Quantum Pranx

ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

Posts Tagged ‘Bernie Madoff Ponzi scheme

A hard look at ‘Ponzi USA’

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by Rick Ackerman
Posted originally July 16, 2010

WE NEVER CEASE TO BE DUMBFOUNDED BY THE FACT THAT THERE are intelligent people out there who think the economy will somehow extricate itself from the morass without our  suffering a period of misery equal in severity to the Great Depression. How could anyone believe that the brazen Ponzi scheme being perpetrated on the citizenry by The Government is anything other than a grand swindle?  Here’s a post from “DG” [writing to Rick’s Picks] that throws cold water on some of the fantasies and delusions that for now are helping to keep The System nominally afloat:

“Reading the comments in the forum yesterday, I was struck by the nonsense of a comment stating that there was no fraud. Seriously? The real estate boom was not fraudulent, when it is documented that there were fraudulent loans creating fraudulent buyers offering fraudulent prices? Doesn’t that indicate fraudulent price discovery? Isn’t the real estate collapse documenting this? (More than 7 million homes in some state of ‘off-the-market-yet-for-sale’ price discovery?)  The credit-crisis duct-tape repair job is not fraudulent when you take from taxpayers, to ‘kinda make whole,’ the same buyers who created the aforementioned fraud?

“Does the bottomless pit of Fannie Mae seem a bit odd? It seems like a house on fire, where they just keep coming with fresh wood from the mill to pile on and destroy more capital. Public pensions? How can someone who for 30 years contributes 8% of an average $50,000 income (for a $120,000 total) realistically expect to spend the following 30 years extracting $80,000 a year? These are better returns than Bernie Madoff offered. (Don’t tweak me on my numbers – they are close enough, and many are far worse.) Not at all possible. (And yet, pensioners somehow think this is more ‘real’ than Social Security.)  It is fraud from the beginning,  just not stated. Social Security never worked, which is why it rose from a 1% tax to 15% over 70 years. And it still doesn’t work. We could continue for quite a while here (Medicare and Medicare Part D, for example) – the numbers are in the significant fraction of a quadrillion dollars.

Bernanke’s Fraudulent Numbers
“To state that PEs are healthy is silly. That is what Bernanke said over and over about housing 2005-7. YouTube it and imagine him in a dunce cap. Sure, there were numbers that supported his thesis, but the numbers were based on fraud, which makes the entire argument fraudulent. The dollar is a debt instrument which supports all of these frauds. Either the frauds all get called out and they collapse, or the dollar does it for them. Either way, it is going to be horrible for us Americans. Dow 15000? In what currency and how many barrels of oil will that buy? It simply cannot work without a huge haircut in currency devaluation.

“I think the hardest part for all of us is accepting the timing of this slow-motion crisis. History shows that these events take decades to build up and go on long enough for the naysayers to be pronounced wrong because their forecasts of doom have been disproven by time — and then they are right in a blink!. Either you were on the right side, or not, with very little if any time to change. We’ve been warned. High Frequency Trading has shown us how much time you will have via the ‘flash crash.’  Nuts!”

Extend and Pretend: It’s either RICO Act or Control Fraud

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by Gordon T. Long of Tipping Points
Posted originally May 27, 2010

http://www.bearmarketinvestments.com/guest-post-extend-pretend-its-either-rico-act-or-control-fraud

WE ARE ENTERING THE AGE OF RAGE. It is presently most visible in Europe as austerity programs that potentially could shred a half century of social entitlement advances are met with increasingly violent street demonstrations.  It is seen in the US Tea Party rallies with their fury that the very fabric which the US capitalist system is based on is being destroyed and discarded. Unfortunately these demonstrations of rage are focusing on the effects and not the cause. The cause is a systemic plaque of unenforced financial control fraud.

Americans witnessed CEOs arrested during the nightly news coverage of the S&L Crisis of the early 90’s. They were placated as they heard the details of over 1000 indictments of the perpetrators of fraud. In the aftermath of the tech bubble implosion ten years later, injured investors once again witnessed the most senior executives at Enron, WorldCom, Tyco, Qwest and others being led off in handcuffs and disgrace to waiting police cruisers. Retirees with decimated retirement plans felt that some level of restitution had been made when 25 year sentences were meted out to these formerly high-flying felons.

After nearly two years since the greatest financial malfeasants in history and ten years since the last public example of financial crime, the public haven’t seen a single CEO sentenced to hard time for the financial meltdown. They have not had their thirst for revenge quenched by a single high level court case. Instead, the public infuriatingly witnesses politically crafted theater in congressional hearings that go nowhere, read watered down legislation that is replete with even richer lobbyist-authored loopholes and only occasionally see small headlines of quiet settlements with insulting token amends payments. Why? Were there no crimes committed? No laws broken?

The public is forced to accept excuses that we have enforcement agencies not enforcing, regulators not regulating and legislators not equipped to legislate properly in our modern fast moving financial world.  The public is left with the gnawing concern of whether it is incompetence or something much deeper, more troubling, and more sinister.  Confidence and trust in government and our democratically elected politicians continue to worsen from already pathetic levels.

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