Treasures from the Threads - Number Thirty-eight!

Panic over the debt of EU countries is reported in The Times this morning, no surprise on this blog of course which has been warning of this inevitable outcome for many years. A comment from Bob D seemed worth passing along in spite of the normal requirement for a full name being missing on this occasion: Bob D wrote:

Wonder where the money has gone?!! - it was never there in the first place. Let's say I buy an acre of land for £1000 and then you buy it off me for £10000. I then buy it back for £100000 and you borrow a million to buy it and then whoops everybody realises the land is worth a measly grand. (If we have borrowed to do this we can split a coll half million each and screw the lender - sound familiar?) Where did the £999K come from? where did it go? are the wrong questions. Unfortunately alot of financial geniuses have been asking the wrong questions for an awful long time. The trouble here being that a lot of these people hold influence on the governments who have been bailing out the sinking ship. These governments have thus bailed out all the idiots who bought an acre of dumpsite and in the process either underwritten this idiocy or ended up themselves with 4840 sq yards of mud. I wrote to the Times yonks back enquring as to why markets believe governments will be able to hold this toxic debt any better than, say, Lehmans. I got nowhere then and I expect to get nowhere now. But that is why the markets are skittish because they are beginning to realise they have been asking the wrong question for decades.

February 4, 2010 11:44 PM GMT on community.timesonline.co.uk

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