Beyond Craziness Economics
When I was working at Bloomberg Financial News a few years back I saw up close what was going on in markets and thought it was crazy. The Wall Street crowd was slicing and dicing the same assets and selling the pieces as if they were new assets. And the risk management derivatives that were supposed to take the place of regulation were nothing more than modeling constructs concocted by mathematical geniuses who didn’t know a bond from an option much less have the slightest understanding of the intrinsic value of the securities whose worth they were purporting to define.
Crazy as the markets I saw while working at Bloomberg, however, they were nothing when it came to craziness compared to what’s going on now, as panic-stampeded government officials around the world throw money at anyone who will take it in hopes of fending off the serious recession their own past laxitude did so much to create. The world economy today is not just exploring where none dared go before. It’s exploring where no one with an ounce of sense and a smidgin of prudence would consider going.
Striped of all the fuzzy economic rationales used to justify current government attempts to prop up world economies, what’s happening now is this: the future of the world’s people is being mortgaged to bailout past errors. Governments aren’t using reserves and won’t have tax income to pay off the astonishingly large new debts they are undertaking. And they aren’t investing this debt in new assets that will make its payback even vaguely plausible. Instead, governments are simply replacing equity that has been lost by financial bunglers in the marketplace, as well as the lost income and savings of people who invested in these mistakes.
Has the past greed of private sector gamesters who didn’t know what they were doings with other people’s money frightened you? If so consider carefully, really carefully, the present panic-driven actions of public gamesters who don’t have the vaguest idea of how their present actions will shape our collective futures.
And be afraid. Very, very afraid.