Seaway Valley: A sign of the times

This week, we’ve been hearing a lot about the financial meltdown from the distance of one year. There’s been fascinating coverage of what we’ve learned, and what we haven’t, on NPR, Fresh Air, in the New York Times, and more.

Today we aired a special report I did about Seaway Valley Capital Corporation and Hacketts, owned by Tom Scozzafava, as well as an interview with Congressional candidate Dede Scozzafava about her role in the company (she is a passive investor).

As I worked on this story, I kept coming back to the idea that Seaway Valley is a sign of the times. It’s not a microcosm; it neither bought nor sold mortgage-backed securities, toxic assets, or any of that stuff.

But Tom Scozzafava sold complex debt instruments to pay off more debt, even as the balance sheets, clever accounting aside, just didn’t add up. At one point during our interview, Tom Scozzafava explained the strategy behind his convertible debentures with this math formula: “It’s 1 + 1 = 2 and a half.”

What will we learn? We’ve been a bunch of hungry consumers paying on credit, then borrowing more to pay off that debt, etc.

I happened to read an article from Harper’s magazine the other night that compared today’s financial crisis to the one dramatized by William Shakespeare in The Merchant of Venice.

The article argued Venice was little different from today’s Wall Street. In Venice, they bought stuff on the promise that boats were arriving with valuable merchandise. Those ships never came in. And Shylock called in his debts.

Tags: economy