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Presentation of 'Planet Ponzi': Numbers Never Lie, People Do
On April 15, 2014, Mitch Feierstein, a British-American investor, banker, analyst, and columnist for The Independent and Huffington Post, presented the Russian edition of his book Planet Ponzi: How Politicians and Bankers Stole Your Future. What Happens Next. How You Can Survive, at the HSE Faculty of World Economy and International Affairs.
In his book, Feierstein analyzes the problems connected with the U.S. mortgage crisis, which started in 2007, as well as its consequences. He explains the essence of a Ponzi scheme on which any social insurance institution is based. It applies to any investment scheme where the promoter offers crazy returns to attract investors.
The presentation started with a part called 'The USA is bankrupt'. Feierstein supports this assumption using statistics demonstrating the country’s huge debt, which exceeded 16 trillion dollars in 2013, and possible default. He explains the way the U.S. government tried to save large companies at the expense of ordinary citizens.
He also pays attention to the situation in Europe, where the scale of inappropriate resource allocation reached record levels. Governments promised their people much more than they could provide. They stood by and watched the financial industry create huge debts and low quality assets, which led to currency depreciation. The statistics show that Spain, Portugal, Ireland and other countries are currently unable to pay their debts. France’s economy is inevitably declining, and Italy is following the way of Greece. The near future of countries in the EU seems dramatic, which is why Feierstein asserts that 'Europe is collapsing'.
Feierstein reveals a huge financial pyramid, which he calls 'Planet Ponzi' for its global scale. He blames it for the bankruptcy of ordinary people. The equity markets are in a bubble whose bursting will cause a new wave of economic destruction. Failure of the financial pyramid is unavoidable, and there will be no happy end. 'The global financial system is broken beyond repair. These are dangerous times and they’re only just starting,' states Feierstein.
During the discussion after the presentation Feierstein argued that printing money is not a solution to the problem; we need to take responsibility for our actions and choices, and find alternatives to paper money. Despite the distressing conclusions made by the author, he stated that he remains optimistic and still has high hopes for the Russian economy.
Ekaterina Solovova, specially for the HSE news service