It's All David Bowie's Fault (or "Let's Blame Someone Else")

By Bedhead in David Bowie, Kate Moss, Madoff, Nutjobs, Recession, Smoking Bolts, Trent Reznor

bowie

Trent Reznor & David Bowie chill on the set of “I’m Afraid Of Americans,” natch.

The English tabloids never cease to amuse me, but they’ve really fallen ass over tit with the notion that David Bowie may have masterminded a devilish scheme to catalyze a global recession. In a lovely display of logical fallacy, the Mirror UK states that, because Bowie Bonds were so fashionable, the banks couldn’t help but follow the trendsetter:

Even when it comes to finances Bowie leads the way – and back in 1997 he did something called “securitisation”.

He thought, “I have a lot of money coming in over the next 10 years from my back catalogue, but I’d rather have the cash now and not have to wait”.

He produced some bits of paper – Bowie Bonds – and said “whoever buys these gets my royalties”.

It meant he no longer had the money coming in but instead had a lot up front. His investors were guaranteed a good income. It was a good deal all round.

And the banks were catching on to the idea. They thought, “We have billions out there in mortgages which are going to pay us back very slowly. Why don’t we sell those and get the money now?”

So the banks started doing what Bowie had done – in a big way.

But then it started to go wrong. As the banks were selling the loans, any bad risk became someone else’s problem. So the banks didn’t have to worry so much who they were lending to. Problem number two was it wasn’t just their standards that dropped – the banks just lent far too much.

It all went pear-shaped for American securities because the banks had lent to people who couldn’t repay them.

Now the economy is in a vicious circle. The banks loan less, so the economy has money sucked out of it. With less money there’s less spending and job losses which cause less spending, and the vicious spiral continues downwards.

The notion that securitization commenced in 1997 is fucking hilarious, really. Even if this were the case, at least everyone would know that Bowie’s assets would be good for the long haul, unlike banks who are too greedy to give a shit about whether loans were bad because, hey, it wasn’t their problem anymore, right? However, as brilliant as Bowie may be, the history of securitization actually began much earlier than the Bowie Bonds:

Asset securitization began with the structured financing of mortgage pools in the 1970s. For decades before that, banks were essentially portfolio lenders; they held loans until they matured or were paid off . . . In February 1970, the U.S. Department of Housing and Urban Development created the transaction using a mortgage-backed security. The Government National Mortgage Association (GNMA or Ginnie Mae) sold securities backed by a portfolio of mortgage loans.

Rolling Stone goes even further to clear Ziggy Stardust’s good name:

In short, our Wall Street source says, “There is no chance in hell that David Bowie inspired banks to package loans into securities, have rating agencies rate them AAA blindly and sell them off to high leverage hedge funds.” We don’t know what any of that means, but it takes the blame of Bowie’s shoulders. Blame Bernie Madoff instead or something. Plus, keep in mind, the accusations against Bowie were printed in the U.K.’s infamous Mirror, proud authors of articles like “Michael Jackson is dying” and “Student puts her virginity up for auction.”

Exactly. The Mirror UK needs to go back to criticizing the vaguest hint of cellulite on Kate Moss’ bum.



5 comments

I am curious at the performance of Bowie Bonds relative to the market. As consumers prefer to steal music than pay for it these days, it could be Bowie was prescient in exchanging future income on a catalogue whose value may not be what once it was.

That said, and unlike most artists, Bowie is in a position to sell his work to consumers who have to pay (advertisers, film producers, anywhere muzak is played, etc.) and I suspect his future earnings are therefore more secure than an artist starting their career in the face of technological change.

Not that I am complaining. Technological change offers many advantages to new artists, particularly those of us now in a position to market and distribute our work without bothering with a major label.

01.21.09 | 1:28 pm

Yeah. I assume that he forfeits all right to be reimbursed for an increase in value for his Bowie Bonds.

You know, I really like the sound of that.

01.21.09 | 6:53 pm

[...] Was the global credit crunch caused by… David Bowie? [...]

01.22.09 | 11:48 am

The Man Who Sold the World…

Someone on Fleet Street is a lad insane, as “Agent Bedhead” writes, if they think David Bowie(!) set in motion our current financial maelstrom. Personally, I blame these cracked actors. (Via Colorado’s the thin white vodka-swilling duke.)……

01.22.09 | 6:41 pm

Alright, nobody else is going to say this, so I will: David Bowie looks like a lesbian with a hormone imbalance.

01.22.09 | 8:43 pm
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