A Hedge Fund Manager
The current banking chaos has been caused by nothing less than institutional fraud on a world-wide basis. The banks have defrauded each other and their clients. The alleged Bernard Madoff affair is only the latest but certainly not the last financial “naughtiness with intent” scam to be discovered.
The so-called Ponzi scheme is being referred-to as a pyramid selling scheme. It is not pyramid selling – it is simply a scheme whereby old investors are paid with incoming new funds and the whole thing keeps rolling along for as long as there is a money-supply.
Most governments are realising that there needs to be much tighter control on unusual investment vehicles. There is a far simpler answer – ban all of these investments. The Americans will no doubt accuse everybody else of an attack on capitalism. It is not an attack on capitalism it is an attack on gangsterism.
Remember that the United States is the country which gave us Capone, Luciano, Bonano, Gambino, Lucchese, Colombo and of course, Ponzi himself. In those days, at least the authorities knew who the enemy was.
Nowadays, it is much more difficult because modern-day bandits are part of the establishment and their fame and power are the deterrents to proper investigation and control. It is not the gun but financial and political “clout” that is their weapon of choice.
The United States would do well to exercise more control of its financial institutions, otherwise the world might notice that it was Uncle Sam who gave us not-only the original gangsters but also securitised mortgages and the Ponzi scam.
We have already heard spluttering British ministers talking about “an enquiry” and pledges to “investigate”. There is really nothing to investigate – for two reasons. The first is that they don’t know what they’re looking for and secondly, they certainly don’t know where to look.