Felix seems confused

He quotes Greenspan:

Greenspan’s thesis does have a certain internal logic:

Since the devastating Japanese earthquake and, earlier, the global financial tsunami, governments have been pressed to guarantee their populations against virtually all the risks exposed by those extremely low probability events. But should they? Guarantees require the building up of a buffer of idle resources that are not otherwise engaged in the production of goods and services. They are employed only if, and when, the crisis emerges.

So this is how he interprets the argument:

But if you think for a moment about the logical implications of what Greenspan is saying here, they’re truly horrific. Imagine a world where the Japanese government did not insure its population against extremely low probability events like the recent earthquake — this is Greenspan’s example, not mine. The toll of death and suffering in one of the richest countries in the world, which was catastrophically high to begin with, would soar, and the Japanese government, through inaction, would be killing thousands of its own citizens, in a heartless and entirely avoidable decision. Meanwhile, the broader Japanese economy would suffer much more greatly than it already is.

For Felix the banker, money and debt are always equivalent to real stockpiles of goods, but that is not true after a catastrophe. The Japanese economy suffers excessively today today because the Japanese government did not force suffering yesterday in an insurance scheme. Had the government provided insurance, then stockpiles of excess goods would already be available and the excess suffering would have happened years ago when the stockpiles were built up.

See my post above on Krugman.