The Economy
I did a post recently about my theories on how the general public have actually been duped when it comes to the economy. I had a couple of very interesting and intelligent replies from Rick and Sheel. I still however feel duped. This chap Madoff has got away with a 50 Billion.....yes BILLION dollar fraud !! How on earth does someone get away with that. I will tell you how. They have the air of knowing what they are talking about which therefore gives them authority. They then can get away with corporate crime. Simple. This guy got caught. How many people out there are perpetuating the same fraud but getting away with it. With figures like these no one can tell me that this does not have an impact on the common man. It does ! So we come back to my initial thinking. The economy of the world has been built in part ( how big that part is will never be known but in my reckoning I'll bet its a big part.) on pure deceit. I remember telling my in-laws some time ago when they invested heavily with Merril Lynch and lost a greater part of that money that Merril Lynch were using their money to pay off losses previously incurred. Can someone please tell me why the assets of these people/companies cannot be seized and then used to help the economy out. It seems to me that the common man is paying for the economic bailout. It is not affecting the cheats at all. In fact I'll bet they are laughing !!
A bit of a rant I know but comments would be greatly appreciated.
Peace and Love
A bit of a rant I know but comments would be greatly appreciated.
Peace and Love
posted by Sandy at Monday, December 15, 2008
3 Comments:
Hi Sanj - I know how you feel but I am very agrieved at the moment by the general attitude of the public that they have been duped.
The reality is that they have been duped, but only by themselves and their own greed. Madoff is a distraction and his $50 Billion is small money compared to the other "business" going on. Do not ever forget that the banks and the investment companies are there to make money for themselves. Their only need to impress the public is in order to acquire new funds with which they to make more money. And who can blame them ? They are after all a business aren't they ? - it's there job to make money primarily for themselves, not for the public.
Madoff defrauded clients of $50 Billion with false promises of high returns. My train company defrauds me and thousands of others everyday of £20 each on the false promise that they will get us to work on time !
Research has shown time and time again that people will believe a positive promise more than a negative promise because they want to believe in the proposed result. - see Quirkology by Richard Wiseman and Freakonomics by Steven D. Levitt & Stephen J. Dubner.
People have a terrible habit of giving away their trust without thinking when they believe they are on to a good thing. Madoff - is a flea compared to the losses of American car companies - the American banks and so many other businesses - but lets not totally blame America, this is a consequence of global greed and Madoff is justa scapegoat (an allegedly guilty one nonetheless!)
People could have seen that Madoff was a fraud if they wanted to look - problem was they all wanted to take the 12% a year he was offering ! Look here for a little insight into how this can happen - http://www.telegraph.co.uk/finance/financetopics/bernard-madoff/3778251/The-50bn-hedge-fund-audited-by-a-one-man-band-and-a-secretary.html
I know I'm ranting too but so many people these days are looking for someone else to blame instead of looking to their own ability to empower. Madoff didn't have any authority other than that bestowed upon him by those he made money for (idf allegedly fraudulantly) Individuals have to learn to think for themselves. The current situation is tantamount to self inflicted gunshot casualties trying to sue their government or the gun manufactirer for letting them have a gun!! Peolple need to take responsibility for their actions, not seek litigation.
Anyway that's my rant ! Hope you and the family are well - all the best
Al
On a lighter note try this - http://www.thedailymash.co.uk/index.php?option=com_content&task=view&id=1461&Itemid=59
:~P Al
Sanj, you're absolutely correct. There is a hell of a lot of profits being made by irregular practices (call it deceit or whatever) out there, and in a downturn, more are discovered. This is because more investors attempt to withdraw or switch their money. I will not be at all surpised if even bigger ones are uncovered.
After having an insight on how fund managers and hedge funds work, I would never consider investing even a penny with them, but people are misled.
So why is this so and what can be done? Capitalism, in itself, is a sound economic fundamental. However, the "capital markets" (as they are known) are not adequately policed. I should know - I used to work for a leading UK Regulatory organisation (who shall remain nameless). I moved after only 15 months there as I was promised a better pay and more career opportunities in a bank. Unless, the pay at the regulatory organisations is competitive, the talent (and I don't include myself in this) will go to the markets. I see this all the time. The pay differential is even more drastic in the USA.
That is precisely why they were caught napping on their job, because they were out of touch completely with the markets. The City could see the Subprime debacle coming in mid-2006, but the Regulatory authorities either didn't see the market changing or judge what the implications might be. I have sometimes been flabberghasted to their lack of action and their policies.
So, in summary, if you need well functioning markets, or need to reduce the risk of crime, you need effective policing. This applies to financial or any other type of crime. Human nature dictates that if you can get away with it, you would do it. Kids do it all the time!
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