[C]an we keep our Ponzi going? Or has it grown too large? Have we reached the moment when, like the Depression, there’s just no escaping the great unwind?
It’s increasingly likely, in my opinion, that the days of increasing debt now to promote growth in the future are over. Even a very rudimentary understanding of the laws governing economies should lead you to similar conclusions:
If our experience to date has taught us anything it should be that kicking losses up to bigger balance sheets solves nothing. Losses have to be taken. The balance sheets on which they reside will end up insolvent. Why compound our problems by piling up more debt and concentrating all of it on the public’s balance sheet? Is American arrogance so great that we believe our Treasury and our currency will survive the trillions of $ worth of losses and stimulus we’ve already agreed to fund? To borrow Martin Wolf’s wonderfully evocative phrase, we are a python that has swallowed a hippopotamus.
I love that phrase – reminds me of Antoine de Saint-Exupéry’s The Little Prince…
It’s rather still rather odd / peculiar for someone who has spent the last n years as a doomsayer, to be feeling somewhat out doomed by the mainstream press. Makes you wonder where they were during the orgy of money years… digging holes and filling cracks, no doubt.
The cycle seems to be getting to the point where something else has to give again. Citi has had it’s head on the block for years now… beware the ides of March?