Ponzi,Squared...

[undergroundpanther]

It's addictive gambling with a staggering cost, it's insane, and
it's fraud.....


Desperate to be rich, Ponzi started The Security Exchange Company in December 1919 (formed with a view to trading International Postal Reply Coupons) which promised returns of between 50% and 100% in just ninety days. Thousand of investors rushed to buy Ponzi Promissory Notes ranging from $10 to $50,000. At the height of the scheme staff were taking $1,000,000 per week, much of it in cash, until the office desk drawers and closets were literally overflowing with dollar bills.
http://www.marketoracle.co.uk/Article940.html


Even the brokers can see the writing on the wall. They will now try to convince you that by wise investing you can 'outperform the market' by buying low and selling high, even if the market is ultimately doomed to do no better than go sideways. This is another great variant on a Ponzi scheme. It's the stuff that has hooked the new breed of gambling addicts called 'day traders'. For every investor whose holdings 'outperform the market' there will be, of course, at least one loser. But the magic of Ponzi is that it's always the other guy, the next guy, the not smart enough guy, who will get burned. You'd be better to play slot machines or buy lottery tickets -- at least the potential payout isn't overstated by 250%.

In addition to the perpetual-growth Ponzi scheme, and the 'outperform the market' con, brokers also make scads of money from IPOs -- initial public offerings. As James Surowiecki has elegantly pointed out, the IPO is a scam by which an aptly-named 'syndicate' of investment firms ('underwriters') buy a mass of shares from the company 'going public', at about half the price per share they know they can flog them to gullible investors, many of whom rely on these very brokers for investment advice. They then dump their shares on these investors, knowing that the price will promptly drop back close to the IPO price. The underwriting brokers get rich, and the unsuspecting customers get burned.

That's the reason Surowiecki and others, most recently Lawrence Fisher in yesterday's excellent analysis over at our mother ship Salon.com, have urged Google, potentially the most lucrative IPO of all time, to screw the brokers and either sell all the shares directly to the public by auction, or, even better, not to go public at all, and save the delirious investors the grief they will suffer when they find out Google has no direct line to God, and hence isn't worth a million dollars a share.
http://blogs.salon.com/0002007/2004/05/07.html#a723


I agree with his thesis, but until the masses come to the same conclusion (which may already be happening) the scheme will be alive and well. I won’t worry too much about the market falling apart though — when the trend turns down, I’ll be long gone from the market.
http://tradermike.net/2004/05/is_the_stock_market_a_ponzi_scheme/



Here’s how crazy this deal is. We are not sure when it was done. Some say it was done June 27th, but kept back-pocket secret until this week. Why? With John Thain’s silence on this and other Merrill issues, you’ve got to wonder if he got into something he is now finding a lot stinkier than he ever imagined. I for one think John Thain will exit Merrill as soon as he sees and open window. Then again, he’s a Paulson frat boy from Goldman Sachs, so he might just be another plug in the dike like Bob Steel at Wachovia. If you put together a list of all of the Goldman Sachs boys and girls, that are at various levels of private business, public office and international office, you would not be able to comprehend the web they have knitted. So, the real question here is whether Paulson can hold it all together. Not a chance. Zip. Nada. Nope. No Way. And when it unravels, it is Humpty Dumpty.

http://realestateandhousing2.blogspot.com/2008/08/worlds-grandest-ponzi-scheme-unravels.html

``The fear is that we really may be in a long, continuous financial crisis,'' said Stephen Lieber, who oversees $9 billion as co-chief executive officer of Alpine Woods Investments in Purchase, New York. ``When you have no sense of certainty as to what will happen tomorrow, it's nerve-racking.''

The above from Bloomberg.
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=81068&t=01002130057764754273

http://www.digitalmoneyworld.com/ponzi-scams-dirty-little-secrets-part-2/

[tazkcmo]

1. I've never been happier

than now that I'm already broke and barely eating. I have very little to lose. My friends have been calling me a crack pot for 3 years now because I've been telling them to invest in survivalist books, dry goods and bottled water and screw the 401K. It's a great time to be poor.

[truedelphi]

2. Tonight on one of the local channels - an indepth look at shoplifters -

And how they manage to loot the big department stores.

My husband groaned and then said, "If only someone would cover the REAL story of the day."

Actually decent reporting is happening on various blogs - it is happening on the internet - but not on the mainstream media.

Mike Morgan says same thing as the husband does - but he knows the ins and outs financially better than we do here.

Mike Morgan says - To Catch A Predator - Just think about it . . . MSNBC Dateline ran child molester stings until we cried Uncle. What would have happened if they did the same about the financial crisis?

If they had done that, they would have all lost their jobs, because Paulson’s fraternity of Goldman Sachs brothers would have eviscerated the advertising of the media through strong-arm tactics on their clients.

Why was it OK to run To Catch A Predator until we puked? Because the sexual predators were not buying air time. Do you realize, Dateline would not even have had to change the name of the show. They could have just changed the format from sexual predators to Wall Street’s financial predators. If they want to call it like it is, start calling it where it hurts.

By the way, the answer to the most frequently asked questions I receive is, Yes. I do wear a bullet proof Kevlar vest. I hired another body guard last week. And I never sleep in the same place twice.####