The main difference really is that the purported victims, or enablers, or co-fantasists of the trader Bernard Madoff say they found out their wealth was illusory all of a sudden, whereas for most people in the English-speaking world, this is happening little by little. [1]
Saft is asking a good question. What do Doomers think?
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[1]: "Was whole economy a Ponzi scheme?", by James Saft, Reuters / IHT, January 1, 2009.
Funny. I was chatting (over reduced rations of single malt) with a knowledgeable friend the other night, and they said exactly the same thing.
Former Fed chair Volcker said, “The problem is simple. We have consumed too much, and produced too little.”
I believe the entire FIRE (finance, insurance, real estate) economy is better described by the more neutral ‘malinvestment’, or ‘post-industrial fairy tales’.
Also, the MBS / etc. bond markets didn’t necessarily depend on bringing in new suckers all the time (classic Ponzi). It involved a widespread agreement to ignore reality.
John-
No question that this is “boiling the frog” syndrome. I’ve been surprised that there hasn’t been more resistance to a few hundred billion for a bailout here and a few billion there. I keep wondering how bad things have to be before voters start demanding more accountability.
Yes, I believe the evidence points that way. First of all, the Feds were warned that this would happen. It really doesn’t take a genius to figure out that you cannot loan money to people who can’t afford to pay back. Top economists were warning that this would happen if the feds artifically kept rates low, so I am sure the feds knew that this would happen.
Now the gov’t and feds are pumping money into a corrupt banking system. This is merely a transfer of wealth which has little to do with what is best for the average citizen. This is a ponzi scheme.
Looks like it to me.
Our economic model requires more people, more purchases, more replacements. More, more, more.
It invites Ponzi Schemes. Nobody’s suspicious because growth seems natural. Motion seems natural.
I think the economic model hit the wall. It had to. It could only go so far till it ran out of steam. We’ve peaked. That includes human beings.
Here we are. It happened during our lifetime.
I really think the Stock Market is going through a pump-n-dump thing right now. Those who get lured back in will lose whatever they didn’t lose before. The Stock Marketeers’ one last attempt to get more of the suckers money.
I suspect Obama’s team to try & reinflate RE, at least the desire for RE. Also, it’ll turn out to be a pump-n-dump thing where those who got out before the peak and managed to safeguard their cash, may be lured back in so as to lose their cash after all.
Being patient is a tough job.
Those who managed to escape the Stock Market and Real Estate crash, and keep their cash, will find it hard to refrain from jumping back in again.
I will probably sit on my hands through ‘09 so I don’t write a check or sign a contract.