Is Springwater Township being driven into a debt and liquidity crises to serve only the civic and corporate elite with the Midhurst Secondary Plan speculation?
Common denominators of speculative episodes:
- very short memory of financial disasters,
- mistaken belief that money and intelligence are associated,
- aberrant optimism,
- widespread naivete (even stupidity), and
- massive debt.
All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment. p. 20
The circumstances that induce the recurrent lapses into financial dementia have not changed in any truly operative fashion since the Tulipomania of 1636-1637. Individuals and institutions are captured by the wondrous satisfaction from accruing wealth. The associated illusion of insight is protected, in turn, by the oft-noted public impression that intelligence, one’s own and that of others, marches in close step with the possession of money. Out of that belief, thus instilled, then comes action – the bidding up of values, whether in land, securities, or, as recently, are. The upward movement confirms the commitment to personal and group wisdom. And so on to the crash. This last, it will now be sufficiently evident, never comes gently. it is always accompanied by a desperate and largely unsuccessful effort to get out. p. 100.
In A Short History of Financial Euphoria (1994), he traces speculative bubbles through several centuries, and argues that they are inherent in the free market system because of “mass psychology” and the “vested interest in error that accompanies speculative euphoria.” Also, financial memory is “notoriously short”: what currently seems to be a “new financial instrument” is inevitably nothing of the sort. Galbraith cautions: “The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.” Crucial to his analysis is the assertion that the common factor in boom-and-bust is the creation of debt to finance speculation, which “becomes dangerously out of scale in relation to the underlying means of payment.” The financial crisis of 2008, which took many economists by surprise, seemed to confirm many Galbraith theses.
Private Gain, Public Loss: And township taxpayers will be stuck with massive debt, empty reserves and recriminations.
There’s no question that this is a time when corporations have taken over the basic process of governing. JKG 1908- 2006