The latest Rolling Stone piece from Matt Taibbi, our Tiresias of Wall Street, was horrifying enough for Halloween (as Susie Madrak points out),  with its latest details of how it all came down. It also gave the best summary I’ve seen of the whole Dantean reality created by it all.

Back when I was writing for Chelsea Now and trying, at the height of the bubble, to figure out how it all worked (and wondering whether I needed an MBA), my colleague Albert Amateau told me a story. I was getting headaches trying to sort out how it could all be legal that the air above your building, the years until you die, were all being “monetized” at such a rapid pace. A few years ago, said Al, he’d been offered a chance at a job writing for a newsletter entirely about derivatives, those malleable catalysts of much market hysteria. It didn’t work out, said Al, one of the best craftsmen in the business, but it told him that people like he and I had wasted our talents studying literature and poetry. It was people on Wall Street that had learned how to really make money with fiction.

Taibbi agrees:

If you squint hard enough, you can see that the derivative-driven economy of the past decade has always, in a way, been about counterfeiting. At their most basic level, innovations like the ones that triggered the global collapse — credit-default swaps and collateralized debt obligations — were employed for the primary purpose of synthesizing out of thin air those revenue flows that our dying industrial economy was no longer pumping into the financial bloodstream. The basic concept in almost every case was the same: replacing hard assets with complex formulas that, once unwound, would prove to be backed by promises and IOUs instead of real stuff. Credit-default swaps enabled banks to lend more money without having the cash to cover potential defaults; one type of CDO let Wall Street issue mortgage-backed bonds that were backed not by actual monthly mortgage payments made by real human beings, but by the wild promises of other irresponsible lenders. They even called the thing a synthetic CDO — a derivative contract filled with derivative contracts — and nobody laughed. The whole economy was a fake.

Oliver Stone got it right the first time, though many took his movie as a spur to enter the casino: I can’t wait to see what the new movie says.

Writing about war, frankly, is far more straightforward, with bodies you can see even though the good and bad guys are sometimes far more blurred.