Tuesday, August 14, 2012

Ponzi on the Potomac

According to Wikipedia, a Ponzi scheme is a "fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation." The linked article notes that Ponzi schemes sometimes commence operations as legitimate investment vehicles if, for example, after incurring unexpected losses, "the promoters, instead of admitting their failure to meet expectations, fabricate false returns and, if necessary, produce fraudulent audit reports."

Unfortunately, that description fits Social Security to a tee.

By definition, the last person who gets out of the Ponzi scheme prior to the collapse does the best. That's a great incentive for keeping politically supported Ponzi schemes going: Make it last long enough for me to get mine. After that, why should I care?

An advanced seminar in why you should care is being provided in Europe as you read this. People relied on the promises made to them as those promises were being fulfilled to those who went before them. When the inevitable occurs and the promises are broken, those who did not get theirs are (a) hurt, as in "injured", not upset; (b) angry. They are angry at everyone: Those who made the promises, those who won't fund the impossible scheme any more, those who received (and are probably still receiving) their benefits.

They are angry enough to riot.

The demonstration on Saturday, one of more than 900 planned around the world to call attention to economic inequality, gave a platform to people who feel shut out of their own futures in a labor market that protects older workers with ironclad contracts and makes it hard for younger ones to get hired except on temporary contracts offering low salaries and little security.

They are angry enough to murder.

At least three people have been killed in the Greek capital as protesters set fire to a bank during a general strike over planned austerity measures.

Think that can't happen here?

It can.

It will, if we don't fix the problem.

That's why I am pleased that Romney chose Ryan. Ryan has a plan to deal fix it. I think his plan is realistic and has a good chance of working. I know his plan has a better chance of working than the plan espoused by the current administration.

Timothy Geithner, Secretary of the Treasury, testifying before the House Budget Committee:

We're not coming before you to say we have a definitive solution to our long-term problem. What we do know is we don't like yours.

That's all. They don't know how they would fix it. They don't have any solution, much less a definitive one. They only know that they don't like the only solution on the table. If Obama does have a solution but is refusing to share it, he does not deserve the high office he has been given. If he does not have a solution, he does not deserve the high office he has been given.

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