Charles Ponzi was one of the greatest swindlers in American history. He has so many descendants you wouldn’t believe..
When you put zero down on the ‘purchase’ of your house and thus had no equity in your house (and re-financed your mortgage each and every time it went up in value) your leverage was literally infinite and you were playing a Ponzi game hoping a ‘greater fool’ than you would be there to buy your house when the time came for you to buy yet another house that you could not afford.
When the bank sold you a mortgage for zero down on the basis of a NINJA (no income, no job or assets) liar loan, with interest only for a while, with negative amortization, and an initial teaser rate, the bank was playing a Ponzi game. They were hoping that you would stay employed; that you would be able to afford the eventual increased mortgage payment; that you would be able to sell the house for more than its original value; that you would always honor the terms of the mortgage. They were even ‘greater fools’ than you were.
When private equity firms engaged in leveraged buy outs with excessive debt-to- earnings ratios they were Ponzi firms playing Ponzi games – all “greater fools” hoping that future earnings would just grow and grow in future years with no likelihood of declining.
When our government issues trillions of dollars of new debt to pay for a severe recession and to socialize private losses it becomes a Ponzi government hoping that the Chinese and other foreign purchases of their debt will continue doing so regardless of the value of the U.S. dollar vis-à-vis their respective currencies and the level of interest paid. How foolish to expect foreign governments to be ‘greater fools’ than ours.
read full article by Lorimer Wilson here
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