Saturday, April 30, 2011

WALL STREETS PATRON SAINT

He was born Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi in Lugo, Italy in 1882. A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments to investors. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases. While the system eventually will collapse under its own weight, the example of Bernard Madoff's investment scandal demonstrates the ability of a Ponzi scheme to delude both individual and institutional investors as well as securities authorities for long periods: Madoff's variant of the Ponzi scheme stands as the largest financial investor fraud committed by a single person in history. Prosecutors estimate losses at Madoff's hand totaling roughly $21 billion, as estimated by the money invested by his victims. If the promised returns are added, the losses amount to $64.8 billion, but a New York court dismissed this estimation method during the Madoff trial.

The scheme is named after Charles Ponzi[1] who became notorious for using the technique in early 1920. Ponzi did not invent the scheme (for example Charles Dickens' 1857 novel Little Dorrit described such a scheme decades before Ponzi was born), but his operation took in so much money that it was the first to become known throughout the United States. Ponzi's original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors' money to support payments to earlier investors and himself.

Knowingly entering a Ponzi scheme, even at the last round of the scheme, can be rational economically if there is a reasonable expectation that government or other person or organisation will bail out those participating in the scheme.[2]

http://en.wikipedia.org/wiki/Ponzi_scheme

46 comments:

  1. @Yukon,

    Sorry you got hacked.

    It is probably random, but given the open displays of the shiny on your blog, there is a chance that you were specifically targeted to try to get your brick and mortar address.

    Consider your physical safety and the safety of your physical.

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  2. Anon,

    Last night you mentioned:
    "I like the anon feature being brought back, it allows people to post who do not want to be profiled."

    -------------------------------------

    For any human being AWARENESS is the key, if you were aware you would not have mentioned that statement, not only those who post under ANON but also the identity of those who only READ the blog and do not post is also known, there is no such thing as privacy in today's technology and what's available to those who monitor, it's 50 yrs ahead of technology available to you. Internet itself was available to DOD in 1960s and not to public till 90s, imagine since then the capability available, it's beyond your imagination. The reason kli temporarily brought back ANON feature was not because he wanted people to remain ANON, he is under no illusion and knows very well evrything is monitored, he did it so people can still post till software glitch in google is fixed which was not allowing some posters to post under google account.

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  3. There is a huge difference between illusion of ANON and not considered a threat. There is no such thing as ANON, so the best course of action is honesty and understanding the fact that identities are known and then going on with daily lives knowing that fact and also understanding that if you are considered no threat then no problem.

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  4. Just curious what others feel about Madoff.
    I am questioning whether the authorities DID know earlier about his ponzi, and for whatever reason, chose to do nothing.
    Wasn't he reported to the SEC on multiple occasions??

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  5. thanks yukon...will be aware. When you are operating a Ponzi that dwarfs Madoff's, you aren't going to be too anxious to reel in a fish like Madoff that draws attention to the "system". Madoff's ponzi had been investigated thoroughly and exposed by a guy named Markopolis. Markopolis was employed by another hedge to track Madoff for 5 years . He handed Madoff on a silver platter to SEC several times.....and was ignored. Draw your own conclusions

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  6. As for as Joe's comments on ANON...NOTHING is anonymous....ALL is monitored. Everytime you log on to various sites you are on a data bank.. BE AWARE.....It does not mean you cannot post, read , or comment but do not be deluded into believing that commenting as an ANON or just "reading" sites keeps you under the radar. The greatest power ever monitors all. If you were a threat then you would have already known it. Trading the casino is very acceptable and political commentary is also allowed...at least for now. Threats ...organized or otherwise NOT acceptable. gl all and feel free to comment or read ......but never delude yourself that its anonymous.

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  7. kli,

    EXACTLY, as I mentioned many times before there is a significant difference between one's brain intelligence and their AWARENESS, one has nothing to do with the other. The Anon person who made the comment last night is intelligent but not AWARE, the key always is AWARENESS.

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  8. Bill,

    What you asked about Madoff falls into the category of what I just described which is brain intelligence vs AWARENESS. Madoff is very intelligent BUT he was not AWARE that his intelligence without using awareness blocked his judgement. Most intelligent people who do dark things believe their intelligence will save them,,ooopssss! the real power always knew what Madoff was doing and they let it go since it was serving their interest and when time came that they needed scape goat then well you know the rest.

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  9. One's intelligence can easily lie to them but their awareness keeps them real informed. Aware person understands the consequences and acts accordingly, that does not apply to intelligent people who are UNAWARE.

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  10. Dark side of your nature has lot more intelligence than you and uses very efficient weapons which includes EGO, envy, and all the other weapons in it's arsenal and has lived long before you were born since human existance goes long way back, therfore you can not defeat it using intelligence, only thru awareness and sacrifice which is the result of awareness one can have a good chance of fighting and defeating their own evil and only then they can look at external evil.

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  11. Weekend logic .... It is illogical to assume that such a massive global economy can be controlled by a handful of bankers. It is even more illogical to believe that they have over a period of several hundred years been able to maintain and strengthen their control and manipulation. I remember the same argument on the PPT(President's Working Group)in 08. One can draw their own conclusions. I have heard two presidents, Alan Greenspan and Hank Paulson refer to the Presidents working group but there are still intelligent (but UNAWARE) people that will argue its existence. Imangine a country as poweful as the United States of America bailing out Bear Stearns AIG LEH and on and on without a bondholders haircut. WITH NO PUBLIC discussion......Imagine placing 14 TRILLION dollars behind the very banks that created this disaster without public discussion.....Imagine all the media at once declaring the economy is recovering in mid March 2009 with the SnP turning on 666. Imagine a President that ran on Change appointing Tim Geithner Larry Summers Rahm Emanuelle Ben Bernanke to implement his vision. Are these random? hundres of billions in bank bonuses since 08.....and this is all random? Awareness...

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  12. BTW don' be afraid to comment on this topic....you're all tagged and bagged already....especially you Red.......hehhehehehhe

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  13. Well, one thing that I am aware of is that "lawn mowing" has returned to the Northeast. Just got mine done.

    But, on a serious note, I would like to think that I have some intelligence and awareness. At least I question what is going on. I just find it hard to believe that our "leaders" are allowing this to happen. I heard the same thing about Madoff that Kli wrote,...that he was handed to the SEC at least a dozen times (actually heard 22 times once). And the best answer that the SEC chairman could come up with was that he "didn't have enough staff." Come on,... really?? So, all of this is being done so that the privileged few can have more power??
    I would like to believe that there are at least some honest leaders that have our people's best interests at heart.
    But, maybe I am drinking Kool Aid when I'm asleep. It is getting harder just what to believe anymore.

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  14. Bill,

    Does the statement you just made, "I just find it hard to believe that our "leaders" are allowing this to happen", in line with definition of politics and political power? Politics is the ART of making one's wicked & selfish desires to SEEM like national interest and political power corrupts the moral and judgement of men. It does not matter what others say or does not say, what do you see? Do not forget people including leaders are what they do not what they say, so what do you see them doing in action? You do not need for any one to tell you how things are run, ask the right questions from yourself and answer them and vola you have it, that's called AWARENESS.

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  15. An important reason that readers need to understand this subject is to be a trader in this market one needs to understand WHAT is behind this market or its VERY difficult to find success over the long term. This explains WHY you have the cycles and WHY you have the "greed" that is allowed to explode your market

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  16. By the way most people in this country do not want to be aware if awareness means they have to face hardship, NATURE on the other hand does not care if people are aware or not, it gives them certain time and then piper is due, nature is always the best equalizer and cleans viciously when time is up. As far as nature is concerned, " I did not know or it's leader's faults" does not cut it. Humans never stop amazing me, heheeeee!

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  17. Nature is the "ultimate cleaner" hehehehe.... speaking of cleaners .....ehhehhee

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  18. Bill,

    I share a little truth with you, unlike kli whom wishes society was aware, just and people did the right thing, I actually like the fact that most have been complacent, un-informed and cared mostly about what serves them individually, kli does not want nature's wrath since he has a good heart, I believe in people learning the hardway and therfore i am glad about the sheep mentality of most, heheeeeee!

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  19. BTW "our leaders" are up to their ears in all of this.....Most do not understand the level of control or even WHO controls but they take their marching orders through a variety of intermediaries and third parties.....eg. K street....American Enterprise institute...Brookings institute... AIPAC ....and on and on....MOST of them do not WANT to know.

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  20. Hi Kli

    Speaking of order takers, I am out here on Conn Ave in Dc drawing a picture when guess who walked by in the following order, Bill O'Reilly, Dennis Miller, Jim Cramer, (asked why he was holding DCTH down, just kidding) Dyan Ratigan and finally by car with a host of helicopters and police the president. Everyone attending the same party.

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  21. Joe,

    "Politics is the ART of making one's wicked and selfish desires SEEM like national interest,..."

    I have become aware of it. I see what you see. I just don't want to believe it or accept it. I would like to think that good people enter politics because they would like to lead people in a proper direction. But, sadly, that is not happening. It has become a chaotic mess of self interest and greed.

    And are the people (sheep) really much better?? I don't know. Seems that many just want their check to come in the mail & watch TV.

    Maybe we all need to be taken to the woodshed, and feels nature's rath.

    While on vacation, I read John Mauldin's book "Endgame"--the end of the debt supercycle and how it changes everything.
    Any of you read it??
    He writes that we are in trouble--big trouble.

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  22. Mauldin probably knows the game.....he certainly understands the supercycle....sharp guy...I have not read his book....but will have one of my partners read it an give me a report...hehhehe...he just read the book on the bushs ....family of secrets....

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  23. damn tom....that many devils close together ....I woulda been nervous with lightning in the area........

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  24. Joe,

    "I believe in people learning the hardway and therfore i am glad about the sheep mentality of most, heheeeeee!"

    Cold very Cold hehehe but true, I have learned my best lessons in just that fashion.....

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  25. No idea what this means, but if true, could this trigger an explosion in metals? Is this really legit?

    http://www.wealthwire.com/news/headlines/1090

    I think I should perhaps take out the maximum allowable loan from my 401k and use the soon to be worthless dollars to buy some soon to be worth a lot more gold and silver bullion.

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  26. cannot find any credible confirmation of it bud.....will keep an eye on it tonight

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  27. Dear Kliguy38, been following you a long time, really appreciate your blog, editorials and comments.

    What is your take on state governments and do you see this as big a looming problem as I do? Will California voters (if granted the opportunity) permit extension of higher tax rates, will Illinois end up defaulting on payments to its vendors (and others). States are almost immediately accountable as they cannot print money - and the music is about ready to stop for alot of state and city employees, educators, contractors, vendors, social service providers and ultimately retirees and pensioners, unless....Obama, Congress and BIG BEN step in...and the consequences of that are truly mindboggling...when this starts to hit big at the local level, for services we as Americans rely on every day, maybe then you get the social protests and rioting you write about...remember the 1968 DNC "the whole world is watching"....?

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  28. randall....states are already being propped up by the Fed through a number of direct and indirect supplements...The equity market and bond markets for instance are what many state pensions have to rely upon for solvency.... Pensioners WILL take monster haircuts ....they already are with stagflation. Cities even WORSE.....Muni bonds will be given a slash and burn haircut....I cannot predict riots .....much better control on the organizers now....through digital monitoring....any rioting will be crushed through brutal force ....but this time unlike the 60s....the silent majority will not cheer.

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  29. on the run randall....so thots are stacotto.....Meredith Whitney is right about Munis but her timing is off.....this is a LIQUIDITY issue right now and as long as the Fed can maintain liquidity

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  30. Wow, look at silver! Someone just torpedoed it in a big way, down over 10% in a matter of minutes to $42 and change. Kli, I can't find any news on this, should be interesting tomorrow.

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  31. yeh bud ......aint it beuuuutiful.....you better not have your hand in the cookie jar.....WHACK UM.....I hope they wack it to 36

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  32. MSM preaching lower silver as we speak, Hope I can get some more physical,LOL. Gold, too...how long you think this lasts Kli/Joe? Read somewhere that PMs exploded in the '70s there was no Asian participation...

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  33. Things could turn even uglier in Libya (& M.E.) after this; NATO killed Qadafi's son & grandchildren...not sure that was part of the mandate for a "no fly zone". Seems like the no fly zone was to protect oil installations as we attempt to assasinate him. Get ready for another Iraq, Afghanistan, etc. etc. etc. Well maybe it'll help bring unemployment down if we can send (& keep) millions of soldiers in the overseas haha! What a sham our foreign policy has become.

    http://www.cnbc.com/id/42845830

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  34. Sis.....that greedy baastid Joe is laughing his azz off at this......I hope they rip it to th mid 30's but Chinese and few other countries may see fit to stop it before

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  35. I sure hope it gets pushed some more, $36 would be a gift. Kli, are you thinking just physical here? If it gets knocked down to the $30s, I'll be looking at PSLV, and even some miners.

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  36. Joe Take a look at ASTM, looks like it will have a good movement in it the 1st of the week. Take a look Ken. Jim

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  37. OBAMA major announcement in 10 minutes.....check your press now

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  38. intersting, thanks for the update. i wonder if it deals with isreal

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  39. Maybe we finally got Bin Laden! Lol!

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  40. futures up, and oil dropping,

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  41. mr. kli it will be interesting to hear your take on the news and its timing.

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  42. Yes, rudemood, will be waiting...here comes the $, there goes the commods...sounds like this happened a few days ago, got confirmation tonight, LOL...U.S. has the body...

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  43. There are few coincidences in the timing of these events. It is obvious this has been in the works for several days. As far as the timing of Os speech tonight that is still for your speculation only. Silver is getting a much needed beatdown and oil is also getting some steam taken out of it.......all will be temporary.

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  44. I would expect a blow off top for the rest of the market (right on time for the short cycle top). Might have to buy some inverse in the AM.

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