Tag Archives: Ponzi scheme

Bernard Madoff serves time incognito

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Pnzi scheme financier scam artist in Groucho incognito glassesYou and I fight traffic tickets, Phil Spector fights charges that he put a gun to a woman’s mouth and pulled the trigger, he fights for years. Everyone fights against the long arm of the law, except Bernie Madoff. Does that make sense to you?

The biggest economic fraud ever perpetrated by one man, and that man pleads guilty. Hmmm.

We are told that as a consequence, Madoff doesn’t have to tell anyone where he buried the treasure. Meanwhile his accomplices are being charged and are proclaiming themselves innocent.

Okay, I didn’t know that not plea-bargaining means not having to say you’re sorry, or divulge where you took the loot. I didn’t know that when Kenneth Lay died, it meant that because his appeal could then never be exhausted, his wife and family got to keep the money. An appetizing pattern emerges…

Can you imagine a parade of white-collar-criminal bunkmates sidling up to Madoff in prison, hoping to learn the whereabouts of his vanished bullions (who saw that pun coming)? Nor can I. Michael Milken –now a financier and philanthropist–had plenty of business suitors waiting to hire his larcenous consultation when he was released. Paper crimes don’t garner severe prison sentences. Whether Madoff has a felony on his record or not can hardly hinder his future prospects.

Madoff has a very good reason to plead guilty. It’s a bit like the Kenneth Lay play-possum legal strategy. Let’s remember Bernie Madoff couldn’t even afflict himself with jail. He remained out on bail in his luxury penthouse, until his day in court. Since then where has he been? Have YOU seen him? Are you sure he’s where authorities say he is?

I’m convinced that Bernie has a plan to stay out of the penal system. And it doesn’t involve a jury verdict.

I’d guess with just a fraction of his loot, he can pay off the very few administrators involved to handle the paperwork to incarcerate someone in his place. No visitors, no outsiders to know. It won’t be Bernie doing the time, it’ll be a stand in. Maybe as simple as a real inmate, written off as released, but reissued Bernie’s ID. No cosmetic surgery necessary, what’s the probability that prison guards know what Bernie Madoff looks like anyway.

If Bernie had to go back and forth to court, he’d have to do be there himself. Being seen by too many people.

In prison, rather, not in prison, Madoff can live the rest of his years on a private estate, miles from onlookers, his fence-line probably abutting Kenneth Lay’s.

Obama talks of lowering the deficit even as he does the opposite

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ponzi-schemeObama sure knows how to talk out of both sides of his mouth at once! And that’s exactly what makes him and the Democratic Party so dangerous to the American people. With the Republican Party of Open Violence everybody knows what’s coming down, but with the Democrats it’s quite different.

Here’s the latest Obama-con as the mass media hits us with… Obama Seeks to Halve Deficit to Half Trillion Per Year by 2013 all timed to hit us with headlines across the nation in the corporate dailies’ Sunday issues today.

So how is Obama, with as corporate loaded a Cabinet as ever was, going to reverse course from his new give outs to the corporate big guys, and now tax them as he says he will? How is he going to cut the military spending even as he sends 17,000 or so new troops into Afghanistan? How is he going to tax corproations more even as he gives out more tax refunds to everybody right away? Barack Obama surely is the guy who can talk out both sides of his mouth at one and the same time, isn’t he? It’s amazing! Slick Willie and his triangulation abacus had nothing ever at all that the duo team of Barack and Hillary we now are stuck with for 4 years can’t match and even double in shenanigans.

We should all be very concerned with this double talk. Barack is setting the deck for a ruling class attack on what the rich call ‘entitlements’, but what we know as social programs… programs like Social Security… for just one example. Yes, General Barack is not going to cut the real billion ton gorilla entitlement program that is known as the US military, but is going to go after social programs, even as he double talks to us about expanding them! We are being scammed. The Democratic Party with Barack Obama at the helm might just be running the biggest ponzi scheme of them all on the American public?

How does it all work? Well just study the cartoon picture that leads this commentary off. Say one thing and do another.

the short end of the stick

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hazelwood tally stick It was one of the greatest heists in history. The scene? London, 1660. The perpetrator? England’s King Charles the II. The loot? All the gold he could con out of the country’s goldsmiths, bankers and businessmen. The tool?
 
A tally stick.

Tally sticks were a brilliant invention, but they were also insidious as they formed the foundation for the fiat currency systems we still have today. One where the root of a currency’s value is in a promise from a faceless institution, and not in the actual value of an object.

Put into use about a thousand years ago, they were a common sense solution for a young gold-and-goods economy where gold was scarce. By the time of the heist they were used in everyday transactions.

Here is how it worked. When a loan was made, the debt was carved in a standard fashion on the surface of a small (preferably hazelwood) stick, and then the stick was split in half through the center of the carving. The longer end of the IOU was given to the purchaser, and its handle was called the “stock” — the root of the word’s use in today’s markets.

Even a mostly illiterate public could read the amount scratched into the wood, and the stick would only fit perfectly with its original other half. That way, when the debtor returned with the money (or goods) owed, the sticks would be matched and the debt would be “tallied.”

In that fundamental use, they worked perfectly. But of course, as is governments’ way, the King was tempted to stretch those bounds.

Charles II ruled at a time when royal power was still based on a divine mandate. His government and institutions — and indeed he himself — saw the king as the Chosen One, which was a real shame for him because it bound him to the laws of Christendom. And Christianity at the time still forbade lending or borrowing with usury (interest). When financing several failing wars against neighboring countries depleted royal coffers, Charles II needed some quick cash to continue living in kingly fashion.

King Charles II turned to the trusted tally and the keen idea of selling his (government) tallies (debt) at a discount. That way he could allow his lenders to profit without charging interest — the basis for government debt being sold at a discount today.

And the King could issue advance tallies for emergency spending, an idea that proved all too tempting. He sold the tallies collected by his Exchequer (tax collector), essentially trading future tax receipts to the country’s goldsmiths (bankers) for quick cash.

The tallies were receipts for taxes to be paid later in the year. This is a crucial part of the story: they weren’t trading on the value of the objects being traded, but on the cost of waiting for a return and the government’s ability to collect taxes and stay honest. If the government is not honest, this is an outright Ponzi scheme, one where new debt issue could theoretically pay for passing bills. For a while.

The King realized that he’d stumbled onto something big. He could wage all the war he wanted and pay his bills with the gold he got for hazelwood. The King spent and spent, and the goldsmiths’ vaults filled up with more and more sticks.

Goldsmiths were handing out certificates for fractional gold reserves and inflating the young economy in a con all their own. And since the King played along with their early building of a banking system, they played along with the sticks-for-gold investment strategy.

Over time, the market got wise to the game. Buyers started attaching larger and larger discounts to the King’s debt to offset the perceived risk in loaning money to the King. The discounts prompted the King to issue even more tallies, promising out more future tax revenues just to meet his short-term spending desires. But remember only the discount was changing here. So the mountain of taxes to be redeemed in order to pay off his debts grew in comparison, soon overwhelming the King’s income.

By the time the whole Ponzi scheme came to an end, the King’s sticks were trading at a 10% discount (to put that into perspective, short-term T-Bills are currently trading with discounts of one-tenth of one percent or less). The payments on his newer issues trading at that discount soon outmatched all the Kingdom’s tax revenues, effectively bankrupting his Exchequer and threatening to put the monarchy in the poorhouse.

So with the stroke of a pen, the King simply declared those debts illegal and ceased payment.

With that single stroke he stole most of England’s gold — having already spent it — and forced the young economy to fall flat on its face. The King’s various creditors ended up on “the short end of the stick” and all credit in the country evaporated very nearly overnight.

Pretty scary, huh? I’m glad such a thing could never happen today.

Democratic Party awash in corruption scandal

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ponziWhat do Illinois Governor Rod Blagojevich and Bernard Madoff have in common? They are both Democratic Party kingpins, the likes of which Barack Obama climbed his way to White House power with. Bernie Madoff ran a $50 billion ponzi scheme from Wall Street but he also poured money into the Democratic Senatorial Campaign war chest ($100,000 between 2005 and 2008) and made large contributions to important Democrats on the Finance Committees, like Rep Henry Waxman and Senator Charles Schumer.

See “It’s Kristallnacht Two!” An Ethnic Cleansing in America By ALEXANDER COCKBURN for more about Madoff. And keep your eye on Governor Blagojevich’s hair piece, too, since this scandal has hardly but just begun. His defense should be, that selling of favors is actually the standard in our 2 corporate party system of American corruption, not a deviation from it! That’s just the simple truth.

These 2 corruption scandals are just the tip of the iceberg in regards to the overall corruption that Barack Obama’s Administration represents and governs through. Barack Obama has yet to even take over the Presidency, yet he and his party have been cooperating with the Republican Party to give away literally trillions of US government money to be used in bailouts for the profit making of the super rich, more war making for the military industrial complex, and cover-up for the torture regime of Dick Cheney and George W. Bush. These two criminal conspiracies, the Democrats and Republicans, co-govern this country, and it really is hard to distinguish the corruption of one group of these gangsters from the corruption of the other group. They are simply in it together.

Corruption is the element that is collapsing The Empire, and the whole world hopes the collapse comes sooner, instead of later. Meanwhile, at home here in the US, there has been no bailout from this corruption that our country has yet to pay the full price for. One thing is for sure, a Democratic Party awash in corruption itself can play little part in moving things forward for the American people. We are caught between a rock and a hard place. Simple as that. Time to get over our ‘lesser of two evils’ buy in to all this top dog corruption and criminality at the very top. Time for patience is coming to an end.

Chain emails and Saint George

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About this time each year for some reason, a certain friend of mine gets into a panic and passes on chain emails in renewed hope that she will come into money. Last year she sent everyone the It-Really-Works-Bill-Gates-Will-Pay-You-$275K email. A day later she apologized.

Does she recognize what all these chain emails are really about? Chain letters and Ponzi schemes in the cyber world take on an entirely different purpose than they used to have through snail-mail. And they succeed wildly. Chain emails circulate for large computers to map contact patterns and networks.

When you forward a chain email, its authors track whom you sent it to and how quickly. That’s why the email is launched in the first place, to chart enormous networks of who is in touch with whom. At the most superficial level, the process determines which email addresses are valid. To information traders the emails reveal social connections and hierarchies.

We’re not just talking about the pyramid schemes, we’re also talking about all those clever emails you get in the morning that apparently made one of your relatives smile. Where did you think those come from? Did you think some cherub with time on his hands, sitting at his kitchen window in Hawaii, composed a funny story addressing impish Americanisms which through myriad cyber degrees of separation found itself in your aunt’s incoming email? You’d be right. Except about the cherub’s clients who are watching the logs as their whimsical package bounces along.

Especially if the message involves embedded graphics. Server-side graphic files telegraph the whereabouts of an email in real time. Often graphic files are disguised as text. (MSN and Hotmail track all their email using embedded graphics that pretend to be text. Given that linked files require many times more computation power than does text, disguising the files AS TEXT would seem to concede that Microsoft knows we would not appreciate what they are doing.)

Don’t you wonder why at the end of each and every one of those clever emails, the funny sentiment is always followed by urgent instruction to send it on?

Do these authors think that they are just SO funny, you MUST pass their work on to everyone you know? Do you see this at the end of newspaper columns or comic strips? Do book authors end their novels by recommending that you tell all your friends to buy a copy or face three years of bad luck?

If an email asks to be sent on, and you want to, and must, here’s how to do it without contributing to the fortunes of direct marketers and spammers. Copy and paste just the text into a fresh email, then send it on. If there is a graphic, save it to disk and then attach it.

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Or put it on the web. Here’s an email forwarded to me from my good friend Paulette. 🙂 It’s an old joke, presented this go-round as Saint George.