Sadly, the flash crash casino doesn't warn its customers when they are about to be wiped out, or that the house always wins; nevertheless the stoned masses are double down at the same roulette wheel that robbed them the last two times. It had to be this way...
Faith in the Delusional Bernanke "Put" is Total
Index Options Put/Call Ratio (50 DMA)
Wall Street's option-based hedging is the lowest in the life of the data (10 years)
Notice back in 2007 the ratio was high due to concerns over subprime, however it declined during the Lehman melt-down as hedges were monetized. If there hadn't been hedging back then, the collapse would have been a lot worse, because hedging de facto forces capital back into the markets when hedges are monetized i.e. it cushions the decline. Prior to the meltdown those index put options were worth pennies on the dollar, but at the market bottom they were worth several thousand percent more. However, just today, we learned that Soros jettisoned a big chunk of his index hedge at recent market highs. Belief in the Bernanke "put" has led to extreme moral hazard and total lack of hedging. People forget that the Bernanke "put" failed to prevent the 2008 debacle. But as long as other people's money is at risk, then plausible deniability is all that's needed to reach for the fat year-end bonus now 6 weeks away...
Double or Dog Food: Life in the Retirement Casino
Technically, globalization is not a Ponzi scheme, because it's not "fraudulent", it's merely highly immoral. It's not fraudulent because everyone implicitly knows it's a ponzi scheme. Everyone knows that billionaires get paid with the profits they make from exploiting Third World wage slaves. Everyone knows that the Third World wage slaves work in ludicrous conditions and will very likely never achieve middle class status much less ever become well-off. And worse yet, everyone knows that if the wage slaves don't keep paying into the scheme via the recurring trade deficit, then this entire immoral scheme will collapse, post haste.
Taking the ponzi definition a step further, any "operation" that pays out its core capital as income is a ponzi scheme. Because without capital maintenance, an organization's ability to continue recurring operations will eventually be impaired. Therefore, liquidating jobs and industries to boost short-term profits is a ponzi scheme. It will work for a while and then fail catastrophically. Again, everyone knows about outsourcing so technically it's not fraudulent, it's merely highly immoral.
Ponzi Schemes Always Fail. Violently and Suddenly
No surprise, when everyone realizes that the music has stopped and there are no chairs left, then it will be game over man. When this all ends it will be sudden and fucking brutal. At that point, the term "counter-party risk" will take on all new meaning as the "reach for yield" dissolves into the "reach for worthless IOUs".
The Bernanke "Put" is a Wall Street Delusion
These phony low volatility markets, elevated on meager volume, have sucked in trillions of combined Federal Reserve and private money slowly but surely over the past five years. Now, with combined $19 trillion in U.S. stock market value and north of $200 trillion in combined global assets, the Fed thinks it can control an asset stampede using a mere $85 billion a month? That amount of flow isn't even half of one percent of current U.S. stock market value. It's like jumping out of a 10 story window and using a blanket to break the fall.
When the algos go full Skynet in the midst of a high volume panic, the underwear will be mighty stained, to say the least. The age of immoral hazard is ending as appropriate, with the mother of all bets on the indefinite status quo.
It had to be this way - moral hazard assured it.