by Charles Ponzi was a swindler. You give him money and he’d pay you interest on that money by using cash from new “investors” in a deal that had only deposits and payouts and no investments.
Bernard Madoff is the new Charles Ponzi. He schemed a $50 billion mess and now people will pay for his lies with their lifestyle.
The arrest of the 70-year-old Madoff, widely considered to have the magic touch as an investor, is another serious black eye for the hedge fund industry and all non-transparent investment vehicles. Investors across the New York area have clamored to be in Ascot because of the stability of double-digit returns and the reports of serious wealth creation. The scandal is bound to reveal the inner workings of the hedge fund industry, whereby intermediary feeders bring in their clients and take fees for putting clients with an investment manager.
If Madoff hadn’t faced $7 billion in redemptions, this Ponzi scheme might not have been discovered. What’s astonishing is that he got away with it for so long with nobody discovering it. What his four family members in Ascot knew is a puzzle that everyone wants answered, but one thing is certain: It’s virtually impossible to have returns like Madoff reported, and it should have been a major warning signal.
We find it fascinating that a Ponzi scheme is illegal and punishable by law, but the Social Security System is seen as a fail-safe method for protecting the elderly from poverty when, in reality, Social Security is a giant, wobbling, government supported Ponzi Scheme that relies solely upon the blood of new money to pay for the welfare of old bodies.
Credit Cards are also the newest Ponzi Scheme as Americans struggle to pay one card with a cash advance from another card. With each American averaging $16,000.00USD in credit card debt, the biggest Ponzi Scheme of them all is about to topple the financial towers.
They have been talking about the knock on effects of this on the UK markets which are already taking a battering.
Do you think in years to come this will be known as the “hedge fund bubble” or the “sub prime bubble”?
We have the same issues over here with Social Security with people like my parents who paid National Insurance all their lives being denied care when they needed it most.
It’s going to be a total meltdown, Nicola.
Here’s an intimately detailed piece on the end of “Wall Street.”
I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
People in their 30’s are now pretty much resigned to the fact that they will never be able to retire like their parents at 65. They’ll have to work until they die to pay the bills.
Many retirees right now have lost half of their life savings with no way to repair the damage. All that suffering and self-denial of the new and pretty things in favor of saving money and investing is now all for naught.
I find it frightening that they can pay fast and loose with all our hard earned money. They are already talking about how much pensions have been devalued by this and how it will affect the large institutions who had bought into this scheme.
Todays pensioners have been robbed – several times.
They have been robbed of their social care they paid and bought into all their lives. If they have assets of over £16000 they have to pay all their care costs. Residential care costs between £500 and £2500 a week depending on what care you need.
They were robbed when the Chancellor raided pension funds and changed the rules about 5 years ago.
They were robbed when they lost tax relief on their pension contributions – meaning it cost more to maintain their expected pension.
They have been robbed again by these irresponsible bankers playing fast and loose with their money.
Nicola —
We have the same sort of terrible system here. If you lived day-to-day and enjoyed every penny you earned, you’re fine. The system will take care of you. If, however, you saved and accumulated wealth, you have to “spend it all” first before the system will kick in, so if you have kids or someone you want to have your money, you can’t do anything with it except pay your long-term healthcare bills until you’re penniless.
There are heartbreaking stories about couples married 50 years divorcing in order to “impoverish” the one in need of long-term critical care so the system they paid into will actually pay without raiding bank and savings accounts. It’s inhuman and cruel and it’s the way of the elderly now in the USA.