Thursday, May 27, 2010

The Greatest Ponzi Scheme of All Time

Edmund Conway at the UK Telegraph explains what is going on:
Politicians temporarily "solved" the sub-prime crisis of 2007 and 2008 by nationalising billions of pounds' worth of bank debt. While this helped reinject a little confidence into markets, the real upshot was merely to transfer that debt on to public-sector balance sheets.

This kind of card-shuffle trick has a long-established pedigree: after the dotcom bust, Alan Greenspan slashed US interest rates to (then) unprecedented lows, which helped dull the pain, but only at the cost of generating the housing bubble that fed sub-prime. It is not so different to the Ponzi scheme carried out by Bernard Madoff, except that unlike his hedge fund fraud, this one is being carried out in full public view.

The problem is that this has to stop somewhere, and that gasping noise over the past couple of weeks is the sound of millions of investors realising, all at once, that the music might have stopped.
When "Ponzi World" collapses, those evil rich people on Wall Street will be blamed instead of the true culprits: socialists like 0bama and his buddies that have been working on "change" for the last 40 years.  When you give everyone everything free, soon no one will produce anything.  As Margaret Thatcher once said (somewhat paraphrased):

The problem with socialism is that you eventually run out of other people's money.

But it all works out for the socialists in the end:  Capitalism is destroyed.  No one will ever be rich again.  We will be lucky to find food.

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