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2012-07-11 11:18 by Karl Denninger
in Editorial , 333 references Ignore this thread
Meanwhile, Back At The Lily Pad... *
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I'm going to reprise a Ticker from 2011-10-18, which you can read here if you want the original, but in a political context.

There was once a nation that was comprised of fish.  The fish lived in a pond that was 64x64 in size, or 4096 square units of surface area.  As with all fish they survived on dissolved oxygen in the water, which came to the water by exchange with the atmosphere above.  Plants grew in the water, receiving their energy from the sun while recycling the waste emitted by the fish as nutrients, and the fish ate the plants. All was well in the nation of fish.

But the economy of fish was limited by its growth.  Some of the bottom where the fish lived was rather rocky, and not much suited to cultivation of aquatic plants.  Some of the bottom was fertile, and beneath still more were various rare and natural treasures, such as energy sources that the fish could use for manufacturing.

One day a bright fish that worked for a bank called "Goldfishbank" got the idea that since plants were food, and more growth is better, the nation would be served by faster "growth."  He introduced to the pond a species of lilly that reproduced very rapidly.  In fact, it produced a new lilly once each day.  He began by placing just one lilly of one unit of size, or 1/4096th of the surface of the pond, in the water.

The next day there were two, and the fish nation cheered.  Then four, and the fish nation demanded that this fine fish be President.  Then eight, and all was even better in the world.

There were, however, some fish that became alarmed, for they had not been sleeping in school.  They knew, as well, that their very survival depended on the exchange of oxygen with the air above, and that absent this exchange all of the fish would surely die.

The great prosperity that appeared to flow, however, led the scholars to be shouted down. 

Unfortunately the great prosperity resulted in the price of fish dwellings, foods and fuels rising precipitously.  The credit created by all of this growth, which had heretofore appeared to be impossible, made everyone feel wealthy.  After just eight days what was 1 lilly had become 128; both great and permanent prosperity appeared to have blessed the fish.

Two days later the pond was 12.5% covered with lillies. 

But in the middle of this prosperity there was much corruption and theft.  The interest rates charged to lend money were corrupted by some of the fish banksters, who reasoned that they were merely making very small changes in what they reported, and due to the leverage they employed, reaped billions of profits.  This they did by stealing pennies from each fish per day.  Nobody would jail them, for some of those "profits" were simply diverted to political contributions in order to make sure that the fish nation government left the thieves alone.

There were other fish that were involved in lending for dwellings, and they too scammed the public.  Some of the lenders collapsed, yet they paid only small fines while most of the fish suffered monstrous losses, with many losing their homes.

Still other parts of the fish economy were involved in health care, and they got laws passed to make differential pricing, cost-shifting and other monopoly behavior protected, for this was their way to riches.  Soon the fish nation spent twice as much on health care as a percentage of its economy as all the other fish nations, but all these monopoly protections, enacted into law, were not seen as the corruption they were.

Unemployment became a problem and the fish nation saw its standard of living decline.  This was puzzling, for the proponents of the new lily had said that such prolific growth would lead to permanent prosperity.  There were many who claimed that the lily was simply not prolific enough, and that means must be found to spur even more lilies to grow.

The three major political parties sparred over the unemployment and economic malaise.  The two largest ones offered that taxes should be increased on the most-fortunate fish and that taxes should be decreased for all fish, respectively.  But neither put forward a plan to cut down the size of the government, which was sapping an increasing amount of the economy.

The third party decided to state that it should cut the size of the government by 43%.  But it refused to address the main growth drivers of the government, that being the medical industry's special protections.  Nor did that party appear to give a damn about all the scams and frauds, which had stolen monstrous amounts of wealth from all the fish.

Soon the political debate within that third party turned to whether fish should be able to smoke pot, which was currently prohibited under penalty of law, and whether a fish named Steve should be able to marry one named Larry.  Some fish believed this was a civil right and of the utmost importance, while others believed it was Satanic. 

Yet these were the only points of political debate on which this third party focused, instead of on the financial institutions that had skimmed off all the "prosperity" that had been promised to the fish nation by the Goldfishbank and others in the financial industry, along with the medical industry that had lobbied for their special protections and which were bankrupting the fish nation's government.

A few of the third party analysts saw that in point of fact the lily issue was soon to kill all the fish and the entire fish nation economy.  They were poo-pooed and called alarmists, for the sun was still visible in the sky above, and their rising stridency was called "divisive" or that "if you simply changes your approach you could actually influence people."  They were even told that their commentary was "self-righteous."

But that commentary, labeled "divisive" and in fact dismissed with "that ends our conversation and damages both our working relationship and friendship" was based the simple fact that while just 12.5% of the pond was covered, the entire fish nation was only three days from extinction, and the last two days had been wasted arguing over gay marriage and dope smoking instead of addressing the impending and mathematically-certain disaster.