There's Been a Bezzle-Fueled Boom in Bonds
Easy money and the confidence that comes with it conceals a wide variety of risk.
Wall Street.
Photographer: Ron Antonelli/BloombergThis article is for subscribers only.
Economist John Kenneth Galbraith has written many words we should all read, but one in particular is proving especially relevant as cracks in the credit markets continue to spread.
That word is bezzle. It describes the period in which an embezzler has stolen a man's money but the victim does not yet realize he's been swindled. It is, as Galbraith puts it, a time when there is a "net increase in psychic wealth." Charlie Munger, Warren Buffett's longtime investment adviser, later built on the idea with his coining of the word "febezzlement," which (perhaps unnecessarily) formally extends the concept to include completely legal but nevertheless unexpected appropriations of wealth.