FONZIE MORE THAN ... PONZI rhymes with Strongbow
From Roubini Global Econmonitor ( www.rgemonitor.com )
Americans have lived in a Ponzi economy-invented (a giant pyramid scheme) for a decade or more. Bernie Madoff is the mirror of the American economy "made off" (invented, in fact) and its agents overexposed: a house of cards financial acrobatics by families, investment companies and corporations that now has collapsed.
When the 'individual get a mortgage with a deposit of zero dollars to buy a house and therefore has no capital in the value of the bow home, his leverage is virtually infinite, and is thus entering the Ponzi game ( pyramid scheme).
And bank that gave him, without any guarantee, a loan NINJA (No Income, No Job and Assets) liar, which for years you can pay only the interest, negative amortization and an initial rate attractive, was also playing with the system Ponzi (pyramid).
And investment companies that have put together more than a trillion dollars LBO (Leveraged Buyouts: The acquisition of one company by another company using borrowed money almost exclusively) in recent years with a ratio debt / income of more than 10 companies were also playing with Ponzi Ponzi scheme. And a government
conclusion that trillions of dollars of new debt to pay for this severe recession and socialize private losses in danger of becoming a government Ponzi if - in the medium term - not a line on tax returns and disciplined-based on debt sustainability.
And that country - for over 25 years - has spent more than you earn and has implemented an endless series of financial deficit and thus became the largest foreign debtor World (with a net foreign debt that could exceed 3 trillion dollars by the end of this year) is also a country that Ponzi could become insolvent at some point if it fails - on time and on time - to tighten their belts and reduce the budget deficit up to transform them into surplus. When
, consistently, year after year, consume more than they earn (a family with savings to the person, a government with a deficit of buget, a company or financial institution with continuing losses, a country with a deficit accounting) are playing the Ponzi game: in economic terms you are not meeting the requirements of the intertemporal budget your long-term borrowing to pay the interest on previous loans, and then you follow a dynamic of unsustainable debt (the debt that grows faster than interest) which ultimately leads to insolvency.
According to economic theory, agents Ponzi are those (families, businesses, banks) who bisongo to borrow money to pay off both the initial loan and the interest of your debt: bisongo have to increase constantly the value of what they have invested to continue to fund their obligations to creditors.
Under this standard, U.S. households whose debt rose from 65% of revenue fifteen years ago to 100% of revenue in 2000 and 135% of revenue today were playing the Ponzi game.
U n'economia where the debt ratio (families, financial companies and corporations) is now equal to 350% is a Ponzi-Economy-off made (invented). And now that home values \u200b\u200bfell by 20% and 20% frame by entering the fall before reaching the minimum level, now that the stock value dropped by 50% (and could still fall), use the houses as ATMs and borrow against the value of the house to finance consumption Ponzi is no longer feasible. The party is over for families, banks and corporations over-exposed.
The bursting of the housing bubble and the stock market bubble and the hedge fund bubble and credit bubble has shown that the wealth that supported the huge economic exposure and the costs of unsustainable wealth was a false economy agents created by the bubbles. Now that those bubbles have burst it is clear that the emperor was naked and that Americans are Emperor naked. The bubble growth hid the fact that the majority of Americans and their banks were swimming naked: the bursting of the bubbles is low tide that showed everyone who was naked.
Madoff will now pass the rest of his days in jail. American families, financial companies and non-financial corporations will spend the next generation in debt prison, with the obligation to minimize fuel costs and to repay the losses inflicted by more than a decade of investment senseless, excessive consumption and reckless risks.
Americans, look in the mirror: are you Madoff and Ponzi's you!
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