"Do I laugh now, or wait till it gets funny?"
--Walter Neff (Double Indemnity)
Peter Atwater relates the Spanish bailout plan to the concept of double leverage. Double leverage is using borrowing funds as equity in an already leveraged institution.
But this is nothing new. This is what strategies seeking to solve a debt and spending problem by borrowing and spending more are essentially about.
Classic Ponzi.
As Mr P used to observe, risk is high.
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Real government spending is plunging because states and localities are cutting back as stimulus funds dry up while unemployment benefits expire because of Republican opposition in Congress to extending them.
We’re actually practicing government austerity on a scale that we haven’t seen in 60 years.
~Paul Krugman, bloomberg.com, 6/3/12
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