Thomas Krugman, in a trenchant analysis in yesterday’s New York Times of the sub-prime mortgage mess and the still-to-be-accounted-for hurt hidden in SIVs (Structured Investment Vehicles), compared investors in sub-prime heavy hedge funds to buyers of un-inspected meat. And that’s just about all the information you need to understand why people are getting sick over this. Oh, so the investment banks are great big unregulated meat processors who chop up mortgage tranches and sell off their parts without anyone really knowing what’s in those parts? Now I get it. The more esoteric aspects of hedge funds may escape some of us, but who doesn’t understand bad meat?

SIVs: Bad Meat From a GameChangers perspective, three issues led to a series of bad scenes and a disastrous sub-prime performance:

The sub-prime scenes involved a win-lose game. Improvisation is a means for all the players in a scene to achieve the objective. In this instance, as in many business scenes, the objective was to make money, which is all well and good. The game played by the culprit banks was, however, designed for themselves and their cronies to make money at the expense of unwary investors and homeowners. Furthermore, the broader business audience loses too, because even those of us who aren’t heavy into SIVs have to experience the tales of woe that comprise the narrative. By contrast, improvised scenes, when well-played, are win-win.

The players’ intentions were obscure. The way improvised scenes work, the intentions of the players in the scene are made clearly known to the audience. The game itself may be obscure, or even invisible, but the characters’ intentions are not. For example, in an improv theater scene, a butcher and a housewife may be discussing a cut of meat, while their intention is a seduction of some sort. The audience can see this. Understand it. It’s what the scene is about. In the sub-prime performance, it may have appeared to the houswife and the audience that the intention of the butcher was seduction. It was not. The intention was to conceal the hoof, hair and horn in the meat. Concealment leads to a very unsatisfying scene.

Scenes were built on fantasy. Well-improvised scenes are built on realities agreed to by the players that are believable to the audience. If, in the improv theater scene described above, the butcher begins ascribing magic powers to the cut of meat — that it will enable the housewife to fly, for example — the scene veers into fantasy. It’s not about anything real or human. One of my improv teachers at the I. O. West Theater, Michael Bertrando, calls this ‘going to Crazy Town’. The sub-prime scenes dealt in the fantasies of a housing market that would never cool, less-than-qualified home buyers who would be able to make balloon payments, and dream homes that blinded those buyers to their economic realities. The butchers, in effect, went to Crazy Town, and the housewives are just now discovering that they cannot fly.

Today, a few players are backstage toasting each other with bottles of 1995 Clos du Mesril, feeling like they nailed their performance and the audience is out on the sidewalk screaming for its money back