondered why the financial markets are headed in a direction that is a sort of counter-derivative of North--that is, South, and South's global underwriters. It's not hard to explain--you've no doubt seen a dozen explanations already, and you may even have seen the derivatives of those explanations--swap-default contra-market, or so-called (by me and my derivatives) "ass-backward" or "switch-and-bait" explanations, or "What--me worry?" explanations, as they are called by insiders and their offshore clients (often referred to in financial circles as "The Gotrocks "). But you can never have enough explanations, especially when you don't understand any of them, so here's another one, which, before you proceed to read it, I would appreciate it if you would check the "I accept the terms of this reading" box below.

I accept the terms of this reading, which are: I will send Daniel Menaker $100 in extremely cold and diamond-hard cash or its equivalent in bullion or coffee futures, whichever is higher, and I understand that checking this agreement does not guarantee gains or protect against losses from reading the explanation, as, after all, like markets, metaphorically, explanations cannot guarantee understanding. I agree to send Daniel Menaker an additional $10 or "Fun Metrocard" for each re-reading and will not forward this explanation to any third party or its derivatives.

Thank you. Welcome to the explanation.

Here's what happened: It's as if you lent someone, let's say, a hundred bucks--not dollars but fully "dressed" male deer, because like other commodities, Venison Futures were in high demand at the time--in fact were rated Triple A Battery Grade instruments by Gloomy's, the sister corporation of Moody's. So this guy--let's say his name is "Robert DeNiro," NLC (No Liability Corporation)--takes out a loan of let's say a thousand shotgun shells with those hundred bucks as collateral. See? He hopes to go hunting with them and collect some bucks of his own and then sell them on the Chicago Venison Exchange.

But wait--it's now only ninety bucks because, let's say, the Chinese entity Yu Oh Mi, Inc., has collected ten of them as interest on a loan it made to, let's say, a guy named Barney Google, a creditor of "Robert DeNiro's" back when deer and deer derivatives were selling well. So now, because you may not understand explanations like these yourself, you get nervous and ask "Robert DeNiro" to give you back the cash equivalent of the hundred bucks--not the bucks themselves, because they are beginning to go a little "off" at this point (a perfect example of "depreciation") and you were canny enough in stating the terms of your loan to put in it somewhere "or their equivalent in cash, buster."

But "Robert" doesn't have the cash; he has only a lot of increasingly gamey male deer and a thousand shotgun shells and he can't get his hunting license because the Town Hall of his town couldn't make its sub-prime (referred to as "top-round" by insiders) mortgage payments and had to "attrit" its staff when Gladys retired, and when he clicks on the online hunting-license website that has supposedly taken her place, he is redirected, alternately, to or, a singles site. It doesn't matter now, anyway, because the deer just crossed the property line from Barney's meadow to his brother Ernie's, next door. You want the cash equivalent back, and suddenly, just after that last sentence was written, the guy or gal who lent "Robert" the shotgun shells wants to collect those same bucks because he or she just does. Wouldn't you?

So let me make it simple for you. Barney is screwed. "Robert DeNiro" is screwed. Yu Oh Mi, Inc., is screwed. And you are screwed. And if you file for bankruptcy and default on the Agreement you signed above, I am screwed. Even the hedge fund I invested in--it specializes in privet futures--has been seriously pruned and is now screwed. But at least I'm a writer and also participate in the general human condition, so I and my derivatives are used to being screwed. The next "instrument" I buy will be a fiddle.