The great economic booms of the modern era – housing in the 2000s, technology in the 1990s, savings & loans in the 1980s – have one thing in common: “Bubbles.” Irrational speculation and massive overreaching that enriches everyone who matters.
Many economists believe we need another bubble to escape the current slowdown. One believer is David Schwarzstein, an un-indicted accountant from Arthur Andersen. He created the popular, low-risk, high-return General Uncertainty Margins, or GUMs, designed to re-inflate the economy.
“Which industry will create the next five year ride of imaginary wealth?” Schwarzstein asked from the cabin of his personal submarine off the coast of Grand Cayman. “Oil or autos, airplanes, entertainment, corn, solar, celebrity fashion? No one knows, but – this came to me on Turks & Caicos – everyone’s speculating. ‘Speculating’ about the ‘speculative’ market. Speculation about speculation is still speculation, isn’t it?”
Turns out, yes, it is. Thus the bubble-bubble concept: Speculation in speculation. Schwarzstein partnered with Citibank, DeutscheBank, and Morgan Stanley to create GUMs. They work as follows:
Institutional investors buy a minimum $10 million “bet” that one of 25 pre-selected industries will produce the next bubble. “They only put down 0.1%,” according to a Citibank spokesman. “So their stake is an incredible 99.9% leveraged!”
These institutional bets are then bundled into GUMs, and shares of those are offered to the public. “It’s totally safe,” confided a DeutscheBank analyst. “All you need is a bank account and the desire to get rich. GUMs will always appreciate.”
Are GUMs SEC and FTC approved? Schwarzstein insists that they probably are. “But that doesn’t matter,” added a Morgan Stanley economist. “What matters is that GUMs are win-win, so there’s no time to lose. Buy shares right now.”
Could these bubble-bubble GUMs rejuvenate America’s arthritic economy? You bet!