A Silver Lining: The Bezzle Bubble Pop

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In his 1955 book “The Great Crash: 1929,” John Kenneth Galbraith, the economist, explained concisely why Bernie Madoff is unlikely to be the last corrupt financier to be shoved into sunlight.

At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks. This inventory – it should be called the bezzle. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more.  Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly.  In depression all this is reversed. . . .  Audits are penetrating and meticulous. Commercial morality is enormously improved.  The bezzle shrinks.

In the meantime, the official outlook continues to darken, which is bad news for everyone, including the bezzle holders. In minutes of a December meeting released yesterday, the Federal Reserve predicted “the unemployment rate was likely to rise significantly into 2010.”

ANOTHER BAD ECONOMIC INDICATOR: As newfloridian notes in the comments, the new owners of Anheuser-Busch theme parks, Inbev, just announced that employees can no longer take home two free cases of beer a month. (This is a joke, sorta. Even if the economy was booming, chances are the new foreign (part Brazilian, part Belgium) owners of Budweiser would have shut off the taps, as they are trying to sell off the theme parks.)