Sometimes I think economists may be a little too optimistic. I know for a fact that politicians are way beyond optimistic. Take the current financial crisis–please! How many Countries are spending Money which they never attained by taxation?–All of them! How much Cash does the Private Sector possess which is lying around loose?–None! Where are various Governments getting the funds with which they are building up the huge debt?–the central banks, of course! Where are the central banks getting their Cash–fancy Printing is the only Means! Let’s get real here–Where have I seen this scenario before? No Income except for bad Paper–Where have I heard this One before? I hope that the politicians and central bankers have devised a better Escape plan than Bernie, as I don’t think the prison system has enough Cash to house that many extra people. What do you call a Ponzi scheme run by central banks?–Government!
I know that the Readers will try to make sense of the wealth of information presented by this Post. I will extend the Warning that this will be hard to do, except to state that Banks are expressing deep regret that they cannot get in the Ponzi scheme business, as hedge funds ex all are suggesting that the market for Ponzi schemes is not out there; Investors want it in Writing that they are guaranteed some form of Return of Principal and Interest. Banks feel victimized that they cannot unload bad Risk, with no Market available to absorb all the bad Paper. Everyone knows that the other Shoe is going to drop, and Banks are highly worried that they will still be holding the mortgage on that Shoe as it hits bottom.
I am almost feeling fraudulent providing a link this wonkish to my Readers, but it is too good to be avoided, and deals somewhat with the discussion I am trying to present rather unsuccessfully. Economists were the first to discover that moral deviance can be hidden and absolved through the development of mathematical models. The later separates the individual from responsibility for the adverse circumstances, even when they were the immediate Participant. It makes the Conditions found a Certainty, and beyond the scope of any individual to control. Ethics become only a Dream, and one fostered by Those ignorant of the mathematical magic. Bankers have watched economists walk away from bad outcomes time after time, and caught on to the beauty of Math. Investors are almost the last to understand the beauty of the math concept, and in some situations, must remain in the dark as to the mathematical potentialities; all in order for the beauty of the math concepts to operate efficiently. Ponzi did not know what he had, when he had it. lgl