Skip to content | Skip to menu | Skip to search

Banbury Cross

a pillow for lost thoughts...

Post details: Larry, Moe and Curly

Larry, Moe and Curly

Every so often I run across a public pronouncement which makes me feel like Alice in Wonderland, fleetingly pondering if I am still on the right side of the Looking Glass. Today, Yahoo Finance served one such piece of wisdom straight from Obama's top economic adviser Larry Summers.

"The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending."


That is like saying - while your plumbing problems were caused by too much hair, too much trash and too much gunk in the piping, the solution is to dump more trash, more gunk and more hair into your sink.

Or it is like saying - while your camel is slowing because it has too much stuff on its back, the way to make him go faster is to tie more junk to its hump. I would actually love to see a dramatization of such scene starring a retired camel in the role of the ailing economy and the three stooges as Wall Street Maestros - three buffoons running in circles around the poor animal, frantically pushing their belongings on top of its cargo area, and punching each other in the process.

But the moral of this parable is really simple - people can't drink themselves sober. It does not work. The mindset which caused a problem is not usually conducive to solving it. Summers' argument sounds like a desperate plea for a continuation of the same old Ponzi scheme which nearly crashed the system to begin with. And even if we could find the new suckers, eventually it will run aground again, except this time with a much larger bang.

Sure, there is one group of people who would profit greatly from the never ending expansion of credit, from driving more and more people into deeper and deeper debt. That would be bankers. They surely would love to pile more debts on top of the old ones - as Larry Summers is undoubtedly well aware. But his point sounds about as sincere as McDonald's spokesman hypothetically claiming: "The central irony of our obesity problem is that it can only be resolved with more hamburgers, more French fries and much fatter mayonnaise".

Albert Einstein allegedly authored the famous quote about insanity - which is "doing the same thing over and over again and expecting different results". Too bad Larry Summers never heard of it.


No Comments for this post yet...

Comments are closed for this post.

This site works better with web standards! Original skin design courtesy of Tristan NITOT.