The carnage is starting in the wake of the credit crunch and subprime fiasco. For years, Wall Street hedge fund traders and their ilk have been reaping unimaginable amounts of money–mostly, as it turns out, by selling toxic mortgages and bonds to each other disguised by a AAA rating from Moody’s and S&P. Now those are blowing up everywhere in a giant game of whack-a-mole, with nobody knowing where the mole portending financial disaster for a fund is going to show up next.

There is fear on the Street, especially in the wake of the stunning jobs report today showing a loss of 4000 jobs in August (compared with an anticipated gain of 100,000+), with prior months also being revised sharply downward. The “subprime contagion” that we have been so assured by the Feds would be contained is now spreading into the main economy. Those $200,000+ bonuses on Wall Street are about to be slashed–oh my, whatEVER will they do!–and they’re already bringing out the job cut scissors.

A Bloomberg columnist writes a tongue-in-cheek (I hope!) article that highlights the angst these out-of-touch rich people are suffering right now:

So right after the Bear Stearns funds blew up, I had a thought: This is what happens when you lend money to poor people.

Don’t get me wrong: I have nothing personally against the poor. To my knowledge, I have nothing personally to do with the poor at all. It’s not personal when a guy cuts your grass: that’s business. He does what you say, you pay him. But you don’t pay him in advance: That would be finance. And finance is one thing you should never engage in with the poor. (By poor, I mean anyone who the SEC wouldn’t allow to invest in my hedge fund.)

That’s the biggest lesson I’ve learned from the subprime crisis. Along the way, as these people have torpedoed my portfolio, I had some other thoughts about the poor. I’ll share them with you.

(You can read the rest here.)

Anyone feeling sorry for these rich folks as they get taken through the meat-grinder after profiting for years off the backs of poor people? No?

The silence is deafening.

Tags: credit-crunch, economics, housing-bubble