Something else which was meant to rise forever

By Felix Salmon
May 25, 2009

Another company defaults on its obligations because its chairman thought his market would simply rise forever:

“In my 30-plus years in the business there’s never been a year that was down versus the prior year,” he said. “This is a first.”

It’s a wonder he didn’t go into mortgage securitization, really.


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Here in Nashville it doesn’t feel like we’ve ben hit quite as hard, but we may have one of the best bankruptcy stories: The March of Dimes filed a chapter 11 last Monday. On their board were some of the fattest cats of our little town, including a Turner (Dollar General) and definitely the suit and tie upper echelon. They over-built, taking a million dollar donation for Clayton McWhorter to build a center for physically challenged kids. Unfortunately, they ended up with the building but no program to go in it. They tried to get an organization that I was on the board of, called High Hopes, to merge with them as they were planning the building, but the head of our board didn’t like what he heard and saw. We were small potatoes, for sure, but are still serving the population. Their whole facility, including an indoor therapy pool that was needed and fully utilized, the kid’s center, the summer camp…all belong to the banks on whose boards their board members also serve.
It would be a great story to write about for some top-notch journalist.

Posted by md sanders | Report as abusive

But isn’t this exactly the fundamental issue? All of “traditional” economic and business theory is based on the concept of perpetual growth, as surely as physics is based on gravity. You can make a chart that goes back as far as the concept of money and markets has existed, and you’ll see a line going up and to the right. Since the 30′s, absent the occasional correction, wages, home prices, the Dow, GDP all have gone up, up, up. Now, the guy you quote seems ignorant of even the idea of short term corrections, and so deserves to be ridiculed. But isn’t the idea that something (anything) grows forever just as absurd?
Can a world that stops growing, stops consuming more, stops spending more, stops expanding, exist? Isn’t it some sort of Ponzi scheme when you need a constant stream of fresh inputs for the system to survive? I have been looking for someone, anywhere, to make a clear cogent explanation of a world economy that could exist in a state of equilibrium. Isn’t that where we need to get to?

Posted by Rockfish | Report as abusive

How can people be so ignorant?

And get paid a CEO salary to boot?