Balance Sheets: R.M.B.S.
Balance Sheets: R.M.B.S.
It was said that digital banking systems could never fail: but a few men had already made this their end. The traders were good at spotting failure and had a special talent for obfuscation. Sitting in front of their computers the speculators could see patterns in the markets that no one else saw or wanted to see, and renamed them so no one would ever find them again. Inwardly they found other people in the systems stupid: securities on bad house loans was an easy trick that could be played on people who desired to live well. The bond traders thought ‘if a number of loans pile up and the borrowers start to lose, it will not take long until the lenders do too’. They sought out the most problematic mortgages and placed their bets on the apocalypse. The speculators were easily bored. If a bond was backed up by subprime mortgage loans, they would come up with new ideas, including Asset-Backed-Security (A.B.S.) and HELOCs (home-equity line of credit). If you ask a trader what secures an A.B.S. they will reply with yet more jargon; R.M.B.S (Residential-Mortgage-Backed-Security) and Alt-As (loans given with no credit). All these names could have remained subprime loans, but the traders were amused by people’s naivety; ‘a triumph of language over truth’ they thought. If people could not pay their loans, the system had to imagine new instruments to justify the missing money. The traders saw the mortgage rates falling and invested billions of dollars in ‘credit-default-swaps', insurances against loan default. To them, it was a simple side bet; the bonds were structured to end badly, ‘bad for people was good for investments’. They looked for the worst borrowers; those without income, living in bad locations, divorcees, those who had had their credit-card declined and made them into securities. Eventually, the index for the loans collapsed but the market for securitizations remained. In fact, it did not take long before the securities grew into a trillion dollar market. When reason is asleep, language triumphs over truth. A market is a bad place for those with nothing but a good one for those who can predict its end.
RMBS was first shown at Balance Sheets, a group exhibition at the Edouard Malingue Galleryin Hong Kong in June 2015.
'Balance Sheets is an international group show that draws out relationships between ideas of balance in aesthetics, economics and ecological thinking'—Kit Hammonds, Curator of the Show.
Balance Sheets, South China Morning Post
Balance Sheets, Eduard Malingue Gallery