by the Sandwichman
In his "Tour of German Inflation" (in One-Way Street), Walter Benjamin singled out the expression, "things can't go on like this" as exemplifying the "stupidity and cowardice constituting the mode of life of the German bourgeois". Embedded in the expression is the unfounded conviction that, somehow or other, unpleasant conditions cannot be enduring ones. However, as Benjamin noted, "to decline is no less stable, no more surprising, than to rise."
Yesterday, in the New York Times, nine economists weighed in on what, in their opinion, would constitute the ideal stimulus package, given the constraints of a $500 billion total to be either spent, returned in tax cuts or some combination of the two. Of course, the underlying premise of any stimulus package is the growthodox conviction that "things can't go on like this" -- that the accustomed "economic growth" of the recent past should be the norm and interruption of that growth can only be an anomaly.
Get over it, suckers. Bernie Madoff had the economic stimulus package meme down pat. Madoff's estimated $50 billion Ponzi scheme was already 10% of the proposed $500 billion package. O.K., then, in twenty five words or less, what's the difference between a stimulus package and a Ponzi scheme (bearing in mind the operative concept, "German Inflation"; see also "Uh Oh...")?
That's an interesting way to view a stimulus package, comparing it to a Ponzi scheme. Let's look more closely at that idea. How is a package of government stimuli likely to be structured? Where does the money, ie. stimuli, go to and where does it come from? We know the temporal aspect of the go to part of the structure. Sooner than later might be prudent in most eyes. It's the come from aspect that begins to bring up images of Ponzi functioning. Don't fret. Such plans have their roots in biblical synopsis of social phenomenon. In this case, taking from Peter to pay Paul. Only Peter represents the future and Paul is whom ever benefits most from the stimulus package.
In the case of the Madoff situation
we see that the agent in the transaction was the primary beneficiary. Money was supposed to go from investor to investment, but appears to have made a segue on the way. That would imply that in any case where money is transiting from one source to another a careful eye should be kept on those acting as agents for the interchange. Who gets their hands on the cash before it reaches the stimulus target? Keep in mind that the source of the funds lies in the future, as in future generations will pay. Who keeps things honest in the here and now? Some how I don't feel trusting of the current avenues of financial exchange. Something to do with track records. Again Mr. Madoff provides an excellent example of all is not what it seems to be, especially in the world of high finance.
I posted a similar provocative message on Marginal Revolution. Basically my point was that to get a stimulus without problems it would be just a matter of getting back the 50 Billions and spend it with a transfer from the greedy to the needy... Will the greedy suffer?
Let's not stop with Bernie's billions. Small potatoes when compared to the gazillions in the various mortgage derivatives that brought down the likes of Lehman Bros. and Bear, Sterns. There are others who fed at that trough, however, and they seem to be enjoying a second feeding at the TARP and sundry other Federal Reserve disbursements. A lot of people are savoring the tens of millions in compensation which they were thought to have earned during the past decade as a result of their financial investing genius. Things appear different now with the passage of a little time. It's the short term vs. long term argument. If you make a fortune over night, but break the bank as a result a few days later who owes what to whom?
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