Tag: ponzi scheme

Welcome to the Ponzi Economy

  You’ve heard the term Ponzi Scheme. Well now I want to introduce you to the term Ponzi Economy.

 Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve. Of course they purchased more 30-year Agency mortgages than Treasuries, but PIMCO and others sold them those mortgages and bought – you guessed it – Treasuries with the proceeds. The conclusion of this fairytale is that the government got to run up a 1.5 trillion dollar deficit, didn’t have to sell much of it to private investors, and lived happily ever – ever – well, not ever after, but certainly in 2009.  Now, however, the Fed tells us that they’re “fed up,” or that they think the economy is strong enough for them to gracefully “exit,” or that they’re confident that private investors are capable of absorbing the balance. Not likely.

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U.S. History They Don’t Teach You In School

The Human Side of the Madoff Scandal: Weisel Foundation Loses All

Yahoo News/AFP reports that the Elie Wiesel Foundation lost nearly everything in the Madoff scheme.  I’m sure you are all aware of Holocaust survivor Wiesel and his work.  Lest we think these Wall Street schemes only effect the rich and the rich wannabees.

“We are writing to inform you that the Elie Wiesel Foundation for Humanity had 15.2 million dollars under management with Bernard Madoff Investment Securities,” said the foundation, which aims to combat anti-Semitism, on its website.  “This represented substantially all of the Foundation’s assets,” it said.  “We are deeply saddened and distressed that we, along with many others, have been the victims of what may be one of the largest investment frauds in history.”

Wiesel, 80, a Nobel laureate and prolific author who survived the Holocaust, created the foundation some 20 years ago to foster international dialogue and youth programs to teach tolerance.

I suspect we will see, in time, that the machinations of Wall Street and the big banks will begin to effect everyday people more and more everyday.  Madoff is the tip of a very big iceberg.  

Yet, I have heard shockingly little from O and the Congressional democrats on new regulation, much less holding these scumbags accountable, other than the ridiculous bail out schemes we have seen to date.  Instead, the people at the center of these ridiculous financial instruments and schemes (e.g., Lawrence Summers, Robert Rubin) have been systematically invited in to advise O.  It is time to call these people out for what they are, scumbags, and assure they have nothing to do with government, the banking industry or Wall Street anytime in the future.