Charlie Stross talks about liquidity:
What we’ve just seen, hidden in the euphemism here, is a confession that drug cartels and other organized criminals have gone on a $352Bn asset-buying spree — and the banks and regulators, world-wide, turned a blind eye to this because the alternative was to allow the banks to collapse. And the corollary is that these investments are now in the system, laundered, whitewashed, and legit. These narcodollars aren’t neatly bundled up inside the mattress any more; they’re in the system, doing their owners’ bidding.
A third of a trillion dollars is a lot of money; it’s enough to fund the US military invading another country halfway around the world, or a manned Mars exploration program. Obviously, there’s no single Mr Big here, no Blofeld investing SPECTREs ill-gotten billions in an ambitious bid to go legit.
But one wonders whether the “organised criminals” have been investing in anything innovative. (Politicians, if they’re smart.) And what the long-term consequences are going to be …
It won’t be Stross’s next novel, but it might be Ben Bernanke’s. Or Larry Summers, whose latest foray into fiction is here.