The Virtual Catastrophe

Saturday, November 15, 2008
There has been much made of Wall Street, Main Street - and most of all - the "real economy".

Nobody ever talks about the fictional economy much less the virtual economy.

I heard a trader say on CNBC dismissively, "Get with real time. History is for..." he stumbled here. "For teaching."

One could argue that we're being taught history in this crisis. The financial system has made many of the same mistakes since 1929. But the ponzi scheme had been remarkably stable for dozens of years. Mutual funds were created in the 1950s. The first hedge fund is roughly dated back to the end of WWII.

But the simple Great Depression analogy is too general. Since the 1980s we've been dealing with a virtual economy. This is a computer network subject to viruses and contagion.