Sunday, March 14, 2010

"Like a Fractal the Same Scheme" Moved From Wall Street to Main Street/Latest Chaos-er Attack & Gaslighting The Beckian Beanstock



(If throwing a contribution Pottersville2's way won't break your budget in these difficult financial times, I really need it, and would wholeheartedly appreciate it. Anything you can afford will make a huge difference in this blog's lifetime.)


Urantian Sojourn dissects the latest chaos madness at Gaslighting The Beckian Beanstock.
Nothing moves product like the hot stink of fear.
David Aaronovitch is another famous chaos-er. Remember Rove's boast that he would be spreading chaos throughout the political process before the seemingly unwinnable 2004 election (and how upset you were to find out that it worked)? Believe anything the pro-WMD-Iraq War "I will not believe anything the government says again if there are not WMD in Iraq" Aaronovitch says at your peril. And don't let the oily visage put you off from listening to his professorial patter. (He's not a professor (badly, but cleverly self-educated (and I'm being kind to his lack of real education here) as far as I can see).) And, yes, part of what he says is true - thus the term chaos-er. Wonder how quickly he wrote this book. Maybe he had been writing since 9/11? Another nationally well-known (and this time black) Rethug chaos-er continues to flaunt his nonsense loudly on all channels. (Emphasis marks added - Ed.)

We all know the guy. He spouts crap about Blacks or Gays or Latinos and when pressed he says "I have several Black friends." Then when asked to name one he sputters and goes on trying to defend stupid statements. This also describes the republican party as a whole. Their policies and pandering to bigots and homophobes reveal them for the insensitive bastards they are. But realizing their lack of a Black guy to call their friend, they decided to hire one and make him chairman of their party. - - - - - - - PBI claimed it was socking its investors’ money into lucrative oil and gas exploration opportunities in Oklahoma and Texas, and it promised the investors absurdly high returns - 6% a month, or 72% a year. Despite such promises, the brothers assured town locals handing over their hard-earned dollars that little risk was involved. Even if the energy exploration didn’t pay off, the land acquired by PBI was valuable and could be sold to offset any losses.

Like Madoff in Palm Beach, the Merkles in Williamston exploited local ties - church and family - to reel in new investors; and like Madoff's investment fund, PBI, too, was a complete sham, and a classic Ponzi scheme - that is, an investment scam in which existing investors’ returns are paid for with money from new investors. In the case of PBI, there was no energy exploration in Oklahoma and Texas.

Some of the money they received from later investors the Merkles used to pay off earlier ones and give their scheme the look of success. But in their case, there was a rub. The Merkles were distinctly creatures of the Ponzi Era: they evidently couldn’t help themselves. Even as they ran their own Ponzi racket, documents show, they were getting fleeced. What they weren't paying out in fake returns the Merkles bet on high-yield, get-rich-quick schemes in the U.S. and abroad that had nothing to do with oil and gas - and other Ponzi schemers and con artists were robbing them blind.

. . . Thanks to an open credit spigot, a booming housing market, and visions of unimaginable wealth on Wall Street, practically everyone in the United States in the past decade seemed to aspire to get rich - and quick. Perfectly ordinary people refinanced their homes, refinanced again, and used the money they got to stake themselves at the crooked casino table of American life.

It’s an unmistakable sign, at the very least, of a deep, simmering distrust and disillusionment, a dark undercurrent of despair spreading through our culture.

. . . the literal Ponzi schemers may be the least of it. Sooner or later, they usually go to jail. But the distrust they sparked has made its way to the very kings of finance, who, like the Ponzi-schemers, were not so long ago going to make us all rich, who struck the match and then stoked the flames of the financial crisis, who created oblique financial products like collateralized debt obligations and pick-a-pay subprime mortgages, and then walked away unscathed with multi-million dollar salaries and bonuses in their pockets.

The distrust extends as well to the government that finally jailed Madoff and is prosecuting Stanford, but has dealt a free pass to Lloyd Blankfein of Goldman Sachs and Dick Fuld of Lehman Brothers. What might be thought of as an American Ponzi mood can be seen in the rise of anti-government groups like the burgeoning Tea Party movement. The scattered “patriot” groups that comprise the Tea Partiers passionately claim the president, the Democrats, and even the Republicans are “stealing” their country and liberty from them; in some cases, they are prepared to take up arms against what they see as fraud of the largest order, which they term “socialist tyranny.”

Most disquieting in the Ponzi Era is the disillusionment it has bred, the sense that people you know or work with could be ripping you off.

. . . How long it will take for that embedded distrust to dissipate is anyone’s guess. As the victims of Madoff can attest, justice is bittersweet in the wake of a Ponzi scheme: the ringleader may spend his life in prison, his belongings publicly auctioned off as a form of catharsis as much as restitution, but investors are rarely made whole again. The scars remain.

Ours is now a Ponzi nation. There is a new mood in the land. Just how it will play out is unknown, but a sense of having been conned is still spreading - as if not just surprising numbers of investors, but the whole country had experienced the last days of a giant Ponzi scheme. With it goes a feeling that what we’ve been living through, even in “the best of times,” wasn’t an American dream, but pure nightmare. Welcome to America, sucker.

Read the first part of the article below.
Ponzi Nation How Get-Rich-Quick Crime Came to Define an Era

Every great American boom and bust makes and breaks its share of crooks. The past decade - call it the Ponzi Era - has been no different, except for the gargantuan scale of white-collar crime. A vast wave of financial fraud swelled in the first years of the new century. Then, in 2008, with the subprime mortgage collapse, it crashed on the shore as a full-scale global economic meltdown. As that wave receded, it left hundreds of Ponzi and pyramid schemes, as well as other get-rich-quick rackets that helped fuel our recent economic frenzy, flopping on the beach.

The high-water marks from that crime wave, those places where the corruption reached its zenith, are still visible today, like the 17th floor of 885 Third Avenue in midtown Manhattan, the nerve center of investment firm Bernard L. Madoff Investment Securities -- and, as it turned out, a $65 billion Ponzi scheme, the largest in history. Or Stanfordville, a sprawling compound on the Caribbean island of Antigua named for its wealthy owner, a garrulous Texan named Allen Stanford who built it with funds from his own $8 billion Ponzi scheme. Or the bizarrely fortified law office -- security cards, surveillance cameras, hidden microphones, a private elevator -- of Florida attorney Scott Rothstein, who duped friends and investors out of $1.2 billion.

The more typical marks of the Ponzi Era, though, aren’t as easy to see. Williamston, Michigan, for instance, lacks towering skyscrapers, Italian sports cars, million-dollar mansions, and massive security systems. A quiet town 15 miles from Lansing, the state capital, Williamston is little more than a cross-hatching of a dozen or so streets. A “DOLLAR TIME$” store sits near Williamston’s main intersection - locals affectionally call it the "four corners" - and its main drag is lined with worn brick buildings passed on from one business to the next like fading, hand-me-down jeans. It’s here, far from New York or Antigua, that thanks to two brothers seized by a financial fever dream, the Ponzi Era made its truest, deepest American mark.

Jay and Eric Merkle, active church members and successful local businessmen, were well known among Williamston’s residents. In 2004, the brothers discovered that an oil-and-gas venture, which they had invested in and which promised them quick, lucrative returns, was a scam. They’d been duped. Their next move should have been simple: turn in the crooks and get on with their lives, their pockets a few dollars lighter. Jay and Eric, however, grasped the spirit of their age and made another decision entirely -- they teamed up with the guys who had ripped them off, in the process switching from prey to predator.

That first venture actually floundered, but in 2005, court records show, they started their own Ponzi scheme, Platinum Business Industries (PBI). Based in Williamston, PBI claimed it was socking its investors’ money into lucrative oil and gas exploration opportunities in Oklahoma and Texas, and it promised the investors absurdly high returns -- 6% a month, or 72% a year. Despite such promises, the brothers assured town locals handing over their hard-earned dollars that little risk was involved. Even if the energy exploration didn’t pay off, the land acquired by PBI was valuable and could be sold to offset any losses.

Like Madoff in Palm Beach, the Merkles in Williamston exploited local ties -- church and family - to reel in new investors; and like Madoff's investment fund, PBI, too, was a complete sham, and a classic Ponzi scheme - that is, an investment scam in which existing investors’ returns are paid for with money from new investors. In the case of PBI, there was no energy exploration in Oklahoma and Texas.

Some of the money they received from later investors the Merkles used to pay off earlier ones and give their scheme the look of success. But in their case, there was a rub. The Merkles were distinctly creatures of the Ponzi Era: they evidently couldn’t help themselves. Even as they ran their own Ponzi racket, documents show, they were getting fleeced. What they weren't paying out in fake returns the Merkles bet on high-yield, get-rich-quick schemes in the U.S. and abroad that had nothing to do with oil and gas -- and other Ponzi schemers and con artists were robbing them blind.

Read the rest here and weep for our loss of innocence as a country.

Not that it won't make us stronger in the long run, but as the wag said, "In the long run, we're all dead." And I certainly didn't need this to make me stronger.

4 comments:

TomCat said...

Thanks Suzan. This puts a whole new light on the term CONservative.

Teeluck said...

Suzan, Wow, CONservative is right... they got my head spinning, and I consider myself adventurous...these Ponzi freaks have the intelligence of snails and minds of snakes...no wonder the country fails at the hands of Repuglickers...I do not see a bright future either because our economy is built on this system.

Suzan said...

Which we had feared the whole time, right, TC? From the logic of watching what they did, not what they said.

This puts a whole new light on the term CONservative.

Adventurous . . . you Teeluck? Nawwww. Intelligent, maybe. . . .

;)

.these Ponzi freaks have the intelligence of snails and minds of snakes

Thanks for the comments, friends.

Love what you do!

S
__________

David G said...

Hey, Suzan, thanks for listing my blog on your list.

I'm trying to get set up to be able to comment on your great blog and this is a trial run. I hope it works this time!