Who Ponzied who?

You have to feel for Bernard Madoff. He got done for having reduced some folk’s investment to nothing, but if you’re giving nothing, what did you expect? And it wasn’t the biggest, either.

Take Mr and Mrs Joe Bloggs, baby-boomers, one house in the suburbs, paid up, near retirement. They get a letter in the mail: their house has been valued at $100,000 more than ‘before’. Off to the bank, spring a mortgage, and they invest it. Doesn’t matter much whether they placed it with Madoff, or Blue Chip. What, exactly did they give?

The house hasn’t changed one iota. Same paint, same everything. Ask the bank – have they shifted any bullion around? Nope. So the ‘wealth’ they ‘invested’ was a few numbers on a bit of paper – representing, at the end of the day, nothing more than a wish. A desire. A greed, when you get down to it.

So they invested a bit of paper with some numbers on it, but no backing, and whoever was caught holding it when the music stopped, was going to be a little unhappy. And more than a little short. There wasn’t the real stuff to underpin the ‘wealth’, and that has been the case since 1970. It’s only collective optimism that keeps the thing going, and only the fact that we were extracting enough parcels with enough energy, to keep passing them while the music played.

When the rate of energy supply (the amount they can pump daily) peaked (see graph below) then we were into music-stopping, not-enough-chairs-to-go-round territory. There will never be enough chairs, now. Not ever, although it is more likely a roller-coaster than a direct slide. There is always a fight over resources when they get scarce, and the privatisation moves we watch daily, are a show of that, even if they aren’t aware of what they are inctinctively doing.

The foreshore and seabed issue is just the same – privatisation by Maori (we’ll screw them out of it, once they own it, we just need they to get it out of public ownership first) .

Madoff, of course did wrong. Very Wrong. But…..is that so much more wrong than telling the punters that growth is sustainable, desirable or forever? That, I suggest, is the greatest Ponzi scheme of all time, one which makes Bernie’s effort look pedestrian.

I mentioned Ellen Mosley-Thompsom a few blogs down (happy huntin’) when she grabbed the microphone at the Otago Uni Staff Club, in response to a question from the floor: “How many people can the planet support, sustainably?”

“That’s not the question”, she started (and you could have heard a pin drop) “the question is: At what level of comfort do you want to live? You tell me that, and I’ll tell you how many people we can support”. For the record, that’s maybe 2 billion, at a level lower than we’re at now, and maybe only 1 billion, at the level we are at. We have nearly 7 billion, aiming for 9, and will be down to that 1 or 2 by the end of the century, and probably by 2050. Can’t not.

Which means that the great growth ponzi we all get dished up daily (more kids, more consumption, more power, more development, more, more, more…..) is going to kill 2 of every 3 of our kid’s generation.

Now THAT’S a Ponzi!


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