Ponzi scheme

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pages: 369 words: 107,073

Madoff Talks: Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History by Jim Campbell

algorithmic trading, Bear Stearns, Bernie Madoff, currency risk, delta neutral, family office, fear of failure, financial thriller, fixed income, forensic accounting, full employment, Gordon Gekko, high net worth, index fund, Jim Simons, margin call, merger arbitrage, money market fund, mutually assured destruction, offshore financial centre, payment for order flow, Ponzi scheme, proprietary trading, Renaissance Technologies, risk free rate, riskless arbitrage, Robinhood: mobile stock trading app, Sharpe ratio, short selling, sovereign wealth fund, time value of money, two and twenty, walking around money

And the whole thing blew up.”2 Ponzi schemes are not built to last. Somehow Madoff’s did for 40 years. Even Bernie didn’t believe how long he got away with it. He told me he believed he could have been brought down by a well-placed, five-minute phone call. In my estimation, five operational cornerstones of the Ponzi scheme allowed Madoff to get away with it for so long. The scheme was driven by Madoff, managed by Frank DiPascali, and operated by unwitting seventeenth-floor overpaid clerks. Some knew more than others. None knew it was a Ponzi scheme, other than Bernie. MADOFF PONZI SCHEME OPERATIONAL CORNERSTONE #1: THE SPLIT STRIKE CONVERSION INVESTMENT STRATEGY The brilliance of Madoff’s split strike conversion* strategy evolved from its seeming opaque complexity; while operationally, it allowed Madoff to scale up the Ponzi scheme to match the exponential account growth.

To make matters worse, I could not find the courage to admit failure and face certain consequences once I realized recovery was impossible.”36 Bernie may have been brilliant, but ultimately his thinking was illogical. He should have known that Ponzi schemes never last. THE DOUBLE LIFE Bernie lived a double life. The industry titan and champion of a business built on integrity created the most notorious Ponzi scheme in history. Bernie built a business around a family culture. He then turned it into an affinity fraud, betraying family as well as his predominantly Jewish investors and charities. He built a legitimate business he could have sold for billions, meaning he had no need to create a Ponzi scheme. Yet he did. The Ponzi scheme precluded him from ever attaining those billions.

We’ll go under the hood of the most notorious Ponzi scheme in history with the forensic experts who unraveled Madoff’s “MO.” We’ll learn how Madoff laundered an incomprehensible hundreds of millions of dollars from his investment advisory Ponzi scheme through the “back door” of his market-making and prop trading business to keep it solvent. Absent the injection of Ponzi money, BLMIS would have been insolvent as early as 2001, seven years before the demise of the Ponzi scheme. The forensic investigation uncovered the exhaustive system behind Madoff’s fraud: the fake, backdated trading, the allocation of fake trades to clients’ accounts, the phony client financial statements, the fake computer screenshots that covered up the lack of real trading, the doctoring of already falsified documents that repeatedly fooled the SEC and external auditors.


pages: 598 words: 169,194

Bernie Madoff, the Wizard of Lies: Inside the Infamous $65 Billion Swindle by Diana B. Henriques

accounting loophole / creative accounting, airport security, Albert Einstein, AOL-Time Warner, banking crisis, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, break the buck, British Empire, buy and hold, centralized clearinghouse, collapse of Lehman Brothers, computerized trading, corporate raider, diversified portfolio, Donald Trump, dumpster diving, Edward Thorp, financial deregulation, financial engineering, financial thriller, fixed income, forensic accounting, Gordon Gekko, index fund, locking in a profit, low interest rates, mail merge, merger arbitrage, messenger bag, money market fund, payment for order flow, plutocrats, Ponzi scheme, Potemkin village, proprietary trading, random walk, Renaissance Technologies, riskless arbitrage, Ronald Reagan, Savings and loan crisis, short selling, short squeeze, Small Order Execution System, source of truth, sovereign wealth fund, too big to fail, transaction costs, traveling salesman

.; Madoff victims; and specific agencies, funds, and individuals arbitrage and, 38–41, 52 arrest of, 12–16, 19–22, 209, 211, 216–17, 222 assets of, frozen and sold, 230, 238, 245, 305, 316–18 audits of, 149–50, 254–55 automation and, 42–49, 103 Avellino & Bienes and, 50–56, 77–78, 102 bail and, 18–20, 224–27, 237–39, 252 bankruptcy problems exposed by arrest of, 327 Bayou scandal and, 147–49 Bear Stearns and, 186–87 beginning of fraud by, xxiii, 29–30, 41, 81, 85–86, 90–94, 113, 225, 251–52, 271, 274, 298, 333–35 brokerage firm founded by, and OTC market, 24–27, 34–36 cash crisis of 1962 and borrowing by, 24–30, 225, 335 cash crisis of 1987 and, xxiii, 84–87, 90–91, 335–36 cash crisis of 1992 and, 94–95 cash crisis of 2005–6 and near exposure of, 146–62 cash crisis of 2005–6 and recovery by, 166–67, 173–76 cash crisis of 2008 and lead-up to collapse of, 21, 193–209 cash flows of 1990s, 81, 90–94 cash flows of 2002, 132–33 cash flows of 2007, 182–83 cash withdrawal requests of 2008 and, 1, 183, 187–88, 190–93, 197, 200–209, 256 cash withdrawals of 1994–2003, 132–36 charities and, 3, 88, 110–11, 114, 183, 337 checks written before confession, 6, 18, 314 childhood and education of, xxii–xxiii, 24, 30–35 Cincinnati Stock Exchange and, 68, 76, 86 civil lawsuits by victims of, 299–302 clawback lawsuits and, 257–58, 266–67, 288, 294–95 Cohmad formed by, 70–75, 149 commission payments and, 117, 136, 151 confession of, xxi–xxii, 1–12, 207–9, 282 congressional hearings on, 267–68 death of parents and, 48 death of son Mark and, 323 derivatives and, 174–76 DiPascali and fraud of, 81–82, 207–9, 297–99 DTCC and, 119–20, 150–51, 159, 164, 245, 255, 272, 296 early investors and introducers and, 43, 57–69, 92, 100–102, 110–15, 148 economic weakness in 2007 and, 176–80 employee money managed by, 182 employee salaries and, 178–79 exclusivity and secrecy and, 59–60, 93, 116–17, 134 extramarital affair allegations and, 277, 288–89 Fairfield Greenwich and, 89–91, 104–10, 187–88, 190–93 falsification of records by, xxiii, 41, 99–100, 102–3, 117–20, 122–27, 129, 139–46, 150–51, 153, 158–59, 163–64, 179, 272–73, 296, 309–10 family illnesses and, 135–36 family of, and impact of crime, 278, 281–90 family of, and questions about knowledge of fraud, 281–84, 333, 337 family wealth and, 160–61, 178, 182, 258, 321, 334 father’s brokerage failure and, 31–32, 35–36 feeder fund fees and, 87, 117 feeder funds begun by father-in-law, 36–39, 41, 50 feeder funds begun by nonfamily members, 102, 104–6, 119–21, 123, 130–32 feelings of, for family, 272 feelings of, for victims, xx, xxii, 333 foreign funds and, 65, 74–75, 84, 166–71, 243–44, 335 French town house, 177, 194, 239, 274, 318 guilty plea of, 247–53, 326 hedge funds and, 87–88, 90–91, 104–5, 119, 123, 125–32, 136, 144–46, 171–73 house arrest of, and gifts to family, 229–30, 237–38 humanity of, xxi, 345–48 IRAs and, 126–27 Jewish connections and, 88–89, 111, 114, 212–15 lawsuits arising from, 295–97 lessons of, for investors and regulators, 339–47 Levy estate executor, 63, 148 Lipstick Building office of, 2, 71–72, 81, 90, 103, 112, 120 loans by, to family and staff, 179, 181, 189–90 London office opened by, 48, 68–69, 82 losses of, and final account statements, 256 losses of, and length of fraud, 279 losses of, and number of victims, 211–16 lying by, xxii–xviii Manhattan penthouse of, 18, 80–81, 274, 280–81, 305, 316 market making and, 40–41, 80, 82–84, 136, 199, 245 Markopolos accusations and, 122–25, 153–59, 162–66 marries Ruth Alpern, 33–35, 47 modern market shaped by, xxiv Montauk beach house, 18, 69, 193, 226, 274, 305, 316 NASDAQ and, 80, 84, 86–87, 107–8 options trading not reported, 142 Palm Beach home and, 18, 109, 114, 183–84, 226, 274, 305 pension funds and, 127–32 Philoctetes speech of 2007, 179–80 Picower and, 63–65, 132–36, 161–62, 333 Picower settlement and, 330–31 Ponzi scheme of, and legitimate firm, 136, 152–53, 160, 251 Ponzi scheme of, described to federal prosecutors, 225–27 Ponzi scheme of, enabled by Wall Street, xxiv Ponzi scheme of, seductiveness of, 339–40 Ponzi scheme of, size of, xxiii, 117, 180, 247, 260 prison interviews of, xvii–xx, xxii, 333–38, 344–345 reason for not fleeing, xxiii–xxiv, 339 relationship with brother, Peter, 48–50, 292–95 relationship with wife, Ruth, 288, 337–38 relationship with sons, xx, 285, 333, 338 returns of, 25, 38, 50–51, 53–54, 56, 67, 76, 80, 93–94, 112–13, 296 Roslyn house of, 47, 69–71, 167 SEC failures exposed by arrest of, 227–30, 272 SEC inquiries of 1992–2005, 152–56, 162 SEC inspector Kotz interviews, 270–72 SEC investigation of 1992 and, 94–104, 335 SEC investigation of 2003 and, 139–40, 145–46 SEC investigation of 2005 and, 139–46 SEC investigation of late 2005–6 and, 153–60, 162–66 SEC investigations of, revealed in 2009, 302–3 SEC shutdown of Avellino & Bienes and, 102 sentencing of, 273, 275–80, 332–33 SIPC liquidation and, 219–22, 235–37, 260–61 small investors and, 171–73 sole responsibility claim of, 225, 252 Sorkin as lawyer for, and conflict issue, 242–43 split-strike conversion strategy and, 74–76, 84–85, 94, 106, 112 suspicions of, 113, 117–29, 131–32, 134–35, 138, 141–44, 150–51, 176–77, 185, 188–89, 203–4, 231, 318, 333 synthetic trades by, and taxes, 85 third market and, 82, 108 trading strength affirmed, 118 travels to France, 179, 194 trust and credibility of, 28, 41–42, 48, 61, 63, 66–68, 82, 86–87, 89–90, 93, 112, 138, 175–76, 214–15, 343, 347 victim compensation and, 338 wealth and lifestyle of, xx, 69–70, 80–82, 136–38, 177–79 yacht and slip of, 177, 179, 239, 305, 318 Madoff, Deborah (former daughter-in-law), 284 Madoff, Marion (sister-in-law), 47 Madoff, Mark (son), 43, 47, 69, 82–83, 136, 152, 178, 230, 276, 288 accusations vs., 281–91 father’s arrest and, 4–13, 19, 230, 324 lawsuits vs., 285–7, 294, 321, 324 loans to, 161, 189–90, 198 suicide of, 321–23, 345 wife changes last name, 285, 321 Madoff, Peter (brother) Cincinnati Stock Exchange and, 68 Cohmad and, 72 death of son and, 5, 135, 161 DiPascali and, 81 early life of, 31, 47 Engler and, 66 family redemption checks and, 335 gifts and loans to, 179, 181–82 hedge funds and, 178 lawsuits vs., 50, 292–95 London office and, 48, 69 Madoff confesses to, 5–8 Madoff’s arrest and, 14–15, 17, 22, 226, 230 Mark’s suicide and, 323 Palm Beach home of, 184 role of, in firm, 3, 47–50, 82, 86, 136, 152, 181 Madoff, Ralph (father), 30–31, 33, 35–36, 48 Madoff, Roger (nephew) illness and death of, 3, 5, 135, 161, 285 Madoff, Rose (grandmother), 30 Madoff, Ruth Alpern (wife), 186, 276, 335 accusations vs., 281–84, 286–91 assets forfeited by, 230, 237–38, 274–75, 280–81, 288, 316–18 charities and, 3, 183 children and, 43, 47 criminal charges not filed vs., 274 early life of, 33–34 early work for firm, 26 family illnesses and, 135–36 feelings of, for victims, 252, 278 firm Christmas party and, 11–12, 182 friendships and, 67, 114, 148 lawsuits vs., 288, 294, 338 Madoff’s arrest and, 13, 15–17, 19–20, 226, 229–30, 237, 275 Madoff’s confession and, 6–9, 18 mails jewelry to family, 230, 238 Manhattan penthouse and, 81 marries Madoff, 33–35 son Mark’s suicide and, 323 stands by husband after arrest, 332, 337–38 year before arrest and, 3–4, 179, 184, 193–94 Madoff, Shana (niece), 17, 47, 73, 135–36, 179, 237, 294, 302, 323 Madoff, Solomon David (grandfather), 30 Madoff, Sondra (sister), 30, 47 Madoff, Stephanie (daughter-in-law), 189, 285, 322–23 Madoff, Sylvia Muntner (mother), 30–31, 48 Madoff family foundation, 135–36, 340 Madoff Securities International, Ltd.

In fact, his questions were totally irrelevant: No knowledge of derivatives is required to investigate a Ponzi scheme. If it’s truly a Ponzi scheme, there are no derivatives; there’s just a liar with a bank account. In fact, Cheung’s previous experience might have been more relevant, since accounting fraud investigations sometimes involve verifying whether the assets shown on the balance sheet actually exist, the precise question a Ponzi scheme investigation must answer. If Cheung had known more about Ponzi schemes, she would have known how to deal with Markopolos’s arrogant and misguided questions. But she didn’t.

Like every Ponzi schemer, he was able to face his victims every day because they didn’t look like victims, not until the final days and weeks—and the evidence is that, in those days, he was as tormented by fear and grief as any guilty, cornered human being would have been. Such is the Ponzi scheme. It is the crime of the egotist, not the sadist. One need not enjoy others’ pain to run a Ponzi scheme. Until the final moments, there is no pain. One is helping, not hurting. That delusion, based on a lie, is reinforced every day by every thankful customer who says, “Bless you, Bernie!” But Madoff’s Ponzi scheme didn’t simply reinforce what we always knew about this sort of crime. It etched new lessons into our hearts. All Ponzi schemes transfer wealth from victim to victim. But because of the nature of so many of Madoff’s victims—charities, endowments, major philanthropists, generous people on all rungs of the economic ladder—this Ponzi scheme transferred wealth from victims to the larger community, too.


pages: 431 words: 132,416

No One Would Listen: A True Financial Thriller by Harry Markopolos

Alan Greenspan, backtesting, barriers to entry, Bernie Madoff, buy and hold, call centre, centralized clearinghouse, correlation coefficient, diversified portfolio, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, family office, financial engineering, financial thriller, fixed income, forensic accounting, high net worth, index card, Long Term Capital Management, Louis Bachelier, low interest rates, Market Wizards by Jack D. Schwager, offshore financial centre, payment for order flow, Ponzi scheme, price mechanism, proprietary trading, quantitative trading / quantitative finance, regulatory arbitrage, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, statistical arbitrage, too big to fail, transaction costs, two and twenty, your tax dollars at work

A CPA on Long Island had lost both his and his wife’s retirement funds as well as their children’s college funds. “I just got those redemptions and kept investing more. After a while I never took anything out,” he said, casually defining the horror of a Ponzi scheme. There was nothing Ocrant could do but listen and sympathize. So while I talked about Madoff’s Ponzi scheme in the abstract, Mike Ocrant knew what a real Ponzi scheme smelled like, and he knew the human damage it did. To Ocrant, this just didn’t smell like a Ponzi scheme. He didn’t know exactly what it was, possibly front-running, but he just couldn’t believe the evidence. When he returned to New York he began his education, spending several hours on the phone with Frank, learning the language of options, and like any good reporter, trying to punch holes in our theory.

It was during their dinner that Frank revealed the details of the investigation. His whole operation was a scam, he said. Madoff was either front-running or it was the biggest Ponzi scheme in history. Like a good reporter, Ocrant casually absorbed the information. He didn’t really respond, but in fact his reaction was typical; he had a tough time believing that Bernard Madoff was running a Ponzi scheme. His professional experience had shown him how difficult it is to sustain a Ponzi scheme for even a couple of years, so it was hard for him to accept the claim that this had been going on for at least a decade. But more than that, he got hung up on the lack of a motive.

The Boston and New York SEC Offices Reacted Very Differently to the 2005 Submission ... The Matter Was Assigned to a Relatively Inexperienced Team, Particularly with Respect to Conducting Ponzi Scheme Investigations ... The Enforcement Staff Considered the Evidence of Little Value Because Markopolos Was Not a Madoff Investor or Someone Personally Involved in the Alleged Ponzi Scheme ... The Enforcement Staff Questioned Markopolos’ Credibility Because of His Perceived Self-Interest ... The Enforcement Staff Concluded That Madoff Did Not Fit the ‘Profile’ of a Ponzi Scheme Operator.” “In April 2008, Markopolos Attempted to Send a Version of the 2005 Submission to the SEC’s Office of Risk Assessment, but It Was Not Received.”


pages: 393 words: 115,263

Planet Ponzi by Mitch Feierstein

Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, Bernie Madoff, book value, break the buck, centre right, collapse of Lehman Brothers, collateralized debt obligation, commoditize, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, disintermediation, diversification, Donald Trump, energy security, eurozone crisis, financial innovation, financial intermediation, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, Future Shock, Glass-Steagall Act, government statistician, high net worth, High speed trading, illegal immigration, income inequality, interest rate swap, invention of agriculture, junk bonds, light touch regulation, Long Term Capital Management, low earth orbit, low interest rates, mega-rich, money market fund, moral hazard, mortgage debt, negative equity, Neil Armstrong, Northern Rock, obamacare, offshore financial centre, oil shock, pensions crisis, plutocrats, Ponzi scheme, price anchoring, price stability, proprietary trading, purchasing power parity, quantitative easing, risk tolerance, Robert Shiller, Ronald Reagan, tail risk, too big to fail, trickle-down economics, value at risk, yield curve

Norman Thomas, 1930 I wish my mum were still alive to enjoy and support Planet Ponzi. This book is for her; she’d have loved it. A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.

His was a useless, wasted, destructive life, but he gave his name to history. A Ponzi scheme is any financial adventure in which depositors can only be paid out by using the money of new investors. As long as the scheme is expanding, everything looks fine. The financial mathematics are bad and getting worse all the time, but you can’t tell how bad a Ponzi scheme is by how you experience the ride. It’s not the ride that matters, it’s the way it ends. Now, you’d be right to think that Ponzi’s investors were dumb. If you think you’d be smarter than them‌—‌relax, you would be. But just as investors have become shrewder over time, so Ponzi schemes have become a little smarter too.

This book begins with the story of how the politicians in Washington and the bankers on Wall Street jointly created the largest Ponzi scheme in history. The origins of that scheme go way back‌—‌at least three decades, if you think only of Wall Street, but arguably as much as sixty years if you think of the federal government. Naturally, I’m aware that my claim sounds implausible, but I hope it doesn’t strike readers as entirely implausible. After all, just a few years ago in 2008–9, part of the Ponzi scheme was laid bare for all to see in the shape of the subprime mortgage bust and the consequent banking crisis. That crisis was already the largest Ponzi scheme in history, so the track record is there.


pages: 329 words: 99,504

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud by Ben McKenzie, Jacob Silverman

algorithmic trading, asset allocation, bank run, barriers to entry, Ben McKenzie, Bernie Madoff, Big Tech, bitcoin, Bitcoin "FTX", blockchain, capital controls, citizen journalism, cognitive dissonance, collateralized debt obligation, COVID-19, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cryptocurrency, data science, distributed ledger, Dogecoin, Donald Trump, effective altruism, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, experimental economics, financial deregulation, financial engineering, financial innovation, Flash crash, Glass-Steagall Act, high net worth, housing crisis, information asymmetry, initial coin offering, Jacob Silverman, Jane Street, low interest rates, Lyft, margin call, meme stock, money market fund, money: store of value / unit of account / medium of exchange, Network effects, offshore financial centre, operational security, payday loans, Peter Thiel, Ponzi scheme, Potemkin village, prediction markets, proprietary trading, pushing on a string, QR code, quantitative easing, race to the bottom, ransomware, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Robinhood: mobile stock trading app, Ross Ulbricht, Sam Bankman-Fried, Satoshi Nakamoto, Saturday Night Live, short selling, short squeeze, Silicon Valley, Skype, smart contracts, Steve Bannon, systems thinking, TikTok, too big to fail, transaction costs, tulip mania, uber lyft, underbanked, vertical integration, zero-sum game

Either the supply of new investors dries up, or worse, the current ones wise up to the fraud and demand their money back, only to discover it isn’t there. Ponzi schemes are traditionally thought of as having a central figure coordinating the fraud. Think of Bernie Madoff, whose Ponzi scheme collapsed during the subprime crisis as investors saw the broader market cratering. By conventional measurements, Madoff’s fraud holds the record for the largest Ponzi scheme in history, with some $64 billion lost—at least on paper. But as Shiller describes in Irrational Exuberance (2015), a Ponzi scheme does not need to have a central administrator to fit the broader definition of one.

But it was already clear that many of the economic gains during the pandemic were going to the ultrarich. And as an armchair economist, I saw far worse storm clouds forming on the horizon. Surveying the markets in the spring of 2021, I saw all the signs of what Robert Shiller describes as “naturally occurring Ponzi schemes.” The premise of a traditional Ponzi scheme is quite simple: A fraudster promises investors he can produce incredible returns if they give him money to invest on their behalf. Instead of legitimately investing that money, the con man pretends to have generated profits and uses that story to lure in more investors. He pays the original investors off with the money from the new ones (See?

Tether stated on its website that they wouldn’t honor redemptions for less than $100,000. And over time, they added other language to their terms of service that practically gave them the right to refuse redemptions for any reason. This is the crimson flag when it comes to fraud, especially Ponzi schemes. Again, from Dan Davies’s book Lying for Money, “a fraud can be called a Ponzi scheme with greater validity, the greater the extent to which the mechanics of the crime revolve around managing the renewal of its financing and convincing the investor and lender communities to keep their money in the scheme rather than demanding repayment in cash.”


pages: 319 words: 106,772

Irrational Exuberance: With a New Preface by the Author by Robert J. Shiller

Alan Greenspan, Andrei Shleifer, asset allocation, banking crisis, benefit corporation, Benoit Mandelbrot, book value, business cycle, buy and hold, computer age, correlation does not imply causation, Daniel Kahneman / Amos Tversky, demographic transition, diversification, diversified portfolio, equity premium, Everybody Ought to Be Rich, experimental subject, hindsight bias, income per capita, index fund, Intergovernmental Panel on Climate Change (IPCC), Joseph Schumpeter, Long Term Capital Management, loss aversion, Mahbub ul Haq, mandelbrot fractal, market bubble, market design, market fundamentalism, Mexican peso crisis / tequila crisis, Milgram experiment, money market fund, moral hazard, new economy, open economy, pattern recognition, Phillips curve, Ponzi scheme, price anchoring, random walk, Richard Thaler, risk tolerance, Robert Shiller, Ronald Reagan, Small Order Execution System, spice trade, statistical model, stocks for the long run, Suez crisis 1956, survivorship bias, the market place, Tobin tax, transaction costs, tulip mania, uptick rule, urban decay, Y2K

She promised to pay 50% returns in two months and enticed 1,200 investors in forty-two states to pay her a total of between $10 and $15 million between 1989 and 1995.25 A particularly dramatic story emerged in Albania in 1996 and 1997 when a number of Ponzi schemes promising fantastic rates of return enticed a good share of the people of that country. Seven Ponzi schemes accumulated some $2 billion, or 30% of Albania’s annual gross domestic product.26 Enthusiasm for the schemes was so intense that in the 1996 local elections members of the ruling government party included symbols of the Ponzi scheme funds on their campaign posters, apparently wanting to gain some credit for the new wealth sources. When the schemes failed in 1997, enraged protesters looted banks and burned buildings, and the government was forced to call out the army to restore peace; a number of rioters were killed.

There is no reason for these stories to be fraudulent; they need only emphasize the positive news and give less emphasis to the negative. The path of a naturally occurring Ponzi scheme—if we may call speculative bubbles that—will be more irregular and less dramatic, since there is no direct manipulation, but the path may sometimes resemble that of a Ponzi scheme when it is supported by naturally occurring stories. The extension from Ponzi schemes to naturally occurring speculative bubbles appears so natural that one must conclude, if there is to be debate about speculative bubbles, that the burden of proof is on skeptics to provide evidence as to why Ponzi-like speculative bubbles cannot occur.

The conspicuous feature of the current high pricing is high confidence that the market will always do well. 64 STR UC TUR AL FAC TOR S Ponzi Schemes as Models of Feedback and Speculative Bubbles It is very hard to prove that a simple mechanical price feedback model, producing heightened investor attention and enthusiasm, is actually a factor in financial markets. We may have a casual impression that investors are showing enthusiasm for investments in response to past price increases, but we do not see any concrete evidence that such feedback actually affects their decisions. In order to provide evidence that such feedback mechanisms do play a role in financial markets, it is helpful to look at the example of Ponzi schemes, or pyramid schemes, by means of which hoaxers create positive feedback from putative current investment returns to future investment returns.


pages: 416 words: 106,532

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond by Chris Burniske, Jack Tatar

Airbnb, Alan Greenspan, altcoin, Alvin Toffler, asset allocation, asset-backed security, autonomous vehicles, Bear Stearns, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, book value, business cycle, business process, buy and hold, capital controls, carbon tax, Carmen Reinhart, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, disintermediation, distributed ledger, diversification, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, fixed income, Future Shock, general purpose technology, George Gilder, Google Hangouts, high net worth, hype cycle, information security, initial coin offering, it's over 9,000, Jeff Bezos, Kenneth Rogoff, Kickstarter, Leonard Kleinrock, litecoin, low interest rates, Marc Andreessen, Mark Zuckerberg, market bubble, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, packet switching, passive investing, peer-to-peer, peer-to-peer lending, Peter Thiel, pets.com, Ponzi scheme, prediction markets, quantitative easing, quantum cryptography, RAND corporation, random walk, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, Robert Shiller, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seminal paper, Sharpe ratio, Silicon Valley, Simon Singh, Skype, smart contracts, social web, South Sea Bubble, Steve Jobs, transaction costs, tulip mania, Turing complete, two and twenty, Uber for X, Vanguard fund, Vitalik Buterin, WikiLeaks, Y2K

The growth of new cryptoassets and new investment products around them create a rapidly evolving marketplace in which financial criminals can exploit profit-seeking motives, especially if the innovative investor doesn’t perform proper due diligence. This chapter will focus on Ponzi schemes, misleading asset issuers, and the cornering of markets (also known as “pump and dump” schemes). As we’ve mentioned, those who lack an understanding of bitcoin and cryptoassets often express their disdain and ignorance with the proclamation, “It’s just a Ponzi scheme.” So let’s start there. PONZI SCHEMES Ponzi schemes, also referred to as pyramid schemes, are the most dangerous type of misleading asset. While it got its name from Charles Ponzi, an Italian who lived from 1882 to 1949, it existed before he was born; he just made it famous.

Tragically, investors often don’t realize they are duping one another, and it is the operator of the Ponzi scheme who makes out handsomely. Before we turn to cryptoassets, let’s look at how Ponzi schemes have played out in traditional assets. Many think of bonds as a safe investment with steady cash flows. If they are issued by a government, then they also have the full backing of that government. As we will soon see, bonds have not always been safe, and in what has been labeled the first emerging market boom, many bonds turned out to be Ponzi schemes.1 For about a century after the equity bubbles brought on by the Mississippi Company2 and South Sea Schemes3 (we’ll cover the shady dealings of these companies in the next section), British investors stuck close to government-issued bonds.4 During the Napoleonic Wars from 1803 to 1815, the British government issued over 400 million pounds of bonds, providing plenty of opportunity to bond investors.

For example, Chile, Colombia, and Peru have spent 27.5 percent, 36.2 percent, and 40.2 percent of their sovereign lives in default or rescheduling, never quite able to escape the early precedent that was set.9 The Bitcoin Ponzi Myth Criticisms of bitcoin and cryptoassets being Ponzi schemes have been circulating since bitcoin first hit investors’ radar screens.10 However, this criticism is deeply misinformed, and the World Bank has joined us in this opinion. In a 2014 report it states: Contrary to a widely-held opinion, Bitcoin is not a deliberate Ponzi. And there is little to learn by treating it as such. The main value of Bitcoin may, in retrospect, turn out to be the lessons it offers to central banks on the prospects of electronic currency, and on how to enhance efficiency and cut transactions cost.11 Historical Ponzi schemes require a central authority to hide the facts and promise a certain annual percent return.


pages: 309 words: 54,839

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts by David Gerard

altcoin, Amazon Web Services, augmented reality, Bernie Madoff, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, Californian Ideology, clean water, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, distributed ledger, Dogecoin, Dr. Strangelove, drug harm reduction, Dunning–Kruger effect, Ethereum, ethereum blockchain, Extropian, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, functional programming, index fund, information security, initial coin offering, Internet Archive, Internet of things, Kickstarter, litecoin, M-Pesa, margin call, Neal Stephenson, Network effects, operational security, peer-to-peer, Peter Thiel, pets.com, Ponzi scheme, Potemkin village, prediction markets, quantitative easing, RAND corporation, ransomware, Ray Kurzweil, Ross Ulbricht, Ruby on Rails, Satoshi Nakamoto, short selling, Silicon Valley, Silicon Valley ideology, Singularitarianism, slashdot, smart contracts, South Sea Bubble, tulip mania, Turing complete, Turing machine, Vitalik Buterin, WikiLeaks

“Judge Awards $40.7 Million in SEC Case Over Bitcoin Ponzi Scheme”. Recode, 19 September 2014. [76] “Manhattan U.S. Attorney And FBI Assistant Director Announce Securities And Wire Fraud Charges Against Texas Man For Running Bitcoin Ponzi Scheme”. Department of Justice, U.S. Attorney’s Office, Southern District of New York (press release), 6 November 2014. [77] Nate Raymond. “Texan gets one-and-a-half years in prison for running bitcoin Ponzi scheme”. Reuters, 21 July 2016. [78] Justin O’Connell. “Lawyer Reveals Details About the Man Behind Bitcoin’s $4.5 Million Ponzi Scheme”. Motherboard, 18 December 2015

The general problem is that you don’t know who or where these people are, and they routinely just disappear with everyone’s money. Scams common to the cryptocurrency world include:59 Ponzi schemes: in which early investors are paid using money from later ones. These are so attractive to crypto fans that when Ethereum took blockchains and added “smart contracts” (programs that run on the blockchain), the first thing people did was write automatic “honest” Ponzis. High-yield investment programmes: a variety of Ponzi scheme. You might think it obvious that no investment scheme could pay 6% interest per week sustainably, particularly when it claims a “secret” investment strategy, but what worked on Bernie Madoff’s victims works on Bitcoiners.

– Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 20081 An experimental new Internet-based form of money is created that anyone can generate at home. People build frightening firetrap computers full of video cards, putting out so much heat that one operator is hospitalised with heatstroke and brain damage. Someone known only as “Pirateat40” starts a “high yield investment program.” Just before its collapse as a Ponzi scheme, it holds 7% of all bitcoins at the time. Aggrieved investors eventually manage to convince the authorities not only that these Internet tokens are worth anything, but that they gave them to some guy on an Internet forum calling himself “Pirate” because he said he would double their money. A young physics student starts a revolutionary new marketplace based on the nonaggression principle, immune to State coercion.


pages: 241 words: 81,805

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis by Tim Lee, Jamie Lee, Kevin Coldiron

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, backtesting, bank run, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, currency risk, debt deflation, disinformation, distributed ledger, diversification, financial engineering, financial intermediation, Flash crash, global reserve currency, implied volatility, income inequality, inflation targeting, junk bonds, labor-force participation, Long Term Capital Management, low interest rates, Lyft, margin call, market bubble, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, negative equity, Network effects, Ponzi scheme, proprietary trading, public intellectual, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, rising living standards, risk free rate, risk/return, sharing economy, short selling, short squeeze, sovereign wealth fund, stock buybacks, tail risk, TikTok, Uber and Lyft, uber lyft, yield curve

As long as it continues, the carry regime changes the economic logic to one in which the carry traders with the most resources win in the end. Is There a Similarity Between Carry Bubbles and Ponzi Schemes? There is a clear similarity between the dynamic described in our description of carry bubbles and that of a Ponzi scheme. For example, the idea that the new carry bubble, created out of the carry crash, tends to be larger than the preceding carry bubble, is similar to the case of a Ponzi scheme that suffers a run. If a Ponzi scheme is to recover from a run, then it will become even larger; the restoration of confidence following the successful test of confidence suggests this, as also does the requirement for the scheme to continue to grow larger because any outflows need to be financed with new inflows.

If a Ponzi scheme is to recover from a run, then it will become even larger; the restoration of confidence following the successful test of confidence suggests this, as also does the requirement for the scheme to continue to grow larger because any outflows need to be financed with new inflows. For example, imagine a hypothetical—admittedly completely unrealistic—alternative scenario for the notorious, and huge, Ponzi scheme run by Bernard (“Bernie”) Madoff. Madoff’s giant Ponzi scheme collapsed in December 2008, during the global carry crash associated with the collapse of Lehman Brothers. At the time of the Madoff scheme collapse, Madoff’s clients had an illusory US$65 billion standing to their credit in the scheme. Madoff’s scheme was a classic Ponzi scheme, operated simply by marking up client accounts to reflect fabricated good and consistent returns, while financing any client withdrawals from the scheme with new client inflows.

Ponzi schemes that are relatively large and long lasting usually have four main characteristics: (1) The funds supposedly standing to the credit of participants, or investors, are not backed by assets of equivalent value, when the value of assets is considered fundamentally in terms of the future flow of goods and services that they can lay claim to or produce. (2) The scheme will collapse once withdrawals exceed new inflows for any significant length of time. (3) The scheme is generally endorsed, or seemingly endorsed, by the government, or someone in authority, or someone who is highly respected. (4) The “fees” taken by the promoters, or insiders, are high relative to the funds committed. As with the concept of carry, participation (as an “investor”) in a Ponzi scheme can be rational from the perspective of the participant, even if not for the economy as a whole. Research on this notion has been produced 142 THE RISE OF CARRY by an economist formerly at Indiana University, Utpal Bhattacharya. In his paper, titled “The Optimal Design of Ponzi Schemes in Finite Economies,” Bhattacharya shows that in a Ponzi scheme that is going to terminate, it can still be rational to participate in the final round (when contributions are considered as taking place in rounds) if the scheme is sufficiently large and a post-collapse bailout is anticipated that will, inevitably, impose costs on nonparticipants.1 Extending this idea, an interpretation is that even if it is considered likely to be at a late stage in the viability of the scheme, it can be rational to be a participant.


pages: 432 words: 127,985

The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry by William K. Black

accounting loophole / creative accounting, affirmative action, Alan Greenspan, Andrei Shleifer, Black Monday: stock market crash in 1987, book value, business climate, cognitive dissonance, corporate governance, corporate raider, Donald Trump, fear of failure, financial deregulation, friendly fire, George Akerlof, hiring and firing, junk bonds, margin call, market bubble, Michael Milken, money market fund, moral hazard, offshore financial centre, Ponzi scheme, race to the bottom, Ronald Reagan, Savings and loan crisis, short selling, The Market for Lemons, transaction costs

They transact with each other or with “straws” on what appears to be an arm’s-length basis, but is really a fraud that massively overvalues assets in order to create fictitious income and hide real losses. Control frauds grow rapidly (Black 1993d). The worst control frauds are Ponzi schemes, named after Carlo Ponzi, an early American fraud. A Ponzi must bring in new money continuously to pay off old investors, and the fraudster pockets a percentage of the take. The record “income” that the accounting fraud produces makes it possible for the Ponzi scheme to grow. S&Ls made superb control frauds because deposit insurance permitted even insolvent S&Ls to grow. The high-tech bubble of the 1990s allowed similarly massive growth.

Nevertheless, he gave the industry the ability to grow massively, and he took no action to stop the large number of S&Ls that began to grow rapidly. The results were, predictably, disastrous. THE ADC PONZI SCHEME The proposed net worth rule restricted growth by increasing capital requirements for faster growing S&Ls. Gray proposed to reverse the Bank Board’s prior policy, five-year averaging, which reduced the capital requirement for fast growers. Gray acted because of the tendency of fast growers to become the worst failures. The agency did not understand the acquisition, development, and construction (ADC) Ponzi scheme fully when it drafted the rule. This was ironic because the rule struck the control frauds’ Achilles’ heel and proved the most critical act of reregulation.

Surely, it is in the interest of control frauds to make profitable loans so they can stay in business and continue to loot the corporation? Most people (fortunately) do not think like white-collar criminals. Control frauds operate by different, perverse rules that harm society, but that does not mean they are irrational. A Ponzi scheme invariably collapses, but that does not mean that the fraud fails: the corrupt CEO can make a great deal of money looting the company. The purported profitability of the Ponzi schemes, combined with deposit insurance, meant that S&Ls could grow rapidly for several years before they collapsed. Such CEOs did not have the option of making money honestly, as my discussion about the inability to grow out of your problem illustrated.


pages: 338 words: 104,815

Nobody's Fool: Why We Get Taken in and What We Can Do About It by Daniel Simons, Christopher Chabris

Abraham Wald, Airbnb, artificial general intelligence, Bernie Madoff, bitcoin, Bitcoin "FTX", blockchain, Boston Dynamics, butterfly effect, call centre, Carmen Reinhart, Cass Sunstein, ChatGPT, Checklist Manifesto, choice architecture, computer vision, contact tracing, coronavirus, COVID-19, cryptocurrency, DALL-E, data science, disinformation, Donald Trump, Elon Musk, en.wikipedia.org, fake news, false flag, financial thriller, forensic accounting, framing effect, George Akerlof, global pandemic, index fund, information asymmetry, information security, Internet Archive, Jeffrey Epstein, Jim Simons, John von Neumann, Keith Raniere, Kenneth Rogoff, London Whale, lone genius, longitudinal study, loss aversion, Mark Zuckerberg, meta-analysis, moral panic, multilevel marketing, Nelson Mandela, pattern recognition, Pershing Square Capital Management, pets.com, placebo effect, Ponzi scheme, power law, publication bias, randomized controlled trial, replication crisis, risk tolerance, Robert Shiller, Ronald Reagan, Rubik’s Cube, Sam Bankman-Fried, Satoshi Nakamoto, Saturday Night Live, Sharpe ratio, short selling, side hustle, Silicon Valley, Silicon Valley startup, Skype, smart transportation, sovereign wealth fund, statistical model, stem cell, Steve Jobs, sunk-cost fallacy, survivorship bias, systematic bias, TED Talk, transcontinental railway, WikiLeaks, Y2K

BitConnect disguised its fraudulent nature with a variety of phony transfers and other complex transactions to make it look like its customers’ BitConnect investments were increasing in value. But when customers wanted to extract those profits, they were paid from deposits made by other investors. In other words, BitConnect was a classic Ponzi scheme dressed up in modern digital currency clothes. Ponzi schemes are named after Charles Ponzi, an Italian immigrant living in Boston who, in 1919, thought he had found a way to make money by buying and selling international postal coupons in different countries. Suppose such a coupon was being sold for the equivalent of $1 at post offices in Italy but for $2 in the United States.

Rumors of his bankruptcy triggered a rush to withdraw, a criminal investigation, and Ponzi’s conviction for fraud.4 A Ponzi scheme is now defined as a business structure in which early participants profit at the direct expense of later ones. Commonly, victims think their money is being used to trade real assets. In reality, some is being stolen by the operators, some is paid to other investors as “profits,” and the rest is held in reserve to pay for future withdrawals so the scam can continue. Most Ponzi schemes follow the same script. The scammer promises an unusually high and consistent monthly or quarterly return and describes the investment principal as completely safe from loss.

Celsius offered 18.9 percent interest per year on Bitcoin deposits but stopped allowing withdrawals during the market downturn early in 2022 and filed for bankruptcy later that year.6 SMOOTH LIKE BUTTER The phony “hedge fund” operated by Bernard L. Madoff was perhaps the largest and longest-running Ponzi scheme on record. Madoff started managing money for people in the early 1960s, but his Ponzi scheme began later (perhaps as early as the 1970s and definitely by 1993). From that point until 2008, when the fraud was exposed and the fund shut down, Madoff made no real trades for his customers. Investors deposited about $20 billion with Madoff over the years, and according to their account statements, there should have been about $65 billion in the fund when it closed.


pages: 263 words: 84,410

Tulipomania: The Story of the World's Most Coveted Flower & the Extraordinary Passions It Aroused by Mike Dash

fixed income, Ponzi scheme, random walk, South Sea Bubble, spice trade, trade route, tulip mania

The hyacinth trade Krelage, Bloemenspeculatie in Nederland, pp. 142–96, and Krelage, Drie Eeuwen Bloembollenexport, pp. 13, 645–55; Garber, “Tulip-mania,” pp. 553–54; Bulgatz, Ponzi Schemes, pp. 109–14. A $4,000 bottle of Coca-Cola Pendergrast, For God, Country, p. 211. The history of the tulip to the present day Krelage, Drie Eeuwen Bloembollen-export, pp. 15–18. Craze for dahlias Bulgatz, Ponzi Schemes, pp. 108–09. During this episode there was even talk of the propagation of blue dahlias—as much a botanical impossibility as the black tulip. Craze for gladioli Posthumus, “Tulip Mania in Holland,” p. 148. Chinese spider lily mania Malkiel, Random Walk down Wall Street, pp. 82–83. Florida land boom Bulgatz, Ponzi Schemes, pp. 46–75. BIBLIOGRAPHY Unpublished Material Municipal Archives, Haarlem Notarial registers, vols. 120–50 Burial registers, vols. 70–76 Index to Heerenboek Manuscript entitled Aanteekeningen van C.

Many of the short accounts of the subject are based on badly flawed popular studies, most notably Charles Mackay’s entertaining but misleading Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (Ware: Wordsworth Editions, 1995), which remains in print today despite having originally appeared in 1841. (Much more reliable, though still dependent on secondary sources, is the fairly extensive modern reanalysis by Joseph Bulgatz, published in Ponzi Schemes, Invaders from Mars and More Extraordinary Popular Delusions and the Madness of Crowds [New York: Harmony, 1992], which has, however, attracted very little attention.) Apart from contemporary pamphlets, collected by E. H. Krelage in De Pamfletten van den Tulpenwindhandel 1636–1637 (The Hague: Martinus Nijhoff, 1942), the most valuable Dutch sources are the solicitors’ acts, which still exist for most of the cities caught up in the mania and record not only some of the (comparatively rare) legal agreements for the purchase of tulip bulbs but also the proceedings brought as a result of the collapse of prices in 1637.

Baudartius and the pressure of overpopulation Deursen, Plain Lives, pp. 3–4, 8. Spread of the fashion for gardening in the Netherlands Cotterell, Amsterdam, pp. 88, 131; Brereton, Travels in Holland, p. 38; Mundy, Travels of Peter Mundy, vol. 4, p. 75; Segal, Tulips Portrayed, p. 8; Bulgatz, Ponzi Schemes, p. 86. Dutch savings Temple, Observations, p. 102. The gambling impulse Deursen, Plain Lives, pp. 67–68, 105–06; Schama, Embarrassment of Riches, pp. 306–07, 347; Zumthor, Daily Life in Rembrandt’s Holland, p. 76. Chapter 10. Boom The course of the mania is set out best in E. H. Krelage, Bloemenspeculatie in Nederland: De Tulpomanie van 1636–37 en de Hyacintenhandel 1720–36 (Amsterdam, 1942).


pages: 428 words: 121,717

Warnings by Richard A. Clarke

"Hurricane Katrina" Superdome, active measures, Albert Einstein, algorithmic trading, anti-communist, artificial general intelligence, Asilomar, Asilomar Conference on Recombinant DNA, Bear Stearns, behavioural economics, Bernie Madoff, Black Monday: stock market crash in 1987, carbon tax, cognitive bias, collateralized debt obligation, complexity theory, corporate governance, CRISPR, cuban missile crisis, data acquisition, deep learning, DeepMind, discovery of penicillin, double helix, Elon Musk, failed state, financial thriller, fixed income, Flash crash, forensic accounting, friendly AI, Hacker News, Intergovernmental Panel on Climate Change (IPCC), Internet of things, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge worker, Maui Hawaii, megacity, Mikhail Gorbachev, money market fund, mouse model, Nate Silver, new economy, Nicholas Carr, Nick Bostrom, nuclear winter, OpenAI, pattern recognition, personalized medicine, phenotype, Ponzi scheme, Ray Kurzweil, Recombinant DNA, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Ronald Reagan, Sam Altman, Search for Extraterrestrial Intelligence, self-driving car, Silicon Valley, smart grid, statistical model, Stephen Hawking, Stuxnet, subprime mortgage crisis, tacit knowledge, technological singularity, The Future of Employment, the scientific method, The Signal and the Noise by Nate Silver, Tunguska event, uranium enrichment, Vernor Vinge, WarGames: Global Thermonuclear War, Watson beat the top human players on Jeopardy!, women in the workforce, Y2K

For this strategy, you do not need to be a genius, working the market night and day; you don’t need to make any trades at all. You just need to keep taking in new money so you have enough to pay off investors who want to cash out. All the rest, you keep. There is a name for this strategy, and it is called a Ponzi scheme, named for the Italian-American Charles Ponzi, who ran a short-lived version of such a racket in 1920 in Boston, conning a flood of new investors. A Ponzi scheme involves no trades and no investments. It is a pure sham. And that is what Harry figured Bernie Madoff was doing. THE CASSANDRA MOMENT At Rampart Investment Management, Markopolos, Casey, and Chelo were fascinated by the scam.

Elie Wiesel’s Foundation for Humanity lost $15 million, everything it had; Wiesel and his wife lost millions more personally.19 When it was all said and done, the collapse of Madoff’s Ponzi scheme brought crippling financial losses to more than 13,500 victims. The shock waves widened far beyond the individual account holders. When philanthropists and foundations took a hit, so did the hospitals, museums, and charities they supported. Thanks to his network of feeder funds, Madoff had built the first truly worldwide Ponzi scheme, with victims in Latin America, China, Japan, Korea, Singapore, and Dubai. Europe was especially hard hit by L’affaire Madoff, as it came to be called in Geneva and Paris.

David Nakamura and Chico Harlan, “Japanese Nuclear Plant’s Evaluators Cast Aside Threat of Tsunami,” Washington Post, Mar. 23, 2011, www.washingtonpost.com/world/japanese-nuclear-plants-evaluators-cast-aside-threat-of-tsunami/2011/03/22/AB7Rf2KB_story.html (accessed Oct. 4, 2016). CHAPTER 6: THE ACCOUNTANT: MADOFF’S PONZI SCHEME 1. Enormous amounts have been written about the Madoff case, but we benefited particularly from Harry Markopolos’s own book, No One Would Listen: A True Financial Thriller (Hoboken, NJ: Wiley, 2010); Erin Arvedlund, Too Good To Be True: The Rise and Fall of Bernie Madoff (New York: Portfolio, 2009); U.S. Security and Exchange Commission Office of Inspector General, Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme (Public Version) (2009); and a series of articles by Mark Seal that appeared in Vanity Fair magazine as “The Madoff Chronicles,” in April, June, and September 2009. 2.


Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, book value, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, Cornelius Vanderbilt, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, flying shuttle, Glass-Steagall Act, Gordon Gekko, Henri Poincaré, Henry Singleton, high net worth, impact investing, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, John Bogle, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, margin call, means of production, Menlo Park, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Performance of Mutual Funds in the Period, Ponzi scheme, Post-Keynesian economics, price mechanism, principal–agent problem, profit maximization, proprietary trading, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Sand Hill Road, Savings and loan crisis, seminal paper, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, tail risk, technology bubble, Teledyne, The Wealth of Nations by Adam Smith, time value of money, tontine, too big to fail, transaction costs, two and twenty, underbanked, Vanguard fund, working poor, yield curve

Or, even if curiosity did not motivate them, why did the simple realities of key man risk not spur them—for was it wise to continue having a man of seventy running a portion of this ostensibly very lucrative business no one else in the firm understood? Shedding light on this question are Bernie Madoff’s own contentions that it should have been abundantly obvious to the SEC that he was running a Ponzi scheme. Madoff said, “I was astonished. They never even looked at my stock records.” He also noted that investigators did not check with the Depository Trust Company. “If you’re looking at a Ponzi scheme, it’s the first thing you do,” said Madoff.4 If Madoff believed that the commission, charged with overseeing thousands of firms, should have had no difficulty in ascertaining that a fraud was underway at his company, then surely his two sons, who spent their entire workweeks directing a part of the firm, had to have figured it out.

Almost comically, the House Appropriations Committee substantially scaled back the budget request for fiscal year 2012 and provided only the same amount of money as it had in fiscal year 2011, despite the new challenges presented by Dodd-Frank. Most puzzling of all, however, were some of the reasons cited by the committee for the decision, including that it “remains concerned with the SEC’s track record in dealing with Ponzi schemes.”165 The solution to the commission’s inability to properly identify and prosecute more cases of Ponzi schemes clearly was not to leave it even more bereft of resources than before. The decisions to reduce the resources of the SEC are seemingly politically motivated attempts to limit the agency’s reach. After all, legislators are wrong to cite the size of the federal deficit as a reason to curtail the SEC’s budget so substantially, because the SEC’s collection of fees and fines is greater than its own budget.166 Fraud, Market Manipulation, and Insider Trading 195 The SEC is hardly a perfect organization.

Straney, Securities Fraud, 83. Ponzi v. Fessenden, 258 U.S. 254 (1922). Erin Skarda, “William Miller, the Original Schemer,” Time, March 7, 2012, http://content.time.com/time/specials/packages/article/0,288 04,2104982_2104983_2104992,00.html. “A Century of Ponzi Schemes,” DealBook (blog), New York Times, December 15, 2008, http://dealbook.nytimes.com/2008/12/15/a-century-of -ponzi-schemes. Skarda, “William Miller.” Darby, “In Ponzi We Trust.” John Steele Gordon, “Pyramid Schemes Are as American as Apple Pie,” Wall Street Journal, December 17, 2008, http://online.wsj.com/news /articles/SB122948144507313073. Ibid. Ibid.


pages: 287 words: 86,870

The Glass Hotel by Emily St. John Mandel

Bernie Madoff, big-box store, discrete time, East Village, high net worth, McMansion, off-the-grid, Panamax, Pepto Bismol, Ponzi scheme, sovereign wealth fund, white picket fence, Y2K

He was sitting behind his desk, Claire crying on the sofa, Harvey staring into space, while Vincent fidgeted around with a coat and shopping bag and then sat and stared at him until he finally had to tell her: “Vincent,” he said, “do you know what a Ponzi scheme is?” “Yes,” Vincent said. Claire, from the sofa, still crying: “How do you know what a Ponzi scheme is, Vincent? Did he tell you? Did you know about this? I swear to god, if you knew about this, if he told you…” “Of course he didn’t tell me,” Vincent said. “I know what a Ponzi scheme is because I’m not a fucking idiot.” He thought, That’s my girl. * * * — In the counterlife, he walks through a hotel corridor—wide and silent with modernist sconces, the corridor of the hotel on Palm Jumeirah—and takes the stairs this time, walking slowly through the cool air.

He spoke very calmly, staring at a painting of Jonathan’s yacht on the opposite wall. He seemed curiously detached from the scene. “Just tell her,” Claire said. “Careful, now,” Harvey said in that same tone of disinterest. After a pained interval of silence, Jonathan settled on a question. “Vincent,” he said, “do you know what a Ponzi scheme is?” PART THREE 10 THE OFFICE CHORUS December 2008 1 We had crossed a line, that much was obvious, but it was difficult to say later exactly where that line had been. Or perhaps we’d all had different lines, or crossed the same line at different times. Simone, the new receptionist, didn’t even know the line was there until the day before Alkaitis was arrested, which is to say the day of the 2008 holiday party, when Enrico came around to our desks in the late morning and told us that Alkaitis wanted us assembled in the seventeenth-floor conference room at one o’clock.

We shuffled our papers, or stared fixedly at our notes, or stared into space and imagined leaving the country (Oskar), or looked out the window and made firm, actionable plans to leave the country (Enrico), or looked out the window and decided fatalistically that it was too late to go anywhere (Harvey), or indulged in the fantastical notion that somehow everything would work itself out (Joelle). Ron glanced around, confused. He often seemed confused, the rest of us had noticed that about him, and it seemed he actually didn’t know what we did here, which was baffling in retrospect: what did he think we were doing, if not running a Ponzi scheme? When we talked among ourselves about the Arrangement, as we’d come to refer to it, what exactly did he think we were discussing? Still, there it was. He looked around in the silence, cleared his throat, and said, “Well, we have so much trading activity with the London office already, though.” The silence that followed this remark was, if possible, even worse than the silence that had preceded it.


pages: 466 words: 116,165

American Kleptocracy: How the U.S. Created the World's Greatest Money Laundering Scheme in History by Casey Michel

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Bellingcat, Berlin Wall, Bernie Sanders, bitcoin, clean water, coronavirus, corporate governance, cross-border payments, cryptocurrency, deindustrialization, Donald Trump, en.wikipedia.org, estate planning, Fall of the Berlin Wall, fixed income, forensic accounting, Global Witness, high net worth, hiring and firing, income inequality, Internet Archive, invention of the telegraph, Jeffrey Epstein, joint-stock company, Kickstarter, Maui Hawaii, McMansion, megaproject, Mikhail Gorbachev, New Journalism, offshore financial centre, opioid epidemic / opioid crisis, Ponzi scheme, race to the bottom, Ronald Reagan, Silicon Valley, Silicon Valley startup, Steve Jobs, too big to fail

And as Gontareva soon discovered, instead of acting as a dependable partner of Ukrainians across the country, those behind PrivatBank had launched the greatest Ponzi scheme the country had ever seen. “No one imagined it was like this,” Gontareva told me. “It was all a Ponzi scheme. There were no assets at all.… That’s why I called this the biggest fraud of the twenty-first century.”12 * * * AFTER NATIONALIZING PRIVATBANK, authorities in Kyiv had one question: Where had all the money gone? As investigators and forensic accountants later discovered, the PrivatBank Ponzi scheme stood—as with many Ponzi schemes—both confusingly complex and perfectly straightforward. The key to PrivatBank’s Ponzi success was what some dubbed a “Shadow Bank”13 or a “Bank within the Bank.”14 Here’s how the scheme worked, according to both Ukrainian and American authorities.

Second, and perhaps more important, his sellers would have been surprised to learn that this was no rich kid playing and investing with his parents’ money. In reality, his finances were linked directly to a post-Soviet oligarch named Ihor Kolomoisky, who posed as a Ukrainian steel and banking magnate—and who at the time was allegedly helping to run one of the largest Ponzi schemes the world had ever seen, conning depositors who used his Ukrainian bank. Kolomoisky was hardly a well-known name in the U.S. Yet this Ukrainian businessman was not only the secret money behind Schochet’s network—he was also a key oligarch rising in power and wealth alike, threatening Ukraine’s democratic trajectory while allegedly pilfering billions of dollars from unsuspecting Ukrainians along the way.

Using Delaware companies and Ohio steel mills, using investments in Texas and Kentucky and Illinois, and using a series of skyscrapers and office buildings in Cleveland, Kolomoisky could take full advantage of America’s money laundering services—all to help clean the proceeds of his massive Ukrainian Ponzi scheme. But that wasn’t all. It would take years, as the following chapters will reveal, for us to learn that this Ukrainian oligarch, who had become the kingpin of Cleveland, had also become the embodiment of something else entirely. For it wasn’t just American money laundering that Kolomoisky was interested in.


pages: 733 words: 179,391

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

Alan Greenspan, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, bitcoin, Bob Litterman, Bonfire of the Vanities, bonus culture, break the buck, Brexit referendum, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, carbon tax, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, confounding variable, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, democratizing finance, Diane Coyle, diversification, diversified portfolio, do well by doing good, double helix, easy for humans, difficult for computers, equity risk premium, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, information security, interest rate derivative, invention of the telegraph, Isaac Newton, it's over 9,000, James Watt: steam engine, Jeff Hawkins, Jim Simons, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, language acquisition, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, megaproject, merger arbitrage, meta-analysis, Milgram experiment, mirror neurons, money market fund, moral hazard, Myron Scholes, Neil Armstrong, Nick Leeson, old-boy network, One Laptop per Child (OLPC), out of africa, p-value, PalmPilot, paper trading, passive investing, Paul Lévy, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, proprietary trading, public intellectual, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Solow, Sam Peltzman, Savings and loan crisis, seminal paper, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, subprime mortgage crisis, survivorship bias, systematic bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, uptick rule, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

After the financial crisis and the subsequent stock market decline between 2008 and 2009, however, the number of Ponzi schemes fell sharply.44 In fact, Deason, Rajgopol, and Waymire estimated there was a correlation of 47.9 percent between the S&P 500 quarterly return and the number of SEC-prosecuted Ponzi schemes per quarter. Why are Ponzi schemes so popular during economic booms compared to economic busts? Wouldn’t the opposite be the case, since people naturally would want to do better in bad times? Deason, Rajgopol, and Waymire noted that Ponzi schemes are harder to sustain in declining markets, as we saw with Madoff. Also, SEC enforcement budgets tend to increase after bubbles burst, and there may be more demand for enforcement by politicians and the public. They also confirmed that Ponzi schemes are more likely when there’s some affinity between the perpetrator and the victim, such as a common religious background or shared membership in an ethnic group, or when the victim group tends to place more trust in others (e.g., senior citizens), reminding us that culture can be exploited maliciously.

This pattern suggests a rising tide makes fraudulent activity a more acceptable corporate risk-taking behavior, but a sinking boat has the opposite effect. What about scams like Madoff’s Ponzi scheme? Researchers Stephen Deason, Shivaram Rajgopal, and Gregory B. Waymire found a very similar pattern in the number of Ponzi schemes prosecuted by the SEC between 1988 and 2012 (see figure 10.6). There was an upward trend during the bull market of the late 1990s, a decline in the aftermath of the Internet bust of 2001–2002, and another increase as the market climbed. After the financial crisis and the subsequent stock market decline between 2008 and 2009, however, the number of Ponzi schemes fell sharply.44 In fact, Deason, Rajgopol, and Waymire estimated there was a correlation of 47.9 percent between the S&P 500 quarterly return and the number of SEC-prosecuted Ponzi schemes per quarter.

“There’s no hard and fast rule about field work but … field work cannot go on indefinitely because people have a hunch,” one NERO assistant director later testified.30 Markopolos’s 2005 complaint reached NERO with the strong endorsement of the SEC’s Boston office.31 However, the fruitless earlier examination of claims against Madoff biased the NERO examiners against Markopolos’s claim.32 The examiners quickly discounted Markopolos’s idea that Madoff was running a Ponzi scheme. The staff attorney involved with the examination wrote at the beginning of the investigation that there wasn’t “any real reason to suspect some kind of wrongdoing … all we suspect is disclosure problems” (emphasis in the original).33 The Office of Investigations was harsh in its verdict: “As a result of this initial failure, the Enforcement staff never really conducted an adequate and thorough investigation of Markopolos’s claim that Madoff was operating a Ponzi scheme.”34 The Madoff debacle, which I’ve streamlined, was only one of many events that caused the internal culture of the SEC to fall under scrutiny.


pages: 267 words: 71,941

How to Predict the Unpredictable by William Poundstone

accounting loophole / creative accounting, Albert Einstein, Bernie Madoff, Brownian motion, business cycle, butter production in bangladesh, buy and hold, buy low sell high, call centre, centre right, Claude Shannon: information theory, computer age, crowdsourcing, Daniel Kahneman / Amos Tversky, Edward Thorp, Firefox, fixed income, forensic accounting, high net worth, index card, index fund, Jim Simons, John von Neumann, market bubble, money market fund, pattern recognition, Paul Samuelson, Ponzi scheme, power law, prediction markets, proprietary trading, random walk, Richard Thaler, risk-adjusted returns, Robert Shiller, Rubik’s Cube, statistical model, Steven Pinker, subprime mortgage crisis, transaction costs

— Dan Guterman See notes on this chapter Contents Prologue: The Outguessing Machine Part One: The Randomness Experiment 1 The Zenith Broadcast 2 How to Outguess Rock, Paper, Scissors 3 How to Outguess Multiple-Choice Tests 4 How to Outguess the Lottery 5 How to Outguess Tennis Serves 6 How to Outguess Football Penalty Kicks 7 How to Outguess Card Games 8 How to Outguess Passwords 9 How to Outguess Crowd-Sourced Ratings 10 How to Outguess Fake Numbers 11 How to Outguess Manipulated Numbers 12 How to Outguess Ponzi Schemes Part Two: The Hot Hand Theory 13 In the Zone 14 How to Outguess Football Bets 15 How to Outguess Oscar Pools 16 How to Outguess Big Data 17 How to Outguess Retail Prices 18 How to Outguess Property Prices 19 How to Outguess the Unpredictable 20 How to Outguess the Stock Market Epilogue: Fortune’s Wheel Acknowledgments Notes Bibliography Index Prologue The Outguessing Machine The outguessing machine began with a messy laboratory accident.

“This could be good — for the seventeenth floor.” Somehow, through Bernie’s wizardry, the $4-million disaster was wished away into that cornfield. It never haunted Mark again. Mark’s lucky streak resumed, lasting until the awful day nine years later when he and his brother turned in their father for running the largest Ponzi scheme in history. Two years after that, the unrelenting scandal drove Mark to end his once-perfect life. It seems such a simple thing to predict the random walks that determine our fates. It’s not, and one reason is that our intuitions about close-to-random sequences often fail us. Misprediction can be the stuff of tragedy.

This is common with expense accounts. • Digit analysis cannot “prove” anything by itself. Its value is in flagging data meriting investigation by a good auditor. Be skeptical of claims (of election fraud, say) based on first-digit Benford tests. See notes on this chapter Twelve How to Outguess Ponzi Schemes From the 1970s through 2008, three longtime employees of Bernard L. Madoff Investment Securities—David Kugel, Annette Bongiorno, and Joann Crupi — did the paperwork. “I worked together with them to create the false trades and make them appear on investment advisor client statements and confirmations,” Kugel told a federal judge.


pages: 294 words: 89,406

Lying for Money: How Fraud Makes the World Go Round by Daniel Davies

Alan Greenspan, bank run, banking crisis, Bernie Madoff, bitcoin, Black Swan, Bretton Woods, business cycle, business process, collapse of Lehman Brothers, compound rate of return, cryptocurrency, fake it until you make it, financial deregulation, fixed income, Frederick Winslow Taylor, Gordon Gekko, high net worth, illegal immigration, index arbitrage, junk bonds, Michael Milken, multilevel marketing, Nick Leeson, offshore financial centre, Peter Thiel, Ponzi scheme, price mechanism, principal–agent problem, railway mania, Ronald Coase, Ronald Reagan, Savings and loan crisis, scientific management, short selling, social web, South Sea Bubble, tacit knowledge, tail risk, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, time value of money, vertical integration, web of trust

Marino dealt with the problem by sending the accounts late on a Friday, on the assumption that by Monday morning they would be buried under a pile of stuff that arrived over the weekend and would never get any real scrutiny. This shows a pretty good understanding of the brokerage business.* The second of Marino’s insights, however, was a work of genius. A fraudulent hedge fund, unlike traditional Ponzi schemes, could go on indefinitely. The mechanics of a Ponzi scheme work by using new inflows to cover investor withdrawals, and since the returns promised to investors compound over time, the fraud needs to keep finding new victims at an ever increasing rate. But what if there aren’t any withdrawals? A hedge fund with good (reported) performance won’t get many requests from investors for their money back – they want to keep it in the fund if it’s doing well.

As an audit report on the SEC came in (the valuation of which was pointlessly disputed by Ponzi), it finally became indisputable that there had never been anything like enough assets to pay the bonds back with 50 per cent interest, and Ponzi was taken away by a US marshal. Ponzi is ill-served as a fraudster by his eponym. He was a considerably more sophisticated operator than the epigones and wannabes behind most modern ‘Ponzi’ schemes. He was aware from the earliest stages of his scheme that he was only buying time and was relying on his ability to find another idea, as brilliant as the postal scheme but not as impossible to execute. He was decades ahead of his time in understanding that ‘assets controlled’ is more important to a wholly dishonest actor than ‘assets owned’.

And any attempt to alleviate the cash drain by selling more bonds was just increasing the size of the underlying problem. The mathematics of compound interest, particularly at 50 per cent every ninety days, was too much for him. Despite his claims to the contrary, the possibility of escape never looks to have been better than theoretical. And this is the essence of the ‘Ponzi scheme’ – the single feature that unites all subsequent frauds bearing the name of Charles Ponzi is the attempt to defeat the runaway nature of fraud by raising new money faster than you pay out old. Pyramid schemes The modern ‘pyramid scheme’ is a rough pile of rocks compared to the Venetian palazzo of Ponzi’s original template.


pages: 505 words: 142,118

A Man for All Markets by Edward O. Thorp

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", 3Com Palm IPO, Alan Greenspan, Albert Einstein, asset allocation, Bear Stearns, beat the dealer, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, book value, Brownian motion, buy and hold, buy low sell high, caloric restriction, caloric restriction, carried interest, Chuck Templeton: OpenTable:, Claude Shannon: information theory, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Edward Thorp, Erdős number, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, Garrett Hardin, George Santayana, German hyperinflation, Glass-Steagall Act, Henri Poincaré, high net worth, High speed trading, index arbitrage, index fund, interest rate swap, invisible hand, Jarndyce and Jarndyce, Jeff Bezos, John Bogle, John Meriwether, John Nash: game theory, junk bonds, Kenneth Arrow, Livingstone, I presume, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, Mason jar, merger arbitrage, Michael Milken, Murray Gell-Mann, Myron Scholes, NetJets, Norbert Wiener, PalmPilot, passive investing, Paul Erdős, Paul Samuelson, Pluto: dwarf planet, Ponzi scheme, power law, price anchoring, publish or perish, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, RFID, Richard Feynman, risk-adjusted returns, Robert Shiller, rolodex, Sharpe ratio, short selling, Silicon Valley, Stanford marshmallow experiment, statistical arbitrage, stem cell, stock buybacks, stocks for the long run, survivorship bias, tail risk, The Myth of the Rational Market, The Predators' Ball, the rule of 72, The Wisdom of Crowds, too big to fail, Tragedy of the Commons, uptick rule, Upton Sinclair, value at risk, Vanguard fund, Vilfredo Pareto, Works Progress Administration

The scheme had already been operating for more than twenty years! Having shown that Madoff was posting made-up trades to my client’s accounts, and that he was apparently doing so to several other investors with whom I spoke, I had the smoking gun that proved fraud. I warned people in my network, forecasting an ever-expanding Ponzi scheme that one day would end disastrously. Ponzi schemes take profits to investors. They use the money the investors put in but eventually need more, which they get by recruiting new investors. These new investors also have to be paid, leading the Ponzi operators to sign up still more. The longer it went undetected the bigger it would grow and the worse it would be when it collapsed.

For the next ten years Markopoulos attempted to get the SEC to investigate, but it brushed him aside repeatedly, cleared Madoff after superficial investigations, and quashed a request from the Boston office, prompted by Markopoulos, to investigate Madoff Investment as a possible Ponzi scheme. In a remarkable 477-page document, “Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme—Public Version,” August 31, 2009, Report No. OIG-509, the SEC investigates and documents its own repeated failures, beginning in 1992 and continuing until Madoff confessed in 2008, to follow up on obvious clues, pointed complaints, and clear violations of securities laws.

It was by chance during this time that I discovered the greatest of all financial frauds. On the afternoon of Thursday, December 11, 2008, I got the news I had been expecting for more than seventeen years. Calling from New York, my son, Jeff, told me Bernie Madoff confessed to having defrauded investors of $50 billion in the greatest Ponzi scheme in history. “It’s what you predicted in…1991!” he said. On a balmy Monday morning in the spring of ’91, I arrived at the New York office of a well-known international consulting company. The investment committee hired me as an independent adviser to review their hedge fund investments. I spent a few days examining performance histories, business structures, and backgrounds of managers, as well as making onsite visits.


pages: 234 words: 63,844

Filthy Rich: A Powerful Billionaire, the Sex Scandal That Undid Him, and All the Justice That Money Can Buy: The Shocking True Story of Jeffrey Epstein by James Patterson, John Connolly, Tim Malloy

"World Economic Forum" Davos, Bear Stearns, Bernie Madoff, corporate raider, Donald Trump, East Village, Elon Musk, Isaac Newton, Jeffrey Epstein, Julian Assange, junk bonds, Murray Gell-Mann, Ponzi scheme, Stephen Hawking, WikiLeaks

By all outward appearances, he could afford it: seventy lawyers worked in his firm, which had offices in Florida, New York, and Venezuela. But Rothstein’s millions actually came from a $1.2 billion Ponzi scheme he’d been running since 2005. In April of 2009, Bradley Edwards joined Rothstein’s firm. The lawyer brought his papers along, and Rothstein showed those pertaining to Epstein to potential investors. In exchange for a lump sum up front, Rothstein said, investors would receive a far larger chunk of money later, which Epstein would pay in future settlements. Edwards and Rothstein both say that Edwards had no knowledge whatsoever of the Ponzi scheme. (Prosecutors, and the Florida Bar, agree.) Edwards left as soon as he caught wind of the scheme, in November of 2009.

“Upon information and belief,” the suit stated, “EDWARDS knew or should have known that ROTHSTEIN was utilizing RRA as a front for the massive Ponzi scheme and/or were selling an alleged interest or investment in the Civil Actions (and other claims) involving Epstein.” The suit also claimed that, “By using Civil Actions against EPSTEIN as ‘bait’ and fabricating settlements regarding same, ROTHSTEIN and others were able to lure investors into ROTHSTEIN’S lair and bilked them of millions of dollars which, in turn, was used to fund the litigation against EPSTEIN for the sole purpose of continuing the massive Ponzi scheme.” Moreover, the suit claimed, L.M. had “testified she never had sex with Epstein; worked at numerous strip clubs; is an admitted prostitute and call girl; has a history of illegal drug use (pot, painkillers, Xanax, Ecstasy); and continually asserted the 5th Amendment during her depositions in order to avoid answering relevant but problem questions for her.”

He bought his own jet, a luxury yacht, and a Long Island mansion to go with his expensive Manhattan apartment. He’d also briefly owned a controlling interest in the New York Post. To cover his tracks, Hoffenberg had been taking money from investors and using it to pay previous investors. It was a classic Ponzi scheme—one of the biggest in history—and Hoffenberg ended up spending nineteen years in a federal prison. Why was Epstein not implicated in the case? All that Hoffenberg will say when asked is: “Ask Robert Gold.” Another source suggests that Gold, the former federal prosecutor who had helped Epstein recover Ana Obregón’s money, kept the US attorney away from Epstein until there were only a few weeks left before the statute of limitations ran out.


pages: 289 words: 22,394

Virus of the Mind by Richard Brodie

Abraham Maslow, cognitive dissonance, disinformation, Douglas Hofstadter, Dr. Strangelove, Gödel, Escher, Bach, joint-stock company, multilevel marketing, New Journalism, phenotype, Ponzi scheme, profit motive, publish or perish, Ralph Waldo Emerson, Richard Feynman, Stephen Hawking, Steven Levy

The pyramid then splits in two, with the two players in the row of two each becoming hosts eligible to make $4,000. Such a deal! Pyramid schemes rely on the same button-pushing memes that the Ponzi scheme does and add in the powerful force of evangelism. Since infected people have a stake in enrolling new players in the pyramid virus, the illusion of reward doesn’t need to be as great as with the Ponzi scheme. Rather than simply attracting new investors, there is now an army of recruiters intentionally infecting people with the pyramid virus. Although the pyramid virus’s spreading mechanism is different from the Ponzi scheme’s, the two institutions fall apart for the same reason. Dependent on exponential growth, they quickly 198 Designer Viruses (How to Start a Cult) exhaust the supply of players.

When the newspaper story broke and people stopped investing, Ponzi was found to owe $7 million and have only $4 million in assets. The later investors were out of luck. *An entertaining exploration of Ponzi’s original scheme and several other interesting virus-like phenomena appear in Joseph Bulgatz’s book Ponzi Schemes, Invaders from Mars, & More Extraordinary Popular Delusions and the Madness of Crowds (Harmony Books, 1992). 197 virus of the mind The mind virus in the Ponzi scheme, though, had nothing to do with the scheme itself. It was the spreading of the strategy-meme Invest with Ponzi. Bundled with powerful button-pushing window of opportunity and reward memes—a Get rich quick meme—Ponzi’s scheme attracted so much attention that it spread quickly throughout the general public in Massachusetts and neighboring states.

I would expect to see many profit-motivated viruses, many power-motivated ones, and perhaps a few motivated by someone’s vision of a better future for humanity. Profit Viruses Profit-motivated designer viruses, many of which are completely legal and aboveboard today, have their shady origins in the crooked Ponzi scheme.* Charles Ponzi was an Italian immigrant who opened a business in Boston in 1919 called the Securities Exchange Company. He offered to repay people’s investments in 90 days with 50 percent interest: an investment of $10 would bring $15 in three months. His story was that he bought international postal reply coupons in Europe and, due to currency fluctuations, redeemed them in the United States at a profit.


pages: 340 words: 91,745

Duped: Double Lives, False Identities, and the Con Man I Almost Married by Abby Ellin

Bernie Madoff, bitcoin, Burning Man, business intelligence, Charles Lindbergh, cognitive dissonance, cognitive load, content marketing, dark triade / dark tetrad, Donald Trump, double helix, dumpster diving, East Village, fake news, feminist movement, forensic accounting, fudge factor, hiring and firing, Internet Archive, John Darwin disappearance case, longitudinal study, Lyft, mandatory minimum, meta-analysis, pink-collar, Ponzi scheme, post-truth, Robert Hanssen: Double agent, Ronald Reagan, Silicon Valley, Skype, Snapchat, TED Talk, telemarketer, theory of mind, Thomas Kuhn: the structure of scientific revolutions

Bourree Lam, “Why Is Utah the First State to Have a White-Collar Crime Registry?,” The Atlantic, March 29, 2016, https://www.theatlantic.com/business/archive/2016/03/utah-white-collar-crime/475896; Greg Smith and Associates, “Utah No. 5 on FBI List for Ponzi Schemes,” https://www.bestutahlawyer.com/Articles/Utah-No-5-on-FBI-List-for-Ponzi-Schemes. 40. Smith and Associates, “Utah No. 5”; State of Utah, “White Collar Crime Offender Registry,” https://www.utfraud.com/Home/Registry. 41. Email interview with author. 42. Ibid. 43. Ibid. 44. Ibid. 45. Dahl, “6 Facts on the Thin Line.” 46. Telephone interview with author. 47.

“You moved everything out, the bed, the couch, all your clothes—only to bring it all back a few weeks later?” “Yes,” he said. I think he believed it himself. CAN YOU LOVE someone who has one foot in one world and one foot in another? I can’t. And ultimately, does it make a difference if the lies are to hide an illegitimate child, a dominatrix habit, an addiction to opioids, or a Ponzi scheme? It’s the same thing: a person with a hidden world, who looks you straight in the eye and vehemently denies your accusations. Who tells you the sky is plaid and makes you think there’s something wrong with you for believing it’s blue. I composed one final email: Hi there, I’ve written a bunch of emails and tossed them, so I’ll keep this brief.

They were grateful that someone had shed light on the subject and, more importantly, not blamed them for being taken for such a ride. But secret lives are all around us, especially in today’s culture. Flip on the TV or surf the web and tales of gross betrayal will assault you: The respected Wall Street financier operating a billion-dollar Ponzi scheme. The friendly neighbor with three women imprisoned in his basement. A beloved comedian known as “America’s Dad” accused of drugging and sexually assaulting dozens of women.2 Married, anti-gay, family values–spouting politicians who solicit men in airport bathrooms. Political and environmental activists who are romantically involved with female group members, and sometimes have children with them—only to be revealed years later as undercover police officers spying for the state.3 While leading a double life sounds like the stomping ground of psychopaths, moles, and covert agents with indeterminate dialects, plenty of “normal” people in appearance and affect keep canyon-sized secrets from those in their immediate orbits.


pages: 489 words: 106,008

Risk: A User's Guide by Stanley McChrystal, Anna Butrico

"Hurricane Katrina" Superdome, Abraham Maslow, activist fund / activist shareholder / activist investor, airport security, Albert Einstein, Apollo 13, banking crisis, Bernie Madoff, Boeing 737 MAX, business process, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, computer vision, coronavirus, corporate governance, cotton gin, COVID-19, cuban missile crisis, deep learning, disinformation, don't be evil, Dr. Strangelove, fake news, fear of failure, George Floyd, Glass-Steagall Act, global pandemic, Googley, Greta Thunberg, hindsight bias, inflight wifi, invisible hand, iterative process, late fees, lockdown, Paul Buchheit, Ponzi scheme, QWERTY keyboard, ride hailing / ride sharing, Ronald Reagan, San Francisco homelessness, School Strike for Climate, Scientific racism, Silicon Valley, Silicon Valley startup, Skype, social distancing, source of truth, Stanislav Petrov, Steve Jobs, Thomas L Friedman, too big to fail, Travis Kalanick, wikimedia commons, work culture

exchange the international coupons for American stamps: Mary Darby, “In Ponzi We Trust,” Smithsonian Magazine, December 1998, https://smithsonianmag.com/history/in-ponzi-we-trust-64016168/. investments would double: Jeannette L. Nolen, “Ponzi Scheme,” Encyclopedia Britannica Online, accessed September 22, 2020, https://britannica.com/topic/Ponzi-scheme; Darby, “In Ponzi We Trust.” pay the phony returns: “Ponzi Schemes,” U.S. Securities and Exchange Commission, accessed October 6, 2020, https://sec.gov/fast-answers/answersponzihtm.html. defrauded $15 million: Nolen, “Ponzi Scheme.” fourteen company-wide cultural values: Upon hearing complaints from employees about Uber’s toxic work culture, the company hired a prestigious law firm to conduct an investigation on the workplace and offer recommendations.

The Securities and Exchange Commission (SEC) assumed that Madoff—an experienced financier who played a part in launching the Nasdaq stock market and himself advised the SEC on trading securities—was acting responsibly. But Madoff was secretly running a multibillion-dollar Ponzi scheme that, once revealed, resulted in a 150-year prison sentence. Charles Ponzi, the namesake of the “Ponzi scheme.” (Photo by Leslie Jones) The SEC wasn’t alone in assuming Madoff’s good intentions: JPMorgan, who ran his bank account, did not raise any red flags about signs of money laundering, nor did accounting firms identify anything suspicious in their financial reviews.

Take former Uber CEO Travis Kalanick—whose behavior and leadership went unchecked as the company soared to unprecedented heights. Since 2009, Kalanick had revolutionized the ride-hailing industry, and in 2017 the tech start-up operated in more than seventy countries, valued at nearly $70 billion by its private investors. Beneath the hood of the car, however, was an engine of toxic corporate culture. ponzi scheming ■ How much is a stamp worth? In 1919 Charles Ponzi realized that there was profit potential in redeeming international postal reply coupons. Customers could exchange the international coupons for American stamps, and—if the country’s economy was weaker than that of the United States—could make a profit.


pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Credit Default Swap, cross-subsidies, currency risk, dematerialisation, disinformation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jim Simons, John Meriwether, junk bonds, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, M-Pesa, market design, Mary Meeker, megaproject, Michael Milken, millennium bug, mittelstand, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, reality distortion field, regulatory arbitrage, Renaissance Technologies, rent control, risk free rate, risk tolerance, road to serfdom, Robert Shiller, Ronald Reagan, Schrödinger's Cat, seminal paper, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, vertical integration, Washington Consensus, We are the 99%, Yom Kippur War

The theft was not complicated – high returns to savers were achieved by paying any withdrawals from the funds subscribed by new investors. The new investors were attracted by the success of those who had been in the scheme from the beginning. Ponzi schemes break down when the supply of new investors is insufficient to meet the withdrawals of the old. The greatest of all Ponzi schemes in history was that perpetrated by Bernard Madoff, who claimed high returns with low volatility from an investment strategy using derivative securities. In fact, no investment activity took place.25 During the global financial crisis the demand for redemptions increased and incoming funds shrank.

Unable to meet withdrawals, Madoff turned himself in to the FBI and was duly sentenced to 140 years in jail. Some of those who invested with Ponzi and Madoff made money. Even if you know, or suspect, a Ponzi scheme, you might hope to get out in time, with a profit. I’ll be gone, you’ll be gone. Ponzi and Madoff went to prison because they lied. But the new economy bubble of 1999–2000 was a – perhaps legal – Ponzi scheme. Early investors made large profits, but it was later investors, attracted by the prospect of similar gains, who provided the funds that made these profits possible. Securities with no intrinsic value were bought and sold repeatedly by people whose motive for buying was knowledge of the profits that had already been made in such stocks and the expectation (fulfilled in many cases) that they would make similar profits by selling these stocks on at higher prices still.

‘Payment in kind’ securities similarly buttressed their value with additional debt of the same kind: the reality of much Third World debt, where promises to pay were simply rolled forward into the future, was similar. Like the gambler in the casino with a martingale strategy who always plays another hand, the borrower defers the due date of payment whenever it falls due. Warren Buffett famously said of these structures that ‘it is impossible to default on a promise to pay nothing’.24 The Ponzi scheme is closely related to the martingale. This approach to thinking yourself rich is named after Charles Ponzi, who told investors (correctly) in the 1920s that international reply coupons, used by the world’s postal authorities, were mispriced. Profits could be earned by buying in one country and selling in another.


When Free Markets Fail: Saving the Market When It Can't Save Itself (Wiley Corporate F&A) by Scott McCleskey

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, barriers to entry, Bear Stearns, Bernie Madoff, break the buck, call centre, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, financial engineering, financial innovation, fixed income, Glass-Steagall Act, information asymmetry, invisible hand, Isaac Newton, iterative process, junk bonds, Long Term Capital Management, margin call, money market fund, moral hazard, mortgage debt, place-making, Ponzi scheme, prediction markets, proprietary trading, risk tolerance, Savings and loan crisis, shareholder value, statistical model, The Wealth of Nations by Adam Smith, time value of money, too big to fail, web of trust

There is some logic to creating a structure that is highly specialized and dispersed, with one and only one regulator for each sector. That regulator would be highly specialized and knowledgeable. But if it fails in its role, there is no Plan B. Criticisms of the SEC for its hidebound inability to listen to warnings about a Ponzi scheme big enough to make the Fortune 500, or of the legion of banking regulators for their failure to spot fraudulent mortgage activity, are not simply criticisms of the specific agencies. They also lay the foundation for the argument that redundancy and even overlap should be built into the structure.

Firms with a high number of customer complaints, those that fared poorly in previous examinations, and those whose business puts them in frequent contact with retail and unsophisticated investors are likely to find themselves inspected more often than others. As such, a firm like Madoff Investment Securities, which did not have a high number of customer complaints (Ponzi schemes rarely do, since everyone is happy until the music stops), dealt primarily with wealthy investors, and had not had particularly bad previous inspection results, may fly under OCIE’s radar for years at a time. The second type of examination is the cause examination. These occur when the OCIE staff have reason to believe that specific violations of federal securities laws are occurring or have already occurred.

With respect to the conduct of investigations, the lead attorney leads the investigation and determines the tactics, but the Branch Chief manages the broader strategy (i.e., what violations are to be investigated and when the investigation is complete). Understanding the workload of the SEC staff and the administrative processes involved in examinations and investigations provides important insight into how the SEC managed to miss a multibillion-dollar Ponzi scheme in spite of the fact that outsiders, and some of its own staff, had raised concerns. If you’ve ever watched a TV crime show, you’ve likely seen a cop (along with C12 06/16/2010 112 11:24:23 & Page 112 Nice Law, Now Go Do It: Regulators and Compliance Officers his partner or dog) working on one case at a time, which he or she or they solve within one hour minus time for commercials.


pages: 296 words: 86,610

The Bitcoin Guidebook: How to Obtain, Invest, and Spend the World's First Decentralized Cryptocurrency by Ian Demartino

3D printing, AltaVista, altcoin, bitcoin, Bitcoin Ponzi scheme, blockchain, buy low sell high, capital controls, cloud computing, Cody Wilson, corporate governance, crowdsourcing, cryptocurrency, decentralized internet, distributed ledger, Dogecoin, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, Firefox, forensic accounting, global village, GnuPG, Google Earth, Haight Ashbury, initial coin offering, Jacob Appelbaum, Kevin Kelly, Kickstarter, litecoin, M-Pesa, Marc Andreessen, Marshall McLuhan, Oculus Rift, peer-to-peer, peer-to-peer lending, Ponzi scheme, prediction markets, printed gun, QR code, ransomware, Ross Ulbricht, Salesforce, Satoshi Nakamoto, self-driving car, selling pickaxes during a gold rush, Skype, smart contracts, Steven Levy, the medium is the message, underbanked, WikiLeaks, Zimmermann PGP

With a business such as an online casino, that might be reasonable; in 99 percent of other cases it is not and the company should be avoided. The most important thing to remember is that if it sounds like a scam, it probably is. Be wary of anyone who promises you instant or unrealistic returns on your investment. The basics of Ponzi schemes work in cryptocurrency just as well as in any other business. If older investors are being paid with the capital from new investments, you are dealing with a Ponzi scheme. People will claim all sorts of things to make it seem as if revenue is coming from elsewhere, so you have to do your own research and dig deep into anything at which you are going to throw any money. The offenders listed below hail from all over the Bitcoin spectrum.

It is possible for cloud-mining companies to use the blockchain to prove they are actually mining and paying those profits to customers, but some don’t. If the company does not prove it has the hashing power it says it has, don’t go anywhere near it. Without that evidence, it is impossible to know whether what you are investing in is an actual mining operation and not a Ponzi scheme. Cloud-mining companies have been caught paying off older investors with new customers’ purchases, which is the very definition of a Ponzi scheme.2 Some people contend that cloud mining doesn’t make sense. If mining is more profitable than the fees gathered from customers, the reasonable question to ask is, why wouldn’t the companies instead mine with that hardware themselves rather than pass those profits on to customers?

According to the article, they were using E-gold as their preferred method of payment because of its global reach and anonymous accounts.6 By this time, E-gold had become the second-largest online payment service, second only to the rapidly growing PayPal. It wasn’t just card thieves who were attracted to E-gold. Ponzi schemes were common with E-gold. Jackson worked with authorities and complied with government requests for information on user accounts—as it turned out, E-gold was not very anonymous if Jackson wanted to reveal a user’s identity. But the Secret Service, which was investigating the stolen credit card numbers, decided not to work with Jackson and sought to bring E-gold into the regulated space along with the likes of MoneyGram and Western Union.


pages: 328 words: 97,711

Talking to Strangers: What We Should Know About the People We Don't Know by Malcolm Gladwell

Berlin Wall, Bernie Madoff, Black Lives Matter, borderless world, crack epidemic, disinformation, Ferguson, Missouri, financial thriller, light touch regulation, Mahatma Gandhi, Milgram experiment, moral panic, Ponzi scheme, Renaissance Technologies, Snapchat

When the SEC did nothing, Markopolos came back in October 2001. Then again in 2005, 2007, and 2008. Each time he got nowhere. Reading slowly from his notes, Markopolos described years of frustration. I gift-wrapped and delivered the largest Ponzi scheme in history to them, and somehow they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority. If a $50 billion Ponzi scheme doesn’t make the SEC’s priority list, then I want to know who sets their priorities. Harry Markopolos, alone among the people who had doubts about Bernie Madoff, did not default to truth. He saw a stranger for who that stranger really was.

The next three chapters of Talking to Strangers are devoted to the ideas of a psychologist named Tim Levine, who has thought as much about the problem of why we are deceived by strangers as anyone in social science. The second chapter looks at Levine’s theories through the story of Bernie Madoff, the investor who ran the largest Ponzi scheme in history. The third examines the strange case of Jerry Sandusky, the Pennsylvania State University football coach convicted of sexual abuse. And this, the first, is about the fallout from that moment of crisis between the United States and Cuba in 1996. Does anything about Admiral Carroll and the Cuban shoot-downs strike you as odd?

The volume numbers that he suggested he was doing [were] not supported by any evidence we could find.” Renaissance had doubts. So did Renaissance sell off its stake in Madoff? Not quite. They cut their stake in half. They hedged their bets. Five years later, after Madoff had been exposed as a fraud—the mastermind of the biggest Ponzi scheme in history—federal investigators sat down with Nat Simons and asked him to explain why. “I never, as the manager, entertained the thought that it was truly fraudulent,” Simons said. He was willing to admit that he didn’t understand what Madoff was up to, and that Madoff smelled a little funny.


pages: 291 words: 85,822

The Truth About Lies: The Illusion of Honesty and the Evolution of Deceit by Aja Raden

air gap, Ayatollah Khomeini, bank run, banking crisis, Bernie Madoff, bitcoin, blockchain, California gold rush, carbon footprint, carbon-based life, cognitive bias, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, data science, disinformation, Donald Trump, fake news, intentional community, iterative process, low interest rates, Milgram experiment, mirror neurons, multilevel marketing, offshore financial centre, opioid epidemic / opioid crisis, placebo effect, Ponzi scheme, prosperity theology / prosperity gospel / gospel of success, Ronald Reagan, Ronald Reagan: Tear down this wall, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Steve Bannon, sugar pill, survivorship bias, theory of mind, too big to fail, transcontinental railway, Vincenzo Peruggia: Mona Lisa

But just as often, people believe things simply because they want to. So. Did investors learn their lesson after Ponzi went to jail? Um, not exactly. In fact, it’s kind of weird we’re still calling it a Ponzi scheme one hundred years later. Especially when he didn’t invent it, didn’t pioneer it, and didn’t even go out the biggest. That dubious honor belongs to Bernie Madoff, who was busted in 2008 for running the biggest Ponzi scheme in history, to the tune of $65 billion. Bernie Madoff was born in Queens, New York, in 1938, the son of a plumber. He briefly attended Brooklyn Law School but decided Wall Street was the place to make real money, so in 1960 he founded his own firm, Bernard L.

See Marcy, Louis patent medicines dangerous drugs in opiates and narcotics in Penn and Teller magicians perceptual cognition, Shell Game on flaws in persistence of vision pharmaceutical companies placebo effect and pure research absence by pharmaceutical marketing of cocaine direct-to-consumer opioid crisis and to physicians physical perception, Shell Game and physicians opiates and narcotics prescriptions by pharmaceutical marketing to placebo effect anticipatory response Beecher and CNS regulating drugs ineffectiveness and confirmation bias and dental surgery study expectation in pharmaceutical companies and science of in Snake Oil Con specific lies and Trivers on Valium and pollination, in nature Ponzi, Charles Ponzi scheme Poyais MacGregor investment capital from MacGregor land sale of MacGregor made up country of MacGregor paradise claim of MacGregor Paris scam Praise the Lord (PTL) Club, of Bakker Premack, David priming behavioral lies told using proof, in Bait and Switch PTL. See Praise the Lord Pyramid Schemes of Avon or Mary Kay Bitcoin critical mass requirement for of Madoff math in of Miller MLM in Ponzi scheme process of of religion 70 percent rule for of Weil Radithor tonic, of Bailey Ralston, William Rasputin, Grigory Yefimovich as Alexandra spiritual advisor Alexei miracle healing by cognitive dissonance and Guru Con of real fake proof, in Bait and Switch religion, Pyramid Scheme and.

Mostly, though, belief—in fact or in falsehood—is an act of will. And often enough, the very expectations that prime us to believe lies are nothing more than our own projected desires. As such, they require only the slightest nudge to loop backward into believability. Money in the Mail Have you ever heard of a Ponzi scheme? It was named after a con man, Charles Ponzi, who became famous when his “rob Peter to pay Paul” postage swindle was exposed. In the 1920s, Ponzi realized he could buy international postal coupons (stamps, essentially) at a discount in certain countries. This occurred to him when he got one in the mail from Spain.


pages: 305 words: 69,216

A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression by Richard A. Posner

Alan Greenspan, Andrei Shleifer, banking crisis, Bear Stearns, Bernie Madoff, business cycle, collateralized debt obligation, collective bargaining, compensation consultant, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, debt deflation, diversified portfolio, equity premium, financial deregulation, financial intermediation, Glass-Steagall Act, Home mortgage interest deduction, illegal immigration, laissez-faire capitalism, Long Term Capital Management, low interest rates, market bubble, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, oil shock, Ponzi scheme, price stability, profit maximization, proprietary trading, race to the bottom, reserve currency, risk tolerance, risk/return, Robert Shiller, savings glut, shareholder value, short selling, statistical model, subprime mortgage crisis, too big to fail, transaction costs, very high income

The more moderate the returns promised by the Ponzi schemer, the longer the scheme can survive the loss of capital caused by the schemer's paying his investors their promised returns out of principal that is not earning what has been promised. Some journalists, confusing Ponzi schemes with pyramid schemes, have described the housing and credit bubbles as Ponzi schemes. That is inaccurate. The essence of a Ponzi scheme is deception. The investor thinks that the promised high return on his investment will come from the promoter's putting the investment to work, not that his investment will be used to pay other investors in order to keep the scheme going.

The longer the world economy went without a depression, the worse the collapse would be when it finally, inevitably, came. Warren Buffett is reported to have said that you don't know who's swimming naked until the tide goes out. The receding stock market tide exposed Bernard Madoff, who is said to have confessed to having pulled off the biggest Ponzi scheme in history. The scheme would have lasted longer and the losses to investors would have been greater had the stock market crash been postponed. The crash reduced the value of Madoff's hedge fund, but more important (because the fund probably had little in the way of assets), the general economic collapse caused requests for redemptions of investments in hedge funds and other investment funds to soar, and Madoff could not honor his investors' requests for redemption and as a result his scheme collapsed.

These are hedge funds that invest in other hedge funds or in similar investment funds and justify the fees they charge their investors as compensation for choosing the best hedge funds in which to invest (there are thousands of hedge funds) and monitoring their performance. Hedge funds are secretive; the funds of funds operate, or claim to operate, as a kind of private Securities and Exchange Commission supervising the hedge fund industry. But it seems that some of the funds of funds invested in Madoffs Ponzi scheme without performing the kind of "due diligence" that their customers had been led to expect. If the confidence of the investment community in the vigilance of the funds of funds is shaken, this will cause additional requests by customers of hedge funds to withdraw their money. But the aspect of the Madoff scandal that I want to emphasize is the light it sheds on a philosophy of government that contributed to the depression.


pages: 404 words: 124,705

The Village Effect: How Face-To-Face Contact Can Make Us Healthier, Happier, and Smarter by Susan Pinker

assortative mating, Atul Gawande, autism spectrum disorder, behavioural economics, Bernie Madoff, call centre, caloric restriction, caloric restriction, cognitive dissonance, David Brooks, delayed gratification, digital divide, Edward Glaeser, epigenetics, Erik Brynjolfsson, estate planning, facts on the ground, fixed-gear, game design, happiness index / gross national happiness, indoor plumbing, intentional community, invisible hand, Kickstarter, language acquisition, longitudinal study, Mark Zuckerberg, medical residency, Menlo Park, meta-analysis, mirror neurons, neurotypical, Occupy movement, old-boy network, One Laptop per Child (OLPC), place-making, Ponzi scheme, Ralph Waldo Emerson, randomized controlled trial, Ray Oldenburg, Silicon Valley, Skype, social contagion, social intelligence, Stanford marshmallow experiment, Steven Pinker, tacit knowledge, The Great Good Place, the strength of weak ties, The Wisdom of Crowds, theory of mind, tontine, Tony Hsieh, Twitter Arab Spring, urban planning, Yogi Berra

Working as the victims’ financial sleuth, manager, and problem-solver, Curran (along with two other adult children of Jones’s victims, Ginny Nelles and Joey Davis) discovered that this was one tightly interwoven social group. It was also an aging and fragile one. By July 2010, one year after Earl Jones’s Ponzi scheme was revealed, three of Jones’s elderly victims had died, one had been diagnosed with breast cancer, five had lost their homes, and another eleven were about to lose theirs as the one-year grace period negotiated with their banks expired. Thirty-five others were forced to accept handouts to pay for rent, food, Ensure, and adult diapers from the charities they had not long before supported with their own donations.1 No one wants to spend their golden years financially vulnerable and dependent on others.

And then there were his own expenses, such as mortgages on four condos, including one in Boca Raton and another on a golf course in Mont-Tremblant, a Quebec ski resort. There was also a condo in Maine that he’d bought for his intellectually handicapped daughter, Kimberly. There were private school fees, cars, and cruises, too, all bankrolled by his clients’ nest eggs. He had been running a Madoff-like Ponzi scheme built on his own community’s life savings. Coughlan was on holiday with her family in Maine in early July 2009 when she got a call from her bank. Her checks were bouncing. Soon other members of her social set were discovering that their money was mysteriously inaccessible. With a trip to New York planned, forty-two-year-old Ginny Nelles—whose late father had been a close friend of Jones’s—discovered that the money she wanted to withdraw from her account with “Uncle Earl” was out of reach, just when she needed it for a family holiday.

The money was ostensibly invested in her account with Earl to give her an immediate high rate of return; Wendy wanted to share this income with her children and grandchildren. On Jones’s advice and against the diversification mantra of most financial planners, she collapsed all her accounts in other banks in order to consolidate her money with him. I met with Ginny Nelles in November 2009, five months after Earl Jones’s Ponzi scheme had been exposed. Her mother was about to lose her house and had no source of income. Ginny and her brother would likely never recover their inheritances from their father, much less their own savings. And this blow had struck after grave health crises for both Ginny and her brother. Yet little of this psychological wear and tear was evident at first glance.


pages: 372 words: 107,587

The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg

3D printing, agricultural Revolution, Alan Greenspan, Anthropocene, Apollo 11, back-to-the-land, banking crisis, banks create money, Bear Stearns, biodiversity loss, Bretton Woods, business cycle, carbon footprint, Carmen Reinhart, clean water, cloud computing, collateralized debt obligation, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, degrowth, dematerialisation, demographic dividend, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy transition, falling living standards, financial deregulation, financial innovation, Fractional reserve banking, full employment, Gini coefficient, Glass-Steagall Act, global village, green transition, happiness index / gross national happiness, I think there is a world market for maybe five computers, income inequality, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jevons paradox, Kenneth Rogoff, late fees, liberal capitalism, low interest rates, mega-rich, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, naked short selling, Naomi Klein, Negawatt, new economy, Nixon shock, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, price stability, private military company, quantitative easing, reserve currency, ride hailing / ride sharing, rolling blackouts, Ronald Reagan, short selling, special drawing rights, systems thinking, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, tulip mania, WikiLeaks, working poor, world market for maybe five computers, zero-sum game

There are plenty of historic examples of currency failures, so this would not be a unique occurrence.18 Some who come to understand that government deficit spending is unsustainable immediately conclude that the sky is falling and doom is imminent. It is disquieting, after all, to realize for the first time that the world economic system is a kind of Ponzi scheme that is only kept going by the confidence of its participants. But as long as deficit spending doesn’t exceed certain bounds, and as long as the economy resumes growth in the not-too-distant future, then the scheme can be sustained for quite some time. In fact, Ponzi schemes theoretically can continue forever — if the number of potential participants is infinite. The absolute size of government debt is not necessarily a critical factor, as long as future growth will be sufficient so that the proportion of debt relative to revenues remains the same.

Again, as long as the down-side of this business cycle is short, such a plan could work in principle. But whether it actually will work in the current situation is problematic. As noted above, Ponzi schemes can theoretically go on forever, as long as the number of new investors is infinite. Yet in the real world the number of potential investors is always finite. There are limits. And when those limits are hit, Ponzi schemes can unravel very quickly. All Loaned Up and Nowhere to Go These are the four categories of debt. Over the short term, there is no room for growth of debt in the household or corporate sectors.

At the height of the scheme, Ponzi was raking in $250,000 a day, millions in today’s dollars. Thousands of people lost their savings, in some cases having mortgaged or sold their houses in order to invest. A few critics (primarily advocates of gold-backed currency) have called fractional reserve banking a kind of Ponzi scheme, and there is some truth to the claim.5 As long as the real economy of goods and services within a nation is growing, an expanding money supply seems justifiable, arguably necessary. However, units of currency are essentially claims on labor and natural resources — and as those claims multiply (with the growth of the money supply), and as resources deplete, eventually the remaining resources will be insufficient to satisfy all of the existing monetary claims.


pages: 304 words: 91,566

Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption by Ben Mezrich

airport security, Albert Einstein, bank run, Ben Horowitz, Big Tech, bitcoin, Bitcoin Ponzi scheme, blockchain, Burning Man, buttonwood tree, cryptocurrency, East Village, El Camino Real, Elon Musk, fake news, family office, fault tolerance, fiat currency, financial engineering, financial innovation, game design, information security, Isaac Newton, junk bonds, Marc Andreessen, Mark Zuckerberg, Max Levchin, Menlo Park, Metcalfe’s law, Michael Milken, new economy, offshore financial centre, paypal mafia, peer-to-peer, Peter Thiel, Ponzi scheme, proprietary trading, QR code, Ronald Reagan, Ross Ulbricht, Sand Hill Road, Satoshi Nakamoto, Savings and loan crisis, Schrödinger's Cat, self-driving car, Sheryl Sandberg, side hustle, side project, Silicon Valley, Skype, smart contracts, South of Market, San Francisco, Steve Jobs, Susan Wojcicki, transaction costs, Virgin Galactic, zero-sum game

None of the professors they’d contacted—some of them among the most elite economics professors in the world—had ever heard of Bitcoin. When the twins had explained what they had learned so far, some responded in a knee-jerk way, labeling Bitcoin as some sort of scam or Ponzi scheme. But when Cameron pressed them on those notions, the professors couldn’t exactly say what the scam was, or why it was a Ponzi scheme. Settling their SUV just below the speed limit, Cameron hit the button to unmute the conversation. “The party is just getting started,” blurted a voice, words coming so fast they threatened to run right into each other. “The market cap of the entire Bitcoin economy is only about a hundred and forty million.

“Your quote is great,” Cameron said, and then read it out loud. “ ‘We have elected to put our money and faith in a mathematical framework that is free of politics and human error.’ ” “Now you finally sound like Men of Harvard,” Tyler’s father joked. “You got a great quote in too, Cameron. ‘People say it’s a Ponzi scheme, it’s a bubble. People really don’t want to take it seriously. At some point that narrative will shift to “virtual currencies are here to stay.” We’re in the early days.’ ” “Nice,” Tyler agreed. “The haters can take that and stuff it where it belongs.” Calling Bitcoin a Ponzi scheme, or equating it to the Dutch tulip bubble of the seventeenth century, were favorite criticisms of the virtual currency. They would never deny there were a lot of growing pains ahead: the Bitcoin market was volatile, still trying to recover from the crash caused by Mt.

What made it better than gold? What was money anyway? “Okay, but gold has some intrinsic value,” Tyler said. “It’s used in jewelry, and in transistors.” “But what about cash?” Charlie responded. “It hasn’t been backed by gold since the 1970s, and the government can print as much of it as it wants. Talk about a Ponzi scheme. No intrinsic value there.” “Cash has intrinsic value,” Cameron responded. “If you were freezing on top of a mountain and all you had was cash, you could burn it to keep warm.” “Ah, the Cliffhanger maneuver,” Azar’s voice came through the car’s speakers. “Love that movie.” “The intrinsic value of gold is overrated,” emerged another voice over the line.


pages: 180 words: 61,340

Boomerang: Travels in the New Third World by Michael Lewis

Apollo 11, Bear Stearns, Berlin Wall, Bernie Madoff, Carmen Reinhart, Celtic Tiger, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, fiat currency, financial engineering, financial thriller, full employment, German hyperinflation, government statistician, Irish property bubble, junk bonds, Kenneth Rogoff, Neil Armstrong, offshore financial centre, pension reform, Ponzi scheme, proprietary trading, Ronald Reagan, Ronald Reagan: Tear down this wall, South Sea Bubble, subprime mortgage crisis, the new new thing, Tragedy of the Commons, tulip mania, women in the workforce

The Irish Property Council has counted twenty-nine suicides by property developers since the crash—in a country where suicide often goes unreported and undercounted. “I said to all the guys, ‘Always take money off the table.’ Not many of them took money off the table,” says Dermont Desmond, an Irish billionaire who made his fortune from software in the early 1990s, and so counts as old money. The Irish nouveau riche may have created a Ponzi scheme, but it was a Ponzi scheme in which they themselves believed. So, too, for that matter, did some large number of ordinary Irish citizens who bought houses for fantastic sums. Ireland’s 87 percent rate of homeownership is the highest in the world. There’s no such thing as a nonrecourse mortgage in Ireland: the guy who pays too much for his house is not allowed simply to hand the keys to the bank and walk away.

The stocks of the three main Irish banks, Anglo Irish, AIB, and Bank of Ireland, had fallen by between a fifth and a half in a single trading session, and a run on Irish bank deposits had started. The Irish government was about to guarantee all the obligations of the six biggest Irish banks. The most plausible explanation for all of this was Morgan Kelly’s narrative: that the Irish economy had become a giant Ponzi scheme, and the country was effectively bankrupt. But it was so starkly at odds with the story peddled by Irish government officials and senior Irish bankers—that the banks merely had a “liquidity” problem and that Anglo Irish was “fundamentally sound”—that the two could not be reconciled. The government had a report newly thrown together by Merrill Lynch, which declared that “all of the Irish banks are profitable and well-capitalized.”

To Ingram’s eyes there appeared to be a vast difference between what the Irish banks were saying and what they were doing. To get at it he ignored what they were saying and went looking for knowledgeable insiders in the commercial property market. He interviewed them, as a journalist might. On March 13, 2008, six months before the Irish real estate Ponzi scheme collapsed, Ingram published a report in which he simply quoted verbatim what market insiders had told him about various banks’ lending to commercial real estate developers. The Irish banks were making far riskier loans in Ireland than they were in Britain, but even in Britain, the report revealed, they were the nuttiest lenders around: in that category, Anglo Irish, Bank of Ireland, and AIB came, in that order, first, second, and third.


Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition by Kindleberger, Charles P., Robert Z., Aliber

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bonfire of the Vanities, break the buck, Bretton Woods, British Empire, business cycle, buy and hold, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, Corn Laws, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-border payments, currency peg, currency risk, death of newspapers, debt deflation, Deng Xiaoping, disintermediation, diversification, diversified portfolio, edge city, financial deregulation, financial innovation, Financial Instability Hypothesis, financial repression, fixed income, floating exchange rates, George Akerlof, German hyperinflation, Glass-Steagall Act, Herman Kahn, Honoré de Balzac, Hyman Minsky, index fund, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Japanese asset price bubble, joint-stock company, junk bonds, large denomination, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Mary Meeker, Michael Milken, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nick Leeson, Northern Rock, offshore financial centre, Ponzi scheme, price stability, railway mania, Richard Thaler, riskless arbitrage, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, special drawing rights, Suez canal 1869, telemarketer, The Chicago School, the market place, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, very high income, Washington Consensus, Y2K, Yogi Berra, Yom Kippur War

(One measurement problem is deciding whether the losses should include only the amounts of the initial deposits that individuals made with Madoff, or whether these losses should also include the ‘investment income’ that they had earned over the years. Another involves whether the cash withdrawn from the accounts should be included.) Madoff had run the scheme for twenty years, so he may hold the world’s record for both the largest and the most long-lived Ponzi scheme. Every Ponzi scheme has a ‘story’ – an explanation for why the firm earns such high returns. Ponzi himself said he was arbitraging international postal reply coupons. (You don’t really need to know the details.) Madoff said he had a ‘split strike option strategy’. Madoff’s scheme differed from Ponzi’s in one other important dimension – the rate of return on the funds entrusted to Madoff were in the range of 10 to 12 percent a year – a bit higher than stocks, and much higher than on bonds.

Ponzi finance, chain letters, pyramid schemes, manias, and bubbles Ponzi finance, chain letters, bubbles, pyramid schemes, finance, and manias are somewhat overlapping terms for non-sustainable patterns of financial behavior, in that asset prices today are not consistent with asset prices at distant future dates. The Ponzi schemes generally involve promises to pay an interest rate of 30 or 40 or 50 percent a month; the entrepreneurs that develop these schemes always claim they have discovered a new secret formula so they can earn these high rates of return. They make the promised interest payments for the first few months with the money received from their new customers attracted by the promised high rates of return.

The implosion of a bubble always leads to the discovery of frauds and swindles that developed in the froth of the mania; these events are reviewed in Chapter 7. Fraud and corruption are based on mis-information – both falsification and misrepresentation; some fraud also involves the theft of private information before it becomes publicly available. Some of the fraud is personal, some is corporate. Bernie Madoff ran one of the largest Ponzi schemes ever, investors lost more than $20 billion. The owners of some business conglomerates in Iceland had ‘captured’ control of the banks and then borrowed from the banks to increase their consumption and their investments. The combination of failed thrift institutions and the rapid growth of junk bonds in the 1980s cost American taxpayers more than $100 billion; some of these thrifts had been acquired by individuals who relied on the junk bonds for their financing.


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

Andrei Shleifer, asset-backed security, Bear Stearns, behavioural economics, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, collapse of Lehman Brothers, compensation consultant, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Michael Milken, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, short selling, Silicon Valley, stock buybacks, the new new thing, The Predators' Ball, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave

David Kotz, Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme, Report of Investigation Case No. OIG-509, United States Securities and Exchange Commission, Office of Inspector General (2011), pp. 61–77, accessed May 29, 2015, https://www.sec.gov/news/studies/2009/oig-509.pdf. 26. James B. Stewart, “How They Failed to Catch Madoff,” Fortune, May 10, 2011. Accessed May 2, 2015. http://fortune.com/2011/05/10/how-they-failed-to-catch-madoff/. 27. Kotz, Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme, p. 249. 28. Ibid., p. 247. 29. Ibid., p. 250. Markopolos gives a graphic account of the conversation from his perspective: No One Would Listen, Kindle location 2585 and following.

But the deterrence effects of prosecuting whole corporations are far weaker: since penalties against organizations are spread across all their stakeholders; whereas penalties against individuals are targeted to those directly responsible. The Madoff case gives a second, much more detailed glimpse into the workings of the SEC, and as we will see, possibly, into the consequences of budgetary deficiency. It is now common knowledge how the great phisher-for-phools Bernard Madoff duped wealthy investors into a Ponzi scheme. Every month the investors would receive a statement showing how their Madoff-held assets had grown in value: with remarkable regularity. An investment quant from Whitman, Massachusetts, Harry Markopolos, followed up on this and presented his suspicions to the SEC Boston regional office. He claimed that Madoff’s high, and smooth, returns (between 1 and 2 percent per month) defied the laws of finance.22 Madoff said that he accomplished the smoothing by an investment strategy called a “collar.”

He said he bought options to cut off extraordinary losses and balanced this with sales of options that cut off extraordinary gains.23 While such a strategy would have smoothed earnings, Markopolos saw that it would be much too costly for Madoff to make the high returns he credited to his investors. A Ponzi scheme was further suggested, since to practice such a collar, it would be necessary for Madoff to make more options trades than on the entire US market.24 Despite their cogency, Markopolos’s suspicions were met with resistance at the SEC. His first complaints to the SEC office in Boston in 2000 and 2001 quickly died.25 But Markopolos persisted, and the New York regional office, with jurisdiction over Madoff, decided to conduct an investigation in November 2005.


pages: 233 words: 66,446

Bitcoin: The Future of Money? by Dominic Frisby

3D printing, Alan Greenspan, altcoin, bank run, banking crisis, banks create money, barriers to entry, bitcoin, Bitcoin Ponzi scheme, blockchain, capital controls, Chelsea Manning, cloud computing, computer age, cryptocurrency, disintermediation, Dogecoin, Ethereum, ethereum blockchain, fiat currency, financial engineering, fixed income, friendly fire, game design, Hacker News, hype cycle, Isaac Newton, John Gilmore, Julian Assange, land value tax, litecoin, low interest rates, M-Pesa, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Occupy movement, Peter Thiel, Ponzi scheme, prediction markets, price stability, printed gun, QR code, quantitative easing, railway mania, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, Stephen Hawking, Steve Jobs, Ted Nelson, too big to fail, transaction costs, Turing complete, Twitter Arab Spring, Virgin Galactic, Vitalik Buterin, War on Poverty, web application, WikiLeaks

Its founders faced all sorts of legal calamities – and are still dealing with the fall-out. I’ve no doubt seeing their fate is part of the reason Bitcoin’s founder so prizes his anonymity. Other companies with similar models to E-gold sprang up and failed in the Noughties – eBullion, Standard Reserve, INTGold and even a multi-million dollar Ponzi scheme that had no gold at all, OS-Gold. James Turk, founder of the gold storage facility Goldmoney, had also patented an e-gold payments system, but Goldmoney abandoned this in 2012 because of the cost of compliance. So, Digicash failed because it had an erratic man in charge and it went bust. E-gold failed because the FBI shut it down.

Over the next six months, the range was flat around $100. More organizations started accepting bitcoins. Venture capital began pouring into the sector, despite continuing criminal activity ranging from hacking to money laundering. One notorious organization – the Texas Bitcoin Savings and Trust – was accused of being a Ponzi scheme. In court, its founder Trendon Shavers tried to argue that bitcoins are not real money to sidestep misappropriation-of-funds charges, but the judge ruled that ‘Bitcoin is a currency or form of money.’ In August, Bitcoin was also ruled a unit of account by the German Federal Ministry of Finance.

You then, if I remember right, had to find eight people beneath you each paying £3,000 to you, so you made £24,000. They then had to find eight more. Did I make money? Er, no. This scene reminded me of the meetings I went to then, with large wads of cash being passed about. It’s a pyramid scheme, a Ponzi scheme, a scam. Alarm bells are going off. Should I get rid of my coins here and now? Now, like then, there are all sorts at the meeting. In addition to those already mentioned there are several Indians, a load of black guys either African or London-born, a proper Shoreditch twit with ridiculous hair and white leather jacket, people from all over Europe, a load of grungy-looking guys who are either homeless (complete with tracksuits, hoodies, roll ups, cans of lager and rotten teeth) or perennials on the festival circuit, a few couples, some city bods of various shapes and sizes, and goodness knows what else.


pages: 295 words: 66,824

A Mathematician Plays the Stock Market by John Allen Paulos

Alan Greenspan, AOL-Time Warner, Benoit Mandelbrot, Black-Scholes formula, book value, Brownian motion, business climate, business cycle, butter production in bangladesh, butterfly effect, capital asset pricing model, confounding variable, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, diversified portfolio, dogs of the Dow, Donald Trump, double entry bookkeeping, Elliott wave, endowment effect, equity risk premium, Erdős number, Eugene Fama: efficient market hypothesis, four colour theorem, George Gilder, global village, greed is good, index fund, intangible asset, invisible hand, Isaac Newton, it's over 9,000, John Bogle, John Nash: game theory, Larry Ellison, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, mental accounting, Myron Scholes, Nash equilibrium, Network effects, passive investing, Paul Erdős, Paul Samuelson, Plato's cave, Ponzi scheme, power law, price anchoring, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, Richard Thaler, risk free rate, Robert Shiller, short selling, six sigma, Stephen Hawking, stocks for the long run, survivorship bias, transaction costs, two and twenty, ultimatum game, UUNET, Vanguard fund, Yogi Berra

As the economist Robert Shiller has long argued quite persuasively, however, the fundamentals of a stock don’t change nearly as much or as rapidly as its price. Ponzi and the Irrational Discounting of the Future Before returning to other applications of these financial notions, it may be helpful to take a respite and examine an extreme case of undervaluing the future: pyramids, Ponzi schemes, and chain letters. These differ in their details and colorful storylines. A recent example in California took the form of all-women dinner parties whose new members contributed cash appetizers. Whatever their outward appearance, however, almost all these scams involve collecting money from an initial group of “investors” by promising them quick and extraordinary returns.

Maybe our genes are to blame. (They always seem to get the rap.) Natural selection probably favors organisms that respond to local or near-term events and ignore distant or future ones, which are discounted in somewhat the same way that future money is. Even the ravaging of the environment may be seen as a kind of global Ponzi scheme, the early “investors” doing well, later ones less well, until a catastrophe wipes out all gains. A quite different illustration of our short-sightedness comes courtesy of Robert Louis Stevenson’s “The Imp in the Bottle.” The story tells of a genie in a bottle able and willing to satisfy your every romantic whim and financial desire.

Ebbers, Bernie acquisition appetite of arrogance of author emails offer of help Digex purchase down-home style of forced to sell WCOM stock fraud by pump and dump strategy and purchase of WorldCom stock by economics, human behavior and The Education of a Speculator (Niederhoffer) “efficient frontier” of portfolios (Markowitz) Efficient Market Hypothesis background of impact of accounting scandals on increased efficiency results in decreased predictability investors beliefs impacting moving averages and paradoxes of randomness and rationale for resistance and support levels and versions of Elliott, Ralph Nelson Ellison, Larry employee remuneration vs. CEO remuneration endowment effect Enron accounting practices margin calls on CEO Ken Lay environmental exploitation, as Ponzi scheme equity-risk premium Erdös, Paul Escher, M. C. European stock market euros benefits of standardizing European currencies euro-pound/pound-euro exchange rate expected excess return expected value. see also mean value covariance and formula for obtaining graphing against risk (Markowitz optimal portfolios) insurance company example “maximization of expected value,” mu (m) probability theory and exploitable opportunities, tendency to disappear Fama, Eugene Fibonacci numbers Elliott wave theory and golden ratio and fibre-optic cable fifty-two-week highs “flocking effect,” Internet Fooled by Randomness (Taleb) formulas Black-Scholes options compound interest expected value fractals Frank, Robert fraud. see also accounting scandals applying Benford’s Law to corporate fraud applying Benford’s law to income tax fraud Bernie Ebbers Salomon Smith Barney benefitting illegally from IPOs WCOM fraud wrongdoing of brokers at Merrill Lynch free market economy French, Ken Full House: The Spread of Excellence from Plato to Darwin (Gould) fund managers. see also stock brokers/analysts fundamental analysis determining fundamental value by discounting process evidence supporting present value and sequence complexity and trading rules and as sober investment strategy stock valuation with unexciting nature of future value P/E ratio as measure of future earnings expectations present value and gambler’s fallacy games gambling and probability game theory guessing games Monopoly Parrondo’s paradox St.


pages: 204 words: 67,922

Elsewhere, U.S.A: How We Got From the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms,and Economic Anxiety by Dalton Conley

Alan Greenspan, assortative mating, call centre, clean water, commoditize, company town, dematerialisation, demographic transition, Edward Glaeser, extreme commuting, feminist movement, financial independence, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Home mortgage interest deduction, income inequality, informal economy, insecure affluence, It's morning again in America, Jane Jacobs, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labor-force participation, late capitalism, low interest rates, low skilled workers, manufacturing employment, mass immigration, McMansion, Michael Shellenberger, mortgage tax deduction, new economy, off grid, oil shock, PageRank, Paradox of Choice, Ponzi scheme, positional goods, post-industrial society, post-materialism, principal–agent problem, recommendation engine, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Skype, statistical model, Ted Nordhaus, The Death and Life of Great American Cities, The Great Moderation, the long tail, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, transaction costs, women in the workforce, Yom Kippur War

Or it could even be the kid herself, who has just the look Mrs. 2009 needs for her newest marketing campaign. Even when the Elsewhere class ostensibly go out purely to socialize, they find that they cannot stop themselves from glancing at their text messages, talking work, or making valuable introductions across the table. It all may be a Ponzi scheme, but it certainly is no shell game: In an information and service economy, much of what drives success is, in fact, social skills. This new merger between work and play can even be seen in the names of the giant corporations that now dominate our business world. Whereas in industrial capitalism the monikers of corporate behemoths attempted to connote nationalism, grandeur, and heaviness, in the new info-economy playfulness is paramount.

As long as demand for housing continued apace, then everyone’s housing values increased (or more specifically, those in white neighborhoods—but that’s another story).6 Today housing wealth represents over one third of all net worth for American households, and that figure is much higher for low- and moderate-income families.7 Likewise, construction jobs were created. In 2008, the home-building industry directly employed 7.5 million workers, up from 1.25 million in 1945.8 Welcome to the Ponzi scheme we call the American real estate market. But this all worked because it was a relatively closed system. Who was footing the bill for high wages for American workers? American consumers, that’s who. It was no big problem, since these were the same folks as the workers who were demanding and receiving higher wages—after they clocked out.

If you live in a home you own—especially if you enjoy the security of owning it outright—you have less need for the government to take care of you with a strong social insurance and pension system.16 Rather, you are actually living in your own private piggybank. What’s more, it is the family home, more than the stock market, that keeps our inequality Ponzi scheme going and that drives government policy and private choices. The median size of new homes has increased to 2,500 square feet today, up by almost 50 percent since 1976. Likewise, the proportion of new homes with four or more bedrooms has doubled and the number with three or more bathrooms has tripled in just the last twenty years.


pages: 823 words: 220,581

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned? by Steve Keen

accounting loophole / creative accounting, Alan Greenspan, banking crisis, banks create money, barriers to entry, behavioural economics, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, book value, business cycle, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, equity risk premium, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, Greenspan put, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, information asymmetry, invisible hand, iterative process, John von Neumann, Kickstarter, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, Money creation, money market fund, open economy, Pareto efficiency, Paul Samuelson, Phillips curve, place-making, Ponzi scheme, Post-Keynesian economics, power law, profit maximization, quantitative easing, RAND corporation, random walk, risk free rate, risk tolerance, risk/return, Robert Shiller, Robert Solow, Ronald Coase, Savings and loan crisis, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave, zero-sum game

.: 348) It would be foolish to deny that we have a similar weakness in modern capitalist society: our tendency to be sucked into Ponzi schemes by a banking sector that profits from rising debt. As I explain in the next chapter, when lending is undertaken for investment or consumption, debt tends not to get out of hand. But when borrowing is undertaken to speculate on asset prices, debt tends to grow more rapidly than income. This growth causes a false boom while it is happening, but results in a collapse once debt growth terminates – as it has done now. Though borrowers can be blamed for having euphoric expectations of unsustainable capital gains, in reality the real blame for Ponzi schemes lies with their financiers – the banks and the finance sector in general – rather than the borrowers.

Though individuals can operate with a soft budget constraint while the price bubble lasts, the entire economy is stuck with the hard budget constraint that, in the long run, the debt must be serviced from income.12 If we are to prevent this process playing out yet again in the future, then we need to prevent the formation of Ponzi schemes in the first place. Unfortunately, the way that financial assets are currently defined contains the seeds of not one Ponzi scheme but two. Because shares currently have an indefinite lifespan, it is quite possible for someone to assert, as Henry Blodget did about Amazon in 1998, that a given company’s shares will go from $1 to $400 in a matter of a year (Blodget 2010).

In a market economy attenuated by the welfare state, this choice is less stark, but still present. A three-horse race This point will become clearer in later chapters, when I outline the monetary approach to economics that I take, in which bankers are treated as a separate social class to capitalists. The précis for now is that bankers’ incomes depend on the level of debt, and if a Ponzi scheme develops, then the level of debt can escalate dramatically. This then transfers income from both workers and capitalists to bankers, and to the detriment of society in general since it also normally results in a lower level of real investment. This issue might seem arcane now, but it has serious implications during a financial crisis, such as the one we are currently in.


pages: 291 words: 91,783

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi

addicted to oil, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Bear Stearns, Bernie Sanders, Bretton Woods, buy and hold, carried interest, classic study, clean water, collateralized debt obligation, collective bargaining, computerized trading, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, desegregation, diversification, diversified portfolio, Donald Trump, financial innovation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Greenspan put, illegal immigration, interest rate swap, laissez-faire capitalism, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, medical malpractice, military-industrial complex, money market fund, moral hazard, mortgage debt, Nixon triggered the end of the Bretton Woods system, obamacare, passive investing, Ponzi scheme, prediction markets, proprietary trading, prudent man rule, quantitative easing, reserve currency, Ronald Reagan, Savings and loan crisis, Sergey Aleynikov, short selling, sovereign wealth fund, too big to fail, trickle-down economics, Y2K, Yom Kippur War

Within the same two-week time frame, a third top-five investment bank, Merrill Lynch, would sink to the bottom alongside Lehman Brothers thanks to a hole blown in its side by years of reckless gambling debts; Merrill would be swallowed up in a shady state-aided backroom shotgun wedding to Bank of America that would never become anything like a major issue in this presidential race. The root cause of all these disasters was the unraveling of a massive Ponzi scheme centered around the American real estate market, a huge bubble of investment fraud that floated the American economy for the better part of a decade. This is a pretty big story, but at the moment I know nothing about it. Take it as a powerful indictment of American journalism that I’m far from alone in this among the campaign press corps charged with covering the 2008 election.

If you want to understand why America is such a paradise for high-class thieves, just look at the way a manufactured movement like the Tea Party corrals and neutralizes public anger that otherwise should be sending pitchforks in the direction of downtown Manhattan. There are two reasons why Tea Party voters will probably never get wise to the Ponzi-scheme reality of bubble economics. One has to do with the sales pitch of Tea Party rhetoric, which cleverly exploits Main Street frustrations over genuinely intrusive state and local governments that are constantly in the pockets of small businesses for fees and fines and permits. The other reason is obvious: the bubble economy is hard as hell to understand.

It was a shell game—money comes in the front door as payroll taxes and goes right out the back door as deficit spending, with only new payroll taxes over the years keeping the bubble from popping, continuing the illusion that the money had never left. Senator Daniel Patrick Moynihan, way back in 1983, had called this “thievery,” but as the scam played out over the decades it earned a more specific title. “A classic Ponzi scheme” is how one reporter who covered Greenspan put it. Coming up with a scheme like this is the sort of service that endears one to presidents, and by the mid-eighties Greenspan got his chance at the big job. Reagan had grown disenchanted with Volcker. The administration apparently wanted a Fed chief who would “collaborate more intimately with the White House,” as one Fed historian put it, and they got him in Greenspan, whom Reagan put in the top job in 1987.


pages: 328 words: 90,677

Ludicrous: The Unvarnished Story of Tesla Motors by Edward Niedermeyer

autonomous vehicles, barriers to entry, Bear Stearns, bitcoin, business climate, call centre, carbon footprint, Clayton Christensen, clean tech, Colonization of Mars, computer vision, crowdsourcing, disruptive innovation, Donald Trump, driverless car, Elon Musk, en.wikipedia.org, facts on the ground, fake it until you make it, family office, financial engineering, Ford Model T, gigafactory, global supply chain, Google Earth, housing crisis, hype cycle, Hyperloop, junk bonds, Kaizen: continuous improvement, Kanban, Kickstarter, Lyft, Marc Andreessen, Menlo Park, minimum viable product, new economy, off grid, off-the-grid, OpenAI, Paul Graham, peak oil, performance metric, Ponzi scheme, ride hailing / ride sharing, risk tolerance, Sand Hill Road, self-driving car, short selling, short squeeze, side project, Silicon Valley, Silicon Valley startup, Skype, smart cities, Solyndra, stealth mode startup, Steve Jobs, Steve Jurvetson, tail risk, technoutopianism, Tesla Model S, too big to fail, Toyota Production System, Uber and Lyft, uber lyft, union organizing, vertical integration, WeWork, work culture , Zipcar

The incident, which directly preceded his hiring at Electrek, would establish him as one of the most aggressive and prolific pro-Tesla propagandists. The accusation that Saleen “resembled a ponzi scheme” was particularly interesting given that Tesla had done the exact same thing Lambert accused the tuning company of doing: using customer deposits to fund operations. Several years after the Saleen lawsuit, when the CEO of the car-dealer chain AutoNation suggested that Tesla might be a ponzi scheme, Lambert wrote an Electrek piece defending the company. Lambert’s ability to compare Saleen’s use of customer deposits to a ponzi scheme while defending Tesla’s practices from the same comparison was emblematic of his coverage.

Jalopnik, July 29, 2015. https://jalopnik.com/saleen-settles-case-with-reddit-user-they-sued-for-call-1720904330 99but not before soliciting financial support: Zach Shahan. “Help FredTesla.” Gas2, July 22, 2015. http://gas2.org/2015/07/22/help-fredtesla/ 99Lambert wrote an Electrek piece defending the company: Fred Lambert. “AutoNation CEO goes after Tesla, compares company to a ‘Ponzi scheme’ and lies about cost.” Electrek, April 11, 2017. https://electrek.co/2017/04/11/tesla-autonation-ceo-ponzi-scheme/ 100reported that Tesla’s Investor Relations team was recommending that investors get their news: Charley Grant. “Investors who have met with IR in private told me they said to go to Reddit and Electrek for news instead of the mainstream media.”

(Tuning is alteration of the appearance or performance of a vehicle. Saleen is generally known for making power-increasing modifications, to Mustangs specifically, while the Tesla they modified had only cosmetic changes.) The lawsuit alleged that Lambert had defamed Saleen as a “pump-and-dump” and ponzi scheme, and sought an injunction against further defamation. Lambert eventually settled with Saleen, agreeing to retract his defamatory statements and refrain from making further such statements, but not before soliciting financial support for his legal battle through several crowdfunding sites. Lambert initially claimed he had researched Saleen in the course of “diligence” for a potential investment, and that his crusade was simply an attempt to warn investors who might be taken in by the “pumpers” trying to boost Saleen’s stock price, but his interest in the company was clearly tied to his investment in Tesla.


pages: 230 words: 76,655

Choose Yourself! by James Altucher

Airbnb, Albert Einstein, Bernie Madoff, bitcoin, cashless society, cognitive bias, dark matter, digital rights, do what you love, Elon Musk, estate planning, John Bogle, junk bonds, Mark Zuckerberg, mirror neurons, money market fund, Network effects, new economy, PageRank, passive income, pattern recognition, payday loans, Peter Thiel, Ponzi scheme, Rodney Brooks, rolodex, Salesforce, Saturday Night Live, sharing economy, short selling, side project, Silicon Valley, Skype, software as a service, Steve Jobs, superconnector, Uber for X, Vanguard fund, Virgin Galactic, Y2K, Zipcar

If you give me the year, I can give you a scam that took place. In the ’90s it was Reg S trading, and everyone involved went to jail. In the early 2000s it was mutual fund timing. In the late 2000s it was PIPEs. In the later 2000s it was insider trading. Of course there were plenty of Ponzi schemes, of which Madoff is the worst. And, of course, a Ponzi scheme has many victims. For instance, me. I was not invested in Madoff. But I was running what’s called a fund of hedge funds at the time. This means an investor would invest money with me, I’d charge a fee, I’d then invest the money in hedge funds I did due diligence on, and they would all charge me fees.

Ultimately, I had to shut my fund down. Who could compete? So many legitimate funds that might have been better places for investor money (better to pay all the fees than lose all your money in a Ponzi scheme) couldn’t survive because the illegitimate funds crowded them out of the space. Some vehicles that “sophisticated investors” invest in: hedge funds, funds of hedge funds, derivatives, venture capital funds, private equity funds. Other than the Ponzi schemes and super-fees charged by all these entities, here is the dark secret that none of these funds will tell you: when the market goes up, all of these funds do well. When the market goes down, pretty much all of these funds go down.

This is borderline illegal and I don’t recommend it. People who cheat. I’ve seen it for 20 years. I’ve seen every scam. I can write a history of scams in the past 20 years. Without describing them, here’s the history: Reg S, Calendar trading, Mutual fund timing, Death spirals, Front running, Pump and Dump, manipulating illiquid stocks, Ponzi schemes, and inside information. Inside information has always existed and always will exist. One time I wanted to raise money for one of my funds. I went to visit my neighbor’s boss. The boss had been returning a solid 12% per year for 20 years. Everyone wanted to know how he did it. “Get some info while you are there,” a friend of mine in the business said when he heard I was visiting my neighbor’s boss.


J.K. Lasser's New Tax Law Simplified: Tax Relief From the HIRE Act, Health Care Reform, and More by Barbara Weltman

accelerated depreciation, Affordable Care Act / Obamacare, Bernie Madoff, employer provided health coverage, estate planning, Home mortgage interest deduction, independent contractor, mortgage debt, Ponzi scheme

As recent court decisions have demonstrated, the election cannot be made retroactively and no extension can be granted to make a late election. Thus, the election cannot be made on an amended return (which, by definition, is filed after the due date of the return for the year in question). Investment Losses in Ponzi Schemes The Bernard Madoff Ponzi scheme and other similar financial frauds in 2008 left thousands of investors without their money and with uncertainty about how to handle their losses for tax purposes. Unfortunately for investors, more financial schemes are being uncovered every day. The IRS has created a safe harbor for affected investors under which they can treat losses as a theft loss and claim a deduction.

The portion of the gain from the sale of this small business stock that is excludable from income for regular tax purposes is includible in alternative minimum taxable income. For instance, if the 50 percent exclusion applies, then seven percent of the exclusion becomes a tax preference for the AMT. P1: OTA/XYZ P2: ABC c04 JWBT413/Weltman October 14, 2010 14:52 Printer Name: Yet to Come INVESTMENT LOSSES IN PONZI SCHEMES Mark-to-Market Reporting Those who regularly trade in securities may make a tax election, called markto-market accounting, to treat all securities positions as having been sold at the end of the year for their fair market value, with all gains and losses deemed to be ordinary gains or losses.

See Limited liability partnerships (LLPs) Local tax, prepaid, 124 Lodging, travel expenses substantiation, 137 Long-term care insurance: deductible portion of, 26 exclusion for benefits paid from, 30 planning strategies, 27 riders, 27 Losses: in federal disaster areas, 108 in passive activities, 86–89 in Ponzi schemes, 85–86 Loss on sale of residence, 9 Lottery winnings, 155 Luxury cars, 132 P1: OTA/XYZ P2: ABC ind JWBT413/Weltman October 18, 2010 15:26 Printer Name: Yet to Come INDEX Making Work Pay tax credit: eligibility, 93–94 expiring tax laws, 167 MAGI cap, 95 payment method, 94 planning strategies, 96 Schedule M, 94 for self-employed individuals, 149–150 tax savings, 50 Mandatory health coverage.


pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

"World Economic Forum" Davos, Abraham Maslow, Airbnb, Apollo 13, barriers to entry, behavioural economics, Bernie Madoff, bike sharing, Buckminster Fuller, business logic, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, Ford Model T, Garrett Hardin, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, intentional community, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Paradox of Choice, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, planned obsolescence, Ponzi scheme, pre–internet, public intellectual, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, systems thinking, TED Talk, the long tail, The Nature of the Firm, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, Tragedy of the Commons, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, work culture , Yochai Benkler, Zipcar

District Court in New York, pleaded guilty to an eleven-count criminal complaint, and was sentenced to 150 years in prison, the maximum sentence allowed. Madoff’s notorious crime was the creation of a $65 billion Ponzi scheme, the largest investor fraud ever committed by a single person. But while Madoff’s actions were abhorrent and the punishment was fitting, we have all in some way been a part of and fallen victim to a far greater Ponzi scheme. The last two hundred years of industrialized growth have been a Ponzi scheme. We have depleted our natural resources, spewed poisonous gases into our atmosphere, and created wasteful products that will far outlive our own existence.

Either way, they assumed that the traditional model of consumerism, the one in which we buy products, use them, throw them away, and then buy more, would continue, even if at a hobbled rate. While the “spend more, consume more” way out may be a short-term fix, it is neither sustainable nor healthy. While the rampant unregulated financial systems led to investors losing millions in Ponzi schemes, hedge funds, insurance companies, and even savings banks, everyday people pursuing the supposed American dream felt the worst impact. In all corners of the world, millions lost their homes, their jobs, their buying power, and their confidence. But within weeks of the crash, there were signs of a new and increasing consumer awareness, tinged with anger.

Even those on the isolated peripheries of our society, such as someone in Siberia or on the equator, or someone with a unique hobby such as collecting miniature Polish pipe organs, can find a group to share and connect with based on common interests. Every investigative journalist knows that the key to breaking a news story is that money always leads to the top. Whether it’s Al Capone or Bernard Madoff, taxes or Ponzi schemes, money is linked to power and control. If we apply these principles to Web 2.0, we find a surprising new relationship between money and power. The Internet is inherently democratic and decentralized. One of the first celebrated examples of this autonomous force was in 1991 when a twenty-one-year-old Finnish student posted a simple request on Usenet (a global discussion forum) for help from his mother’s Helsinki apartment.


pages: 376 words: 109,092

Paper Promises by Philip Coggan

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Alan Greenspan, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , Bretton Woods, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, carried interest, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, delayed gratification, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, falling living standards, fear of failure, financial innovation, financial repression, fixed income, floating exchange rates, full employment, German hyperinflation, global reserve currency, Goodhart's law, Greenspan put, hiring and firing, Hyman Minsky, income inequality, inflation targeting, Isaac Newton, John Meriwether, joint-stock company, junk bonds, Kenneth Rogoff, Kickstarter, labour market flexibility, Les Trente Glorieuses, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, market clearing, Martin Wolf, Minsky moment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, negative equity, Nick Leeson, Northern Rock, oil shale / tar sands, paradox of thrift, peak oil, pension reform, plutocrats, Ponzi scheme, price stability, principal–agent problem, purchasing power parity, quantitative easing, QWERTY keyboard, railway mania, regulatory arbitrage, reserve currency, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, Suez crisis 1956, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, time value of money, too big to fail, trade route, tulip mania, value at risk, Washington Consensus, women in the workforce, zero-sum game

However, this was a false analogy. French land was worth something because it produced food and offered shelter. The colonial possessions delivered nothing like enough to pay the dividends promised to those who bought the shares. Law had to pay those from the money raised in new issues – the definition of a Ponzi scheme.5 Law developed his system so that the bank would both collect taxes and assume the national debt. Everything seemed to add up; investors could pay for the shares with gold and silver (good), paper from Law’s bank (also good), or with government bonds (another positive, since it reduced the debt).

In the Women Empowering Women scheme, each person needed to find eight new investors at every stage. At that rate, the expansion is very rapid, with successive stages requiring 8, 64, 512,4,096, 32,768 and 262,144 investors. Five more stages after that and the scheme would require more investors than there are people on the planet.8 The Ponzi scheme was built on a similar epic scale. With money doubling every three months, investors would have been 16 times better off in a year and 256 times better off in two. Within five years, anyone who had invested a single dollar would have become a millionaire. We know that pyramids must eventually collapse, and the higher the return (or promised return), the faster that collapse will come.

Had banks kept a lid on the amount they would lend, relative to incomes, the supply of new buyers would have run out. So they increased the income multiple – janitors were given the chance to buy $500,000 houses. This was the heyday of sub-prime mortgages, when people with poor credit records and no proof of income were able to get loans. From the point of view of a Ponzi scheme, this made sense. A scheme always needs a fresh supply of new buyers. So the proportion of homeowners in the US population increased from 63 per cent to 69 per cent, and plenty of people ‘invested’ in property by buying additional homes. Loans were made with no money down. Indeed some loans did not even require borrowers to meet the full interest payment, with the shortfall simply added to the capital sum due.


Small Change: Why Business Won't Save the World by Michael Edwards

"Friedman doctrine" OR "shareholder theory", Bernie Madoff, clean water, corporate governance, corporate social responsibility, different worldview, high net worth, invisible hand, knowledge economy, Larry Ellison, light touch regulation, Mahatma Gandhi, Mark Shuttleworth, market bubble, microcredit, Nelson Mandela, New Journalism, One Laptop per Child (OLPC), Ponzi scheme, profit motive, public intellectual, Robert Shiller, shareholder value, Silicon Valley, Silicon Valley startup, Social Responsibility of Business Is to Increase Its Profits, subprime mortgage crisis, The Fortune at the Bottom of the Pyramid, The Spirit Level, The Wealth of Nations by Adam Smith, transaction costs

Come to think of it, that’s not such a bad idea: It might have saved us from the colossal mismanagement and risk taking by banks and hedge funds that led to the financial crisis — companies that were so successful and well managed that, like Lehman Brothers and its foundation, they collapsed overnight, leaving hundreds of nonprofits to face financial ruin — or it might have spared us Bernard Madoff with his massive Ponzi scheme, who defrauded Jewish charities of huge amounts of money and caused whole philanthropies like the JEHT Foundation to vanish without a trace.9 “In investment banking, it is taken for granted that decisions about how to use capital are based on rigorous research into performance,” say Bishop and Green in their love poem to irrational exuberance 5 philanthrocapitalism; or as we now know, such decisions could be based on raw speculation at everyone else’s expense.

See also Creative Capitalism Gates, Melinda, 9, 30, 92 Girl Scouts of America, The, 52, 58 GiveWell, 80 Global Fund to Fight AIDS, Tuberculosis and Malaria, 2 Global Giving, 72 Global Peace Index, 61 Good Club, The, 94 Good to Great, 78 Google.org, 20, 32, 34, 80 Grameen Bank, 19, 62 Grameen Foundation, 41 Grameen Phone, 41 Greed patterns of, 9 Green Dot, 47 Green, Michael, 2 Greenlining Institute, 101 GuideStar International, 79 H Habitat for Humanity, 52, 58 Hartigan, Pamela, 74 Hasan, Arif, 12 Hatred patterns of, 9 Helmsley, Leona, 94 Hewlett Foundation, 104 Hindustan Lever (HLL), 42 HIV/AIDS, 37, 60, 89 Hoffman, Kurt, 3–4 Holla, Richard, 43 Homophobia patterns of, 9 Hookworm, 37 Hotmail, 72 How to Change the World: Social Entrepreneurs and the Power of New Ideas (Bornstein), 19 Humankind, love of, 2 I Ibrahim, Mo, 32 IMproved, 72 Individualism role of entrepreneur and, 71 Inequality attitudes toward economic, 67 Infosys, 3 Intel, 31 Iverson, Erik, 8 J JEHT Foundation, 4 K Kahn, Si, 70 Kaletra, 37 Karnani, Aneel, 42 Karnofsky, Holden, 80 Kassoy, Andrew, 21 King, Martin Luther, 19 Kiva, 72 Kunreuther, Frances, 70 L La Mujer Obrera, 19, 44 Landsburg, Daniel, 31 Lee, Mike, 87 Lehman Brothers, 4, 59 Leishmaniasis, 37 M Madoff, Bernard, 4, 59. See also Ponzi scheme Make the Road New York, 10, 11, 77 index Malaria bed nets and, 36 Mandela, Nelson, 30 Market regulation, 6 McKinsey and Company, 39, 52 Menon, Lakshmi, 43 Micro-Credit Ratings International Ltd., 73 Microcredit, 40 Microfinance, 40 Microsoft, 29, 30, 72 Mondragon, 22 Morino, Mario (quoted), 5 Movement Strategy Center, 13 MTV.com, 44 Multinational companies versus mom-and-pop stores, 17 Munger, Charles (quoted), 2 N National AIDS Control Organization, 39 National Center for Social Entrepreneurs, 47 National Committee for Responsive Philanthropy (NCRP), 90–91 Nature Conservancy, The, 51 NCRP (National Committee for Responsive Philanthropy), 90–91 New business models, 21–22 New Deal, 23 New Philanthropy Capital (NPC), 79 Nightingale, Florence, 19 Nilekani, Nandan, 3 Nilekani, Rohini, 74 Nonmarket peer production, 22 Nonprofit Quarterly, 51, 57–58 Novogratz, Jacqueline, 8 121 O Obama, Barack, 6 Omidyar Network, The, 30, 104 Omidyar, Peter, 7, 89 One Laptop Per Child, 31, 44 Oracle, 2 P Parent Teacher Associations (PTAs), 54 Participant Productions, 19, 44 PATH, 44 Peaceworks, 30 Philanthrocapitalism as form of philanthropy, 2 civil rights and, 14 competition and, 68 focus of, 9 hype surrounding, 34 rise of, 1–6 social justice and, 73 social problems and, 36 versus social transformation, 7 Philanthrocapitalists, 2–3, 78.

., 73 Microcredit, 40 Microfinance, 40 Microsoft, 29, 30, 72 Mondragon, 22 Morino, Mario (quoted), 5 Movement Strategy Center, 13 MTV.com, 44 Multinational companies versus mom-and-pop stores, 17 Munger, Charles (quoted), 2 N National AIDS Control Organization, 39 National Center for Social Entrepreneurs, 47 National Committee for Responsive Philanthropy (NCRP), 90–91 Nature Conservancy, The, 51 NCRP (National Committee for Responsive Philanthropy), 90–91 New business models, 21–22 New Deal, 23 New Philanthropy Capital (NPC), 79 Nightingale, Florence, 19 Nilekani, Nandan, 3 Nilekani, Rohini, 74 Nonmarket peer production, 22 Nonprofit Quarterly, 51, 57–58 Novogratz, Jacqueline, 8 121 O Obama, Barack, 6 Omidyar Network, The, 30, 104 Omidyar, Peter, 7, 89 One Laptop Per Child, 31, 44 Oracle, 2 P Parent Teacher Associations (PTAs), 54 Participant Productions, 19, 44 PATH, 44 Peaceworks, 30 Philanthrocapitalism as form of philanthropy, 2 civil rights and, 14 competition and, 68 focus of, 9 hype surrounding, 34 rise of, 1–6 social justice and, 73 social problems and, 36 versus social transformation, 7 Philanthrocapitalists, 2–3, 78. See also Philanthrocapitalism; Philanthropy Philanthropy as ineffective, 3 as support system, 99–100 fun of, 102–103 Planned Parenthood of America, 51 Ponzi scheme, 4 Porter, Michael (quoted), 3 Prahalad, C. K., 42 Project Red, 96 Project Shakti, 42 Public goods support for, 104–105 Pulse, 80 Pushback Network, 11 122 small change R Racism patterns of, 9 Rajani, Rakesh, 39 RealBenefits, 44 Red Brand, 2 Resource Generation, 104 Robinson, Mary, 30 Rockefeller, John D., 21 S School of Forestry and Environmental Studies (Yale), 65 Schwarz, Eric, 58 SCOPE (Strategic Concepts in Organizing and Policy Education), 10 Scott, H.


pages: 384 words: 118,572

The Confidence Game: The Psychology of the Con and Why We Fall for It Every Time by Maria Konnikova

Abraham Maslow, attribution theory, Bear Stearns, behavioural economics, Bernie Madoff, Bluma Zeigarnik, British Empire, Cass Sunstein, cognitive dissonance, cognitive load, coherent worldview, Daniel Kahneman / Amos Tversky, dark triade / dark tetrad, endowment effect, epigenetics, Higgs boson, higher-order functions, hindsight bias, lake wobegon effect, lateral thinking, libertarian paternalism, Milgram experiment, placebo effect, Ponzi scheme, post-work, publish or perish, Richard Thaler, risk tolerance, seminal paper, side project, Skype, Steven Pinker, sunk-cost fallacy, the scientific method, tulip mania, Walter Mischel

No matter the medium or the guise, cons, at their core, are united by the same basic principles—principles that rest on the manipulation of belief. Cons go unreported—indeed, undetected—because none of us want to admit that our basic beliefs could be wrong. It matters little if we’re dealing with a Ponzi scheme or falsified data, fake quotes or misleading information, fraudulent art or doubtful health claims, a false version of history or a less than honest version of the future. At a fundamental, psychological level, it’s all about confidence—or, rather, the taking advantage of somebody else’s. This book is not a history of the con.

CHAPTER 1 THE GRIFTER AND THE MARK He does not answer questions, or gives evasive answers; he speaks nonsense, rubs the great toe along the ground, and shivers; his face is discolored; he rubs the roots of his hair with his fingers. —PROFILE OF A LIAR, 900 BCE Whenever people ask me if I’ve ever been conned, I tell them the truth: I have no idea. I’ve never given money to a Ponzi scheme or gotten tripped up on an unwinnable game of three-card monte—that much I know. And there have been some smaller deceptions I’ve certainly fallen for—though whether they qualify as full-fledged cons is a matter of dispute. But here’s the thing about cons: the best of them are never discovered.

In a 2011 study of over seven hundred fraud victims, alongside fifteen hundred non-victims, psychologists Karla Pak and Doug Shadel found that different types of people fell for different types of cons; depending on where you look, the profile of the ideal mark shifts considerably. Victims of investment frauds, like Bernie Madoff’s Ponzi scheme, and business opportunity frauds, like a lucrative investment in a new oil field, were more likely to be well-educated older men who made over $50,000 a year. Lottery frauds, on the other hand—fake tickets and the like—were likely to claim victims who were less educated and earned less money. When it came to prescription drug fraud and identity theft, the typical victim was a single female who made less than $50,000 a year.


pages: 226 words: 65,516

Kings of Crypto: One Startup's Quest to Take Cryptocurrency Out of Silicon Valley and Onto Wall Street by Jeff John Roberts

4chan, Airbnb, Alan Greenspan, altcoin, Apple II, Bernie Sanders, Bertram Gilfoyle, Big Tech, bitcoin, blockchain, Blythe Masters, Bonfire of the Vanities, Burning Man, buttonwood tree, cloud computing, coronavirus, COVID-19, creative destruction, Credit Default Swap, cryptocurrency, democratizing finance, Dogecoin, Donald Trump, double helix, driverless car, Elliott wave, Elon Musk, Ethereum, ethereum blockchain, family office, financial engineering, Flash crash, forensic accounting, hacker house, Hacker News, hockey-stick growth, index fund, information security, initial coin offering, Jeff Bezos, John Gilmore, Joseph Schumpeter, litecoin, Marc Andreessen, Mark Zuckerberg, Masayoshi Son, Menlo Park, move fast and break things, Multics, Network effects, offshore financial centre, open borders, Paul Graham, Peter Thiel, Ponzi scheme, prediction markets, proprietary trading, radical decentralization, ransomware, regulatory arbitrage, reserve currency, ride hailing / ride sharing, Robert Shiller, rolodex, Ross Ulbricht, Sam Altman, Sand Hill Road, Satoshi Nakamoto, sharing economy, side hustle, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, smart contracts, SoftBank, software is eating the world, Startup school, Steve Ballmer, Steve Jobs, Steve Wozniak, transaction costs, Vitalik Buterin, WeWork, work culture , Y Combinator, zero-sum game

Matos had made his investment through a website that encouraged customers to trade in bitcoin and receive a new cryptocurrency—called Bitconnect—which they could lend out in order to receive returns as high as 40 percent a month. Customers could obtain even higher returns if they signed up other clients for Bitconnect. Crypto details aside, Bitconnect was an old-fashioned Ponzi scheme. It worked for a while. Bitconnect tokens reached an all-time high in late 2017 of $450, but the value collapsed when the company shut down months later amid an FBI investigation. Today, its millions of tokens are worth nothing. The thousands of people who bought Bitconnect tokens, which briefly sat as the twentieth-most-popular cryptocurrency, lost every dollar.

These include Wyoming, which has passed a series of banking laws that encourage crypto companies to set up shop. • • • All this doesn’t mean crypto has lost its outlaw side, of course. A report revealed that scammers took in a record $4 billion in 2019 as a result of crypto hustles, most notably through Ponzi schemes. On social media, the scams became so bad that crypto firm Ripple filed a lawsuit against YouTube over a series of send-us-your-money videos that hijacked the image of its CEO Brad Garlinghouse. Meanwhile, teenagers would hack into Twitter in July of 2020, hijacking the accounts of everyone from Brian to Elon Musk to Michelle Obama in order to invite their millions of followers to send bitcoin.

Gox, 57 Casares, Wences, 182–183, 216 Casey, Michael, 23 celebrity endorsements, 144–145 Chainalysis, 196 Charles Schwab, 207–208 China, 81–83, 207 Choi, Emilie, 175, 191, 209 Circle, 55, 105 circuit breakers, 140 Clayton, Jay, 169 CNBC, 146 Coinbase, 173 acquisitions by, 186–187, 197, 209 agency trading model at, 174 Apple Store and, 40, 63 Balaji at, 185–187 Binance and, 179–181, 187–190 Bluxome Street office, 37–38, 66–67 capacity issues at, 151 Chicago and, 192 cold storage at, 43–44 competition for, 54–55, 178–181 the crypto winter and, 172–175 culture at, 39, 49–51, 67–68, 189–190 currencies added to, 96–97, 181–182, 187–190, 196 customer acquisition at, 47, 139, 154, 156–157 customer service at, 159, 173–175 diversification at, 64, 209 engineering strategy at, 187–188 Ethereum and, 93–95 Facebook and, 205–206 first hires at, 24–30 flash crash and, 139–141 funding rounds for, 33–37, 51, 64–65, 154–155, 173 future of, 216, 219–220, 225–226 hacking attacks on, 40–43, 143, 157 hiring at, 29, 37–41, 45–47, 49–51 Hirji at, 157–158 hot wallet attack on, 40–43 infrastructure issues at, 155–159, 209–210 IRS and, 121–126 JP Morgan and, 213 layoffs at, 74 leadership team at, 157, 175 Market Street office, 67 Moon Launch, 65 opposition to, 27 origins of, 3–15 in other countries, 65 private keys and, 9 profits at, 154–155 regulation and, 118, 121–131 reputation of, 42–43, 68, 71–72, 124, 125 running through brick walls at, 33–52, 63–64 security systems at, 79–80 Silicon Valley Bank and, 69–70, 72–73 staff departures from, 117–118, 193–195 super voting shares at, 112–113 threats against, 149–151 Wall Street and, 104 coinbase, in bitcoin, 21 CoinDesk, 145, 182 Commodity Futures Trading Commission (CFTC), 126 Conscious Leadership, 68 Consensus, 167 ConsenSys, 94 Covid-19 pandemic, 221–223 The Creamery, 37–38 creative destruction, 214 criminal activity, 18, 224 Dread Pirate Roberts and, 31, 59 money laundering, 45, 58 Mt. Gox and, 56–58 Ponzi schemes, 141–142 swindles, 141–145 threats of, 149–151 cryptocurrencies academic research on, 218–219 altcoins/shitcoins, 138 Binance and, 179–181 bubble around, 133–139 bubble in, 138–145, 149–155 bull run in, 201–203 celebrity endorsements of, 144–145 code for, 188–189 crash in, 160–161, 165–175 exchanges of, 127, 215–216 Libra, 205–207 as property versus currency, 122–126 swindles using, 141–145 See also individual currencies crypto winter, 170–175, 198, 201 Custody, 209 cypherpunks, 23, 99–100 CZ.


pages: 232 words: 70,835

A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan by Ben Carlson

Albert Einstein, asset allocation, backtesting, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, book value, business cycle, buy and hold, buy low sell high, commodity super cycle, corporate governance, delayed gratification, discounted cash flows, diversification, diversified portfolio, do what you love, endowment effect, family office, financial independence, fixed income, Gordon Gekko, high net worth, index fund, John Bogle, junk bonds, loss aversion, market bubble, medical residency, Occam's razor, paper trading, passive investing, Ponzi scheme, price anchoring, Reminiscences of a Stock Operator, Richard Thaler, risk tolerance, Robert Shiller, robo advisor, South Sea Bubble, sovereign wealth fund, stocks for the long run, technology bubble, Ted Nelson, transaction costs, Vanguard fund, Vilfredo Pareto

—Michael Mauboussin In December 2008, as the financial world was in the process of crumbling all around us following the near collapse of the banking system and the bankruptcy of Lehman Brothers, there was another event that shook the collective trust of the investing public. Bernie Madoff's Ponzi scheme—the largest in history at almost $65 billion in fake gains promised to clients—finally unraveled after years of lies and deception. That very same month Dr. Stephen Greenspan released a book called Annals of Gullibility: Why We Get Duped and How to Avoid It that focused on human competence or the lack thereof.

Gullibility is when our intelligence fails us and we are easily tricked into doing something that's against our better judgment. Now here's the kicker—Greenspan was an investor in Madoff's funds! The man who literally wrote the book on human gullibility was himself duped into investing in the biggest Ponzi scheme of all-time. Greenspan was kind enough to pen an op-ed for the Wall Street Journal to explain what caused this to happen and share some lessons he took away from the experience: In my own case, the decision to invest in the Rye fund (a feeder fund invested with Madoff) reflected both my profound ignorance of finance, and my somewhat lazy unwillingness to remedy that ignorance.

She knew it was an ear infection so putting the ear drops on the patient's rear end made absolutely no sense, but she never questioned the instructions because they came from a doctor. The patient went right along as well. No one bothered to question the misinterpreted instructions because they came from someone in a position of influence.3 An investor without a well thought out investment philosophy might as well be throwing their money away in a Ponzi scheme or putting ear drops up their butt, because there's no use in implementing a portfolio strategy without first understanding your investment philosophy. An investment philosophy is simply a set of principles that will guide your actions when making portfolio decisions. It's your core beliefs. It may seem like a minor distinction, but an investment philosophy must be determined before a portfolio strategy can be implemented.


pages: 316 words: 117,228

The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor

Andrei Shleifer, Asian financial crisis, asset-backed security, barriers to entry, Bear Stearns, Bernie Madoff, Big Tech, bilateral investment treaty, bitcoin, blockchain, Bretton Woods, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, conceptual framework, Corn Laws, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, digital rights, Donald Trump, double helix, driverless car, Edward Glaeser, Ethereum, ethereum blockchain, facts on the ground, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, full employment, global reserve currency, Gregor Mendel, Hernando de Soto, income inequality, initial coin offering, intangible asset, investor state dispute settlement, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, land reform, land tenure, London Interbank Offered Rate, Long Term Capital Management, means of production, money market fund, moral hazard, offshore financial centre, phenotype, Ponzi scheme, power law, price mechanism, price stability, profit maximization, railway mania, regulatory arbitrage, reserve currency, Robert Solow, Ronald Coase, Satoshi Nakamoto, secular stagnation, self-driving car, seminal paper, shareholder value, Silicon Valley, smart contracts, software patent, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, trade route, Tragedy of the Commons, transaction costs, Wolfgang Streeck

Ponzi, who ran one of the most audacious Ponzi schemes in the 1920s. See Minsky, Stabilizing an Unstable Economy, pp. 230–232, where he compares hedge, speculative, and Ponzi finance. 61. Johann Plenge, Gründung und Geschichte des Crédit Mobilier (Tübingen: Verlag der H. Laupp’schen Buchhandlung, 1903); the book includes the articles of incorporation of the bank. 62. For a short definition and the description of the original Ponzi scheme, see https://www.investopedia.com/terms/p/ponzischeme.asp (last accessed August 8, 2018). n ote s to c h a P te r 5 255 63. Robert Lenzner, “Bernie Madoff ’s $50 Billion Ponzi Scheme,” December 12, 2008, available online at www.forbes.com. 64.

The company paid high dividends to boost the value of Crédit Mobilier’s share price, thereby keeping existing shareholders happy and attracting new ones; but to sustain the scheme over time, it was not enough to attract new shareholders or bondholders and take their contributions to pay out dividends or fixed returns to old shareholders and old bondholders. This resembles a Ponzi scheme, named after an ItaloAmerican of the early twentieth century who attracted investors by promising them extraordinary returns, when in fact he simply used the money that new investors paid in to pay out dividends to the previous ones.62 This works as long as enough investors show up every day; indeed, it can work for decades even under the eyes of powerful financial market regulators, such as the SEC, as Bernard Madoff ’s secretive Ponzi scheme, which blew up only after the 2008 crisis, has demonstrated.63 Still, at some point some investments must produce some real returns for the company to survive—a tall order in the case of Crédit Mobilier, given that most investments were made in infrastructure projects that, by nature, are long-term investments.

., 49 Pennsylvania University, 113 pensions, 63, 75, 83, 106, 255n71 Péreire brothers, 102–3 Pfizer Pharmaceuticals, 121–22, 124 pharmaceutical industry: Eli Lilly and, 138– 42, 152–55, 261n17, 261n19; intellectual property and, 129; Pfizer and, 121–22, 124; sovereignty and, 138; trade secrets and, 129 Piketty, Thomas, 4–5 plaintiffs, 32, 58, 69, 113, 142, 214, 265n5, 275n17 poison pills, 163–64, 266n15, 266n17 Poland, 133 Polanyi, Karl von, 11, 19, 128, 133, 220, 228, 276n29 Ponzi schemes, 103, 254n60, 254n62 Portugal, 133, 255n66 Posner, Eric A., 230, 232 power structures, 185, 206 Pratt, Ed, 121–22 PRIMA (place of the relevant intermediary approach), 136 priority rights: capital rule and, 206–7, 215; cloning legal persons and, 55–56, 63; code masters and, 158, 161; coding land and, 24–25, 29, 37, 39, 46; digital code 293 and, 193; durability and, 14; empire of law and, 13–14, 16, 18; enforcement of, 16; global code and, 149, 156; landlords and, 206; lawyers and, 158, 161; legal entities and, 14; minting debt and, 97, 107; Native Americans and, 34, 192–93; nature’s code and, 110; shielding and, 54–56, 107, 215; trade secrets and, 126 private law, ix; capital rule and, 20, 209–19; cloning legal persons and, 68; code masters and, 169–73, 182; contracts and, 2 (see also contracts); crytocurrency and, 198; digital code and, 198; empire of law and, 20–21; first-mover advantage and, 214–15; global code and, 133, 136, 154; international, 68, 136; law’s inherent incompleteness and, 210–13; minting debt and, 107; public power and, 216–19; trust law and, 3, 5, 44, 78, 211, 219, 226 private money: code masters and, 175; Crédit Mobilier and, 102–6; crytocurrency and, 198–99, 202; digital code and, 198–99, 202; future growth and, 102; Germany and, 101; minting debt and, 86, 89, 92, 101–7, 147, 202; Péreire brothers and, 102–3; risk and, 187, 198– 99; state money and, 15, 238n52 Privy Council, 27–29, 126 productivity, 39, 79, 117, 244n64 property: absolute, 30, 33; acquired rights and, ix–x, 42–45; capital rule and, 206, 209, 212–20, 222, 224, 230, 276n24; cloning legal persons and, 47, 68; code masters and, 158–60, 164, 172, 177; coding land and, 23–39, 42–46, 240n2, 241n10, 241n13, 242n27, 242n36, 243n41, 245n75; Cohen on, 137–38; Conveyance Act and, 38–39; courts and, 17, 23–28, 30, 38–39, 43–44, 96–97, 126, 136, 140, 143, 159–60, 172, 214–15, 218, 262; Debt Recovery Act and, 39–40; digital code and, 184–86, 191–94, 198, 203–4, 272n28; discovery doctrine and, 34–35; as dominium, 138; emerging land market and, 32; empire of law and, 1–5, 11–14, 17, 19, 21, 238n44, 238n48, 238n50, 239n56, 240n68; enclosure and, 29–35, 39, 229, 256n14; Enclosure Acts and, 29–30; eviction and, 41, 233; exclusive use rights and, 35, 209; feudalism and, 30, 36, 128–29, 158, 218; foreclosure and, 39, 95–98, 253n44; France and, 218, 242n27; general, 30; global code and, 135–40, 143, 262n45; 294 indeX property (continued) growth and, 4; industrial policy and, 118– 22; intangible capital and, 13, 24, 115–21, 143, 212, 216; intellectual, 3, 138 (see also intellectual property); ISDS and, 136–38, 140, 155–56, 261n22; labor and, 120; landlords and, 29–32, 35, 59, 93, 112–13, 158–59, 192, 206, 214, 244n64; landowners and, 24, 34–39, 42, 45, 56, 78, 128, 158–59, 166; legal entities and, 24, 44–47, 136, 159, 217, 224; legal title and, 24–29, 31, 33–34, 45–46; Maya people and, 23–29, 230, 261n21; minting debt and, 78, 86, 95–97, 107; monopolies and, 119–21 (see also monopolies); Native Americans and, 34, 192–93; nature’s code and, 108–9, 114–30; Norman conquest and, 30; numerus clausus and, 160; occupancy and, 31; ownership and, 30; patents and, 118–22; residual rights and, 191–92; rise of West and, 4; securitization and, 43, 78; Settled Land Acts and, 38–39; settlers and, 33–35, 42, 125, 192–93; sovereignty and, 26–27, 33, 120–21, 135–43, 160; squatters and, 34; Statute of Enrollments and, 44; Statute of Uses and, 44; Szabo on, 192–93, 198; titles and, 13, 25–27, 30–35, 37, 43, 46, 75, 96–97, 110, 125, 194, 206; treaty law and, 120; trust law and, 42–45; turning land into private, 29–35; US Constitution and, 25; wealth and, 4–5, 12, 14, 19, 21, 24, 36, 42–43, 46, 108, 130, 209, 217, 222, 224, 237n38, 240n68 Prussia, 93–95, 172–73, 242n27 public power, 216–19 put option, 55, 64, 226 Qatar, 84 Quarterly Journal of Economics, 94 radical markets, 230–33 rate of return, 4–5, 147 rating agencies, 80, 86–87, 98–100, 251n6, 251n19 rational choice theorists, 208, 216 real estate mortgage investment conduits (REMIC), 95, 253n41 reform: capital rule and, 218, 231; code masters and, 158–59, 171; coding land and, 38–41, 244n58, 244n64; digital code and, 273n46; empire of law and, 1; English land law and, 158, 244n58; minting debt and, 101, 106, 255n73; TRIPS and, 124–25 regulation: arbitrage and, 48, 56, 73–76, 90–91, 226; capital rule and, 211, 213, 216–17, 221, 224–27, 274n1; code masters and, 160–63, 168, 171–77, 182, 267n37, 268n42; coding land and, 44; convertibility and, 226–27; corporations and, 47–48, 50, 56, 68, 73–75, 249n46; digital code and, 185–86, 190, 271n17, 272n30; empire of law and, 7; global code and, 132, 135, 137, 141, 143, 145, 148, 151–54, 264n58, 264n67; insurance, 271n17; lawyers and, 160–63, 168, 171–77, 182, 267n37, 268n42; minting debt and, 85, 90–91, 99–100, 103–7, 251n6, 255n73; private, 264n58; REMIC and, 253n41; US Securities and Exchange Commission (SEC) and, 103, 195 Regulation and Administration of Safe Custody and Global Settlement (RASCAL), 73–75, 250n60, 250n62 regulatory arbitrage, 48, 73–76, 90–91, 226 religion, 90, 236n26 repurchase agreements (Repos), 74, 76, 145, 148, 211, 262n45 residential mortgage-backed securities (RMBS), 87, 94, 103, 108 residual rights, 191–92 retirement, 65 R.


Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals by David Aronson

Albert Einstein, Andrew Wiles, asset allocation, availability heuristic, backtesting, Black Swan, book value, butter production in bangladesh, buy and hold, capital asset pricing model, cognitive dissonance, compound rate of return, computerized trading, Daniel Kahneman / Amos Tversky, distributed generation, Elliott wave, en.wikipedia.org, equity risk premium, feminist movement, Great Leap Forward, hindsight bias, index fund, invention of the telescope, invisible hand, Long Term Capital Management, managed futures, mental accounting, meta-analysis, p-value, pattern recognition, Paul Samuelson, Ponzi scheme, price anchoring, price stability, quantitative trading / quantitative finance, Ralph Nelson Elliott, random walk, retrograde motion, revision control, risk free rate, risk tolerance, risk-adjusted returns, riskless arbitrage, Robert Shiller, Sharpe ratio, short selling, source of truth, statistical model, stocks for the long run, sugar pill, systematic trading, the scientific method, transfer pricing, unbiased observer, yield curve, Yogi Berra

If the late 1990s was a price bubble, it seems to be ending with many intervening pauses. 370 METHODOLOGICAL, PSYCHOLOGICAL, PHILOSOPHICAL, STATISTICAL FOUNDATIONS Self-Organizing Ponzi Schemes The feedback theory of price bubbles is appealing because of its plausibility and the numerous historical examples that seem to confirm its validity. However, it is hard to prove that a simple feedback mechanism involving heightened investor focus, imitative behavior, and exaggerated investor confidence is truly operational in financial markets. Nevertheless, Yale economist Robert Shiller believes actual cases of pyramid frauds known as Ponzi schemes offer evidence that confirms the feedback theory. The scheme, named after the infamous Charles Ponzi, who invented the idea in the 1920s, involves promising investors a high rate of return from some sort of business venture or investment.

The moths dive into the flame. Shiller contends that speculative bubbles are naturally occurring Ponzi schemes that emerge spontaneously in financial markets, without requiring the machinations of a fraudulent promoter.82 Such self-organizing phenomena are common in complex systems. There is no need for false stories because there is always some buzz about the stock market anyway. A trend Theories of Nonrandom Price Motion 371 of rising prices acts as a call to action much like the gains of early investors in a Ponzi scheme. The message is then amplified by Wall Street’s salesmen, and they need not tell lies.

The message is then amplified by Wall Street’s salesmen, and they need not tell lies. They simply pitch the upside potential while downplaying the risk side of the story. The parallels between Ponzi schemes and speculative bubbles are so clear in Shiller’s opinion that the burden of proof is on those who deny the similarity. Competing Hypotheses of Behavioral Finance A mathematical model quantifies a scientific hypothesis about some aspect of the world, This allows quantitative predictions to be made that can be tested against future observations. Of course, those proposing the model hope its predictions will coincide with said observations. Nevertheless, if they should clash, a true scientist stands ready to formulate a new model that both explains the discordant observations and makes additional predictions that can be tested against further observations.


pages: 831 words: 98,409

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

.: The Financial Shadow Capital IMF Meetings in Istanbul: Dancing on the Titanic Power Summit: The Bilderberg Conference Stealth Power: Family Office Gatherings Feeding Off Power: Power Lunches Power Workout: Networking, Working, and Working Out “Superhub-Nobbing”: Private Parties The Higher Purpose of Networking: The Charity Circuit CHAPTER 8 OPPORTUNITY COSTS: THE DOWNSIDE OF THE UPSIDE Missing Out on Memorable Moments Stress Test: When Being a Superhub Is Not So Super Married to Their Jobs: Work-Family Life Imbalance Media Madness: Living Under a Microscope Super-Sick: Paying the Ultimate Price Clash of the Titans: Close Combat and Coups d’État Triumph and Defeat: A Turbulent Career CHAPTER 9 “WOMENOMICS”: THE MISSING LINK The Gender Gap: Women Missing in Action The Access Gap: Exclusive Means Excluding The Networking Gap: Schmooze or Lose The Assessment Gap: Performance versus Potential The Wage Gap: Selling Women Short The Failure Gap: Demoting Promotions The Mentoring Gap: Missing Out on Mentoring The Sexism Gap: The Wolves of Wall Street on the Prowl The Resilience Gap: Male Might and Female Feebleness Closing the Gender Gap: Superhub Christine Lagarde CHAPTER 10 REVOLVING SUPERHUBS: CREATING NETWORK MONOPOLIES Psychological Kidnapping The Revolving Door The Oscillating Megahub: Robert Rubin Open Doors: Tony Blair Cross-Connections: Cooperating Constructively in Times of Crises Launching a President “Legalized Corruption”: The Best Democracy Money Can Buy Purchasing Political Protection Relationship Power: Diffusing the Euro Time Bomb Super-Entity: The Capitalist Network That Runs the World CHAPTER 11 DE-LINKED: EXPULSION AND COMEBACK Sent into Exile: Dick Fuld Shock-Resistant: Larry Summers’s Network Meteoric Rise Against All Odds The Bull in Charge of the China Shop Den of Thieves: Mike Milken Complete Network Collapse: Dominique Strauss-Kahn Ponzi Schemes and Sex Scandals: Buddy Fletcher and Ellen Pao Omni-Connected: Michael Klein CHAPTER 12 SUPER-CRASH: “EXECUTIVE CONTAGION” The Crash of a Titan: John Meriwether The Big Picture: Capitalism in Crisis Debt and Financialization Wealth Gap and Inequality Globalization Winners versus Globalization Losers Approaching the Tipping Point When an Irresistible Force Meets an Immovable Object: Brexit The Next Crisis: Systemic Failure and Contagion The Culprit: The Superhubs or the System?

While any official position at least for the time being seems inconceivable, the stigma surrounding him has somewhat subsided—though it will likely never fully disappear. The French establishment has slowly lowered its guard and begun opening up its ranks and including him again. Thus, while regaining his status as a superhub is highly unlikely, becoming a well-linked hub again seems feasible in the absence of further jaw-dropping scandals. PONZI SCHEMES AND SEX SCANDALS: BUDDY FLETCHER AND ELLEN PAO Minorities in high finance are rare; rarest of all are minority couples in which both partners are superhubs. One of those power couples was Buddy Fletcher and Ellen Pao. In network terms, they started out as nodes at the fringes of the system before equipping themselves with the preconditions and qualities needed to move to the center of the financial network.

It also surfaced that Fletcher had financed his brother Geoffrey’s movie Violet & Daisy with $7.7 million of public-pension-fund money, an investment that unfortunately yielded a multimillion-dollar unrealized loss.13 According to the trustee’s report, “In many ways, the fraud here has many of the characteristics of a Ponzi scheme, where, absent new investor money coming in, the overall structure would collapse.”14 While building his impressive portfolio of prime real estate, cars, and relationships, Fletcher also continued to build an impressive portfolio of high-profile lawsuits. In addition to his racial discrimination suits against Kidder Peabody and the Dakota, he was sued by two of his Harvard friends-turned-employees, Michael Meade and Stephen Cass, who alleged sexual harassment after being fired for spurned advances.


pages: 349 words: 102,827

The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet With Ethereum by Camila Russo

4chan, Airbnb, Alan Greenspan, algorithmic trading, altcoin, always be closing, Any sufficiently advanced technology is indistinguishable from magic, Asian financial crisis, Benchmark Capital, Big Tech, bitcoin, blockchain, Burning Man, Cambridge Analytica, Cody Wilson, crowdsourcing, cryptocurrency, distributed ledger, diversification, Dogecoin, Donald Trump, East Village, Ethereum, ethereum blockchain, Flash crash, Free Software Foundation, Google Glasses, Google Hangouts, hacker house, information security, initial coin offering, Internet of things, Mark Zuckerberg, Maui Hawaii, mobile money, new economy, non-fungible token, off-the-grid, peer-to-peer, Peter Thiel, pets.com, Ponzi scheme, prediction markets, QR code, reserve currency, RFC: Request For Comment, Richard Stallman, Robert Shiller, Sand Hill Road, Satoshi Nakamoto, semantic web, sharing economy, side project, Silicon Valley, Skype, slashdot, smart contracts, South of Market, San Francisco, the Cathedral and the Bazaar, the payments system, too big to fail, tulip mania, Turing complete, Two Sigma, Uber for X, Vitalik Buterin

Many of the scams that mushroomed in 2017 started getting uncovered. Plexcoin was one of the many obvious Ponzi schemes, with promoters guaranteeing 1,300 percent monthly returns. The SEC shut them down in January. The two creators of CentraTech, the company behind the ICO promoted by Floyd Mayweather and DJ Khaled, were arrested for securities fraud. A Vietnamese company called Modern Tech, which had raised $660 million in two ICOs, simply disappeared with the money. Probably the most notorious scam was Bitconnect, another Ponzi scheme, infamous for a cultlike gathering where spokesman Carlos Matos half-danced, half-jumped around onstage as he told the cheering crowd how he was putting his money in the scheme even as his wife and friends told him it was a scam.

Matthew, who was editor in chief at the time, resigned in September 2012, just four months after the first issue shipped. His departure was a consequence of his decision to throw his support behind a crypto project called “Pirate” that was rumored to be a scam. On BitcoinTalk, he challenged those saying the project was a Ponzi scheme or fraud to comment on his post saying how much they were willing to bet him the project was legitimate. If he won, he would pay them back double the amounts committed. Not surprisingly, with a name like Pirate, the project closed with allegations of lost investments discussed in online forums.

The first post said, “it simply is NOT fair and safe or possibly even legal what these guys are doing and if regulation is looming and imposed without warning you people out there supporting crap like this could wound [sic] up waking up tomorrow with charges laid against you.” It added, “Bottom line it’s a dumb idea and it’s an IPO and IPO’s in crypto are ALL scams.” Farther down the thirty-page thread someone wrote, “Ethereum is a ponzi scheme ran [sic] by a few wealthy investors who think throwing bags of money to a coin will attract subsequent bags of money from subsequent investors.” Some went for personal attacks on the cofounders. Joe Lubin’s connection with Goldman Sachs was brought up as a reason to be wary, while a more vicious user wrote, Anthony is some Oliver Twist–esque Fagin character and Vitalik is an anointed coding genius that is utilized to play the role of lead dev.


pages: 296 words: 76,284

The End of the Suburbs: Where the American Dream Is Moving by Leigh Gallagher

Airbnb, big-box store, bike sharing, Burning Man, call centre, car-free, Celebration, Florida, clean water, collaborative consumption, Columbine, commoditize, crack epidemic, demographic winter, East Village, edge city, Edward Glaeser, extreme commuting, Ford Model T, General Motors Futurama, gentrification, helicopter parent, Home mortgage interest deduction, housing crisis, Jane Jacobs, Kickstarter, Lewis Mumford, low skilled workers, Mark Zuckerberg, McMansion, Menlo Park, microapartment, mortgage tax deduction, negative equity, New Urbanism, peak oil, Peter Calthorpe, Ponzi scheme, Quicken Loans, Richard Florida, Robert Shiller, Sand Hill Road, Seaside, Florida, Silicon Valley, Steve Jobs, Stewart Brand, streetcar suburb, TED Talk, the built environment, The Death and Life of Great American Cities, Tony Hsieh, Tragedy of the Commons, transit-oriented development, upwardly mobile, urban planning, urban sprawl, Victor Gruen, walkable city, white flight, white picket fence, young professional, Zipcar

The amount of tax revenue their low-density setup generates, he says, doesn’t come close to paying for the cost of maintaining the vast and costly infrastructure systems, so the only way to keep the machine going is to keep adding and growing. “The public yield from the suburban development pattern is ridiculously low,” he says. One of the most popular articles on the Strong Towns Web site is a five-part series Marohn wrote likening American suburban development to a giant Ponzi scheme. Here’s what he means. The way suburban development usually works is that a town lays the pipes, plumbing, and infrastructure for housing development—often getting big loans from the government to do so—and soon after a developer appears and offers to build homes on it. Developers usually fund most of the cost of the infrastructure because they make their money back from the sale of the homes.

His house, which he and his wife had built in 1995 and refinanced a few times, has lost value; it was assessed at $272,000 a few years ago and he thinks it would sell today for $200,000. But he’s more concerned for his brother, Brent, who lives forty-five minutes from Minneapolis in the exurb of Rogers, Minnesota—an area that, as Marohn puts it, “got very caught up in the entire growth Ponzi scheme”—and commutes to an inner-ring suburb. Brent’s house has dropped “tremendously” in value, Marohn says. He worries about his brother’s situation; the more gas prices go up, the fewer people there will be that can afford his house, forcing prices to drop further and further. At that point, Marohn believes, one of two things will happen: either a local economy will spring up in his brother’s town to provide jobs for its people so they don’t have to commute, or his brother’s house is going to continue to lose value until it’s ultimately worth nothing and sold for salvage.

., 204 Las Vegas housing bust in, 72, 73–74 Zappos relocation to, 174–77 Lawrenceville, Pittsburgh, 202 Le Corbusier, 119 Lee, Annette, 85–86, 194 Leinberger, Christopher, 38, 64, 81–82, 130, 131, 135, 188 on housing market location, 199 reactions to ideas of, 195 on suburban development, 38 Lennar Corporation, 156 Levitt, William, 37 Levittown, 37, 43, 46, 65 Libertyville, Illinois, 140–41 LifeEdited, 22, 138–39, 159 Lifestyle centers, 127–28, 132 Lind, Diana, 208 Lindsay, Greg, 166 “Little Boxes” (song), 39 Littledigs.com, 138 Live/work spaces, 122 Living alone, rise of, 146 Llewellyn Park, West Orange, New Jersey, 31 Location-efficient mortgages, 101–3, 206 LoDo, Denver, 168 Loneliness of suburbanites, 91–92, 125, 132–33 Long Beach, California, 63 Lopez, Russ, 45–46 Loudoun County, Virginia, 13, 68 Lower East Side, New York City, 29 Lowe’s, 45 Lucy, William, 160–61, 199–200, 210 McGirr, Lisa, 179 McIlwain, John, 209 McLinden, John, 7, 140, 141–42, 200–201 McLives, 139–140 McMahon, Bob, 133 McMansions, 69–71, 136, 205 Malls. See Shopping malls Mangiamele, Paul M., 182 Mansueto, Joe, 173 Marohn, Charles, 53–61 background information, 53–56 on codes and standards, 63 on housing boom/bust, 74 Ponzi scheme, suburban development as, 58–60, 77–78 Strong Towns/Curbside Chat, 56–58 on suburban prosperity myth, 65, 207 Marriage average age of, 146 decline in rate of, 145–46 Mass-produced communities, 37–38, 46, 70 Matthews, Anne, 184 May, William, 154 Media, Pennsylvania, 10–13, 133, 201–2 Meeks, Rachel, 108 Melman, Stephen, 138 MetroWest, Washington, DC, 128 Meyer, Deborah, 128, 145 Millennials birth years of, 19 cities, preference for, 19–20, 157–59 delayed adulthood of, 152–54 driver’s license decline among, 20 in “first ring” suburbs, 202–3 as Generation Rent, 158 home-related needs of, 157–59 impact on housing market, 155–59 living with parents, 152–55 Miller, Nicole, 154, 161 Minimalism, post-Recession mentality, 138–140 Model T, 32, 82 Morristown, New Jersey, 128–29, 203 Mortgages cheap, and housing boom (2000s), 66, 69, 71 deduction, negative aspects of, 74–76 foreclosures and housing bust, 73–74 historical view, 35, 40, 61 interest tax deduction, 35, 61, 74–75 location-efficient mortgages, 101–3, 206 Moses, Robert, 47 Multifamily construction, 6, 16, 18, 198 Multigenerational homes, 156–57 Mumford, Lewis, 27, 33, 46, 48 My Favorite, 144 Narberth, Pennsylvania, 134–35, 171 National Association of Home Builders (NAHB), 39 National Homeownership Day, 65 National Homeownership Strategy, 66 Neighborhood Market, 18, 172 Neighborhood satisfaction, 91 Nelson, Arthur C., 20, 60, 159, 204 Newgeography.com, 193 Newtown Station, Pennsylvania, 129 New Urbanism, 113–142.


pages: 225 words: 11,355

Financial Market Meltdown: Everything You Need to Know to Understand and Survive the Global Credit Crisis by Kevin Mellyn

Alan Greenspan, asset-backed security, bank run, banking crisis, Bernie Madoff, bond market vigilante , bonus culture, Bretton Woods, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, deal flow, disintermediation, diversification, fiat currency, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, George Santayana, global reserve currency, Greenspan put, Home mortgage interest deduction, inverted yield curve, Isaac Newton, joint-stock company, junk bonds, Kickstarter, liquidity trap, London Interbank Offered Rate, long peace, low interest rates, margin call, market clearing, mass immigration, Money creation, money market fund, moral hazard, mortgage tax deduction, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, paradox of thrift, pattern recognition, pension reform, pets.com, Phillips curve, plutocrats, Ponzi scheme, profit maximization, proprietary trading, pushing on a string, reserve currency, risk tolerance, risk-adjusted returns, road to serfdom, Ronald Reagan, shareholder value, Silicon Valley, South Sea Bubble, statistical model, Suez canal 1869, systems thinking, tail risk, The Great Moderation, the long tail, the new new thing, the payments system, too big to fail, value at risk, very high income, War on Poverty, We are all Keynesians now, Y2K, yield curve

If the average person needs $40,000 a year to live in retirement and will on average live twenty years, that means that they need $800,000 over that period. Obviously, you and I can’t save that kind of cash. There are only two ways to solve the problem. One is pay-as-you-go ‘‘unfunded’’ government pensions like Social Security. These are classic Ponzi schemes, sort of Bernie Madoff on a much vaster scale. Today’s payroll taxes are not invested; individuals have no accounts and don’t have any legal right to a pension. Instead, people working today are taxed to pay benefits to people who are retired or on disability. As long as people mostly died before becoming eligible or didn’t live long in retirement, this worked fine.

The banks misunderstood their real risks and had too much faith in financial rocket science, but even if we resent the enormous salaries and perks they gave themselves, there is scant evidence of illegality or even conscious recklessness related to the collapse. The poster child of the meltdown has become Bernie Madoff, just as Charles Ponzi is still remembered from the Roaring Twenties. Madoff ’s and other Ponzi schemes by money managers were discovered when the markets plunged, but his scheme was a classic investment scam that had run for decades under the noses of the regulators and had nothing to do with the bankers and instruments at the center of the meltdown. As Warren Buffett wrote, ‘‘It is only when the tide goes out that you see who has been swimming 175 176 FINANCIAL MARKET MELTDOWN naked.’’

We can’t anticipate exactly what the market will do tomorrow, but we can hedge our bets and act on our own risk tolerance. We Conclusion can make our own decisions like grown-ups and take responsibility for the ones that go wrong. If something sounds too good to be true, it probably is, and those who are not skeptical of the claims of financial professionals can end up at the wrong end of a Ponzi scheme or an exploding interest-only mortgage. However, nobody is compelled to do anything. Markets are about choice. Political risk is different, as our founding fathers, who knew a lot of real history, well understood. When the state seizes the ‘‘commanding heights’’ of the economy like the banking system and replaces the millions of choices people make in markets with its own superior wisdom, bad things almost always follow.


pages: 434 words: 77,974

Mastering Blockchain: Unlocking the Power of Cryptocurrencies and Smart Contracts by Lorne Lantz, Daniel Cawrey

air gap, altcoin, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, call centre, capital controls, cloud computing, corporate governance, creative destruction, cross-border payments, cryptocurrency, currency peg, disinformation, disintermediation, distributed ledger, Dogecoin, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, global reserve currency, information security, initial coin offering, Internet of things, Kubernetes, litecoin, low interest rates, Lyft, machine readable, margin call, MITM: man-in-the-middle, multilevel marketing, Network effects, offshore financial centre, OSI model, packet switching, peer-to-peer, Ponzi scheme, prediction markets, QR code, ransomware, regulatory arbitrage, rent-seeking, reserve currency, Robinhood: mobile stock trading app, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, smart contracts, software as a service, Steve Wozniak, tulip mania, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, web application, WebSocket, WikiLeaks

Homero Joshua Garza Operated GAW Miners, a cryptocurrency mining firm that sold more units than it possessed in inventory. In this way, the operation acted like a Ponzi scheme. GAW Miners also sold customers “virtual miners,” or “Hashlets,” for future mining profits, which to the SEC appeared like securities. In 2018, Garza was sentenced to 21 months in prison for wire fraud. Mark Scott Acted as an attorney for OneCoin, a Ponzi scheme that generated billions in revenue. Scott was responsible for laundering $400 million of revenue through tax havens. OneCoin was a multilevel marketing operation that has seen prosecutions globally over false claims of its private blockchain-based cryptocurrency.

This section lists a few examples of people or groups that have been penalized by US enforcement agencies: Trendon Shavers Created Bitcoin Savings & Trust, a scheme that took in over 764,000 BTC by promising investors a 7% return per week via arbitrage trading. Shavers was sentenced to one and a half years in prison and ordered to pay $1.23 million in restitution in 2015. This is widely known as the first Ponzi scheme conviction and first US criminal securities fraud case in cryptocurrency. Charlie Shrem Facilitated bitcoin transactions as an unlicensed money transmitting business. Using his company BitInstant, Shrem helped a broker provide bitcoin without KYC/AML to users of Silk Road. Over $1 million in bitcoin transactions were conducted.

Gox-Bitfinex multisignature wallet contracts, Multisignature Contracts-Multisignature Contracts N Namecoin, Altcoins naming services, Naming Services network hash rate, Block discovery networkscentralized versus decentralized versus distributed design, Distributed Versus Centralized Versus Decentralized Corda, The Corda networknodes having visibility into transactions, Corda ledger DAG design, DAGs Libra's centralization challenge, Novi transactions confirmed by network on Bitcoin, Transaction life cycle New York Department of Financial Services (NYDFS), FinCEN Guidance and the Beginning of Regulation NiceHash, NiceHash Nightfall blockchain, Nightfall nodes, Distributed Versus Centralized Versus Decentralizedin Avalance consensus mechanism, Avalanche Libra, validator and full nodes, How the Libra Protocol Works Lightning, Lightning nodes and wallets in proof-of-stake networks, Proof-of-Stake nonces, The mining processin block discovery on Bitcoin, The mining process running out of nonce space or overflow, The mining process in Satoshi Nakamoto's whitepaper, The Whitepaper noncustodial wallets, Wallet Types: Custodial Versus Noncustodial(see also wallets) nonfungible tokens, Fungible and Nonfungible TokensERC-721 standard for, ERC-721 Nothing-at-Stake problem, Proof-of-Stake Novi wallet, Novi NuBits, NuBits NXT blockchain, NXT O oligarchical model dominating the web, Web 3.0 Omni Core, Understanding Omni Layerlimitations of, Deploying and Executing Smart Contracts in Ethereum Omni Layer, Understanding Omni Layer-Adding custom logicadding custom logical operations to Bitcoin, Adding custom logic-Adding custom logic how it works, How Omni Layer works limitations of, Deploying and Executing Smart Contracts in Ethereum technical stack, overview of, Understanding Omni Layer Tether project built on, Tether opcodes, Gas and Pricing Open Systems Interconnection (OSI) model, The More Things Change operating system platform (EOS), Blockchains to Watch operators, ERC-777, ERC-1155 Optimistic Rollups, Other Altchain Solutions, Lightning nodes and wallets options, Derivatives OP_RETURN field, Adding custom logictranslation of metadata in, Adding custom logic Oracle, Blockchain Platform, Blockchain as a Service oracles, Important Definitionsmanipulation in Fulcrum attack, The Fulcrum Exploit order books, Order Booksthin, slippages and, Slippage over-the-counter (OTC) market, Slippage P paper wallets, Wallet Type Variations Parity, Parity Parity hack (2017), Parity participants, Participants passwordssecurity vulnerabilities, Zero-Knowledge Proof Thinbus Secure Remote Password protocol, Zero-Knowledge Proof pay-to-play, Tools for fundamental analysis payment channels, Lightningnode dropping or losing connection to, Lightning nodes and wallets opening by sending funding transaction, Funding transactions withdrawing funds from, Off-chain transactions payment systemsLibra, Borrowing from Existing Blockchains permissioned ledger uses of blockchain, Payments physical cash versus digital, Electronic Systems and Trust Permacoin, Alternative methods permissioned ledger uses of blockchain, Permissioned Ledger Uses-Paymentsbanking, Banking central bank digital currencies, Central Bank Digital Currencies gaming, Gaming health care, Health Care Internet of Things, Internet of Things IT systems, IT payments systems, Payments permissioned ledgers, Databases and Ledgers permissionless ledgers, Databases and Ledgers person-to-person trading of cryptocurrency, Evolution of the Price of Bitcoin phishing attacks, Security Fundamentals Plasma implementation of sidechains, Other Altchain Solutions Ponzi schemes in cryptocurrency, Skirting the Laws PotCoin, More Altcoin Experiments precompilation of zk-SNARKs, zk-SNARKs preminingissues with, Litecoin premined altcoin, Ixcoin, Altcoins prices (gas), Gas and Pricing Primecoin, Altcoins privacyand censorship resistance with dapps, Use Cases Ethereum-based privacy implementations, Ethereum-Based Privacy Implementations future developments in blockchains, Privacy information security in decentralizing finance and the web, Privacy-Ring Signaturesring signatures, Ring Signatures Zcash, Zcash zero-knowledge proof, Zero-Knowledge Proof zk-SNARKs, zk-SNARKs insufficient anonymity on Bitcoin, The Evolution of Crypto Laundering paired with scalability, Mimblewimble blockchain protocol, Mimblewimble, Beam, and Grin privacy-focused blockchains, PrivacyMonero, Blockchains to Watch-How Monero Works Zcash, Zcash privacy-focused cryptocurrencies, Privacy-Focused CryptocurrenciesDash, Dash Monero, Monero Zcash, Zcash private blockchain networks, Privacy private blockchains, The Enterprise Ethereum Alliance private keys, Public/private key cryptography(see also public/private key cryptography) products/services, buying or selling, Evolution of the Price of Bitcoin proof-of-history, Alternative methods proof-of-stake, Proof-of-Stake-Proof-of-StakeByzantine fault-tolerant algorithm, HotStuff, Borrowing from Existing Blockchains Casper algorithm in Ethereum 2.0, Ethereum Scaling proof-of-stake velocity, More Altcoin Experiments proof-of-storage, Alternative methods proof-of-work, Block Generation, Proof-of-Work-Confirmationsbit gold's client puzzle function type, Bit Gold block discovery, Block discovery confirmations by miners of blocks to include in blockchain, Confirmations criticisms of, Proof-of-Stake, Ripple and Stellar CryptoNote protocol, Monero Ethereum's Ethash protocol, Ethereum: Taking Mastercoin to the Next Level longest chain rule, The mining process mining process for block discovery on Bitcoin, The mining process mining process on Bitcoin, The mining process in Satoshi Nakamoto's whitepaper, The Whitepaper transaction life cycle, Transaction life cycle use by B-Money, B-Money use by Hashcash, Hashcash X11 ASIC-resistant, Dash protocols, Electronic Systems and Trust pseudonimity, KYC rules and, KYC and pseudonymity public keys, Public/private key cryptography(see also public/private key cryptography) public/private key cryptographyBitcoin's use of, Public/private key cryptography examples of public and private keys, Naming Services generating keys, Generating keys private key storage for digital wallets, Authoring a smart contract private keys for wallets, Private Keys public and private keys in cryptocurrency systems, Public and Private Keys in Cryptocurrency Systems-Public and Private Keys in Cryptocurrency Systems unauthorized access to private key, Bitcoin Transaction Security use in controlling access to personal information, Identity and the Dangers of Hacking pull transactions, Bitcoin Transaction Security, ERC-777 push transactions, Bitcoin Transaction Security, ERC-777 Q Quantum Ledger Database (QLDB), Blockchain as a Service Quorum blockchain, Quorum, JPMorgan R ransomware, CryptoLocker and, CryptoLocker and Ransomware rate limiting, Exchange Risk, Rate Limiting real estate transactions, using tokens on a blockchain, Tokens on the Ethereum Platform recovery seed, Recovery Seed recursive call vulnerability, Forking Ethereum and the creation of Ethereum Classic regulationof cryptocurrency exchanges, Jurisdiction FATF and the Travel Rule, The FATF and the Travel Rule FinCEN guidance and beginnings of, FinCEN Guidance and the Beginning of Regulation-FinCEN Guidance and the Beginning of Regulation regulatory challenges in cryptocurrency market, Regulatory Challenges-Basic Mistakes regulatory issues with ICOs, Tokenize Everything regulatory arbitrage, Avoiding Scrutiny: Regulatory Arbitrage-Crypto-Based StablecoinsICOs as example of, Initial Coin Offerings relational databases, Databases and Ledgers replay attacks, Replay attacksprotecting against, on Ethereum and Ethereum Classic, The Ethereum Classic Fork replication systems, Databases and Ledgers REST APIsEthereum network, Interacting with Code WebSocket versus, REST Versus WebSocket ring confidential transactions, Blockchains to Watch, How Monero Works ring signatures, Monero, Ring Signatures, Blockchains to Watchhiding public address of sender on Monero, How Monero Works Ripple, Other Concepts for Consensus, Rippleblock times, Float Configuration 2 Robinhood mobile app, Brokerages Rollups, Zero Knowledge (ZK) and Optimistic, Other Altchain Solutions, Lightning nodes and wallets Royal Mint, The Royal Mint S Santander, blockchain-issued bonds, Banking SAP, Blockchain as a Service, Blockchain as a Service satoshi, Gas and Pricing Satoshi Nakamotobitcoin address related to, The Evolution of Crypto Laundering efforts to establish identity of, Storing Data in a Chain of Blocks identity, guesses at, Bahamas Satoshi's Vision group (Bitcoin SV), The Bitcoin Cash Fork whitepaper, The Whitepaper savings services (DeFi), Savings scalabilitycentralized versus decentralized exchanges, Scalability discontent over Bitcoin network's scaling, The Bitcoin Cash Fork EOS solution to blockchain issues, Tokenize Everything privacy paired with, Mimblewimble blockchain potocol, Mimblewimble, Beam, and Grin Scalable Transparent ARguments of Knowledge (STARKs), STARKs scaling blockchains, Scaling Blockchains-Other Altchain Solutions, The Scaling Problem-Ethereum ScalingAvalanche consensus mechanism, Avalanche DAG network design, DAGs Ethereum, Ethereum Scaling-Ethereum Scaling Lightning solution, Lightning, Lightning-Lightning nodes and wallets Liquid multisignature wallet, Liquid other altchain solutions, Other Altchain Solutions SegWit, SegWit sharding, Sharding sidechains, Sidechains STARKs, STARKs Schnorr algorithm, Privacy Scott, Mark, Skirting the Laws SCP consensus protocol, Stellar scripted money, Improving Bitcoin’s Limited Functionality Scrypt mining, Altcoins, Litecoin Secret Network, Privacy securitiestokens proposed in ICOs, Different Token Types unregistered securities offerings, Skirting the Laws Securities and Exchange Commission (SEC), FinCEN Guidance and the Beginning of Regulation securityBitcoin transaction security, Bitcoin Transaction Security custody infrastructure for exchanges, Counterparty Risk detection of blockchain tampering with Merkle roots, The Merkle Root early vulnerability on Bitcoin, An Early Vulnerability exchanges taking care of private keys, Counterparty Risk flash loans exploiting vulnerabilities in DeFi platforms, The Fulcrum Exploit fundamentals for cryptocurrencies, Security Fundamentals-Recovery Seed identity and dangers of hacking, Identity and the Dangers of Hacking information security in decentralizing finance and the web, Privacy Lightning Network vulnerabilities, Lightning proof-of-stake consensus algorithm, criticisms of, Proof-of-Stake recursive call vulnerability, Forking Ethereum and the creation of Ethereum Classic replay attacks vulnerability, Replay attacks, The Ethereum Classic Fork sharding, vulnerabilities with, Other Altchain Solutions theft of cryptocurrencies in exchange hacks, Exchange Hacks-NiceHash theft of cryptocurrencies in other hacks, Other Hacks-Summary transaction malleability vulnerability, Lightning nodes and wallets security token offerings (STOs), Different Token Types security tokens, Token Economics seeds (recovery), Recovery Seedstorage of, Authoring a smart contract SegWit (Segregated Witness), SegWit, Lightning nodes and wallets self-sovereign identity, Identity and the Dangers of Hacking SHA-256 hash algorithm, Introducing the Timestamp Server, Hashes SHA256 and RIPEMD160 functions, Generating keys shadow market for disinformation, Tools for fundamental analysis sharding, Other Altchain Solutions, Shardingin Ethereum 2.0, Ethereum Scaling Shavers, Trendon, Skirting the Laws Shrem, Charlie, Skirting the Laws sidechains, Other Altchain Solutions, SidechainsLiquid technology and, Liquid Optimistic Rollups and, Lightning nodes and wallets Silk Road, Catch Me If You Cancriminal investigation tracking bitcoin address to operator, The Evolution of Crypto Laundering provision of bitcoin to users without KYC/AML, Skirting the Laws SIM swapping, SIM Swapping-SIM Swapping Singapore, regulatory arbitrage, Singapore single-shard takeover attacks, Other Altchain Solutions slashing algorithms, Proof-of-Stake slippage, Slippage smart contracts, Mastercoin and Smart ContractsDAML language for distributed applications, DAML for decentralized exchanges, Decentralized Exchange Contracts, Custody and counterparty risk deploying and executing in Ethereum, Deploying and Executing Smart Contracts in Ethereum-Interacting with Codeauthoring a smart contract, Authoring a smart contract deployment, Deploying a smart contract-Deploying a smart contract Ethereum Virtual Machine (EVM), The Ethereum Virtual Machine executing a smart contract, Executing a smart contract gas and pricing, Gas and Pricing interacting with a smart contract, Interacting with a smart contract programmatically interacting with Ethereum, Interacting with Code reading a smart contract, Reading a smart contract writing a smart contract, Writing a smart contract deployment for dapps, Challenges in Developing Dapps EOS platform, Blockchains to Watch ERC-20 compliantevents supported by, ERC-20 example of, ERC-20-ERC-20 methods implemented, ERC-20 ERC-compliant, library of, Decentralized Exchange Contracts flash loanscreating the contract, Creating a Flash Loan Contract-Deploying the Contract deploying the contract, Deploying the Contract manipulation of oracles in Fulcrum attack, The Fulcrum Exploit steps in process, Flash Loans Libra support for, Borrowing from Existing Blockchains Omni Layer providing, Understanding Omni Layer publicly viewable record of method call to Uniswap smart contract, Custody and counterparty risk-Exchange rate sending tokens to via push and pull transactions, ERC-777 third-party auditors of, Fungible and Nonfungible Tokens Uniswap contract viewable on Ethereum, Infrastructure social media, campaigns to influence cryptocurrencies, Tools for fundamental analysis soft forks, Understanding Forks software development, changes from use of cryptcurrency and blockchain, Web 3.0 software forks, Understanding Forks software wallets, Wallets Solidcoin, Altcoins Solidity language, Authoring a smart contract South Korean exchanges, Regulatory Challenges speculation in cryptocurrency, Market Infrastructure, Tulip Mania or the internet?


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, Alan Greenspan, altcoin, Apple Newton, bank run, banking crisis, bitcoin, Bitcoin Ponzi scheme, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, Cody Wilson, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, decentralized internet, disinformation, disintermediation, Dogecoin, driverless car, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, Firefox, Flash crash, Ford Model T, Fractional reserve banking, Glass-Steagall Act, hacker house, Hacker News, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, off-the-grid, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, printed gun, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, Vitalik Buterin, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

A month later, the Securities and Exchange Commission filed charges against Trendon Shavers, a Texan accused of running a bitcoin Ponzi scheme under the moniker pirateat40. That the Feds were now taking bitcoin seriously was an alarming yet exhilarating proposition for bitcoiners, who were divided between those who wanted its lawlessness to continue and those who believed its growth depended on the legitimacy of regulation and enforcement against criminality. While the news of drug busts and Ponzi schemes bred some mainstream suspicion about this unfamiliar, anonymous currency, it also spurred curiosity among some who hadn’t yet cottoned on to bitcoin’s possibilities.

You read the paper every day, and enough stories have appeared to convince you that bitcoin is real, that some entrepreneurs, including the Winklevoss twins of Facebook fame, expect to make a lot of money from it. But the details don’t add up. You get it by doing math problems? No? By having your computer do math problems? How can that possibly work? At this stage, phrases like Ponzi scheme and tulip mania enter your mind. Stage Three: Curiosity. You’ve kept reading. It becomes clear that many people, even some seemingly sensible people such as Internet pioneer Marc Andreessen, people with a track record for being right about this stuff, are genuinely excited by it. But why all the fuss?

Kenna had to return all the money his customers had entrusted to Tradehill and shut down the exchange. The only other option was to “turn into a fractional-reserve bank,” he said jokingly, referring to the bank model that allows banks to lend out deposits while holding only a fraction of those funds in reserve. “They call it a Ponzi scheme unless you have a banking license.” He’d sunk everything he had into Tradehill. Now, he was broke, so broke that he couldn’t afford rent. He figured the only way he could find shelter was to turn some place into a communal living space. If he could organize it, he figured, he could finagle the rent.


End the Fed by Ron Paul

affirmative action, Alan Greenspan, Bear Stearns, Bernie Madoff, Bernie Sanders, Bretton Woods, business cycle, crony capitalism, currency manipulation / currency intervention, fiat currency, Fractional reserve banking, guns versus butter model, hiring and firing, housing crisis, illegal immigration, invisible hand, Khyber Pass, Long Term Capital Management, low interest rates, market bubble, means of production, military-industrial complex, Money creation, moral hazard, Ponzi scheme, price mechanism, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, Savings and loan crisis, too big to fail, tulip mania, We are all Keynesians now, Y2K

Regulations must someday be directed toward the more deserving targets, such as the Fed, Treasury, FDIC, SEC, and the Exchange Stabilization Fund. The entire system of fiat money and fractional-reserve banking is like a super Ponzi scheme (if we can’t pay it back, let’s just create more!) and is the source of our problems. Why should we be surprised that, if our government runs a Ponzi scheme, some people feel morally justified doing the same? When did we accept this idea that governments have license to do what they want without moral restraints, and the people must live by a different standard? The answer, of course, is that government must follow the same rules that moral people are expected to.

Congress accommodated and quickly passed the Sarbanes-Oxley legislation. Just as the SEC regulations of the 1930s aggravated and helped to prolong the Depression, the bear market starting in the year 2000 has been aggravated and prolonged by Sarbanes-Oxley. The argument following the Madoff revelation of a $50 billion Ponzi scheme prompted outcries about the deficiencies of the SEC and that we needed even more SEC regulators on the job. We have 3,500 bureaucrats in the SEC, and the argument is that we don’t have enough. Of course that’s enough, although the truth is that 20,000 SEC regulators wouldn’t suffice because they can’t police every business transaction and prevent fraud from being committed.


Trend Commandments: Trading for Exceptional Returns by Michael W. Covel

Alan Greenspan, Albert Einstein, Alvin Toffler, behavioural economics, Bernie Madoff, Black Swan, business cycle, buy and hold, commodity trading advisor, correlation coefficient, delayed gratification, disinformation, diversified portfolio, en.wikipedia.org, Eugene Fama: efficient market hypothesis, family office, full employment, global macro, Jim Simons, Lao Tzu, Long Term Capital Management, managed futures, market bubble, market microstructure, Market Wizards by Jack D. Schwager, Mikhail Gorbachev, moral hazard, Myron Scholes, Nick Leeson, oil shock, Ponzi scheme, prediction markets, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Sharpe ratio, systematic trading, the scientific method, three-martini lunch, transaction costs, tulip mania, upwardly mobile, Y2K, zero-sum game

His big question made me think: Ignition 7 “Taking a stand always stands out. Who do you want to take a shot at?”4 A valid question. My answer: Wall Street, the government, and media for starters. Let go of them. That is a breath of fresh air in an era of constant depression and recession talk, nonstop predictions, clueless economists, and Federal Reserve Ponzi schemes. Trend Commandments is for those who know deep down that there is a real way to make money in the markets, but just do not know how yet. However, you will be surprised that the secret is hiding in plain sight. There was a great story on author Seth Godin’s web site. He had a college professor who worked as an engineering consultant.

If you are able to apply such an unsound principle, you can keep on averaging down by buying 200 at 44, then 400 at 41, 800 at 38, 1600 at 35, 3200 at 32, 6400 at 29, and so on.1 “Don’t frown, double down!” Not smart strategy. Losses are a part of the game. You want no losses? You want positive returns every month? It does not work that way, that is, not unless you were lucky enough to be invested in the Bernard Madoff Ponzi-scheme—which has resulted in assorted criminal convictions and a few suicides. Losses are not your problem. It’s how you react to them. Ignore losses with no plan, or try to double down on your losses to recoup, and those losses will come back like a Mack truck to run over your account. You can’t win if you are not willing to lose.

In 2010, Brian Sack, a senior official at the New York Fed, admitted the need to keep stock markets artificially high: “Nevertheless, balance sheet policy can still lower longer-term borrowing costs for many households and businesses, If you close your and it adds to household wealth by keeping asset eyes, the monster prices higher than they otherwise would be.” will not go away. The Fed has essentially admitted to operating 2 a Ponzi scheme. Am I saying to not trade? No. A government-manipulated market is still a market. You lose money and you jump out the window, too bad. It’s your problem. Government should realize at the end of the day it’s investors who bear responsibility for their investments.3 With all of the extracurricular policy-making of the government aimed at rigging the markets to some unknown right level, trend following is the only sanity available.


pages: 353 words: 91,520

Most Likely to Succeed: Preparing Our Kids for the Innovation Era by Tony Wagner, Ted Dintersmith

affirmative action, Airbnb, Albert Einstein, Bernie Sanders, Clayton Christensen, creative destruction, David Brooks, driverless car, en.wikipedia.org, Frederick Winslow Taylor, future of work, immigration reform, income inequality, index card, Jeff Bezos, jimmy wales, Joi Ito, Khan Academy, Kickstarter, knowledge economy, knowledge worker, language acquisition, low skilled workers, Lyft, Mark Zuckerberg, means of production, new economy, One Laptop per Child (OLPC), pattern recognition, Paul Graham, Peter Thiel, Ponzi scheme, pre–internet, school choice, Silicon Valley, Skype, Steven Pinker, TaskRabbit, TED Talk, the scientific method, two and twenty, uber lyft, unpaid internship, Y Combinator

“The battle over climate science.” Popular Science, June 21, 2012. http://www.popsci.com/science/article/2012-06/battle-over-climate-change (accessed December 30, 2014). 22 Jacobson, Louis. “Rick Perry says Social Security is a Ponzi scheme.” PolitiFact.com, September 12, 2011. http://www.politifact.com/truth-o-meter/statements/2011/sep/12/rick-perry/rick-perry-says-social-security-ponzi-scheme/ (accessed December 30, 2014). 23 Baker, Dean, and David Rosnick. “Basic facts on social security and proposed benefit cuts/privatization.” Center for Economic and Policy Research, March 2005. 24 Krugman, Paul. “Inventing a crisis.”

Case Study: Future Financial Obligations At the federal, state, local, and private-sector levels, our society has large pools of collective funds in complex vehicles such as state and local pension funds, federal entities (Social Security, Medicare, and our national debt), or corporate pension funds. The aggregate amount of capital in such pools across our country approaches some $50 trillion. A vitriolic controversy rages in our country about the fiscal sustainability of these funds. We have prominent political figures calling them “Ponzi schemes”22 and other political influencers calling them the financial equivalent of the Rock of Gibraltar.23 Analyzing the financial footing of any of these large pools of money, including realistic estimates of future in-flows and out-flows, is a numbers-driven exercise. Determining under what circumstances a given pool will remain financially solvent shouldn’t be determined by political party affiliation.

Determining under what circumstances a given pool will remain financially solvent shouldn’t be determined by political party affiliation. Yet, as our parties have become more polarized, we see a sharp partisan divide on the issue of financial reality.24 Democrats Give Far Less Priority to Reducing the Budget Deficit While we wouldn’t use the ethically charged term “Ponzi scheme” to describe the financial underpinnings of these pools, it is quite clear that many of these vehicles are ticking financial time bombs. Despite overwhelming evidence that our future generation is being handed a huge financial mess, our civil society is stuck in the mud in making progress on reform.


pages: 369 words: 94,588

The Enigma of Capital: And the Crises of Capitalism by David Harvey

accounting loophole / creative accounting, Alan Greenspan, anti-communist, Asian financial crisis, bank run, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, cotton gin, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, equal pay for equal work, European colonialism, failed state, financial innovation, Frank Gehry, full employment, gentrification, Glass-Steagall Act, global reserve currency, Google Earth, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, guns versus butter model, Herbert Marcuse, illegal immigration, indoor plumbing, interest rate swap, invention of the steam engine, Jane Jacobs, joint-stock company, Joseph Schumpeter, Just-in-time delivery, land reform, liquidity trap, Long Term Capital Management, market bubble, means of production, megacity, microcredit, military-industrial complex, Money creation, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Northern Rock, oil shale / tar sands, peak oil, Pearl River Delta, place-making, Ponzi scheme, precariat, reserve currency, Ronald Reagan, Savings and loan crisis, sharing economy, Shenzhen special economic zone , Silicon Valley, special drawing rights, special economic zone, statistical arbitrage, structural adjustment programs, subprime mortgage crisis, technological determinism, the built environment, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, Timothy McVeigh, too big to fail, trickle-down economics, urban renewal, urban sprawl, vertical integration, white flight, women in the workforce

Releasing money back into circulation to get more social power takes either an act of faith, or requires safe and trustworthy institutions where you can put your personal money at someone else’s disposal to pursue profit-making adventures (which is, of course, what banks traditionally do). Trust in the system becomes crucial. Ponzi schemes of whatever sort undermine that trust. Loss of confidence in the symbols of money (the power of the state to guarantee monetary stability) or in the quality of money (inflation) butts up against the possibility of monetary famine and the freezing up of the means of payment of the sort that occurred in autumn in 2008.

All manner of predatory practices as well as legal (usurious interest rates on credit cards, foreclosures on businesses by the denial of liquidity at key moments, and the like) can be used to pursue tactics of dispossession that advantage the already rich and powerful. The wave of financialisation that occurred after the mid-1970s has been spectacular for its predatory style. Stock promotions and market manipulations; Ponzi schemes and corporate fraud; asset stripping through mergers and acquisitions; the promotion of levels of debt incumbency that reduce whole populations, even in the advanced capitalist countries, to debt peonage; dispossession of assets (the raiding of pension funds and their decimation by stock and corporate collapses) – all these features are central to what contemporary capitalism is about.

Finally we need to note the role of crises. A crisis, after all, is nothing less than a massive phase of dispossession of assets (cultural as well as tangible). To be sure, the rich as well as the poor suffer, as the cases of housing foreclosures and losses from investing with Bernie Madoff’s crazy Ponzi scheme show. But this is how wealth and power get redistributed both within and between classes. Devalued capital assets left over from bankruptcies and collapses can be bought up at fire-sale prices by those blessed with liquidity and profitably recycled back into circulation. Surplus capital thus finds a new and fertile terrain for renewed accumulation.


pages: 318 words: 87,570

Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio by Sal Arnuk, Joseph Saluzzi

algorithmic trading, automated trading system, Bernie Madoff, buttonwood tree, buy and hold, commoditize, computerized trading, corporate governance, cuban missile crisis, financial engineering, financial innovation, Flash crash, Gordon Gekko, High speed trading, latency arbitrage, locking in a profit, machine readable, Mark Zuckerberg, market fragmentation, National best bid and offer, payment for order flow, Ponzi scheme, price discovery process, price mechanism, price stability, proprietary trading, Sergey Aleynikov, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, stocks for the long run, stocks for the long term, transaction costs, two-sided market, uptick rule, zero-sum game

Insider trading cases, including the recent, high-profile prosecution of Raj Rajaratnam from Galleon Group, certainly protect us from those gaining unfair advantages at the expense of long-term investors. However, the Rajaratnam case—the largest insider trading scandal in our nation’s history—centers around only $53 million in ill-gained profits. Compare that to the SEC’s failure to stop the $68 billion Bernie Madoff Ponzi scheme, despite being tipped multiple times. Although we praise the SEC for going after Rajaratnam, we can’t help but be disappointed in the agency’s seeming lack of action around HFT and the conflicts of interests in our market structure. HFT firms generate between $8 billion and $21 billion a year in profits.

The audience before her was filled with friends and acquaintances, people she had known for years during her decades-long career as a government and private sector regulator, and she was happy to be in front of what was certainly a friendly group. She needed friends. Appointed chairman of the SEC just over a year earlier, Schapiro was trying to reform a government agency reeling from one spectacular failure after another, especially the Madoff and Stanford Ponzi schemes and the SEC’s own role in the 2008 financial crisis. Madoff was an exceptionally deep wound. The SEC’s Inspector General had recently issued a scathing report on the agency’s failure to detect the scam. The report showed that despite many tips and warnings, some of them very detailed, and despite sending several teams of SEC examiners to Madoff’s offices over the years to look for fraud, Madoff swindled clients for 20 years under the SEC’s nose.

In April he wrote, “What retail investors fail to acknowledge is that the quants [HFT firms] close out a majority of their ultra-short term positions at the end of each trading day, meaning that the vanilla money is stuck as a hot potato bag holder to what can only be classified as an unprecedented Ponzi scheme.”10 In July, after a former Goldman Sachs programmer was arrested on charges he stole Goldman’s proprietary trading software, Tyler Durden wrote almost daily about the dominance and risks of hyperactive computer-driven trading strategies, drawing more attention to the practice than ever before.


pages: 482 words: 121,672

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Eleventh Edition) by Burton G. Malkiel

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, beat the dealer, Bernie Madoff, bitcoin, book value, butter production in bangladesh, buttonwood tree, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Detroit bankruptcy, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, equity risk premium, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial engineering, financial innovation, financial repression, fixed income, framing effect, George Santayana, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Japanese asset price bubble, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, margin call, market bubble, Mary Meeker, money market fund, mortgage tax deduction, new economy, Own Your Own Home, PalmPilot, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Salesforce, short selling, Silicon Valley, South Sea Bubble, stock buybacks, stocks for the long run, sugar pill, survivorship bias, Teledyne, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond, zero-sum game

ZZZZ Best was accused of acting as a front for organized-crime figures who would buy equipment for the company with “dirty” money and replace their investment with “clean” cash skimmed from the proceeds of ZZZZ Best’s legitimate carpet-cleaning business. The spectacular growth of the company was produced with fictitious contracts, phony credit card charges, and the like. The operation was a giant Ponzi scheme in which money was recycled from one set of investors to pay off another. Minkow was also charged with skimming millions from the company treasury for his own personal use. Minkow and all the investors in ZZZZ Best were in wall-to-wall trouble. The next chapter of the story (after Chapter Eleven) occurred in 1989 when Minkow, then twenty-three, was convicted of fifty-seven counts of fraud, sentenced to twenty-five years in prison, and required to make restitution of $26 million he was accused of stealing from the company.

The updraft encourages more people to buy the stocks, which causes more TV and print coverage, which causes even more people to buy, which creates big profits for early Internet stockholders. The successful investors tell you at cocktail parties how easy it is to get rich, which causes the stocks to rise further, which pulls in larger and larger groups of investors. But the whole mechanism is a kind of Ponzi scheme where more and more credulous investors must be found to buy the stock from the earlier investors. Eventually, one runs out of greater fools. Even highly respected Wall Street firms joined in the hot-air float. The venerable investment firm Goldman Sachs argued in mid-2000 that the cash burned by the dot-com companies was primarily an “investor sentiment” issue and not a “long-term risk” for the sector or “space,” as it was often called.

And as Robert Shiller, author of the best-selling Irrational Exuberance, has noted, the process feeds on itself in a “positive feedback loop.” The initial price rise encourages more people to buy, which in turn produces greater profits and induces a larger and larger group of participants. The phenomenon is another example of the Ponzi scheme that I described in chapter 4, in connection with the Internet bubble. Eventually one runs out of greater fools. Such herding is not limited to unsophisticated individual investors. Mutual-fund managers have a tendency to follow the same strategies and herd into the same stocks. Indeed, a study by Harrison Hong, Jeffrey Kubik, and Jeremy Stein, three leaders in the field of behavioral finance, determined that mutual-fund managers were more likely to hold similar stocks if other managers in the same city were holding similar portfolios.


pages: 225 words: 61,388

Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa by Dambisa Moyo

affirmative action, Asian financial crisis, belling the cat, Bob Geldof, Bretton Woods, business cycle, buy and hold, colonial rule, correlation does not imply causation, credit crunch, diversification, diversified portfolio, en.wikipedia.org, European colonialism, failed state, financial engineering, financial innovation, financial intermediation, Hernando de Soto, income inequality, information asymmetry, invisible hand, Live Aid, low interest rates, M-Pesa, market fundamentalism, Mexican peso crisis / tequila crisis, microcredit, moral hazard, Multics, Ponzi scheme, rent-seeking, risk free rate, Ronald Reagan, seminal paper, sovereign wealth fund, The Chicago School, trade liberalization, transaction costs, trickle-down economics, Washington Consensus, Yom Kippur War

But micro-finance is not without its naysayers. This type of lending to the poor is criticized as loan-sharking (charging punitive and exorbitant rates), as fuelling Ponzi schemes (borrowing from one lender to pay off another) and as simply supporting reckless consumption. However, with ever-increasing numbers of micro-lenders, and growing participation in this type of lending, the interest rates charged inevitably become lower and, in this sense, more competitive. As to the Ponzi scheme criticism, the objection merely points to the need for more information concerning borrowers – who’s good and who’s bad (which, by the way, is exactly the information asymmetry that the Grameen model mitigates).

D. 46 Heavily Indebted Poorest Country debt relief programme (HIPC) 53 HIV–AIDS pandemic 4–5, 7, 71–2 Hu Jintao 104, 108 Human Development Report (1994) 52 Hungary 85–6 IMF (International Monetary Fund) aid warning 47 appointment of Irwin Blumenthal 53 debt crisis 18–19 and foreign capital 63 inception 11–13 and Malawi 55–6 and ‘nit-picking’ 108–9 Structural Adjustment Facilities 21 In Search of Prosperity (Rodrik) 34 India 112, 117, 123, 132, 134, 137–8 India–Africa Forum 112, 123 Indonesia 34, 56 Industrial and Commercial Bank (China) 106 inflation 61–5 innovation 139–40 International Bank for Reconstruction and Development see World Bank International Development Association (IDA) 37–8 International Development and Food Assistance Act (US 1975) 16 International Peace Research Institute (Stockholm) 59 International Remittance Network 136 International Trade Organization 11 investment bonds 77–83, 87–96 borrowing costs 84–5 credit ratings 78, 83, 87–8 emerging markets 79–81, 85 portfolio diversification 80–82 Ireland 37, 125 Israel 134 Italy 125 Ivory Coast 109–10 Jamaica 136 Japan 99, 102–3, 112, 125 Johannesburg Stock Exchange 4 John Paul II, Pope 26 joint liability 129 Jubilee Debt Campaign 26 Kagame, President Paul 27–8, 148–9 Kanbur, Ravi 54 Kariba dam 15 Kenya and EBA 118 and exports 62 favourable view of China 109 fragile democracy 72 HIV prevalence rates 3 and long-term debt 87–8 money transfer systems 136 population 124 and rampant corruption 48 stake in the economy 152 trade-oriented commodity-driven economy 146 turbulent elections 2008 33 Keynes, John Maynard 11 Kibaki, Mwai 33 Kiva 130 Kurtzman, Joel 51 Lambsdorff, Graf 51 Landes, David 33–4, 147 least-developed countries (LDC) 123 Lensink, R. 136 Lesotho 118 life expectancy 5 Lin Yifu, Justin 153 Live Aid 26 Lumumba, Patrice 14 Lundin, Lukas 98 M-Pesa (money transfer system) 136 Mahajan, Vijay 132 McLiesh, Caralee 101 McNamara, Robert 16, 17 maize scandal (Malawi) 56 Malawi 55–6, 106, 117, 145 Mali 71–2, 94, 109–10, 116 Maren, Michael 60 Markit (data/index firm) 91 Marshall, George C. 12 Marshall Plan 12–13, 35–8 Mauritania 120 Mauritius 34, 89 Maystadt, Philippe 107 Mengistu Haile Mariam 14, 23 Mexico 18, 82, 84, 117, 132, 144, 151 micro-finance 126–32, 140 middle class 57–8 Millennium Challenge Corporation aid campaign (US) 40, 56 Millennium Development Goals (MDG) 45, 96–7 Mkapa, President Benjamin 26 Mobutu Sese Seko, President 14, 22–3, 48, 53, 108 Monterrey Consensus 2002 74 Moody’s Investors Service 83 morality 150 ‘More Aid for the Poorest’ (UK white paper) 16 mosquito net producer (example) 44–5, 114, 122, 130–31 Mozambique 117, 134 Mugabe, Grace 146 Mugabe, Robert 108, 146–7 Mwanawasa, President Levy 53 Mystery of Capital, The (de Soto) 137–8 Na’m, Moisés 107 Namibia 89, 93 ‘negative corruption’ 57; see also corruption Netherlands 63 New York City 151; see also United States New Zealand 121 Nicaragua 151 Nigeria and AGOA duty-free benefits 118 aid from World Bank 107–8 assets looted 48 banking sector 4 beneficiary of FDI 105 and the bond index 92 and corruption 23 cotton revenues 116 favourable view of China 109 humanitarian catastrophe 26 independence 71 and long-term credit ratings 88 Maiduguri money find 137 many tribes 32 natural-gas reserves development 112 rebuilding colonial-era railway 106 remittances 133 ‘No Donor Money, No Loans’ policy 128 North, Douglass 41 Norway 73 ODA (official aid) 25 Odinga, Raila 33 oil 17–18, 48–9, 82, 105–6, 108–9, 120 oil crisis 1979 17–18 Olson, Mancur 41 Olympics 2008 108 Organization of Economic Cooperation and Development (OECD) 115 Oxfam 117 Pakistan 34, 124 Pan-African Infrastructure Development Fund (PAIDF) 95 Paris Club of creditors 108 PEPFAR (AIDS Relief) 7 Peru 151 Peters Projection Map 121 Pew Report 2007 109 Philippines, the 135 PIMCO (bond investment organization) 91 Poland 8–6 Ponzi schemes 130 ‘positive’ corruption 56, 59; see also corruption Private Equity investments 4–5 programme aid 21 Protestantism 31 Przeworski, Adam 43 Raiffeisen, Friedrich 131 Rajan, Raghuram G. 142 Ramalho, Rita 101 Ramesh, Jairam 123 Reagan, Ronald 20, 22 Reichel, R. 46 remittances 133–6 Resource Flows to Africa (UN) 133 Revolutionary United Front (Sierra Leone) 59 Rodrik, Dani 34 Rosenstein-Rodan, Paul 39 Ruiz-Arranz, Marta 136 Russia 84, 87, 112 Rwanda 27, 32, 148 Sachs, Jeffrey 96–7 Sani Abacha, President 48 São Tomé and Principe 106 savings 137–40 Schulze-Delitzsch, Herman 131 Scottish Banks 139–40 Second Conference of Chinese and African Entrepreneurs 114 securitization 96 Sen, Amartya 42 Senegal 109–10 Short, Clare 56 Sierra Leone 59 Singapore 152 Singh, Manmohan 123 small/medium enterprises (SMEs) 125 social capital 58–9 Somalia 60, 118, 133 South Africa abandoning foreign aid 144 and AGOA duty-free benefits 118 and bond issues 89, 92–3 and credit league tables 82 1997 stock market fall 84 not reliant on aid 150 and PAIDF 95 remittances 133 setting an example 78 South Korea 45, 82, 87 Sovereign Wealth Funds 112 Spain 86 Spatafora, N. 133 stabilization programme 20 Standard & Poor’s rating agency 83, 87–8 Standard Bank 106 sterilization 64–5 stock market liquidity 4 Structural Adjustment Facilities 20–21 Subramanian, Arvind 142 subsidies 115–16 Sudan 105–6, 108, 120 sugar production 116–17 Svensson, J. 39, 52 Swaziland 5, 106 Sweden 73 Tanzam Railway 103–4 Tanzania 26, 56, 97, 103–4, 110, 124, 131 taxation 52, 66 Thailand 57 Thatcher, Margaret 20, 67 Togo 94, 116 Tokyo International Conference on African Development 112 Toxopeus, H. 136 trade 17, 19–21, 38–40, 62, 64, 112, 114, 117–24 Transparency International 51, 56, 71 Turkey 93, 112, 117 Uganda aid-fuelled corruption 53 and bonds 65, 97 favourable view of China 109 and HIV–AIDS 71 improved economic growth 101 plunderers and despots 108 population 124 remittances 134 trade-oriented commodity-driven economy 146 UN Conference on Trade and Development (UNCTAD) 102 United Kingdom 108, 120 United Nations Development Programme (UNDP) 25 United Nations Human Development Report 5 United States and African Growth and Opportunity Act 118 aid history 12–17, 40 bond comparisons 80 diplomatic ties with Zimbabwe 108 Energy Information Administration 103 Food For Peace budget 45 freer trade access for African countries 149 influence compared to China 109–10 and Malawi 56 public’s desire on aid 74 Soft Banks 139 and subsidies 115–16 trading partner status 119 2006 foreign aid 99–100 US Farm Security and Rural Investment Act 2005 115 USSR 14, 19, 24 Venezuela 86 venture capital (VC) 139 Wade, President Abdoulaye 149 Washington Consensus 21–2 Wealth and Poverty of Nations, The (Landes) 33–4, 147 Weber, Max 31 Weder, Beatrice 52 Wen Jibao 104, 114 West African Economic and Monetary Union 88 What makes Democracies endure?


pages: 256 words: 60,620

Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin

affirmative action, Alan Greenspan, asset allocation, Atul Gawande, availability heuristic, Benoit Mandelbrot, Bernie Madoff, Black Swan, butter production in bangladesh, Cass Sunstein, choice architecture, Clayton Christensen, cognitive dissonance, collateralized debt obligation, Daniel Kahneman / Amos Tversky, deliberate practice, disruptive innovation, Edward Thorp, experimental economics, financial engineering, financial innovation, framing effect, fundamental attribution error, Geoffrey West, Santa Fe Institute, George Akerlof, hindsight bias, hiring and firing, information asymmetry, libertarian paternalism, Long Term Capital Management, loose coupling, loss aversion, mandelbrot fractal, Menlo Park, meta-analysis, money market fund, Murray Gell-Mann, Netflix Prize, pattern recognition, Performance of Mutual Funds in the Period, Philip Mirowski, placebo effect, Ponzi scheme, power law, prediction markets, presumed consent, Richard Thaler, Robert Shiller, statistical model, Steven Pinker, systems thinking, the long tail, The Wisdom of Crowds, ultimatum game, vertical integration

Greenspan, a professor of psychology, explained why we allow other people to take advantage of us and discussed gullibility in fields including finance, academia, and the law. He ended the book with helpful advice on becoming less gullible. The second was the exposure of the greatest Ponzi scheme in history, run by Bernard Madoff, which cost its unsuspecting investors in excess of $60 billion. A Ponzi scheme is a fraudulent operation in which a manager uses funds from new investors to pay off old investors. Since there is no legitimate investment activity, it collapses when the operator can’t find enough additional investors. Madoff’s scheme unraveled when he couldn’t meet requests for redemptions from the investors stung by the financial meltdown.

Madoff’s scheme unraveled when he couldn’t meet requests for redemptions from the investors stung by the financial meltdown. The irony is that Greenspan, who is bright and well regarded, lost 30 percent of his retirement savings in Madoff’s Ponzi scheme.1 The guy who wrote the book on gullibility got taken by one of the greatest scammers of all time. In fairness, Greenspan didn’t know Madoff. He invested in a fund that turned the money over to the scheme. And Greenspan has been gracious in sharing his story and explaining why he was drawn to investment returns that looked, in retrospect, too good to be true.


pages: 205 words: 61,903

Survival of the Richest: Escape Fantasies of the Tech Billionaires by Douglas Rushkoff

"World Economic Forum" Davos, 4chan, A Declaration of the Independence of Cyberspace, agricultural Revolution, Airbnb, Alan Greenspan, Amazon Mechanical Turk, Amazon Web Services, Andrew Keen, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, basic income, behavioural economics, Big Tech, biodiversity loss, Biosphere 2, bitcoin, blockchain, Boston Dynamics, Burning Man, buy low sell high, Californian Ideology, carbon credits, carbon footprint, circular economy, clean water, cognitive dissonance, Colonization of Mars, coronavirus, COVID-19, creative destruction, Credit Default Swap, CRISPR, data science, David Graeber, DeepMind, degrowth, Demis Hassabis, deplatforming, digital capitalism, digital map, disinformation, Donald Trump, Elon Musk, en.wikipedia.org, energy transition, Ethereum, ethereum blockchain, European colonialism, Evgeny Morozov, Extinction Rebellion, Fairphone, fake news, Filter Bubble, game design, gamification, gig economy, Gini coefficient, global pandemic, Google bus, green new deal, Greta Thunberg, Haight Ashbury, hockey-stick growth, Howard Rheingold, if you build it, they will come, impact investing, income inequality, independent contractor, Jane Jacobs, Jeff Bezos, Jeffrey Epstein, job automation, John Nash: game theory, John Perry Barlow, Joseph Schumpeter, Just-in-time delivery, liberal capitalism, Mark Zuckerberg, Marshall McLuhan, mass immigration, megaproject, meme stock, mental accounting, Michael Milken, microplastics / micro fibres, military-industrial complex, Minecraft, mirror neurons, move fast and break things, Naomi Klein, New Urbanism, Norbert Wiener, Oculus Rift, One Laptop per Child (OLPC), operational security, Patri Friedman, pattern recognition, Peter Thiel, planetary scale, Plato's cave, Ponzi scheme, profit motive, QAnon, RAND corporation, Ray Kurzweil, rent-seeking, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, Shoshana Zuboff, Silicon Valley, Silicon Valley billionaire, SimCity, Singularitarianism, Skinner box, Snapchat, sovereign wealth fund, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Steven Pinker, Stewart Brand, surveillance capitalism, tech billionaire, tech bro, technological solutionism, technoutopianism, Ted Nelson, TED Talk, the medium is the message, theory of mind, TikTok, Torches of Freedom, Tragedy of the Commons, universal basic income, urban renewal, warehouse robotics, We are as Gods, WeWork, Whole Earth Catalog, work culture , working poor

Two months later, the dotcom bubble burst, the NASDAQ crashed, and the very same newspapers that had celebrated the AOL–Time Warner merger were now decrying it as an epic failure on the part of Time Warner’s CEO, a former director of the New York Stock Exchange no less, Gerald Levin. People blamed his poor judgment on the trauma of losing his son, and watched, stunned, as $200 billion of shareholder money seemingly evaporated. The Internet Revolution was derided as a Ponzi scheme. Moreover, the marriage of old and new media did not infuse Time Warner with the disruptive values of internet culture. The resulting company didn’t become more adventurous or innovative. Quite the contrary: it became much more traditionally corporate in spirit, obsessed with the bottom line.

As Ted Turner later explained it in characteristic hyperbole, “the Time Warner–AOL merger should pass into history like the Vietnam War and the Iraq and Afghanistan wars. It’s one of the biggest disasters that have occurred to our country.” And at the time they thought I was being pessimistic. The AOL failure exposed the Ponzi scheme underlying the early internet. The broader dotcom crash that followed erased $5 trillion, or 78 percent, of the NASDAQ index by October 2002. Yes, the markets eventually recovered. But the relationship of technology to capital was forever changed. Money was no longer seen as a way to fund new technologies; new technologies became understood purely as ways of making fast money—as long as you could get out in time.

Once addicted to exponential growth, it’s hard for an entrepreneur, a company, or an entire economy to slow down. Everyone’s “cap tables” are modeled on continuing expansion at ever-increasing rates. That’s how the debt-based economy works. The 2008 Lehman Brothers collapse showed us what happens when the Ponzi scheme breaks down. But not to worry. While their ability to increase the raw speed of their machines may have reached certain limits, the digital environment offers them another way to go from creatio ex nihilo to deux ex machina . They just go “meta.” 7 Exponential WHEN YOU CAN GO NO FURTHER, GO META I got mugged in front of my apartment building while I was taking out the garbage.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", accounting loophole / creative accounting, bank run, banking crisis, banks create money, behavioural economics, Bernie Madoff, bitcoin, Bitcoin Ponzi scheme, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, capitalist realism, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, currency risk, David Graeber, debt deflation, dematerialisation, disintermediation, Dogecoin, emotional labour, eurozone crisis, fiat currency, financial engineering, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, gentrification, German hyperinflation, Goldman Sachs: Vampire Squid, Herbert Marcuse, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, Minsky moment, mobile money, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, National Debt Clock, Neal Stephenson, negative equity, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, post-Fordism, Post-Keynesian economics, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, Satoshi Nakamoto, scientific management, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

Another cause was that the very feature that was meant to ensure that Bitcoins were sound money (just like gold) in the first place—their finite supply—became a source of speculation, and a Bitcoin bubble.35 Arguably, Bitcoins were being mined primarily not in order to be used but rather to be hoarded. This phenomenon prompted some critics to liken the currency to a Ponzi scheme. The comparison seems flawed: unlike entrants to a Ponzi scheme, holders of Bitcoins are not—per se—victims of fraud. But according to Eric Posner, Bitcoin “investors” are likely to suffer the same fate: “Bitcoin will collapse when people realize that it can’t survive as a currency because of its built-in deflationary features, or because of the emergence of bytecoins, or both. A real Ponzi scheme takes fraud; Bitcoin, by contrast, seems more like a collective delusion.”36 Viewed simply as a currency, Bitcoin’s biggest pitfall is likely to be price deflation (and, in extremis, hyperdeflation), not inflation.

Bureau of Economic Analysis, see http://www.bea.gov/scb/pdf/2011/07%20July/0711_brief_indy_tables.pdf. 34 Source: Federal Deposit Insurance Corporation, see http://www.fdic.gov/bank/statistical/. 35 Source: World Bank, see http://search.worldbank.org/quickview?name=%3Cem%3EBank%3C%2Fem%3E+capital+to+assets+ratio+%28%25%29&id=FB.BNK.CAPA.ZS&type=Indicators&cube_no=2&qterm=bank+debt+leverage. 36 The latter is a reference to Charles Ponzi, origin (but not originator) of the term “Ponzi scheme.” A Ponzi scheme is a fraudulent investment scheme that pays returns to its investors not from earned profits but from the monies paid into the scheme from new investors. Ponzi operated such a scheme, via his Securities Exchange Company based in Boston, which collapsed in 1920. He spent the next fourteen years in and out of prison (Zuckoff 2006). 37 The sophistication increases when nonbank financial institutions use bank debt, open-market debt, and long-term bonds to acquire debts and a “layering” of debt occurs (Minsky 1975: 121). 38 “Thus investment becomes ‘safe’ for the individual investor over short periods.”

According to Krugman, “the vast riches being earned … in our bloated financial industry undermined our sense of reality.”25 In a similar vein, Slavoj Žižek called the Bernard Madoff case “an extreme but therefore pure example of what caused the financial breakdown itself” (Žižek 2009: 36). Madoff’s crime (his wealth management business operated as a Ponzi scheme for many years before its collapse in 2008, costing investors around $18 billion) was merely a manifestation of a form of reasoning that is inscribed into the very system of capitalist relations, namely, that the sphere of circulation must be expanded—using “fraudulent” monetary instruments, if necessary—to keep the machinery running: “the temptation to ‘morph’ legitimate business into a pyramid scheme is part of the very nature of the capitalist circulation process” (Žižek 2009: 36).


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Bear Stearns, Ben Bernanke: helicopter money, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, BRICs, business climate, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Dr. Strangelove, Edward Snowden, eurozone crisis, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global macro, global reserve currency, global supply chain, Goodhart's law, Growth in a Time of Debt, guns versus butter model, Herman Kahn, high-speed rail, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, junk bonds, Kenneth Rogoff, labor-force participation, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, megaproject, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shale / tar sands, open economy, operational security, plutocrats, Ponzi scheme, power law, price stability, public intellectual, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, Solyndra, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, undersea cable, uranium enrichment, Washington Consensus, working-age population, yield curve

Bank sponsors of WMPs address the problems of nonperforming assets and maturity mismatches by issuing new WMPs. The new WMP proceeds are then used to buy the bad assets of the old WMPs at inflated values so the old WMPs can be redeemed at maturity. This is a Ponzi scheme on a colossal scale. Estimates are that there were twenty thousand WMP programs in existence in 2013 versus seven hundred in 2007. One report on WMP sales in the first half of 2012 estimates that almost $2 trillion of new money was raised. The undoing of any Ponzi scheme is inevitable, and the Chinese property and infrastructure bubbles fueled by shadow banking are no exception. A collapse could begin with the failure of a particular rollover scheme or with exposure of corruption associated with a particular project.

CHAPTER 4 CHINA’S NEW FINANCIAL WARLORDS Most countries fail in the reform and adjustment process precisely because the sectors of the economy that have benefitted from . . . distortions are powerful enough to block any attempt to eliminate those distortions. Michael Pettis Peking University December 2012 China’s shadow banking sector has become a potential source of systemic financial risk. . . . To some extent, this is fundamentally a Ponzi scheme. Xiao Gang Chairman, Bank of China October 2012 ■ History’s Burden To contemporary Western eyes, China appears like a monolithic juggernaut poised to dominate East Asia and surpass the West in wealth and output in a matter of years. In fact, China is a fragile construct that could easily descend into chaos, as it has many times before.

A more likely scenario is that money printing will continue in both nations long after 2 percent inflation is achieved. At that point, the risks are all on the side of much higher inflation as the change in expectations becomes difficult to reverse, especially in the United States. A Chinese collapse. The seventh sign will be financial disintegration in China as the wealth-management-product Ponzi scheme collapses. China’s degree of financial interconnectedness with the rest of the world is lower than that of the major U.S. and European banks, so a collapse in China would be mainly a local affair, in which the Communist Party will use reserves held by its sovereign wealth funds to assuage savers and recapitalize banks.


pages: 345 words: 100,989

The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal by Duncan Mavin

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Adam Neumann (WeWork), air freight, banking crisis, Bernie Madoff, Big Tech, Boeing 737 MAX, Boris Johnson, Brexit referendum, British Empire, carbon footprint, coronavirus, corporate governance, COVID-19, Credit Default Swap, democratizing finance, Donald Trump, Eyjafjallajökull, financial engineering, fixed income, global pandemic, global supply chain, Gordon Gekko, Greensill Capital, high net worth, Kickstarter, lockdown, Long Term Capital Management, low interest rates, Masayoshi Son, means of production, Menlo Park, mittelstand, move fast and break things, NetJets, Network effects, Ponzi scheme, private military company, proprietary trading, remote working, rewilding, Rishi Sunak, rolodex, Silicon Valley, skunkworks, SoftBank, sovereign wealth fund, supply chain finance, Tim Haywood, Vision Fund, WeWork, work culture

And it’s also a tale of the stock market, where heady valuations are fuelled by massive global investors who never seem to lose, even when a company they bet on turns out to be a failure. This is a story that echoes many of the biggest financial and business scandals of all time. Politicians have accused Lex of running a Ponzi scheme, named for a 1920s Italian-born US financier. Like Lex, Charles Ponzi was a natty dresser, and an outsider who slipped into high society. Ponzi convinced investors to part with their money and offered them huge profits. But his investments were an illusion, using money from new investors to pay off older investors.

Money was flowing in because Credit Suisse’s bankers encouraged it to flow in. Performance was steady because the funds didn’t have to recognize when loans went bad – instead, they could just roll the loan over. It was a kind of ‘extend and pretend’ approach. More than one Credit Suisse executive later told me it was the definition of a Ponzi scheme. The only way the funds would be forced to show their true performance was if investors withdrew so much money, so quickly, that Greensill would have to liquidate its assets, revealing which loans had gone bad or could not be repaid in a hurry. Under any other circumstances, so long as money kept rolling in, Lex could write up whatever performance he wanted.

Lex said how sad he was for his staff, Greensill’s clients and the investors in Greensill’s funds. And then he blamed someone else. ‘It’s deeply regrettable that we were let down by our leading insurer, whose actions assured Greensill’s collapse.’ Though Lex was typically verbose, the panel interview went downhill from there. MPs said he was running a Ponzi scheme. They asked if he was a fraud. Lex read out an email exchange with the former Treasury minister, Paul Myners, including personal details of Myners’ health issues, in a crude attempt to undermine earlier testimony from Myners that had been critical of Greensill. He launched into a strange dispute with one MP over the use of the phrase ‘prospective receivables’ instead of ‘future receivables’.


pages: 257 words: 64,763

The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street by Robert Scheer

Alan Greenspan, banking crisis, Bear Stearns, Bernie Madoff, Bernie Sanders, business cycle, California energy crisis, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, do well by doing good, facts on the ground, financial deregulation, fixed income, Glass-Steagall Act, housing crisis, invisible hand, Long Term Capital Management, low interest rates, mega-rich, mortgage debt, new economy, old-boy network, Ponzi scheme, profit motive, Ralph Nader, rolling blackouts, Ronald Reagan, Savings and loan crisis, too big to fail, trickle-down economics

Nonsense, argued Eliot Spitzer, who as New York attorney general was way ahead of the curve in challenging Wall Street arrogance. Writing in Slate on November 23, 2009, Spitzer pointed out: “Pressuring Goldman and the other counterparties to offer concessions would have forced them to absorb the consequences of making suspect deals with an insurance company that was essentially a Ponzi scheme.” The Ponzi scheme brings us back full circle to the Clinton bubble. As the inspector general’s report stated: “In 2000, the [Clinton administration-backed] Commodity Futures Modernization Act (CFMA) . . . barred the regulation of credit default swaps and other derivatives.” Why did the financial geniuses of the Clinton administration seek to prevent that obviously needed regulation?

That was because of the wonders of securitization of debt to be sold in that unregulated commodities market, which seventeen months later the Commodity Futures Modernization Act signed by Clinton would guarantee to remain unregulated. The press release marked this enormous shift in the marketing of mortgages, quoting Mozilo: “This new strategic agreement between Fannie Mae and Countrywide is an unprecedented milestone in mortgage banking history.” Key to the new era of the housing Ponzi scheme was the reduction of capital required to back up the unsavory mortgages as the Countrywide press release clearly stated: “The strategic agreement contemplates efforts by Fannie Mae and Countrywide to work together to create capital structures that reduce the intensive capital demands of mortgage banking.


pages: 202 words: 66,742

The Payoff by Jeff Connaughton

Alan Greenspan, algorithmic trading, bank run, banking crisis, Bear Stearns, Bernie Madoff, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, desegregation, Flash crash, Glass-Steagall Act, locking in a profit, London Interbank Offered Rate, London Whale, Long Term Capital Management, naked short selling, Neil Kinnock, plutocrats, Ponzi scheme, proprietary trading, risk tolerance, Robert Bork, Savings and loan crisis, short selling, Silicon Valley, TED Talk, too big to fail, two-sided market, uptick rule, young professional

Predictably, Breuer dodged Ted’s questions and instead proffered generalities (“The department has engaged in a robust and comprehensive investigation”), statistics on garden-variety financial fraud cases (“between October 2009 and June 2010, nearly three thousand defendants were sentenced to prison for financial fraud, and more than sixteen hundred of these defendants have received sentences of greater than twelve months”), and details of recent cases that had nothing to do with Wall Street and the financial crisis (“on September 15, 2010, Nevin Shapiro, the former CEO of Capital Investments USA Inc., pleaded guilty in Newark, New Jersey, to fraudulently soliciting funds for a non-existent grocery distribution business”). Sitting behind Ted, I tried hard not to roll my eyes as Breuer touted the successful prosecution of a grocer for a small-time New Jersey Ponzi scheme. He was ducking the main issue and continuing to assure Ted and the rest of the committee that the department was being “thorough” and “robust” in its effort to bust big-time fraudsters. To the department’s credit, the U.S. attorney in the Eastern District of Virginia, Neil MacBride (a former Biden chief counsel), had recently indicted Lee Bentley Farkas, the former CEO of Taylor, Bean & Whitaker Mortgage Corporation (TBW).

In his testimony, Khuzami was more clear and detailed. He at least separated the cases the SEC had brought into two categories: those related to the financial crisis (like civil actions against Goldman Sachs, Citigroup, State Street, and several other major players) and those unrelated to the crisis (like Ponzi schemes and insider trading). Khuzami stressed that in the last nine months the SEC had brought enforcement actions (and obtained hundreds of millions of dollars in settlement penalties) against companies and individuals that: concealed from investors the risks and exposures from subprime mortgage-based securities; concealed business strategies that heightened the risks relating to mortgage-based securities; failed to disclose to investors the involvement of adverse parties in structuring complex mortgage-based securities; concealed that investment funds contained high-risk mortgage-based securities; marketed high-risk mortgage-based securities while secretly divesting themselves of their own holdings.

She responded by reiterating her pledge, which she’d made publicly in response to Ted’s letter, that the SEC would conduct a comprehensive review of market-structure issues and HFT. She added that she had many other issues on her plate. And indeed she had. America had just been through the biggest financial disaster in sixty years; Bernie Madoff’s Ponzi scheme had gone undetected by the SEC for years despite repeated warnings from whistleblowers; investors were rattled and worried that the SEC was toothless. Nevertheless, it was obvious to me that she only had one choice if history was to judge her well: she had to do something. Ted must have been thinking the same thing.


pages: 242 words: 71,943

Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity by Charles L. Marohn, Jr.

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, A Pattern Language, American Society of Civil Engineers: Report Card, anti-fragile, bank run, big-box store, Black Swan, bread and circuses, Bretton Woods, British Empire, business cycle, call centre, cognitive dissonance, complexity theory, corporate governance, Detroit bankruptcy, Donald Trump, en.wikipedia.org, facts on the ground, Ferguson, Missouri, gentrification, global reserve currency, high-speed rail, housing crisis, index fund, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jane Jacobs, Jeff Bezos, low interest rates, low skilled workers, mass immigration, megaproject, Modern Monetary Theory, mortgage debt, Network effects, new economy, New Urbanism, paradox of thrift, Paul Samuelson, pensions crisis, Ponzi scheme, quantitative easing, reserve currency, restrictive zoning, Savings and loan crisis, the built environment, The Death and Life of Great American Cities, trickle-down economics, Upton Sinclair, urban planning, urban renewal, walkable city, white flight, women in the workforce, yield curve, zero-sum game

Incremental Growth Complex versus Complicated Buildings Neighborhood Renewal The Stifling Nature of High Land Values Private and Public Investment The Party Analogy Note Chapter 3. An Infinite Game An Infinite Game Revenues and Expenses Infrastructure Not as a Means, but as an End The Municipal Ponzi Scheme The Illusion of Wealth Understanding Detroit Notes Chapter 4. The Infrastructure Cult The American Society of Civil Engineers Real Investment, Paper Returns Accounting for Infrastructure Assuming Secondary Effects A Real Return on Investment The Data Doesn’t Lie Notes Chapter 5.

It was Upton Sinclair who said, “It is difficult to get a man to understand something when his salary depends on his not understanding it.” With a few notable exceptions, I found Sinclair’s observation maddeningly insightful. For me, the evidence was pointing to a conclusion I found difficult to believe, yet impossible to ignore: The more our cities build, the poorer they become. The Municipal Ponzi Scheme When local governments need professional assistance, they often issue what is called a request for proposal (RFP). Consultants like myself respond to the RFP and, if successful, there is an interview. I’ve done many such interviews, answering questions from city staff as well as elected and appointed public officials.

Any neighborhoods deemed “at risk” also didn’t qualify for government support, the left hand of government policy destroying urban land values while the right hand kept people trapped there – at this point, largely economically stressed minority populations – from sharing in the spoils of new growth. By the time the United States reached the end of the first generation of the post-war boom, the first iteration of what I’ve termed the Municipal Ponzi Scheme, the bulk of the country felt so prosperous it embarked on a massive campaign to end poverty – the Great Society – as it simultaneously fought an expensive war in Vietnam. By many economic measurements, this is the high-water mark of the twentieth century, particularly for America’s middle class.


pages: 403 words: 105,550

The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale by Simon Clark, Will Louch

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, An Inconvenient Truth, anti-communist, Berlin Wall, Bernie Madoff, British Empire, clean water, collapse of Lehman Brothers, colonial rule, coronavirus, corporate governance, COVID-19, dark triade / dark tetrad, do well by doing good, Donald Trump, fake news, forensic accounting, high net worth, impact investing, income inequality, Jeffrey Epstein, Kickstarter, load shedding, low cost airline, Mahatma Gandhi, megacity, Menlo Park, Michael Milken, Mohammed Bouazizi, Nelson Mandela, offshore financial centre, planetary scale, plutocrats, Ponzi scheme, profit maximization, rolling blackouts, Ronald Reagan, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, SoftBank, sovereign wealth fund, Suez crisis 1956, TED Talk, The Fortune at the Bottom of the Pyramid, trade route, Virgin Galactic, WikiLeaks, young professional

If one of the world’s largest auditors couldn’t detect wrongdoing at Abraaj it was unlikely investors could either. Taking money from one private equity fund to benefit investors in another fund amounted to a crude kind of fraud known as a Ponzi scheme. This kind of fraud was named after Charles Ponzi, an Italian-born swindler active in the United States in the 1920s who used money from new investors to pay off earlier investors. Ponzi schemes like the one operated by the American fund manager Bernard Madoff can go undetected for years and usually come to light during an economic downturn, when investors ask for their money back and the fraudster can’t raise funds from new investors to pay them off.

The dark side of globalization—a shadowy hinterland of political intrigue and illicit offshore money flows—lurked behind the bright vision of the future Arif championed in public. His investments, in truth, were too good to be true, and his firm had been insolvent for years. Stolen cash propped up Abraaj in what the famed Bernard Madoff investigator Harry Markopolos described to us as a Ponzi scheme with leverage. Abraaj had become one of the largest corporate frauds in history, and Arif, accused of wrongfully holding on to $385 million of the funds he had taken, faced 291 years in a high-security jail. Abraaj employees who naively believed in Arif and his mission of making money and doing good were at a loss to explain what went wrong.

Agency for International Development’s investment in Abraaj fund for, 98 U.S. attempts at stabilization of, 59, 65 U.S. support of military dictator in, 14 Pakistan Banking Council, 15 Palestine, 72, 77–78, 90, 197–98 Parasie, Nicolas, 5, 260 Participant Media, 129 partnership capital, 106, 193 patient capitalism, 87 Patterson, Anne, 64 Pearl, Daniel, 58 Pearl Initiative, 104, 159–60 Peres, Shimon, 78 philanthrocapitalism, 42, 191 Polman, Paul, 45, 222 Ponzi, Charles, 156 Ponzi schemes, 7, 156–57 poverty programs Arab Spring and, 82 of Bill and Melinda Gates Foundation, 164 CDC Group and, 92–93, 94 emerging markets and, 45–46, 91–93 Arif Naqvi’s involvement in, 2, 6, 46, 83, 91–92, 149–50 Barack Obama on, 74–75 poverty conference in Italy, 85–88 C. K. Prahalad on, 45–46 of United Nations, 2, 147–49, 152 Powell, Colin, 35 Prahalad, C.


pages: 368 words: 102,379

Pandemic, Inc.: Chasing the Capitalists and Thieves Who Got Rich While We Got Sick by J. David McSwane

Affordable Care Act / Obamacare, commoditize, coronavirus, COVID-19, disinformation, Donald Trump, Elon Musk, fake it until you make it, fake news, global pandemic, global supply chain, Internet Archive, lockdown, Lyft, Mark Zuckerberg, microaggression, military-industrial complex, obamacare, open economy, Ponzi scheme, race to the bottom, ransomware, remote working, ride hailing / ride sharing, shareholder value, side hustle, Silicon Valley, social distancing, statistical model, stem cell, Steve Bannon, stock buybacks, TaskRabbit, telemarketer, uber lyft, Y2K

Department of Justice, July 28, 2021, https://www.justice.gov/opa/pr/texas-man-sentenced-24-million-covid-19-relief-fraud-scheme. In Georgia, a reality TV personality “Reality TV Star Sentenced for PPP Fraud and for Operating a Multimillion-Dollar Ponzi Scheme,” U.S. Department of Justice, September 15, 2021, https://www.justice.gov/usao-ndga/pr/reality-tv-star-sentenced-ppp-fraud-and-operating-multimillion-dollar-ponzi-scheme. more than 120 people “CARES Act Fraud Tracker,” Arnold & Porter, October 28, 2021, https://www.arnoldporter.com/en/general/cares-act-fraud-tracker. the Justice Department had charged “DOJ Continues to Combat COVID-19 Fraud with ‘Historic’ Levels of Enforcement: Enforcement Edge: Blogs,” Arnold & Porter, April 2, 2021, https://www.arnoldporter.com/en/perspectives/blogs/enforcement-edge/2021/04/doj-continues-to-combat-covid-fraud.

He used $40,000 to pay child support, which is nice but still illegal. Less impressive—he leased a Rolls-Royce with $136,000 and paid $50,000 in restitution for a previous fraud conviction. As FBI investigators dug into his finances, they learned he paid $230,000 to associates involved in a multistate Ponzi scheme in which he’d defrauded twenty people going back to 2013. He would later be sentenced to seventeen years in prison. In the program’s first year, including two waves of loans, more than 120 people would be criminally charged by the Justice Department. Counting PPP fraud and looting of similar relief programs, such as the Economic Injury Disaster Loan program, the Justice Department had charged more than 470 defendants, involving about $570 million in taxpayer-guaranteed and largely forgivable loans.

See also masks; N95 respirators; ventilators Boston Capital Consultants and, 212–214 Disaster Leadership Group meetings and, 29 exported to China, 40–41 halting export of, 36 Navarro on hoarding, 67 NYC’s efforts to obtain, 72–78 Polowczyk’s goals on, 55, 57 Project Airbridge and, 60–61 states requesting, 46, 52 Pfizer, 234, 236, 237 Pfizer-BioNtech vaccine, 230–231, 234, 236 Phlow, 83–84 “pirates,” 98, 121–122, 123 Pittsburgh Post-Gazette, 247 POL (proof of life), 211 Polowczyk, John FEMA and, 52, 53 HHS requesting logistics planning by, 49–50 on Kushner’s shadow task force, 57, 59–60 meeting at HHS, 51, 52 meeting with Paul Mango, 53 meeting with Pence and Kushner, 53–55 Phlow deal and, 84 Project Airbridge and, 60–61 Ponzi scheme, 197 Potbelly Sandwich, 198 presidential election (2020), January 6th insurrection and, 226–227 Prestige Ameritech, 23–24, 26–27, 30, 151, 258–259 Preston, Richard, 16 price gouging Federal Government Experts contract with VA, 5, 93, 211 during the Great Influenza, 121–122 by Kaleo, 83 law enforcement and, 3–4 N95 respirators, 5, 42, 66 by Romano, Ronald, 66, 70 by Stewart, Robert Jr., 5, 110, 210–211 prison, Delta variant in, 260 profiteering, 65, 66–68.


pages: 661 words: 185,701

The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance by Eswar S. Prasad

access to a mobile phone, Adam Neumann (WeWork), Airbnb, algorithmic trading, altcoin, bank run, barriers to entry, Bear Stearns, Ben Bernanke: helicopter money, Bernie Madoff, Big Tech, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bretton Woods, business intelligence, buy and hold, capital controls, carbon footprint, cashless society, central bank independence, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, deglobalization, democratizing finance, disintermediation, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, eurozone crisis, fault tolerance, fiat currency, financial engineering, financial independence, financial innovation, financial intermediation, Flash crash, floating exchange rates, full employment, gamification, gig economy, Glass-Steagall Act, global reserve currency, index fund, inflation targeting, informal economy, information asymmetry, initial coin offering, Internet Archive, Jeff Bezos, Kenneth Rogoff, Kickstarter, light touch regulation, liquidity trap, litecoin, lockdown, loose coupling, low interest rates, Lyft, M-Pesa, machine readable, Mark Zuckerberg, Masayoshi Son, mobile money, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, offshore financial centre, open economy, opioid epidemic / opioid crisis, PalmPilot, passive investing, payday loans, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price anchoring, profit motive, QR code, quantitative easing, quantum cryptography, RAND corporation, random walk, Real Time Gross Settlement, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, risk/return, Robinhood: mobile stock trading app, robo advisor, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seigniorage, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, smart contracts, SoftBank, special drawing rights, the payments system, too big to fail, transaction costs, uber lyft, unbanked and underbanked, underbanked, Vision Fund, Vitalik Buterin, Wayback Machine, WeWork, wikimedia commons, Y Combinator, zero-sum game

The Bottom Line on Mobile Money One example of mobile money allegedly fueling illicit activities comes from Zimbabwe. In May 2020, the Reserve Bank of Zimbabwe accused mobile money operator EcoCash of running a Ponzi scheme that was devaluing the Zimbabwean dollar by facilitating overdraft facilities that were, in effect, creating counterfeit money. See Tawanda Karombo, “Zimbabwe’s Central Bank Says the Dominant Mobile Money Platform Is Running a Ponzi Scheme,” Quartz Africa, May 12, 2020, https://qz.com/africa/1855919/zimbabwes-reserve-bank-says-ecocash-running-ponzi-scheme/. Somalia’s per capita income is estimated by the IMF in its annual country reports. The World Bank estimates that, in 2015, remittances supported 23 percent of Somalia’s GDP.

High and rising real estate valuations seemed to be based on the notion that all it took to make money from a house purchased at inflated prices was to find just one buyer—an even greater fool than oneself—willing to pay an even higher price. Carney’s speech came on the heels of another by Agustín Carstens, head of the Bank for International Settlements; he described Bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster.” Skeptics, including central bankers and academics, correctly note Bitcoin’s extremely volatile prices and the periodic price collapses it has experienced. Indeed, from an economist’s perspective, there is no logical reason Bitcoin should be priced beyond its value in providing a pseudonymous payment mechanism, let alone the sort of value it commands.

Financial Stability The main goal of financial regulation is to ensure that finance works well in supporting economic activity and attaining the other objectives for which it is designed and, more importantly, that it does not become a source of instability itself. The notion that market forces favor safer and more efficient firms and cull riskier and less efficient ones does not seem to hold in finance. From Ponzi schemes à la Bernie Madoff to large investment banks such as Bear Stearns and Lehman Brothers that took on vast amounts of risk and came crashing down, finance run amok causes pain across broad swaths of society. When stock markets fall, investors take a hit to their portfolios. When a company files for bankruptcy, owners of that company’s equities or debt could lose their investments.


pages: 829 words: 187,394

The Price of Time: The Real Story of Interest by Edward Chancellor

"World Economic Forum" Davos, 3D printing, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, asset allocation, asset-backed security, assortative mating, autonomous vehicles, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, bitcoin, blockchain, bond market vigilante , bonus culture, book value, Bretton Woods, BRICs, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cashless society, cloud computing, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, commodity super cycle, computer age, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cryptocurrency, currency peg, currency risk, David Graeber, debt deflation, deglobalization, delayed gratification, Deng Xiaoping, Detroit bankruptcy, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, double entry bookkeeping, Elon Musk, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, everywhere but in the productivity statistics, Extinction Rebellion, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global reserve currency, global supply chain, Goodhart's law, Great Leap Forward, green new deal, Greenspan put, high net worth, high-speed rail, housing crisis, Hyman Minsky, implied volatility, income inequality, income per capita, inflation targeting, initial coin offering, intangible asset, Internet of things, inventory management, invisible hand, Japanese asset price bubble, Jean Tirole, Jeff Bezos, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, land bank, large denomination, Les Trente Glorieuses, liquidity trap, lockdown, Long Term Capital Management, low interest rates, Lyft, manufacturing employment, margin call, Mark Spitznagel, market bubble, market clearing, market fundamentalism, Martin Wolf, mega-rich, megaproject, meme stock, Michael Milken, Minsky moment, Modern Monetary Theory, Mohammed Bouazizi, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, Northern Rock, offshore financial centre, operational security, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, peer-to-peer lending, pensions crisis, Peter Thiel, Philip Mirowski, plutocrats, Ponzi scheme, price mechanism, price stability, quantitative easing, railway mania, reality distortion field, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk free rate, risk tolerance, risk/return, road to serfdom, Robert Gordon, Robinhood: mobile stock trading app, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, Second Machine Age, secular stagnation, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, subprime mortgage crisis, Suez canal 1869, tech billionaire, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Haywood, time value of money, too big to fail, total factor productivity, trickle-down economics, tulip mania, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Walter Mischel, WeWork, When a measure becomes a target, yield curve

Trillions of dollars of buybacks effected a ‘slow-motion leveraged buyout of the entire [stock] market’.41 Thanks to the miracle of financial engineering, the earnings per share of S&P 500 companies grew faster than reported profits and sales.42 Even companies with declining profits were able to report a rise in per-share earnings.43 Some firms, including Exxon and IBM, operated what were in effect Ponzi schemes by distributing more in buybacks and dividends than they earned by way of profit.44 THE FINANCIALIZED FIRM Under the influence of shareholder value, the distinction between financial and non-financial corporations was eroded. Corporate finance took precedence over ordinary business operations as the financial operations within firms accounted for an increasing share of profits.45 As one commentator put it, ‘the productive activities of the modern corporation are therefore incidental to the restructuring of corporate balance sheets and the making of money by buying and selling subsidiaries.’46 Thorstein Veblen would have understood what was going on.

Easy money encouraged Turkish corporations to take on too much debt, borrowing in liras and foreign currencies. Easy money fuelled the rising inflation, which peaked at 25 per cent in 2018. As the tenth anniversary of Lehman’s bankruptcy approached, Turkey’s real estate market resembled Spain’s on the eve of the global financial crisis. What a leading Istanbul estate agent called a ‘big Ponzi scheme’ was broken. Residential developments ground to a halt, as Turkey’s housing market was weighed down with a couple of million unsold houses. One incomplete development, the Brooklyn Dream project on the Asian side of Istanbul, had been marketed to ‘those who want an active and dreamlike life in the center of the city’.

Any bank that offered too little interest would lose clients.15 The advent of cryptocurrencies has the potential to realize Hayek’s vision. Cryptocurrencies are already lent on various platforms (one of which calls itself ‘Compound’). Interest on crypto loans is charged at suspiciously high rates, suggesting the existence of Ponzi schemes, and the early history of cryptocurrencies has been marked by seamy behaviour and uncertainty regarding their true scarcity. Still, it’s possible that one day a cryptocurrency may emerge which is safe to store, efficient for transactions and limited in supply. The trouble is that governments won’t willingly give up their money monopoly.


pages: 482 words: 149,351

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

BCCI infested US politics too: when Jack Blum, one of the lawyers who eventually helped bring the bank down, started investigating it he soon came up against the CIA and ‘an army of people working in Washington on all sides’. BCCI wasn’t just a global octopus of murder and organised crime; it was also a giant Ponzi scheme for ripping off its depositors and investors, and turned out to be the biggest banking fraud of the twentieth century.1 It bamboozled everyone by splitting its main operations three ways: between two separate holding companies in Luxembourg and Cayman, and its headquarters in London. By this stage of the book it should be obvious why Abedi chose Cayman and London.

Luxembourg has the world’s second-largest mutual funds sector after the United States, but a courts system ‘the size of a small provincial town’ as one lawyer put it. They can’t possibly police the financial oceans that roil through here – and they don’t want to; competitive policing of finance is after all, part of the point.8 Many of the funds that channelled European investors’ savings into Bernie Madoff’s giant Ponzi scheme were run out of Luxembourg, and ‘the whole set-up violated European law,’ said Erik Bomans, a partner in Deminor, a financial recovery firm representing some 3,000 defrauded Madoff investors. ‘There were no control mechanisms, no yearly due diligence, nothing, nothing, nothing,’ Bomans told me.

Here in America we assume everyone who handles other people’s money has the potential to be a criminal. And we legislate for the possibility.”’6 As Bosworth-Davies and his colleagues faced this influx of crime, the BCCI scandal exploded in Britain. As I described in Chapter 5, BCCI combined organised crime and murder with risky mechanisms threatening financial stability in a single Ponzi-scheme package run out of the bank’s global headquarters in London. It was arguably the biggest single banking fraud of the twentieth century. As the scandal unfolded in the early 1990s, Britain and the Bank of England actively worked to frustrate US efforts to shut the rogue bank down. Robert Morganthau, the Manhattan district attorney who led the attempts to close BCCI down, remembers the Cayman attorney general, ‘a crotchety British guy’, refusing to help.


pages: 444 words: 151,136

Endless Money: The Moral Hazards of Socialism by William Baker, Addison Wiggin

Alan Greenspan, Andy Kessler, asset allocation, backtesting, bank run, banking crisis, Bear Stearns, Berlin Wall, Bernie Madoff, Black Swan, bond market vigilante , book value, Branko Milanovic, bread and circuses, break the buck, Bretton Woods, BRICs, business climate, business cycle, capital asset pricing model, carbon tax, commoditize, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crony capitalism, cuban missile crisis, currency manipulation / currency intervention, debt deflation, Elliott wave, en.wikipedia.org, Fall of the Berlin Wall, feminist movement, fiat currency, fixed income, floating exchange rates, foreign exchange controls, Fractional reserve banking, full employment, German hyperinflation, Great Leap Forward, housing crisis, income inequality, index fund, inflation targeting, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, land bank, land reform, liquidity trap, Long Term Capital Management, lost cosmonauts, low interest rates, McMansion, mega-rich, military-industrial complex, Money creation, money market fund, moral hazard, mortgage tax deduction, naked short selling, negative equity, offshore financial centre, Ponzi scheme, price stability, proprietary trading, pushing on a string, quantitative easing, RAND corporation, rent control, rent stabilization, reserve currency, risk free rate, riskless arbitrage, Ronald Reagan, Savings and loan crisis, school vouchers, seigniorage, short selling, Silicon Valley, six sigma, statistical arbitrage, statistical model, Steve Jobs, stocks for the long run, Tax Reform Act of 1986, The Great Moderation, the scientific method, time value of money, too big to fail, Two Sigma, upwardly mobile, War on Poverty, Yogi Berra, young professional

Of course, the disinfectant of transparency goes a long way, but common sense is the most effective tool at our disposal to avoid being sucked into such schemes. The centerpiece of operational risk for our time has to be the Bernie Madoff scandal, which broke in December 2008. However, the continual financial market meltdown has revealed other giant Ponzi schemes, such as the failure of the $50 billion Stanford Group in February 2009. Oddly, most mainstream professional money managers had never heard of Madoff, yet he had raised over $50 billion. The public response will likely be a vociferous demand for yet more intensive regulation of the financial industry (a topic examined in detail later in this book), yet Madoff ’s operation was not in fact a hedge fund.

When practiced in its purest form, it involves buying and selling calls, puts, and an underlying equity such that risk of price movement is hedged away. Under these circumstances the market has long offered essentially Treasury bill type returns, because arbitrage has narrowed spreads since at least the 1970s. In contrast to other risky investments, Madoff ’s returns were not off the charts. Just like any good Ponzi scheme they were plausibly in the low double digits, with never a down month and rarely if ever a sub-par result. However, they aroused suspicion in the options community. Madoff ’s competitors, assailed with feedback from the capital-raising specialists that they were incompetent because they could not replicate the effortlessly sellable Madoff track record, were appalled.

Presently the government is hooked on debt and does not feel its pinch due to generationally low interest rates. Legislators maintain high spending to maintain voter support from the left. As socialization spreads to the mainstream, spending increasingly helps the lower-middle class, which might vote conservative otherwise. Government can essentially operate a Ponzi scheme, fooling buyers of Treasury bonds into believing that other dupes, be they taxpayers or other bond buyers, will be there to make good on the next coupons as they are presented for payment. We have operated this way for decades, causing layer upon layer of debt to be added, but in the Bush presidency the problem became intractable due to the math of compounding, despite generally having had manageable deficits as a percentage of GDP.


pages: 261 words: 71,798

Dangerous Personalities: An FBI Profiler Shows You How to Identify and Protect Yourself From Harmful People by Joe Navarro, Toni Sciarra Poynter

Bernie Madoff, business climate, call centre, Columbine, delayed gratification, impulse control, Louis Pasteur, Norman Mailer, Peoples Temple, Ponzi scheme, social intelligence, Steve Jobs, Ted Kaczynski, Timothy McVeigh

The narcissist worked for and got what he wanted, so what’s the problem when he comes home drunk, smelling of other women? What his wife wants doesn’t matter; the only thing that matters is what he feels he’s entitled to. He has used attentiveness to ensnare, but he doesn’t really care. In real life, financier Bernard Madoff used connections and friendships to ensnare trusting people in his Ponzi scheme. The crushing difference between what they expected and what they got is the terrible truth of relationships with a narcissistic personality. You expect to be treated as an equal, as a friend, but a narcissist has no equal. For the narcissistic personality, friends are functional. They serve a purpose: to provide the narcissist with something wanted or needed.

These individuals are persistently calculating, manipulative, and aggressively predatory. When you read about someone who meticulously planned and executed a crime, who stalked and staked out his victim, who’s been committing criminal acts for a long time, who traveled distances to achieve an illicit endeavor, or who’s constructed elaborate Ponzi schemes, you’re reading about predators. Similarly, when you hear of someone who’s always in trouble with the law, is a serial sex offender, a recidivist, or someone who is scheming to cheat others of their money, you’re hearing about a predator. Expect predators to frequently change jobs, change plans, fail to repay loans, ruin or end relationships, disappoint or take advantage of others, and shirk responsibilities.

Forero-Parra replied. “As he was being led into the jail, he asked, ‘How does my hair look?’ ” Sometimes, predators are palpably narcissistic. This was one of those times. Indeed, we often see some of the features of the predator with the narcissist. Bernard Madoff, mastermind and architect of the largest Ponzi scheme in US history, who took advantage of his own family and friends, appears to have many of the features of the narcissist, whose behaviors say, “I can do anything, by any means, without restraint” and the predator, whose behaviors say, “I will take advantage of whom I can, when I can, without remorse.”


pages: 280 words: 73,420

Crapshoot Investing: How Tech-Savvy Traders and Clueless Regulators Turned the Stock Market Into a Casino by Jim McTague

Alan Greenspan, algorithmic trading, automated trading system, Bear Stearns, Bernie Madoff, Bernie Sanders, Black Monday: stock market crash in 1987, Bretton Woods, buttonwood tree, buy and hold, computerized trading, corporate raider, creative destruction, credit crunch, Credit Default Swap, financial innovation, fixed income, Flash crash, High speed trading, housing crisis, index arbitrage, junk bonds, locking in a profit, Long Term Capital Management, machine readable, margin call, market bubble, market fragmentation, market fundamentalism, Myron Scholes, naked short selling, Nixon triggered the end of the Bretton Woods system, pattern recognition, Ponzi scheme, proprietary trading, quantitative trading / quantitative finance, Renaissance Technologies, Ronald Reagan, Sergey Aleynikov, short selling, Small Order Execution System, statistical arbitrage, technology bubble, transaction costs, uptick rule, Vanguard fund, Y2K

No one else had noticed what they had noticed. Regulators had been asleep. They hadn’t blown any time-out whistles or thrown any penalty flags for spoofing or momentum ignition or pinging. This was outrageous, because the SEC and FINRA were supposed to be cleaning up their act after missing abuses like Bernie Madoff’s outrageous Ponzi scheme. But after the two traders disseminated the white paper, nothing happened—nothing at all. Investors in December 2008 had other things on their minds. They were consumed by bailouts, failures, bankruptcies, and the incoming Democratic administration of Barack Obama. The white paper was little more than background noise.

In the end, the SEC would maintain its turf, but the historic legislation would end up saddling the SEC a to-do list containing more than 80 new chores, including studies and the adoption of new regulations, and a deadline of two years for most of them. Simultaneously, Schapiro struggled to reinvigorate the agency, to make it more aggressive. The SEC had missed uncovering the Bernie Madoff Ponzi scheme because somnambulant bureaucrats had ignored direct complaints between 1992 and 2008. There had been a pair of half-hearted investigations and some cursory exams of Madoff’s firm but, according to a report by the SEC’s inspector general, “a thorough and competent investigation or examination was never performed.”

The Trouble with Mary—and Gary The Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) chiefs in charge of the Flash Crash investigation had a litany of strengths but also a cart full of heavy baggage that could affect its progress. Mary Schapiro, the first female to head the SEC, had to live down her imperfect record while at the helm of Financial Industry Regulatory Authority (FINRA), the brokerage industry’s self-regulatory agency. Two big scandals had broken on her watch—the Madoff Ponzi scheme and the alleged, $8 billion, R. Allen Stanford investment scam—and she had been faulted for not uncovering them. Gary Gensler, chairman of the CFTC, had opposed the regulation of the credit derivatives market while serving in the U.S, Treasury under Bill Clinton. Inadequate regulation of this market had been a major cause of the credit market meltdown from 2007 to 2008 that put seven million people out of work and required federal bailouts of major Wall Street banks and brokerage houses.


pages: 322 words: 77,341

I.O.U.: Why Everyone Owes Everyone and No One Can Pay by John Lanchester

Alan Greenspan, asset-backed security, bank run, banking crisis, Bear Stearns, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, fixed income, George Akerlof, Glass-Steagall Act, greed is good, Greenspan put, hedonic treadmill, hindsight bias, housing crisis, Hyman Minsky, intangible asset, interest rate swap, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, junk bonds, Kickstarter, laissez-faire capitalism, light touch regulation, liquidity trap, Long Term Capital Management, loss aversion, low interest rates, Martin Wolf, money market fund, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, new economy, Nick Leeson, Norman Mailer, Northern Rock, off-the-grid, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, Right to Buy, risk-adjusted returns, Robert Shiller, Ronald Reagan, Savings and loan crisis, shareholder value, South Sea Bubble, statistical model, Tax Reform Act of 1986, The Great Moderation, the payments system, too big to fail, tulip mania, Tyler Cowen, value at risk

Much of this doctrinaire laissez-faire involved the nonenforcement of the rules which already existed. An activist SEC, for instance, would never have allowed Bernard Madoff to run his Ponzi scheme; the very consistency of his returns—the funny smell alluded to above—would have been enough to draw their close attention to his accounts. In 2005, a professional investor named Harry Markopolos, a mild-mannered Boston accountant, wrote a twenty-one-page letter to the SEC, pointing out the high probability that Madoff’s fund was a Ponzi scheme. The only alternative explanation Markopolos could come up with wasn’t that Madoff was legit; it was that he was doing something called “front running,” using private information gleaned from his stockbroking operation to make profits for his other funds.

., 115–17, 157–58 liabilities, 31–35 in balance sheets, 25–28, 31–34, 37 of banks, 25, 32–35, 37, 41, 204 of individuals, 27–28, 35 leverage and, 35, 41, 60 libel law, 93 life expectancies, 17, 213 liquidity, 212 housing and, 28–29, 90, 96–97 investments and, 60–61 Lloyds TSB, 36, 38–40 loans, lending, 74–76, 108–9 in balance sheets, 27, 30, 34 of banks, 22, 24, 27, 33–36, 41–42, 58–60, 67, 69–70, 74, 83–84, 91–94, 102, 117, 127, 129–30, 143, 146, 165, 187, 216–17, 229 credit and, 209, 216–17 derivatives and, 50–51, 55, 66–75, 80, 121–22 Exxon deal and, 67–68 interest rates and, 59–60, 66, 74, 102, 108, 145, 172–73 paying the bill and, 220–21 predatory, 122, 127–32 risk and, 66–67, 69–72, 74–75, 80, 95, 117, 145, 174 securitization in, 69, 74 see also mortgages London, 53, 84 housing in, 88–90 see also City of London Long-Term Capital Management (LTCM): collapse of, 142, 162, 164–65, 230–31 derivatives and, 54–56, 80 loss aversion, 137 Lovelock, James, 231 Lowenstein, Roger, 161 Macmillan, Harold, 216 Madoff, Bernard, 105, 171, 191–92, 195 Mailer, Norman, 172 Manias, Panics, and Crashes (Kindleberger), 104 manufacturing, 4, 13, 58, 109, 229 and financial vs. industrial interests, 197, 199 Marxist analysis of, 15–16 stocks and, 148–49 market discipline, 183–84 Markopolos, Harry, 192 Markowitz, Harry, 147–49, 158 mark to market, 42, 105–6 Marx, Karl, 15–16 Maryland, housing in, 125–31 Masters, Blythe, 68, 121 mathematics, 5, 231 derivatives and, 47–48, 52–54, 115–17, 166 risk and, 46, 55–56, 74, 133, 136, 146–50, 154, 158, 160–67, 202 of share pricing, 147–48 Meriwether, John, 54 Merrill Lynch, 39, 77, 120, 190, 227 Merton, Robert, 54–55 microeconomics, 137 Minsky, Hyman, 104 Monetary Policy Committee, 178–79 money: assumptions based on primacy of, 202–4 cost of, 102–3 flows of, 7–9, 26 inconceivable amounts of, 8 Money Machine, The (Coggan), 25 Moody’s Investors Service, 62, 70, 114, 119, 208, 210 Morgan, John Pierpont, 20, 64 Morgan Stanley, 40, 64, 227 Morris, Charles, 42 mortgages, 38–40, 83–87, 89–95, 97–102, 110–32 in balance sheets, 27–28 balloon payments on, 100 and buy-to-let properties, 177 conforming, 112, 124 credit ratings and, 123–24, 126 of Cutter family, 126–27 defaults on, 159–60, 163, 165, 229 derivatives and, 38, 57–58, 75–76, 112–22, 132, 157–60, 172, 210–12 discriminatory practices and, 99–101, 127 durations of, 95 endowment, 86–87, 89–90, 146 Iceland’s economic crisis and, 10–11 interest and, 8, 58, 86, 89, 91–92, 95, 100, 102, 108, 110, 112–14, 122, 128, 145–46, 174, 176, 212 “liar,” 126, 132 “no doc,” 132 No Income, No Job or Assets (NINJA), 126 piggyback, 132 predatory lending and, 122, 127–32 regulation and, 99–100, 185 risk and, 145, 158–60, 163–65 sizes of, 92–94 subprime, 38, 75, 83, 100, 113–19, 122–25, 127, 132, 157–59, 165, 202, 210 see also houses, housing, home ownership Nasdaq, 104 nationalization, 24, 39–40, 228–30 New York Times, The, 77, 98, 208 “Night in Tunisia, A,” 45 Nikkei 225, 51–52, 54 9/11 terrorist attacks, 2, 107 Northern Rock, 5, 39, 94, 194, 206 Obama, Barack, 77, 205 regulation and, 188, 190, 223–24 Objectivism, 142–43, 173 oil, 3–4, 107–8, 148–49 “On Default Correlation” (Li), 116 options, 50–52, 151, 174, 184 how they work, 46–47, 50–51 Osaka exchange, 54 Pacioli, Luca, 26 panic of 1893, 64 panic of 1907, 20, 64 Parker, Charlie, 45 Paulos, John Allen, 8 pensions, 76–77, 165, 204 in balance sheets, 27–28, 31 Phillips, Julia, 199 politics, politicians, 5–6, 19–21, 23–25, 81, 118–19, 169–70, 176–78, 217–26, 228–32 AIG bailout and, 76–78 banks and, 25, 33, 43, 182, 186, 195, 202, 207, 211, 217, 228–31 bonds and, 29–30, 61–62, 103, 109, 118, 144, 176–77, 208–9 derivatives and, 57, 183–86 financial industry’s ascent and, 19–20 free-market capitalism and, 14–15, 19, 21, 23–24 housing and, 87–89, 91, 96–101, 177–78 Iceland’s economic crisis and, 9–10, 12, 24, 223 interest rates and, 102–3, 107–8, 172–80, 221 paying the bill and, 219–23 regulation and, 15, 19–21, 24, 169, 180–92, 195, 199, 201, 223–26 risk and, 142–43, 164–66, 174, 184 Ponzi, Charles, 105 Ponzi schemes, 191–92 poor, poverty, 3–4, 13, 21, 82, 179, 196 housing and, 100, 113, 118, 121–23, 126–27, 130–31, 163 pork bellies, 48–49 portfolio insurance, 151–52, 162 “Portfolio Selection” (Markowitz), 147 Posner, Richard A., 120, 174, 182, 193 Powell, Anthony, 62 price, prices, 105–11, 203 and banking-and-credit crisis, 216–18, 220 bonds and, 61, 63, 102–3, 108–10, 144 derivatives and, 38, 46–52, 54, 56, 75, 158–59, 166 of houses, 5, 28–29, 37–38, 61, 71, 86–91, 101, 109–11, 113, 115, 125, 157, 160, 164–66, 173–76, 194, 208 of oil, 3–4, 107–8, 148–49 risk and, 145–50, 158–59, 164–66 of stocks, 102, 105–6, 109–10, 147–51, 158, 174 of toxic assets, 37–38, 42 volatility of, 47–48, 148–50 “Pricing of Options and Corporate Liabilities, The” (Black and Scholes), 45, 47–48, 147 probabilities, 46, 55, 74, 115, 141, 145, 153–55, 160–63 profits, 20, 28, 104–6, 110, 192, 226–28, 230 banks and, 33, 35, 67, 78, 227–28 and benefits of debt, 59–60 derivatives and, 50, 54, 57, 63, 65, 106, 114, 121–22 Enron and, 105–6 regulation and, 204, 226 risk and, 150, 226 Protection of Homeowners in Foreclosure Act, 131 “Quiet Coup, The” (Johnson), 19–20, 185–86 Ragtime (Doctorow), 64 Rand, Ayn, 142–43, 173 Reagan, Ronald, 14, 19–20, 24, 142, 185 recessions, 42, 89, 94, 142, 171, 175, 219 regulation, deregulation, 15, 19–22, 24, 169, 180–202 banking and, 21, 33, 180–91, 194–96, 199–200, 202, 204–5, 208, 211, 223–27 bond ratings and, 208–9 derivatives and, 68, 70, 73, 153, 183–86, 200–201 framework and regime of, 189–92 market discipline and, 183–84 mortgages and, 99–100, 185 proposals for, 223–26 risk and, 143, 153, 164, 187–88, 191, 195, 202, 204–5, 212, 224, 226 in U.K., 21–22, 105n, 180–82, 194–96, 199–201, 218 in U.S., 181, 184–92, 195, 199–200, 223–24, 227 Reykjavík, 10, 12, 170 risk, risks, 49–58, 66–76, 133–36, 141–67, 211–12, 219 AIG and, 75–76 assessment of, 46, 55–56, 74, 133, 135–36, 141–43, 145–67, 187–88, 191, 202, 205, 212, 216, 226 banks and, 19, 34–37, 41, 133, 135–36, 143, 150–54, 156–57, 160, 165–66, 174, 187–88, 191–95, 202, 204–7, 216, 224, 226, 228, 230 bonds and, 61–63, 103, 118, 144, 154, 208 derivatives and, 46–47, 49–52, 54–55, 57–58, 66–75, 78–80, 114–15, 117–22, 151, 153, 158–60, 163, 166–67, 184–85, 205, 212 desirability of, 144, 146, 150, 206–7 diversification and, 146–48 Greenspan and, 142–43, 164–66, 174, 184 hedging of, 49–50, 52, 58, 115, 205 historical data and, 163, 166 housing and, 88, 94–97, 112–13, 125, 129, 145, 158–60, 163–65 investing and, 5, 68, 70, 88, 103, 144, 146–53, 158, 165, 184, 190 leverage and, 35–36 LTCM and, 55–56 overconcentration of, 72–73 regulation and, 143, 153, 164, 187–88, 191, 195, 202, 204–5, 212, 224, 226 securitization and, 69–70, 163, 165 of stairs, 134–35 VAR and, 151–57, 162–63 risk-adjusted return on capital (RAROC), 150–51 Ritholtz, Barry, 219–20 Robinson, Phillip, 128–31 Rogers, Jim, 221 Royal Bank of Scotland (RBS), 34–36, 120, 227 bailout of, 32, 40, 204 Russia, 3, 15–16, 18, 53 bond default of, 55–56, 162, 164–65 Salomon Brothers, 63 Sanford, Charles, 150 Santander, 40 savings, 28, 86, 107, 177, 179, 187 savings and loan crisis, 73, 185, 220 Scholes, Myron, 45, 47–48, 54–55, 147 Securities and Exchange Commission (SEC), 195 credit ratings and, 209–10 regulation and, 153, 186, 189–92 securitization, 20, 22, 200 derivatives and, 69–70, 74, 113–14, 117–19, 122, 212 risk and, 69–70, 125, 163, 165, 212, 224 selling, sales, 34, 42, 104, 174, 203 of bonds, 59, 61–63, 144 derivatives and, 46–50, 52, 56, 65, 67–68, 73–74, 120 of equity, 58–59 of houses, 28–29, 71, 89–90 risk and, 151–52, 165, 224 Shiller, Robert, 106, 145n, 194 Simon, David, 83–84 Singapore exchange, 54 Skilling, Jeffrey, 106 small numbers, law of, 137 Sociét Générale, 51, 77 solvency, insolvency, 28–29 of banks, 36–38, 40–43, 64, 74–75, 120 Spain, 15, 40, 177, 214 contracting economy of, 222–23 housing in, 92, 110 special purpose vehicles (SPVs), 70, 120 stairs, deaths caused by, 134–35 Standard & Poor’s (S&P), 62, 114, 151, 209 statistics, 160–62 Stefánsdóttir, Rakel, 9–10, 12 stock market, stocks, 22, 54–55, 61, 76, 80, 101–11, 115, 226 bubbles and implosions in, 3, 42, 103–9, 142, 175–76 derivatives and, 50–52, 54 investing in, 59, 73, 101–7, 111, 146–52, 158, 175, 192 new-economy, 103 1929 crash of, 152, 199, 213 October 1987 crash of, 142, 151–52, 161–62, 164–65 prices of, 102, 105–6, 109–10, 147–51, 158, 174 structured investment vehicles (SIVs), 120 Summa de Arithmetica (Pacioli), 26 Summers, Lawrence, 43, 74, 188 Taleb, Nassim, 53, 155–56 Tax Reform Act of 1986 (TRA), 100 technology, 42, 104, 149, 155, 166 terrorism, 2, 12, 18, 107 Tett, Gillian, 121, 193 Thatcher, Margaret, 199, 217, 222 free-market capitalism and, 14, 21, 24 on housing, 87, 91, 98 regulation and, 21, 195–96 torture, end of ban on, 18 tranching, 117–18, 122 Treasury, British, 181–82 Treasury, U.S., 43, 54, 64, 74, 76–78 AIG bailout and, 76, 78 regulation and, 188–90 Treasury bills (T-bills), 29–30, 62, 103, 118, 144, 208 China’s investment in, 109, 176–77 Trichet, Jean-Claude, 92 Trillion Dollar Meltdown, The (Morris), 42 Troubled Assets Relief Program (TARP), 37, 189 Turner, Adair, 181 Tversky, Amos, 136–38, 141 UBS, 36, 120 uncertainty, 96 fair value theory and, 147–48 risk and, 55–56, 153, 163 United Kingdom, 9, 11–12, 18, 28–29, 61, 122–24, 134, 139, 194–202, 216–18 banking in, 5, 11, 32–36, 38–40, 51–54, 76–77, 89, 94, 120, 146, 180, 194–96, 199, 202, 204–6, 211–12, 217, 227–28 bill of, 220–22, 224 and City of London, 21–22, 32, 195–97, 200, 217–18 credit ratings and, 123–24, 209 derivatives and, 72, 200–201 financial vs. industrial interests in, 196–99 free-market capitalism in, 14–15, 21, 230 GDP of, 32, 214, 220 Goodwin’s pension and, 76–77 housing in, 38, 87–98, 110, 122, 177–78 interest rates in, 102, 177–80 personal debt in, 221–22 prosperity of, 214, 216 regulation in, 21–22, 105n, 180–82, 194–96, 199–201, 218 United Nations, 4 United States, 17–22, 34, 62–71, 120–31, 134n, 165, 199–201 AIG bailout and, 76–78 banks of, 36–37, 39–40, 43, 63–71, 73, 75, 77–78, 84, 116, 120–21, 127, 150, 152, 163, 183, 185, 190, 195, 204, 211–12, 219–20, 225, 227–28 bill of, 219–20 China’s investment in, 109, 176–77 credit and, 109, 123–24, 195, 208–9, 211 free-market capitalism in, 14–15, 230 housing in, 37, 82–86, 95, 97–101, 109–10, 114–15, 122, 125–31, 157–58, 163 interest rates in, 102, 107–8, 173–77 regulation in, 181, 184–92, 195, 199–200, 223–24, 227 urban desolation in, 81–86 value, values, 42, 74–75, 78–80, 103–4, 179, 181, 217–18, 220, 227 bonds and, 61, 103 derivatives and, 38, 48–49, 185, 201 housing and, 28–29, 71, 90, 92–95, 111, 176 investing and, 60–61, 104, 198 LTCM and, 55–56 notional, 38, 48–49, 80 value at risk (VAR), 151–57, 162–63 Vietnam War, 18, 220 Viniar, David, 163 volatility, 20, 158 risk and, 47–48, 148–50, 161 Volcker, Paul, 20 Waldrow, Mary, 127 Wall Street, 22, 53, 64, 129, 188 Washington Post, The, 18 wealth, 4, 10, 19–21, 64, 204, 206 financial industry’s ascent and, 20–21 in free-market capitalism, 15, 19, 230 housing and, 87, 90, 121 Keynes’s predictions on, 214–15 in West, 218–19 Weatherstone, Dennis, 152 Wells Fargo, 84, 127 Wessex Water, 105n West, 14–18, 43, 213, 231 conflict between Communist bloc and, 16–18 free-market capitalism in, 14–15, 17, 21, 23 wealth in, 218–19 wheat, 49n, 52 When Genius Failed (Lowenstein), 161 Williams, John Burr, 147 Wilson, Lashawn, 130–31 Wire, The, 83–84 World Bank, 58, 65, 69 * GDP, which will be mentioned quite a few times in this story, sounds complicated but isn’t: it’s nothing more than the value of all the goods and services produced in an economy.


Molly's Game: The True Story of the 26-Year-Old Woman Behind the Most Exclusive, High-Stakes Underground Poker Game in the World by Molly Bloom

housing crisis, Ponzi scheme, Steve Jobs

Glen was in for $400,000, so we ordered lunch, more cigarettes, and more vodka. We put on the sports channels for the guys: I had several television screens in my living room for this very purpose. But I was close to cutting Glen off because I couldn’t afford a hit this big if he decided not to pay. Most game runners are essentially running Ponzi schemes. They extend massive credit without actually having the capital to back it up: that’s why most games die. I didn’t work this way—I didn’t extend credit I couldn’t back up, and I always covered. I couldn’t afford to die. Luckily, Glen started winning somehow. He smiled and winked at me, and again, his flirtation affected me.

I never got the call I was expecting from Vinny . . . or anyone else. I couldn’t believe how lucky I was. MY LUCK DIDN’T LAST FOR LONG: A subpoena arrived via certified mail. Brad Ruderman, one of my players from my old L.A. game had been indicted by the federal government. Allegedly his fund had been a Ponzi scheme. “Bad Brad” Ruderman was known in my games in Los Angeles as “free money.” It became routine after I sent out the invitation text for the weekly game that everyone responded with, “Is Brad playing?” He was so bad it often felt like he was trying to lose. No one could actually play the cards that poorly after two years of steady practice.

Brad had already disclosed information about the game, the players, the amount he lost, who the checks went to, and allegedly that the game was run and orchestrated by me. I kept reading the subpoena. Brad was claiming that I lured him into my games and that in these clandestine rooms he had developed a gambling addiction which led him to lose sight of his morals, culminating in the Ponzi scheme. So I flew to Los Angeles. MY OLD, L.A. ATTORNEY picked me up at the airport. The deposition was as unpleasant as I had expected. After hours of skirting questions and only confirming innocuous details, I was exhausted. The questions dredged up memories of my L.A. life, which I had pushed into that corner of my mind that I refused to visit.


pages: 416 words: 118,592

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, backtesting, Bear Stearns, beat the dealer, Bernie Madoff, book value, BRICs, butter production in bangladesh, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial engineering, financial innovation, fixed income, framing effect, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Japanese asset price bubble, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, margin call, market bubble, Mary Meeker, money market fund, mortgage tax deduction, new economy, Own Your Own Home, PalmPilot, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, stock buybacks, stocks for the long run, sugar pill, survivorship bias, The Myth of the Rational Market, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond

ZZZZ Best was accused of acting as a front for organized-crime figures who would buy equipment for the company with “dirty” money and replace their investment with “clean” cash skimmed from the proceeds of ZZZZ Best’s legitimate carpet-cleaning business. The spectacular growth of the company was produced with fictitious contracts, phony credit card charges, and the like. The operation was a giant Ponzi scheme in which money was recycled from one set of investors to pay off another. Minkow was also charged with skimming millions from the company treasury for his own personal use. Minkow and all the investors in ZZZZ Best were in wall-to-wall trouble. The next chapter of the story (after Chapter Eleven) occurred in 1989 when Minkow, then twenty-three, was convicted of fifty-seven counts of fraud, sentenced to twenty-five years in prison, and required to make restitution of $26 million he was accused of stealing from the company.

The updraft encourages more people to buy the stocks, which causes more TV and print coverage, which causes even more people to buy, which creates big profits for early Internet stockholders. The successful investors tell you at cocktail parties how easy it is to get rich, which causes the stocks to rise further, which pulls in larger and larger groups of investors. But the whole mechanism is a kind of Ponzi scheme where more and more credulous investors must be found to buy the stock from the earlier investors. Eventually, one runs out of greater fools. Even highly respected Wall Street firms joined in the hot-air float. The venerable investment firm Goldman Sachs argued in mid-2000 that the cash burned by the dot-com companies was primarily an “investor sentiment” issue and not a “long-term risk” for the sector or “space,” as it was often called.

And as Robert Shiller, author of the best-selling Irrational Exuberance, has noted, the process feeds on itself in a “positive feedback loop.” The initial price rise encourages more people to buy, which in turn produces greater profits and induces a larger and larger group of participants. The phenomenon is another example of the Ponzi scheme that I described in chapter 4, in connection with the Internet bubble. Eventually one runs out of greater fools. Such herding is not limited to unsophisticated individual investors. Mutual-fund managers have a tendency to follow the same strategies and herd into the same stocks. Indeed, a study by Harrison Hong, Jeffrey Kubik, and Jeremy Stein, three leaders in the field of behavioral finance, determined that mutual-fund managers were more likely to hold similar stocks if other managers in the same city were holding similar portfolios.


pages: 387 words: 112,868

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by Nathaniel Popper

4chan, Airbnb, Alan Greenspan, Apple's 1984 Super Bowl advert, banking crisis, Ben Horowitz, Benchmark Capital, bitcoin, Bitcoin Ponzi scheme, blockchain, Burning Man, buy and hold, capital controls, Colonization of Mars, crowdsourcing, cryptocurrency, David Graeber, Dogecoin, Edward Snowden, Elon Musk, Extropian, fiat currency, Fractional reserve banking, Jeff Bezos, Julian Assange, Kevin Roose, Kickstarter, life extension, litecoin, lone genius, low interest rates, M-Pesa, Marc Andreessen, Mark Zuckerberg, Max Levchin, Neal Stephenson, Occupy movement, off-the-grid, PalmPilot, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price stability, QR code, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Simon Singh, Skype, slashdot, smart contracts, Startup school, stealth mode startup, the payments system, transaction costs, tulip mania, Tyler Cowen, Virgin Galactic, Vitalik Buterin, WikiLeaks

Just as the Internet took power from big media organizations and put it in the hands of bloggers and dissidents, Bitcoin held out the promise of taking power from banks and governments and giving it to the people using the money. This was all rather high-minded stuff and it attracted plenty of derision—most ordinary folks imagined it falling somewhere on the spectrum between Tamagotchi pet and Ponzi scheme, when they heard about it at all. But Bitcoin had the good fortune of entering the world at a utopian moment, in the wake of a financial crisis that had exposed many of the shortcomings of our existing financial and political system, creating a desire for alternatives. The Tea Party, Occupy Wall Street, and WikiLeaks—among others—had divergent goals, but they were united in their desire to take power back from the privileged elite and give it to individuals.

Practically no one was promising to take Bitcoin for anything. The primary value the coins had at this point was the expectation that they would be worth more in the future, allowing current holders to cash out for more than they paid. To some cynics, that description made Bitcoin sound suspiciously like a less savory sort of financial invention: a Ponzi scheme. FROM THE OUTSIDE, it would have been easy to conclude that Charlie and BitInstant were somehow dodging all these problems. Charlie was shopping for new, larger real estate for his company and eventually settled on a well-appointed suite in an office tower. Charlie had finally managed to move out of his parents’ basement in Brooklyn.

Gox collapse, 309 2014 Bitcoin Pacifica (Lake Tahoe), 346–348 Anoncoin (digital currency), 270–271 Anti-state.org (website), 29 Argentina, 153–161, 182, 240–242, 259, 277–280, 286, 349–353 ASIC (computer chip), 189–190, 259, 329–330 Assange, Julian, 56–57 Athey, Susan, 345 Atlantis, 245 Australia, 44–45, 117, 168, 171 Automated Clearing House (ACH), 133 Avalon (ASIC), 190, 206 Back, Adam, 17–22, 339, 348 Baidu (Chinese search engine), 261–262 bank bailout of 2008, 32, 111 Bank of America, 272 Bates, Richard, 75–77, 115–116 bee-te-bee (Chinese Bitcoin), 255–256 Beijing Summer Olympics (2008), 145 Benchmark Capital, 282, 293, 305 Bernanke, Ben, 266 Bezos, Jeff, 353 Bharara, Preet, 299–300 Bill and Melinda Gates Foundation, 353–355 Bitcoin arrival of Gavin Andresen, 44–47 arrival of Martti Malmi, 29–30 building trust, 24–25, 33, 48, 61–62, 69, 99–100, 279, 315, 339 buying/selling with, 43–44, 82, 119–120, 129–130 changing business model, 236–239 characterization as “cryptocurrency,” 36 comparison to gold, 157–158, 165, 182 comparison to paper money, 219, 286–287 creation and operation of original code, 4–6, 20–24 disappearance of Satoshi Nakamoto, x–xiii hacking and scandals, 91–99 increasing price/value, 38, 66–69, 79, 81–85, 89–91, 131, 175, 180, 184, 193–196, 204–206, 210–211, 250–253, 262–264, 267, 271–275, 284–285 legality/government regulation, 196–198, 251 limitations based upon computers, 347 Mt. Gox collapse busts bubble, 308–317 origin and ideology, vii–xv, 5, 113–114 as Ponzi scheme, 220 proof-of-work, 18–19 Bitcoin Foundation candidacy of Bobby Lee, 345 dealing with Bitcoin collapse, 314–315 Gavin Andresen as member, 192 involvement in Senate hearing, 265–267, 270, 300–302 Patrick Murck as member, 176 planning and creation of, 138–142 regulatory problems, 217–219, 233–236 resignation of Charlie Shrem, 302 Bitcoinica, 237 Bitcoin Investment Trust, 314 Bitcoin Meetups.


pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

"World Economic Forum" Davos, Admiral Zheng, Alan Greenspan, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, full employment, G4S, George Akerlof, German hyperinflation, Gini coefficient, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, junk bonds, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low interest rates, low skilled workers, market clearing, Martin Wolf, mass immigration, Meghnad Desai, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, Savings and loan crisis, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, We are all Keynesians now, women in the workforce, working-age population, Y2K, Yom Kippur War

As they did so, they allowed banks to raise funds well beyond their deposits through the creation of securitized products. Many of these funds were lent to US households with questionable credit histories in the form of sub-prime mortgages. Some of the funds raised, though, were lent back to the emerging economies. This wasn’t quite a Ponzi scheme (although Ponzi schemes, most obviously Bernard L. Madoff Investment Securities LLC, nevertheless developed), but it had much the same effect. The combination of rapidly growing emerging economies, 1990s Asian failures and a hunt for yield left investors with the belief that capital gains had to be plucked from the tree without any real regard for risk.

(i), (ii) Permanent Income Hypothesis (i) Persia (i), (ii) Philippines (i), (ii), (iii) Pike, Rob (i) Pingali, Prabhu (i) plague (i), (ii) Plaza accord (i) pogroms (i), (ii) Poland (i) political economy inequalities (i) education (i) the emerging gap (i) emerging nations and income inequality in the developed world (i) food shortages (i) globalization (i) living with inequality (i) new modes of distribution (i) not getting just rewards (i) a three-country model (i) too much domesticity (i) United Kingdom (i) winners and losers (i) market forces (i) return of political economy (i) scarcity (i) state capitalism (i) politics (i), (ii), (iii), (iv), (v) Ponzi schemes (i) population ageing anarchy in capital markets (i), (ii) command over limited resources (i) demographic dividends and deficits (i), (ii), (iii), (iv) globalization (i) government debt (i) Japan (i) migration (i), (ii), (iii), (iv), (v) nationalism (i) pensions and healthcare (i) political economy and inequalities (i), (ii) savings (i) trade (i) population demographics China (i), (ii) demographic dividends and deficits (i) demographic dynamics (i), (ii) globalization (i), (ii) infant mortality (i) Japan (i) migration (i) pensions and healthcare (i) political economy and inequalities (i) scarcity (i), (ii), (iii), (iv), (v) population of working age (i), (ii), (iii), (iv), (v), (vi) porcelain (i) ports (i) Portsmouth FC (i) Portugal (i), (ii), (iii) Potosí (i) poverty globalization (i), (ii), (iii) migration (i) political economy and inequalities (i), (ii), (iii) price stability and economic instability (i) scarcity (i) Spain and silver (i) price stability anarchy in capital markets (i), (ii) political economy and inequalities (i), (ii), (iii), (iv) price stability brings economic instability (i) back to the 1970s (i) defining and controlling inflation (i) emerging economies (i), (ii) inflation as an instrument of income and wealth distribution (i) inflation as a result of currency linkages (i) overview (i), (ii) from stability to instability (i), (ii) we are not alone (i) scarcity (i), (ii), (iii) state capitalism (i), (ii) trade (i), (ii) printing money (i), (ii) privatization (i), (ii) productivity anarchy in capital markets (i) land grabs (i) political economy and inequalities (i), (ii), (iii) population demographics (i), (ii), (iii), (iv) price stability (i), (ii), (iii), (iv), (v) rent-seeking behaviour (i) scarcity (i), (ii), (iii), (iv) Spain and silver (i) state capitalism (i) trade (i) Western progress (i), (ii) profits anarchy in capital markets (i), (ii) price stability (i), (ii), (iii), (iv) scarcity (i), (ii) state capitalism (i) trade (i) property rights population demographics (i) scarcity (i), (ii), (iii) secrets of Western success (i), (ii) the West’s diminished status (i), (ii), (iii), (iv) Prophet Mohammed (i) prostitution (i) protectionism anarchy in capital markets (i), (ii) globalization (i) migration (i) nineteenth century (i) political economy and inequalities (i), (ii), (iii) secrets of Western success (i), (ii), (iii) trade (i) the West’s diminished status (i), (ii), (iii), (iv), (v) Prussia (i) public sector (i), (ii) purchasing power parity (i), (ii), (iii) Putin, Vladimir (i), (ii), (iii) Qu Hongbin (i) racism (i), (ii), (iii), (iv) railways (i), (ii) Rauh, Joshua (i) Rawls, John (i) raw materials (i), (ii), (iii), (iv), (v), (vi), (vii) Reagan, Ronald (i), (ii) real estate (i), (ii), (iii), (iv), (v), (vi) recession (i), (ii), (iii), (iv), (v), (vi), (vii) Reformation (i) regulation (i), (ii), (iii) religion (i), (ii), (iii), (iv), (v) remittances (i), (ii) renminbi (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) rent-seeking behaviour (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) reserve currency (i), (ii), (iii), (iv), (v), (vi), (vii) Reserve Fund for Future Generations (i) reserves see foreign-exchange reserves resources population demographics (i), (ii), (iii) price stability and economic instability (i) scarcity (i), (ii), (iii), (iv), (v), (vi) state capitalism (i) the West’s diminished status (i), (ii), (iii) retirement (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Ricardo, David (i), (ii), (iii), (iv), (v), (vi) rice (i), (ii) risk (i), (ii), (iii) Rockefeller Center (i), (ii), (iii) Rocket steam locomotive (i) Roman Empire (i), (ii), (iii) Romania (i), (ii), (iii) Rover Group (i) Royal Navy (i), (ii) rural populations (i), (ii), (iii), (iv), (v), (vi) Russian Revolution (i), (ii) Russia/Russian Federation pogroms (i), (ii) political economy and inequalities (i), (ii), (iii) population demographics (i), (ii), (iii) a post-dollar financial order (i), (ii), (iii) price stability and economic instability (i), (ii) Russian default (i), (ii), (iii) scarcity (i), (ii) secrets of Western success (i), (ii), (iii) state capitalism (i), (ii), (iii), (iv) trade (i), (ii), (iii), (iv), (v) the West’s diminished status (i), (ii), (iii), (iv), (v) Saddam Hussein (i) Samsung (i) Samuelson, Paul (i), (ii) sanitation (i), (ii) Saudi Arabia (i), (ii), (iii), (iv), (v), (vi), (vii) savings anarchy in capital markets (i), (ii), (iii), (iv), (v) economic models (i), (ii) political economy and inequalities (i) population demographics (i), (ii), (iii) price stability and economic instability (i), (ii) state capitalism (i), (ii), (iii), (iv) trade (i) the West’s diminished status (i), (ii), (iii) Scandinavia (i) scarcity (i) back to the classical economists (i) faith in the market (i) history (i) opportunity for all (i) overview (i) population demographics (i), (ii) price stability and economic instability (i) technology replication and resource scarcity (i) the West’s diminished status (i), (ii) Wimbledon and the Olympics (i) Schröder, Gerhard (i), (ii) Schumer, Charles (i) science (i), (ii), (iii) SCO see Shanghai Co-operation Organization Scotland (i) Seat (i) Second World War (i), (ii), (iii), (iv) securities (i), (ii), (iii), (iv) Sen, Amartya (i) Seoul (i) Sevilla, Jaypee (i) Shah, Saef (i) Shanghai (i), (ii) Shanghai Co-operation Organization (SCO) (i), (ii), (iii) Shinawatra, Thaksin (i) Shinkasen (‘Bullet’ train) (i) ships (i), (ii), (iii) Siemens (i) Silicon Valley (i) silk (i), (ii), (iii) Silk Road (i), (ii), (iii) silver (i), (ii) Singapore (i), (ii), (iii) Sinopec (i) SIVs see special investment vehicles Škoda (i) slavery political economy and inequalities (i) population demographics (i), (ii), (iii) scarcity (i), (ii) secrets of Western success (i) Spain (i) Slovakia (i) Slovenia (i) Smetters, Kent (i) Smith, Adam (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Smoot–Hawley trade tariff (i), (ii) smuggling (i), (ii) soccer clubs (i), (ii), (iii), (iv), (v) social security (i), (ii), (iii), (iv), (v), (vi) soft knowledge (i), (ii) software development (i), (ii), (iii) South Korea (i), (ii), (iii), (iv), (v), (vi) South Stream (i), (ii), (iii), (iv) sovereign wealth funds (SWFs) (i), (ii), (iii), (iv), (v) Soviet communism (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Soviet Union (i), (ii), (iii), (iv), (v) Spain (i), (ii), (iii), (iv) special investment vehicles (SIVs) (i), (ii) specialization (i), (ii), (iii), (iv), (v) spending power (i), (ii), (iii), (iv) spice trade (i), (ii), (iii) sports (i), (ii), (iii), (iv) stagflation (i), (ii) Standard Bank (i), (ii) ‘Starbucks effect’ (i), (ii) state (i), (ii), (iii), (iv) state capitalism indulging the US no more (i), (ii), (iii) migration (i) political economy and inequalities (i), (ii), (iii), (iv) protectionism (i) rise of state capitalism (i) dynamics of excess saving (i) excess savings and command over assets (i) food prices (i) heading East (i) overruling the market (i) ownership versus control (i) rise of Russian power politics (i) rise of sovereign wealth funds (i) sleeping giants no more (i) unwilling sellers (i) who owns what?


pages: 268 words: 81,811

Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History by Liam Vaughan

algorithmic trading, backtesting, bank run, barriers to entry, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Bob Geldof, centre right, collapse of Lehman Brothers, data science, Donald Trump, Elliott wave, eurozone crisis, family office, financial engineering, Flash crash, Great Grain Robbery, high net worth, High speed trading, information asymmetry, Jeff Bezos, Kickstarter, land bank, margin call, market design, market microstructure, Market Wizards by Jack D. Schwager, Navinder Sarao, Nick Leeson, offshore financial centre, pattern recognition, Ponzi scheme, proprietary trading, Ralph Nelson Elliott, Reminiscences of a Stock Operator, Ronald Reagan, selling pickaxes during a gold rush, sovereign wealth fund, spectrum auction, Stephen Hawking, the market place, Timothy McVeigh, Tobin tax, tulip mania, yield curve, zero-sum game

and I said, ‘On a good day, nine hundred grand.’ They said, ‘That’s crazy.’ ” A week later, after Nav sent them his statements, RCG turned him down. When he asked why, they told him they didn’t think it was possible for a trader in his bedroom to make that much money. “They said they believe that it’s a Ponzi scheme,” Nav recounted. “They thought I was Bernie Madoff!” Nav hoped he’d found an alternative when Knight Capital agreed to take him on, but then the firm lost $460 million and he was left brokerless once again. Unable to trade and with few other interests, Nav returned to the proverbial garage to work on his trading machine.

The judge asked Nav to confirm he agreed to forfeit the $12.87 million, and Burlingame said he did, although so far Kobre & Kim had still only managed to retrieve $6.5 million—essentially what was seized from the R. J. O’Brien trading account. “Judge, if I might, we’ve been engaged in a process with the CFTC for the last sixteen months of attempting to collect the defendant’s assets all of which have been stolen from…I mean, he invested in a Ponzi scheme,” the lawyer explained. In lieu of the full amount, the judge agreed for Nav’s parents and brother, Jasvinder, to place a lien on their homes to the value of $750,000. To confirm the arrangement, she placed a call to Hounslow that was played on the courtroom’s speakers. “Good evening. My name is Judge Kendall, and you are on the record and in open court.

It was one of those rare finance stories that cross into the mainstream—the genius kid from the wrong side of the tracks who finds himself in the crosshairs of the U.S. government—and I watched with fascination as the Hound of Hounslow butted up against the UK and U.S. legal systems. Then his lawyer revealed in court that, despite making tens of millions of pounds, the master manipulator of the S&P 500 couldn’t pay his fine because he himself had been the victim of a Ponzi scheme, and I knew someone had to write a book. This is a work of nonfiction. All the characters and events I describe are real, and no details have been changed or exaggerated for effect. The narrative was built using both public and private documents, which I detail extensively in the notes, as well as interviews with over 150 people from every facet of the story, many numerous times.


pages: 263 words: 80,594

Stolen: How to Save the World From Financialisation by Grace Blakeley

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, basic income, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Big Tech, bitcoin, bond market vigilante , Bretton Woods, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, cryptocurrency, currency peg, David Graeber, debt deflation, decarbonisation, democratizing finance, Donald Trump, emotional labour, eurozone crisis, Extinction Rebellion, extractivism, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, full employment, G4S, gender pay gap, gig economy, Gini coefficient, global reserve currency, global supply chain, green new deal, Greenspan put, housing crisis, Hyman Minsky, impact investing, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Jeremy Corbyn, job polarisation, junk bonds, Kenneth Rogoff, Kickstarter, land value tax, light touch regulation, low interest rates, low skilled workers, market clearing, means of production, Modern Monetary Theory, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, paradox of thrift, payday loans, pensions crisis, Phillips curve, Ponzi scheme, Post-Keynesian economics, post-war consensus, price mechanism, principal–agent problem, profit motive, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Right to Buy, rising living standards, risk-adjusted returns, road to serfdom, Robert Solow, savings glut, secular stagnation, shareholder value, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, the built environment, The Great Moderation, too big to fail, transfer pricing, universal basic income, Winter of Discontent, working-age population, yield curve, zero-sum game

But when Carillion collapsed in 2017, the government did not step in to help — perhaps because of the public outrage at the incredible irresponsibility of the firm. When the auditors came in to manage Carillion’s bankruptcy, they found that the company had just £29m in cash and owed £1.2bn to the banks, meaning that it didn’t even have enough money to pass through administration before entering liquidation. Carillion had become a giant, state-sponsored Ponzi scheme, siphoning off money from the taxpayer and channelling it into the pockets of wealthy shareholders. Whilst many of those shareholders who did not sell on the first signs of trouble have now lost out, the real losers have been the contractors and workers hired by Carillion, many of whom have found themselves out of pocket.

More money enters the financial system, pushing up asset prices even further and creating a self-reinforcing cycle of optimism-driven asset price inflation. Eventually, the financial cycle enters a phase of “Ponzi finance”, with investors piling into assets one after another based purely on the speculation-driven price rises of the recent past. Just like a Ponzi scheme which uses new recruits to pay off old lenders, investors end up taking out debt simply to repay interest. This underlies Minsky’s famous insight that “stability is destabilising”: when investors experience an extended period of high returns without any crashes, they become overexuberant about the prospects of future growth and take risks they otherwise might not.

In doing so, they were attempting to disguise the chronic shortfall in demand finance-led growth threatened to create, and to make the system politically sustainable. Rising mortgage lending increased house prices, eventually inflating a bubble that saw the British and American housing markets turned into a giant Ponzi scheme. Banks took this mortgage debt, packaged it up and sold it on international financial markets, disguising the amount of risk they were taking. Capital flooded into the US and the UK to take advantage of the boom, and repressed activity in the rest of the economy. The spark that set the whole thing alight came from the US, but the fallout extended throughout the financialised economies of the global North, and was particularly severe in Britain, whose economy had been buoyed by rising debt and asset prices for decades.


pages: 482 words: 122,497

The Wrecking Crew: How Conservatives Rule by Thomas Frank

"Hurricane Katrina" Superdome, affirmative action, Alan Greenspan, anti-communist, barriers to entry, Berlin Wall, Bernie Madoff, British Empire, business cycle, classic study, collective bargaining, corporate governance, Credit Default Swap, David Brooks, disinformation, edge city, financial deregulation, full employment, George Gilder, guest worker program, Ida Tarbell, income inequality, invisible hand, job satisfaction, Michael Milken, Mikhail Gorbachev, Mont Pelerin Society, mortgage debt, Naomi Klein, Nelson Mandela, new economy, P = NP, plutocrats, Ponzi scheme, Ralph Nader, rent control, Richard Florida, road to serfdom, rolodex, Ronald Reagan, school vouchers, shareholder value, Silicon Valley, stem cell, stock buybacks, Strategic Defense Initiative, Telecommunications Act of 1996, the scientific method, too big to fail, Triangle Shirtwaist Factory, union organizing, War on Poverty

The system is corruption itself. In its heyday, conservative Washington was saturated with these ideas: The Federal Reserve as a “legal counterfeiter” because it is empowered to adjust the nation’s money supply. The Community Reinvestment Act, which outlaws redlining, as “a blackmail tool.” Social Security as a “Ponzi scheme.” The EPA as “the Gestapo of government.” The operations of city governments as “looting.” As for taxation, wrote Grover Norquist, “your average street mugger is an improvement. He knows it’s your wallet. He knows you earned the money. He just wants it for himself and he is straightforward enough to say, ‘Give me your money, I have a knife.’

Its overworked staffers, whose pay was comparable to that of other federal employees, were expected to face down some of the most highly paid corporation lawyers in the world—a disparity that led, here as elsewhere, to the revolving door. By the time of the crash, the SEC was so utterly clueless that it completely missed the greatest Ponzi scheme of all time, the investment firm run by Bernard Madoff, despite having received numerous tips on the megafraud. It took years for conservatives to transform the SEC into the laughingstock it became in 2008. Their vandalism began, as we have seen elsewhere, with personnel decisions: Before the 1980s, SEC commissioners were drawn from within the agency; from Reagan’s presidency on, they came from Wall Street.

Our ancestors understood that capitalism requires supervision; when you take it away—or when you defund the supervisors, or make them answer to the supervised, or replace them with a “voluntary compliance” program—suddenly you’ve got diseased factories shipping salmonella-laced peanut butter throughout the country. You’ve got worthless mortgage-backed securities—rated triple-A, backed up by useless appraisals, issued by defunct banks—sickening financial institutions from San Diego to Budapest. You’ve got the world’s greatest Ponzi scheme spreading its gift of bankruptcy throughout the land. Thus did the conservative movement keep its appointment with destiny. Free-market techniques secured for it a world of free markets; criminal techniques gave it a land in which crime was triumphant. And with their eyes fixed firmly on their nineteenth-century utopia, its armies of privatizers, pressure boys, PAC men, political entrepreneurs, and professional victims made the world safe for predation.


pages: 154 words: 47,880

The System: Who Rigged It, How We Fix It by Robert B. Reich

"World Economic Forum" Davos, Adam Neumann (WeWork), affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Bernie Madoff, Bernie Sanders, Big Tech, Boeing 737 MAX, business cycle, Carl Icahn, clean water, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate raider, corporate social responsibility, Credit Default Swap, crony capitalism, cryptocurrency, Donald Trump, ending welfare as we know it, financial deregulation, Glass-Steagall Act, Gordon Gekko, green new deal, Greta Thunberg, immigration reform, income inequality, independent contractor, Jeff Bezos, job automation, junk bonds, London Whale, Long Term Capital Management, market fundamentalism, mass incarceration, Michael Milken, mortgage debt, Occupy movement, opioid epidemic / opioid crisis, Paris climate accords, peak TV, Ponzi scheme, race to the bottom, Robert Bork, Ronald Reagan, Savings and loan crisis, shareholder value, Sheryl Sandberg, stock buybacks, too big to fail, trickle-down economics, union organizing, WeWork, women in the workforce, working poor, zero-sum game

In the bank’s 2013 quarterly report, its list of legal imbroglios ran to nine pages of small print: improper energy trading, fraud in collecting credit card debt, misrepresenting the quality of mortgages in securities sold to investors, misleading credit card customers, bribing officials in foreign countries to buy certain securities, illegally foreclosing on mortgages, covering up Bernie Madoff’s Ponzi scheme, manipulating the foreign exchange market. That year the bank paid out more than $20 billion to settle the claims but still made a profit of $17.9 billion. So JPMorgan’s board voted to boost Dimon’s pay to $20 million, a 74 percent increase over the year before, which came out to about $1 million for every billion dollars JPMorgan had been fined for illegal activities.

In fact, Dimon’s star actually rose at the bank when, due to his personal connections, he negotiated with the government directly. He reached out to then attorney general Eric Holder to get a $13 billion settlement on claims of mortgage fraud. A few months later, he personally approached Preet Bharara, the United States attorney in Manhattan who had led the investigation into the Madoff Ponzi scheme, and settled that one, too. Still, JPMorgan’s board struggled to strike the right balance in determining Dimon’s compensation, according to the people briefed on the matter. Cutting his pay would have sent a message to bank regulators that the firm understood it had done wrong, but might have angered Dimon.


pages: 265 words: 93,231

The Big Short: Inside the Doomsday Machine by Michael Lewis

Alan Greenspan, An Inconvenient Truth, Asperger Syndrome, asset-backed security, Bear Stearns, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, facts on the ground, financial engineering, financial innovation, fixed income, forensic accounting, Gordon Gekko, high net worth, housing crisis, illegal immigration, income inequality, index fund, interest rate swap, John Meriwether, junk bonds, London Interbank Offered Rate, Long Term Capital Management, low interest rates, medical residency, Michael Milken, money market fund, moral hazard, mortgage debt, pets.com, Ponzi scheme, Potemkin village, proprietary trading, quantitative trading / quantitative finance, Quicken Loans, risk free rate, Robert Bork, short selling, Silicon Valley, tail risk, the new new thing, too big to fail, value at risk, Vanguard fund, zero-sum game

To sift every pool of subprime mortgage loans took him six months, but when he was done he came out of the room and gave Eisman the news. All these subprime lending companies were growing so rapidly, and using such goofy accounting, that they could mask the fact that they had no real earnings, just illusory, accounting-driven, ones. They had the essential feature of a Ponzi scheme: To maintain the fiction that they were profitable enterprises, they needed more and more capital to create more and more subprime loans. "I wasn't actually a hundred percent sure I was right," said Vinny, "but I go to Steve and say, 'This really doesn't look good.' That was all he needed to know.

They were doing what they were doing without thinking very much about it. It was in Las Vegas that Eisman and his associates' attitude toward the U.S. bond market hardened into something like its final shape. As Vinny put it, "That was the moment when we said, 'Holy shit, this isn't just credit. This is a fictitious Ponzi scheme.'" In Vegas the question lingering at the back of their minds ceased to be, Do these bond market people know something we do not? It was replaced by, Do they deserve merely to be fired, or should they be put in jail? Are they delusional, or do they know what they're doing? Danny thought that the vast majority of the people in the industry were blinded by their interests and failed to see the risks they had created.

"The minute Steve starts to speak," said Vinny, "the stock starts to fall." As Eisman explained why no one in his right mind would own the very shares he had bought sixteen hours earlier, Danny dashed off text messages to his partners. 9:49. Oh my--Bear at 47 "If [the U.S. financial system] sounds like a circular Ponzi scheme it's because it is." 9:55. Bear is 43 last OMG "The banks in the United States are only beginning to come to grips with their massive loan problems. For instance, I wouldn't own a single bank in the State of Florida because I think they might all be gone." 10:02. Bear 29 last!!!! "The upper classes of this country raped this country.


pages: 310 words: 90,817

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown by Detlev S. Schlichter

bank run, banks create money, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, currency peg, fixed income, Fractional reserve banking, German hyperinflation, global reserve currency, inflation targeting, Kenneth Rogoff, Kickstarter, Long Term Capital Management, low interest rates, market clearing, Martin Wolf, means of production, Money creation, money market fund, moral hazard, mortgage debt, open economy, Ponzi scheme, price discovery process, price mechanism, price stability, pushing on a string, quantitative easing, reserve currency, rising living standards, risk tolerance, savings glut, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, We are all Keynesians now, Y2K

Money has been exchanged for a claim against a bank, which—one hopes—is almost as good as money. Inevitably it comes with extra risk, and the interest income it provides can be considered compensation for this risk. It would not be entirely incorrect to compare fractional-reserve banking with a Ponzi scheme. The depositors pool their money holdings in a bank and get paper receipts in return. They know that the banker will issue more receipts as part of his lending business so that ultimately considerably more paper tickets circulate than is money in the bank to pay out every holder of a paper ticket.

The disastrous and misguided idea of state-sponsored “cheap credit” has to be abandoned completely. The state has to exit, once and for all, the sphere of money and banking. Personally, this would be my preferred solution. I do not think that fractional-reserve banking should be outlawed by the state. The practice can correctly be called a Ponzi scheme, but in a free society people should still be allowed to join such schemes. As long as the fallout from this practice is not being socialized through central banking and other support mechanisms by the state, we should trust voluntary cooperation on free markets to properly guide and restrict this activity.

See also money, paper money Enron equilibrium, economic European Central Bank (ECB) evenly rotating economy F Fannie Mae Federal Reserve establishment of fiat money fiduciary model Fisher, Irving foreign exchange market Foster, William Trufant fractional-reserve banking as Ponzi scheme controls of misconceptions about stability of state and understanding franc France, paper money and Freddie Mac Friedman, Milton functions of money G GDP. See gross domestic product Geldwertstabilisierung und Konjunkterpolitik The General Theory of Employment, Interest, and Money Germany, paper money and global foreign exchange market global reserve currency global state fiat money standard gold gold standard Nixon and resurrecting Roosevelt and goldsmiths Goldtheorie und Konjunkturtheorie goods production, money production versus government debt, monetization of government, funding Great Depression greenbacks Gresham’s law gross domestic product (GDP) effect of money injections on H Harrison, Henry Hayek, Fredrich August von hyperinflation I IMF.


pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Alan Greenspan, Albert Einstein, algorithmic trading, Andy Kessler, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, BRICs, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, carbon credits, Carl Icahn, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, deal flow, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Dr. Strangelove, Dutch auction, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Fall of the Berlin Wall, financial engineering, financial independence, financial innovation, financial thriller, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, global reserve currency, Goldman Sachs: Vampire Squid, Goodhart's law, Gordon Gekko, greed is good, Greenspan put, happiness index / gross national happiness, haute cuisine, Herman Kahn, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", job automation, Johann Wolfgang von Goethe, John Bogle, John Meriwether, joint-stock company, Jones Act, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Michael Milken, Mikhail Gorbachev, Milgram experiment, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, Phillips curve, planned obsolescence, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, Reminiscences of a Stock Operator, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Thaler, Right to Buy, risk free rate, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, stock buybacks, survivorship bias, tail risk, Teledyne, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, two and twenty, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game

But the interest and the amount borrowed may not be paid back, therefore requiring more borrowing that continues until the borrower collapses under the weight of debt. The only way out is for borrowers to induce new borrowers into larger amounts of debt to allow them to pay off their own debts. The system works, like any Ponzi scheme, as long as everyone believes the debt can be paid back and the market value of assets bought with that debt keeps rising. The economy inexorably gravitates toward debt-fueled consumerism, inflation, and increasing debt. This leads to a constant cycle of credit booms and bust. In the second half of the twentieth century, credit money gradually became the primary form of money, leading to an explosion of debt.

As the inflation adjustment was paid at maturity, the structure conserved cash flows, which were distributed to other investors or to the bank as fees. Issuing these securities robbed shareholders in the infrastructure projects of at least some of the inflation hedge that they purchased. Jim Chanos, whose fund Kynikos Associates bet on Macquarie’s share pricing falling, argued that the model was a giant Ponzi scheme. Edward Chancellor, a journalist, was also critical: “excessive fees, excessive leverage and excessive complexity.”4 Public Squalor, Private Profits Over time, adjacency—close enough—allowed the techniques to be applied to mobile phone antennae, casinos, car parks, parking meters, shopping centers, water utilities, and even emergency services communications networks.

In 2008, Bernard Madoff confessed to an investment fraud totaling more than $60 billion, involving nearly 5,000 clients. Madoff’s hedge funds, operating from three floors of the Lipstick Building, generated solid returns, trading stocks, and options. In reality, since the mid-1990s, Madoff had operated a Ponzi scheme. Lucky Man Jones charged 20 percent of performance, but no management fee, and paid expenses from his performance fee. Traditional hedge funds charged 1 percent management fee and a performance fee of 20 percent of returns above a benchmark, the watermark. There was also a high watermark.


pages: 346 words: 101,763

Confessions of a Microfinance Heretic by Hugh Sinclair

"World Economic Forum" Davos, accounting loophole / creative accounting, Bernie Madoff, colonial exploitation, en.wikipedia.org, end world poverty, financial innovation, financial intermediation, Gini coefficient, Global Witness, high net worth, illegal immigration, impact investing, inventory management, low interest rates, microcredit, Northern Rock, peer-to-peer lending, pirate software, Ponzi scheme, principal–agent problem, profit motive, Vision Fund

Client savings, however obtained, and whether forced or voluntary, could be used to meet such a shortfall, but whether this was legal or not was a valid question. And even if legal, it was no free lunch: the cash may be accessible for use in other areas, but the obligation of the MFI to return these funds to clients did not vanish. In a sense such practices can be likened to Bernie Madoff’s recent Ponzi scheme. For as long as new investors keep pouring money in, there are funds available to return to early investors, and no one need know quite how the underlying portfolio is doing for as long as the dance maintains its momentum. The more recent investors are locked in for some period before they can extract their profits, by which point more investors have been found.

Details, such as having nineteen simultaneous loans, were ignored as long as the music continued to play. The microfinance funds proudly announced their social impact by catapulting people out of poverty in Nicaragua, that war-torn country many had heard of but few could identify on a map, and they naturally earned their fair share of the profits. The musical Ponzi scheme continued unabated until one rather awkward moment that everyone had assumed would never occur: the music stopped. If there was ever a country that demonstrated that the funding bodies had entirely lost all track of reality, it was Nicaragua. Many microfinance funds lost millions of dollars as MFIs defaulted—not their dollars, of course, but those of their own investors, thanks to their failure to consider the simple fact that pyramid schemes require permanent new injections of capital and limited withdrawals.

For the few funds that do strive to honestly tackle the problem of poverty, here are some suggestions to help produce positive results: • Demand a higher management fee—2 percent is not enough to cover genuine due diligence and will inevitably lead to cutting corners. If your investors don’t appreciate the benefit of this, find new investors or close your fund. Pay peanuts, get monkeys. • Assume a priori that every MFI you consider is a jazzed-up Ponzi scheme. Be happy to be proved wrong. • Listen to what your investors actually want. If you can’t actually deliver it, don’t take their money. • Do proper due diligence, on-site, including an auditor; take an IT expert to sniff around in the MFI’s back office; do background checks on managers and look for conflicts of interest within the MFI.


pages: 404 words: 95,163

Amazon: How the World’s Most Relentless Retailer Will Continue to Revolutionize Commerce by Natalie Berg, Miya Knights

3D printing, Adam Neumann (WeWork), Airbnb, Amazon Robotics, Amazon Web Services, asset light, augmented reality, Bernie Sanders, big-box store, business intelligence, cloud computing, Colonization of Mars, commoditize, computer vision, connected car, deep learning, DeepMind, digital divide, Donald Trump, Doomsday Clock, driverless car, electronic shelf labels (ESLs), Elon Musk, fulfillment center, gig economy, independent contractor, Internet of things, inventory management, invisible hand, Jeff Bezos, Kiva Systems, market fragmentation, new economy, Ocado, pattern recognition, Ponzi scheme, pre–internet, QR code, race to the bottom, random stow, recommendation engine, remote working, Salesforce, sensor fusion, sharing economy, Skype, SoftBank, Steve Bannon, sunk-cost fallacy, supply-chain management, TaskRabbit, TechCrunch disrupt, TED Talk, trade route, underbanked, urban planning, vertical integration, warehouse automation, warehouse robotics, WeWork, white picket fence, work culture

Available from: https://www.sfgate.com/business/networth/article/Scathing-Report-of-Amazon-Is-a-Must-Read-for-2750932.php [Last accessed 19/6/2018]. 20 Anonymous (2000) Can Amazon survive? Knowledge at Wharton, 30 August. Available from: http://knowledge.wharton.upenn.edu/article/can-amazon-survive/ [Last accessed 19/6/2018]. 21 Anonymous (2000) Amazon: Ponzi scheme or Wal-Mart of the web? Slate, 8 February. Available from: http://www.slate.com/articles/business/moneybox/2000/02/amazon_ponzi_scheme_or_walmart_of_the_web.html [Last accessed 19/6/2018]. 22 Corkery, Michael and Nick Wingfield (2018) Amazon asked for patience. Remarkably, Wall Street complied, New York Times, 4 February. Available from: https://www.nytimes.com/2018/02/04/technology/amazon-asked-for-patience-remarkably-wall-street-complied.html [Last accessed 19/6/2018]. 23 Baldwin, Caroline (2018) Sir Ian Cheshire on how to compete with Amazon, Essential Retail, 30 January.

Wall Street analysts were convinced Bezos was building a house of cards,18 with Lehman Bros analyst Ravi Suria predicting Amazon would run out of cash in a matter of months unless it could ‘pull another financing rabbit out of its rather magical hat.’19 Suria wasn’t alone here. The same year, finance magazine Barron’s put out a list of 51 internet companies that were expected to go bust by the end of 2000. The Burn Rate 51 included now-forgotten names like CDNow and Infonautics – and Amazon. Headlines such as ‘Can Amazon Survive?’20 and ‘Amazon: Ponzi Scheme or Wal-Mart of the Web?’21 illustrated doubts over Amazon’s future. Amazon was expected to be yet another victim of the dot-com bubble. Despite the broader scepticism and genuine befuddlement over its unconventional business model, Amazon managed to persuade enough shareholders by telling a compelling story.


pages: 261 words: 103,244

Economists and the Powerful by Norbert Haring, Norbert H. Ring, Niall Douglas

accounting loophole / creative accounting, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, asset allocation, bank run, barriers to entry, Basel III, Bear Stearns, Bernie Madoff, book value, British Empire, buy and hold, central bank independence, collective bargaining, commodity trading advisor, compensation consultant, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, diversified portfolio, financial deregulation, George Akerlof, illegal immigration, income inequality, inflation targeting, information asymmetry, Jean Tirole, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge worker, land bank, law of one price, light touch regulation, Long Term Capital Management, low interest rates, low skilled workers, mandatory minimum, market bubble, market clearing, market fundamentalism, means of production, military-industrial complex, minimum wage unemployment, Money creation, moral hazard, new economy, obamacare, old-boy network, open economy, Pareto efficiency, Paul Samuelson, pension reform, Ponzi scheme, price stability, principal–agent problem, profit maximization, purchasing power parity, Renaissance Technologies, Robert Solow, rolodex, Savings and loan crisis, Sergey Aleynikov, shareholder value, short selling, Steve Jobs, The Chicago School, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, transaction costs, ultimatum game, union organizing, Vilfredo Pareto, working-age population, World Values Survey

After the first movers start to do this, other bank CEOs are compelled to do likewise, because otherwise they would not be able to meet the new industry standard for profitability and success. If such a dynamic plays out on the mortgage market, house prices will go up, making the aggressive lending strategy even seem reasonable. By the time the Ponzi scheme collapses and takes the companies down with the lending institutions, the control frauds and many of their imitators have cashed out big. If they were careful, they have not done anything for which they could go to jail (Black 2010). This may sound like an ex post description of what was going on in the run-up to the subprime crisis.

SEC management had delayed Mack’s testimony for over a year, until days after the statute of limitations expired, and had fired the whistleblower. No serious and credible investigation of his claims was ever conducted, according to the Senate. It is quite clear that the failure of the SEC to detect the huge Ponzi scheme of Bernard Madoff, a major contributor 218 ECONOMISTS AND THE POWERFUL to federal candidates, parties and committees, was not an isolated case but part of a pattern (Correia 2009). Conclusion: Strengthen and Protect the Political System from Itself One school of thought concludes from this that it is best to have as small a government as possible and give it as little power as possible.

Morgan (bank) 54, 59, 70, 87, 105 labor xii, 4–6, 8, 10, 18, 33–4, 137, 139, 141, 143, 146, 153–5, 157–9, 163–5, 167–73, 176, 178–83, 189–94, 197, 200, 203–5 legitimacy 16, 25 Lehman Brothers 17, 90, 94, 96 Leviathan (government) 210 liberty 8, 25, 207 liquidity xi, 66, 103–5, 112 London School of Economics 20, 27, 40, 144 Long-Term Capital Management (LCTM) 66, 92 macroeconomics 14 Madoff, Bernard 217 managerial power approach 119, 120, 124, 126, 132 marginal cost 142–4 marginal product 156–8, 189, 192 marginal rate of substitution 14 marginal utility 5–6, 13, 214 marginalism 1, 4–5 market forces x, 126, 169, 171–2, 180–82 market power xii, 154, 161, 164, 170, 203 Marshall, Alfred 5, 10, 16, 188, 193 Marx, Karl 5, 188, 198 Marxism 5–6, 10, 165 mass production 7, 15, 143, 161 Mazur, Paul 17–18 median voter theory 212, 214 Menger, Carl 5, 12 mercantilism 2–3 Merrill Lynch 90, 112, 133 Methuen Treaty 3 military vii, 3, 19–20, 22, 25, 45, 116, 208, 215 minimum wage 140–41, 154, 158, 183, 188–9, 192–7, 203–4 Mises, Ludwig von 12 monopoly viii, 9, 18, 26, 41, 86–7, 97–9, 142, 145–7, 149–54, 161, 171, 177 monopsony 153–4 Moody’s (ratings agency) 97–9 Morgan Stanley 49, 63, 90, 217 mutual fund 56, 58, 64–6, 68, 97, 134 NASDAQ 55 natural selection 167 negotiating power 160, 179, 205 net present value 159 new welfare economics 14, 19 news 53, 56, 114, 122, 143, 220 Nobel Prize 7, 17, 20, 22–4, 26, 44, 170, 186 Organisation for Economic Cooperation and Development (OECD) 20, 30, 41, 187, 189, 203 Olson, Mancur 23–4 optimal contracting 109, 119–20, 124, 126–7, 132 ordinalism 1, 11, 17, 21 outrage constraint 119–21, 124, 126–7, 136 outsourcing 165, 177, 184–6 over the counter (OTC) (derivatives) 90 Paretian welfare economics 14 Pareto, Vilfredo 12–13, 21, 157 INDEX pay-for-performance 95, 107–8, 111–12, 115, 119, 121–2, 126, 128, 139 pensions viii, 36, 39, 57, 58, 98, 113, 140, 134 perfect competition (economic) x, xii, 141–2, 145–6, 168, 187, 193 perfectly substitutable (economically) x performance-related pay 109, 111; see also pay-for-performance perverse incentive 113, 133 Pigou, Arthur C. 10, 188, 192–3, 198 Pimco (fund) 96, 215 Ponzi (scheme) 95, 217 poststructuralism 8 power viii–xii, 1–4, 8–9, 18, 25, 27–32, 42, 145, 147, 153–4, 159–61, 164, 166–8, 171, 174, 177–9, 184–7, 193, 198, 203–4 corporate 107–40 economic xii, 1, 32, 45, 46, 54, 208, 219 financial 47–106 informational 207–20 managerial (see managerial power approach) political ix, xii, 32, 86, 208, 210, 219 principal–agent theory 107 prisoner’s dilemma 38 private equity 68, 136 productivity (economic) ix, 10, 32, 34–6, 48, 79–80, 101, 137, 141, 146–7, 156, 171, 173, 176, 178, 180, 186, 189, 192, 194, 196, 201, 204–5 professions, the viii, 1, 25 profit xii, 2, 7, 43, 46, 54–6, 59, 61–2, 65, 68, 76, 82–3, 85, 91, 97, 99– 100, 105, 109–10, 112–13, 118, 127–8, 130, 135, 137, 141–3, 145–50, 153, 155, 157, 159–60, 164, 166, 171, 173, 175, 177–9, 184, 186, 197, 205, 215–16 profitability 49, 53, 60, 74, 84, 95, 97, 100, 132–3, 139, 143, 151, 183, 191, 194 245 profit margin 3, 195 profit maximization 120, 143, 147, 149–51 property rights 22, 215 public relations (PR) 15–16 quadratic weighting (inflation) 33 rating agencies x, 97–100 rational choice movement 1, 21–3, 25, 214 raw materials 2–3, 184 redistribution 10, 12, 19, 39, 161, 186, 210, 213 representative agent 14 reserve requirement 82–4, 103–4 risk management 94 Robbins, Lionel 12–13, 17, 21, 210–11 Robinson, Joan 146, 159–60, 208 Ross, Edward 9–10, 18, 38 Rothschild, Mayer Amschel 72–3, 75 S&P 500 110, 120 Samuelson, Paul 159–60 Sarbanes–Oxley Act 92, 99, 123 Schumpeter, Joseph 19 Second (Workingmen’s) International 5 Second World War 2, 18–19, 30, 79–80 Securities and Exchange Commission (SEC) 52–3, 69, 90, 93–4, 97–8, 115, 123–4, 130, 217 securitization 112 selfishness 7, 38, 40, 108, 167, 170, 211, 213 shareholder franchise 133 shareholders xii, 93, 102, 107–10, 112–15, 120–22, 128, 131, 133–6, 138 SMD assumptions/conditions 7, 14 Smith, Adam 3–4, 42, 155, 163, 188, 198 social norms 38, 108, 117, 120, 135, 138–9, 164 social security 36, 39, 188, 198–9 246 ECONOMISTS AND THE POWERFUL socialism 5–6 , 9–10, 19, 24, 27, 193 Solow, Robert 159 Sonnenschein–Mantel–Debreu theorem: see SMD assumptions/ conditions Soros, George 47, 67, 105 spring loading (stock options) 122 Squam Lake Group 44 Sraffa, Piero 141, 144, 159–60 staggered board (of directors) 126, 134 stagnation 32, 101, 218 stakeholders xii, 107–8, 117, 136–7 Standard & Poor’s (rating agency) 97, 99 Stanford University 10, 18, 93 stock option backdating 122 stock options 43, 67, 92–3, 96, 108–10, 112–13, 120, 122–5, 128, 131–3 structural reforms 188–9 subprime xi, 43, 47, 69–71, 82, 88, 90, 95, 97–8, 101, 105, 108, 111, 113, 120, 133, 136, 205, 217 supply and demand 108, 167 sustainability ix, 13 Syracuse University 9 takeover 70, 102, 113, 126, 135 tariffs 3, 16, 84 TARP: see Troubled Asset Relief Program (TARP) taxation 83, 109, 139, 214 Thatcher, Margaret 40 “too big to fail” 83, 105 transaction costs 7, 74, 168–9 transportation 7, 41, 73, 118, 143, 144–5, 169, 186 treasury secretary xi, 69, 71, 87, 90, 96 Troubled Asset Relief Program (TARP) 70 UBS (bank) 105 unemployment 170, 180–81, 188–9, 197–200, 203–5, 213 university 9, 16–17, 20–21, 27, 41, 101, 117, 142 University of Chicago: see Chicago, University of value added 31, 136 Wall Street xi, 38, 42, 54, 63, 67, 69–70, 88, 92–3, 96, 99, 105, 122–3 Walras, Leon 5–7 Warwick Commission 100–101, 103 Washington Mutual (bank) 95–6 wealth viii, xii, 2, 9, 42, 45, 69, 71–2, 96, 101, 110–11, 120, 135, 207–10 welfare economics 14–15 welfarism 10–11 Wieser, Friedrich von 12–13 worker representatives 137 World Bank 27–8, 31 Worldcom 52, 61, 92, 98, 110, 113, 128, 132 Yale University 10, 13


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The Production of Money: How to Break the Power of Banks by Ann Pettifor

Alan Greenspan, Ben Bernanke: helicopter money, Bernie Madoff, Bernie Sanders, bitcoin, blockchain, bond market vigilante , borderless world, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, clean water, credit crunch, Credit Default Swap, cryptocurrency, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, distributed ledger, Donald Trump, eurozone crisis, fiat currency, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, green new deal, Hyman Minsky, inflation targeting, interest rate derivative, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land bank, Leo Hollis, light touch regulation, London Interbank Offered Rate, low interest rates, market fundamentalism, Martin Wolf, mobile money, Money creation, Naomi Klein, neoliberal agenda, offshore financial centre, Paul Samuelson, Ponzi scheme, Post-Keynesian economics, pushing on a string, quantitative easing, rent-seeking, Satyajit Das, savings glut, secular stagnation, The Chicago School, the market place, Thomas Malthus, Tobin tax, too big to fail

They are often hidden from the public authorities and managed off balance sheets in ‘special investment vehicles’ or SIVs. Problems occur when these unregulated ‘promises’ evaporate – and are defaulted upon. The so-called ‘liquidity’ quickly and dangerously dries up. A rush for the exits follows. Like a Ponzi scheme, those who get out first take most of the gains. The losers are left empty-handed. Central bankers have, since the 1990s, turned a blind eye and largely failed to understand these and more innovative self-enriching activities. Shadow banking was only named and identified by the economist Paul McCulley as late as 2007, in a speech at the annual financial symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming.9 Members of the shadow banking ‘blind-eye brigade’ include Alan Greenspan, who in 2004 said that under the deregulated system of credit creation, ‘Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.’10 Credit creation and Goethe’s ‘Sorcerer’s Apprentice’ As argued above, to ensure that the monetary system addresses society’s varied needs, credit (debt) creation must be managed to ensure it is offered at low real rates of interest, and used productively and sustainably to create employment, and with it savings, income and other revenues, part of which can be used to repay the debt.

In reality, the purpose is to ratchet up the value of bitcoins, most of which are owned by originators of the scheme. In this sense, bitcoin miners are no different from goldbugs talking up the value of of a finite quantity of gold, from tulip growers talking up the price of rare tulips in the seventeenth century, or from Bernard Madoff talking up his fraudulent Ponzi scheme. However, some have hyped up the technology used by bitcoin – blockchain, a distributed database or ledger – and argued that it could revolutionise the distribution of wealth and provide transparent accounts of transactions. We should treat these claims cautiously. In a recent blog, Financial Times journalist Izabella Kaminska argued that financial technology fads follow a pattern similar to new music designated first as ‘hip’ and ‘cool’ but which then fades and becomes ‘so last year’.


pages: 209 words: 53,175

The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel

airport security, Amazon Web Services, Bernie Madoff, book value, business cycle, computer age, Cornelius Vanderbilt, coronavirus, discounted cash flows, diversification, diversified portfolio, do what you love, Donald Trump, financial engineering, financial independence, Hans Rosling, Hyman Minsky, income inequality, index fund, invisible hand, Isaac Newton, It's morning again in America, Jeff Bezos, Jim Simons, John Bogle, Joseph Schumpeter, knowledge worker, labor-force participation, Long Term Capital Management, low interest rates, margin call, Mark Zuckerberg, new economy, Paul Graham, payday loans, Ponzi scheme, quantitative easing, Renaissance Technologies, Richard Feynman, risk tolerance, risk-adjusted returns, Robert Gordon, Robert Shiller, Ronald Reagan, side hustle, Stephen Hawking, Steven Levy, stocks for the long run, tech worker, the scientific method, traffic fines, Vanguard fund, WeWork, working-age population

His crime is well known. Madoff is the most notorious Ponzi schemer since Charles Ponzi himself. Madoff swindled investors for two decades before his crime was revealed—ironically just weeks after Gupta’s endeavor. What’s overlooked is that Madoff, like Gupta, was more than a fraudster. Before the Ponzi scheme that made Madoff famous he was a wildly successful and legitimate businessman. Madoff was a market maker, a job that matches buyers and sellers of stocks. He was very good at it. Here’s how The Wall Street Journal described Madoff’s market-making firm in 1992: He has built a highly profitable securities firm, Bernard L.

You would think an industry with such poor performance would be a niche service and have a hard time staying in business. But there’s almost five trillion dollars invested in these funds.⁶⁶ Give someone the chance of investing alongside “the next Warren Buffett” and they’ll believe with such faith that millions of people will put their life savings behind it. Or take Bernie Madoff. In hindsight his Ponzi scheme should have been obvious. He reported returns that never varied, they were audited by a relatively unknown accounting firm, and he refused to release much information on how the returns were achieved. Yet Madoff raised billions of dollars from some of the most sophisticated investors in the world.


pages: 180 words: 55,805

The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future by Jeff Booth

3D printing, Abraham Maslow, activist fund / activist shareholder / activist investor, additive manufacturing, AI winter, Airbnb, Albert Einstein, AlphaGo, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, basic income, bitcoin, blockchain, Bretton Woods, business intelligence, butterfly effect, Charles Babbage, Claude Shannon: information theory, clean water, cloud computing, cognitive bias, collapse of Lehman Brothers, Computing Machinery and Intelligence, corporate raider, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, dark matter, deep learning, DeepMind, deliberate practice, digital twin, distributed ledger, Donald Trump, Elon Musk, fiat currency, Filter Bubble, financial engineering, full employment, future of work, game design, gamification, general purpose technology, Geoffrey Hinton, Gordon Gekko, Great Leap Forward, Hyman Minsky, hype cycle, income inequality, inflation targeting, information asymmetry, invention of movable type, Isaac Newton, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, late fees, low interest rates, Lyft, Maslow's hierarchy, Milgram experiment, Minsky moment, Modern Monetary Theory, moral hazard, Nelson Mandela, Network effects, Nick Bostrom, oil shock, OpenAI, pattern recognition, Ponzi scheme, quantitative easing, race to the bottom, ride hailing / ride sharing, self-driving car, software as a service, technoutopianism, TED Talk, the long tail, the scientific method, Thomas Bayes, Turing test, Uber and Lyft, uber lyft, universal basic income, winner-take-all economy, X Prize, zero-sum game

We should ask whether those same assets would have gone up over the last twenty years if there hadn’t been $185 trillion of new capital injected into economies over that time. When that stops, which it eventually will, things will change very quickly. If it takes ever-increasing credit growth to achieve economic growth, how are our economies any different from a Ponzi scheme? A Ponzi scheme creates an illusion of profits because it pays early investors with investments from later investors. Even though the scheme is a fraud, it can look like a good business in that early investors talk about how great their returns are. Because it requires more and more capital to pay out investors, it continues until new investors at the bottom of the pyramid slow down enough to stop paying out earlier investors, which brings the entire system down.


pages: 693 words: 204,042

New York 2140 by Kim Stanley Robinson

Anthropocene, availability heuristic, back-to-the-land, Black-Scholes formula, Burning Man, central bank independence, creative destruction, credit crunch, crowdsourcing, decarbonisation, East Village, full employment, gentrification, happiness index / gross national happiness, hive mind, income inequality, invisible hand, Jane Jacobs, Ken Thompson, Kim Stanley Robinson, liquidity trap, Mason jar, mass immigration, megastructure, microbiome, music of the spheres, New Urbanism, offshore financial centre, Planet Labs, plutocrats, Ponzi scheme, precariat, quantitative easing, Reflections on Trusting Trust, rent-seeking, Social Justice Warrior, the built environment, too big to fail

But it’s funny how things sometimes shift like flocking birds. And the way bubbles work is structurally identical to Ponzi schemes—what a coincidence!—and indeed it’s another amazing coincidence how much the entire capitalist economy resembles in its basic structure either a Ponzi scheme or a bundle of Ponzi schemes. How could this be? Is this another case of convergent evolution, or isomorphic identity, or cloning, or simply an astonishing Jungian synchronicity, in other words a coincidence? Probably just a coincidence, sure. But be that as it may, bubbles and Ponzi schemes and capitalism all have to keep growing or else they are in deep shit.

You can, as I had found out by doing it, invent a bubblistic investment possibility more or less by accident, then sell it to people and watch it go long, knowing all the while that it is turning into a bubble; and all the while you can short it in preparation for the time that bubble pops. Spoofing? No. Ponzi scheme? Not at all! Just finance. Legal as hell. So, for the previous six months, reading the stats from around the coastlines of the world and trying to calculate all the trends, reading the tea leaves, the engineering journals, everything, including urban folktales, I had come to believe that the moment was approaching when this bubble was going to pop.


pages: 274 words: 60,596

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam

Albert Einstein, asset allocation, Bernie Madoff, buy and hold, diversified portfolio, financial independence, George Gilder, index fund, John Bogle, junk bonds, Long Term Capital Management, low interest rates, Mary Meeker, new economy, passive investing, Paul Samuelson, Ponzi scheme, pre–internet, price stability, random walk, risk tolerance, Silicon Valley, South China Sea, stocks for the long run, survivorship bias, transaction costs, Vanguard fund, yield curve

He came into Daryl’s office with a lawyer, but the contract was legally airtight; there was nothing the lawyer could do about it. But, as Daryl explained, he took pity on the woman and gave the motor-home ownership back to the couple. It sounded like an amazing operation. However, nobody can guarantee you 54 percent on your money—ever. Bernie Madoff, the currently incarcerated Ponzi-scheming money manager in the U.S. promised a minimum return of 10 percent annually and he sucked scores of intelligent people into his self-servicing vacuum cleaner—absconding with $65 billion in the process.2 He claimed to be making money for his clients by investing their cash mostly in the stock market, but he just paid them “interest” with new investors’ deposits.

Another friend deposited more than $100,000 into the business; he was paid $54,000 in yearly interest. But Alice’s Wonderland was more real than our fool’s paradise. Like Bernie Madoff (who was caught after Daryl) the party eventually ended in 2006 and the carnage was everywhere. We never found out whether Daryl intended for his business to be a Ponzi scheme from the beginning (he was clearly paying interest to investors from the deposits of other investors) or whether his business slowly unraveled after a well-intentioned but ineffective business plan went awry. Klein was eventually convicted of breaching the provincial securities act, preventing him from engaging in investor-relations activities until 2026.4 The fact that he was slapped on the wrist, however, was small consolation for his investors.


pages: 219 words: 61,720

American Made: Why Making Things Will Return Us to Greatness by Dan Dimicco

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Alan Greenspan, American energy revolution, American Society of Civil Engineers: Report Card, Apollo 11, Bakken shale, barriers to entry, Bernie Madoff, California high-speed rail, carbon credits, carbon footprint, carbon tax, clean water, congestion pricing, crony capitalism, currency manipulation / currency intervention, David Ricardo: comparative advantage, decarbonisation, digital divide, driverless car, fear of failure, full employment, Google Glasses, high-speed rail, hydraulic fracturing, invisible hand, job automation, knowledge economy, laissez-faire capitalism, Loma Prieta earthquake, low earth orbit, manufacturing employment, Neil Armstrong, oil shale / tar sands, Ponzi scheme, profit motive, Report Card for America’s Infrastructure, rolling blackouts, Ronald Reagan, Savings and loan crisis, Silicon Valley, smart grid, smart meter, sovereign wealth fund, The Wealth of Nations by Adam Smith, too big to fail, uranium enrichment, Washington Consensus, Works Progress Administration

All of the staggering wealth that was supposedly created in the 1990s and 2000s—think of the $7.3 trillion in home equity that evaporated when the housing bubble burst—wasn’t really created at all. In DiMicco’s words, “it was a shell game.” “What did we get by playing that game? We got bubbles. The savings-and-loan bubble, the dot-com bubble, the Enron bubble, the housing bubble, all of the Ponzi schemes originating on Wall Street, one after another, all trying to create wealth from nothing, all driven by major debt and smoke and mirrors.” Instead of allowing ourselves to wander further down the path of exploding bubbles and phantom prosperity, DiMicco argues that the nation’s political and economic leaders should have focused on innovating, building, and making things.

You find a pattern of well-paying jobs disappearing, to never return, and millions of manufacturing jobs being replaced with service industry jobs or financial industry jobs. You find greed, you find cheating and fraud and a wholesale abandonment of ethics. You find Bernie Madoff and Ken Lay and Dennis Kozlowski. You find bubbles that burst with disastrous consequences. The housing bubble, like every other debt-driven bubble before it, was a giant Ponzi scheme. In reality, for every year that housing prices ballooned, and people found more elaborate ways of packaging financial service “products” that nobody really understood, we lost more ground. You can manage wealth, certainly. It’s important to manage wealth wisely. But you cannot establish a business of selling mortgages to people with low incomes and poor credit, repackage the debt into “mortgage-backed securities,” sell it around the world, and expect to last very long.


pages: 559 words: 169,094

The Unwinding: An Inner History of the New America by George Packer

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Apple's 1984 Super Bowl advert, bank run, Bear Stearns, big-box store, citizen journalism, clean tech, collateralized debt obligation, collective bargaining, company town, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, DeepMind, deindustrialization, diversified portfolio, East Village, El Camino Real, electricity market, Elon Musk, Fairchild Semiconductor, family office, financial engineering, financial independence, financial innovation, fixed income, Flash crash, food desert, gentrification, Glass-Steagall Act, global macro, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, high-speed rail, housing crisis, income inequality, independent contractor, informal economy, intentional community, Jane Jacobs, Larry Ellison, life extension, Long Term Capital Management, low skilled workers, Marc Andreessen, margin call, Mark Zuckerberg, market bubble, market fundamentalism, Maui Hawaii, Max Levchin, Menlo Park, military-industrial complex, Neal Stephenson, Neil Kinnock, new economy, New Journalism, obamacare, Occupy movement, off-the-grid, oil shock, PalmPilot, Patri Friedman, paypal mafia, peak oil, Peter Thiel, Ponzi scheme, proprietary trading, public intellectual, Richard Florida, Robert Bork, Ronald Reagan, Ronald Reagan: Tear down this wall, Savings and loan crisis, shareholder value, side project, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, single-payer health, smart grid, Snow Crash, Steve Jobs, strikebreaker, tech worker, The Death and Life of Great American Cities, the scientific method, too big to fail, union organizing, uptick rule, urban planning, vertical integration, We are the 99%, We wanted flying cars, instead we got 140 characters, white flight, white picket fence, zero-sum game

In the exurbs going up around Tampa Bay, property taxes could remain low, with new schools and fire stations funded by bond issues floated on the projection of future growth. So in a sense everyone was getting returns from investments that would come in tomorrow, or next year. A few local critics pointed out the strategy’s resemblance to a Ponzi scheme. But everything kept growing and no one paid attention. The growth machine cleared out the pine trees and palmettos and orange groves along State Road 54 up in Pasco County. It cut down the mangroves on Apollo Beach and laid asphalt over the strawberry farms around Plant City. Farther south down Interstate 75, in Lee County, the growth machine built a university on the wetlands near Fort Myers (Senator Connie Mack put in a call to the Army Corps of Engineers), and it sold quarter-acre lots on the installment plan between the drainage canals of Cape Coral.

Half or two-thirds of the houses were vacant, but the residents who hung on in Country Walk parked their cars in the empty driveways and kept the neighboring lawns of San Augustine grass mowed to avoid an appearance of decline. On the more forsaken blocks the change was obvious—six inches of grass, weeds in the driveway, copper wiring ripped from the air-conditioner boxes, a rash of green mold spreading across a beige stucco wall, a VACANT or ABANDONED notice tacked to a front door. But the collapse of the Ponzi scheme was unspectacular, with no demolished factories or abandoned farms. The ghost subdivisions were pretty, in a way. Under the brilliant aquamarine sky the houses looked like perfect cardboard cutouts, the surfaces smooth and regular, the blinds drawn, the landscape almost untainted by human life.

Some of the foreclosed houses were being used by drug dealers or traffickers in stolen goods, littered with contraband. There had even been a shooting. Sheriff’s deputies were making nightly visits out to Carriage Pointe. Paranoia was running high, and one man proudly showed Van Sickler the security cameras he’d installed on his driveway. “In suburbia,” Van Sickler said, “no one can hear you scream.” A Ponzi scheme was a confidence game that succeeded only when enough people were willing to put aside common sense. Everyone involved was both being taken and taking someone else. The result was universal credulousness and universal fear. Carriage Pointe was supposed to be a little slice of the American dream, but it felt like the end of days.


pages: 1,239 words: 163,625

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

What Buffett, Munger, and a lot of other people who have been successful in life (true success, not measured by money) have in common is that they strive for a happy and fulfilling life. Not just getting rich. Not just trying to get famous. But living a truly satisfying existence with full integrity and helping others around them achieve the same. Bernie Madoff achieved great admiration and wealth over the duration of his Ponzi scheme, but was he happy? He made it clear, after he had been caught, that he wasn’t. Here was a guy who had all the admiration in the world, an external scorecard showing an A+. But what happened when he lost it all? He heaved a sigh of relief. According to New York magazine, “For Bernie Madoff, living a lie had once been a full-time job, which carried with it a constant, nagging anxiety.

This is the discretionary surplus that can be distributed to reward shareholders. The higher the proportion of FCF out of the CFO, the better. If FCF is negative and the dividend is always funded by debt, then the investor should not take any comfort from a high dividend yield. If a company is not ever able to generate FCF, then it may be the equivalent of a perpetual Ponzi scheme, wherein it simply robs Peter to pay Paul. Remember, intrinsic value is derived from the cash that can be taken out of a business during its lifetime. When a company reports profits but bleeds cash, believe the cash. Always. The most common symptoms of falsified earnings are negative free cash flow accompanied by rising debt, increasing shares outstanding, and bloating in receivables, inventory, noncurrent investments, and intangibles. 3.

New investors keep pouring money into the firm but are never able to take anything out. And if any dividends are paid, they come not from operating cash flow but from the fresh fund infusions made by debt and equity investors. These companies are just recycling cash from new investors to old investors, which is the functional equivalent of a Ponzi scheme. In Berkshire’s fiftieth annual letter, Buffett described these kind of companies: Business models based on the serial issuances of overpriced shares—just like chain-letter models—most assuredly redistribute wealth, but in no way create it. Both phenomena, nevertheless, periodically blossom in our country—they are every promoter’s dream—though often they appear in a carefully crafted disguise.


pages: 374 words: 114,600

The Quants by Scott Patterson

Alan Greenspan, Albert Einstein, AOL-Time Warner, asset allocation, automated trading system, Bear Stearns, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Blythe Masters, Bonfire of the Vanities, book value, Brownian motion, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Carl Icahn, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Dr. Strangelove, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial engineering, Financial Modelers Manifesto, fixed income, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Haight Ashbury, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, index fund, invention of the telegraph, invisible hand, Isaac Newton, Jim Simons, job automation, John Meriwether, John Nash: game theory, junk bonds, Kickstarter, law of one price, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, Mark Spitznagel, merger arbitrage, Michael Milken, military-industrial complex, money market fund, Myron Scholes, NetJets, new economy, offshore financial centre, old-boy network, Paul Lévy, Paul Samuelson, Ponzi scheme, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Robert Mercer, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Savings and loan crisis, Sergey Aleynikov, short selling, short squeeze, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

Amazingly, not one of the quants, despite their chart-topping IQs, their walls of degrees, their impressive Ph.D.’s, their billions of wealth earned by anticipating every bob and weave the market threw their way, their decades studying every statistical quirk of the market under the sun, saw the train wreck coming. How could they have missed it? What went wrong? A hint to the answer was captured centuries ago by a man whose name emblazoned the poker chips the quants wagered with that night: Isaac Newton. After losing £20,000 on a vast Ponzi scheme known as the South Sea Bubble in 1720, Newton observed: “I can calculate the motion of heavenly bodies but not the madness of people.” Just past 5:00 A.M. on a spring Saturday in 1961, the sun was about to dawn on a small, ratty casino in Reno, Nevada. But inside there was perpetual darkness punctuated by the glow of neon lights.

Similar discrepancies appeared for trades on IBM, Disney, and Merck options, among others, Thorp’s research revealed. He told the firm that had made the investment to pull its money out of the fund, which was called Bernard L. Madoff Investment Securities. In late 2008, the fund, run by New York financier Bernard Madoff, was revealed as the greatest Ponzi scheme of all time, a massive fraud that had bilked investors out of tens of billions. Regulators had been repeatedly warned about the fund, but they never could determine whether its trading strategies were legitimate. While Thorp was taking a break from the investing game, the stage for the amazing rise of the quants had been set.

Few of the high-powered occupants of those mansions felt much like celebrating. It was a glum holiday season in Greenwich, hedge fund capital of the world. Making matters worse, a multibillion-dollar money management firm run by a reclusive financier named Bernard Madoff had proved to be a massive Ponzi scheme, one that Ed Thorp had already unearthed in the early 1990s. The losses rippled throughout the industry like shock waves. A cloud of suspicion fell upon an industry already infamous for its paranoia and obsessive secrecy. Ground zero of Greenwich’s hedge fund scene was Two Greenwich Plaza, a nondescript four-story building beside the town’s train station that once had housed a hodgepodge of shippers, manufacturers, and stuffy family law firms.


pages: 459 words: 118,959

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff by Christine S. Richard

activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, Blythe Masters, book value, buy and hold, Carl Icahn, cognitive dissonance, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, electricity market, family office, financial innovation, fixed income, forensic accounting, glass ceiling, Greenspan put, Long Term Capital Management, market bubble, money market fund, moral hazard, old-boy network, Pershing Square Capital Management, Ponzi scheme, profit motive, Savings and loan crisis, short selling, short squeeze, statistical model, stock buybacks, subprime mortgage crisis, white flight, zero-sum game

His impatience can make people feel a bit used, and his thoroughness can be seen as obsession, Mayer says. “Look at Markopolos,” Mayer says, referring to Harry Markopolos, the fund manager who tried for 10 years to warn the Securities and Exchange Commission in detailed letters and e-mails about Bernie Madoff’s Ponzi scheme. “Unfortunately, if you write long letters, people think you are crazy,” Mayer says. Even Ackman’s friends poked fun at his relentless pursuit of MBIA. For his 40th birthday, Ackman’s wife Karen threw him a party, inviting more than 100 family members and friends to the Blue Hill at Stone Barns restaurant in upstate New York.

A market in which home prices remained flat would completely wipe out triple-B-rated bonds. A triple-B rating is a low investment-grade-rated security. A decline in home values would cause the damage to move up the rating scale, putting even single-A-rated bonds in jeopardy. The subprime market contained the hallmark of every Ponzi scheme. It worked only as long as more money was put into the scheme. When home prices were rising, overextended borrowers usually could pay off their first mortgage—and often a home-equity loan and credit-card bills on top of that—by selling their house in a rising market. Once home prices stopped rising, the game was over, and home prices would plummet.

Financial Guaranty Insurance Co. v. IKB Deutsche Industriebank AG, New York Supreme Court, New York County, Dec. 29, 2008. Docket No. 600704/08. Master File No. 07 Civ. 9901 (SHS) United States District Court Southern District of New York. In re Citigroup Inc. Securities Litigation. Citigroup’s CDO Ponzi Schemes. 208. Luke Mullins, “Waxman Digs Into Moody’s, S&P with Internal Docs,” U.S. News and World Report, Oct. 23, 2008. Special Comment, “Structured Finance Rating Transitions: 1983-2008,” Moody’s Investor Service, March 2009. Alexandre Dumas, The Count of Monte Cristo (New York: Bantam Dell, 2003), p. 272.


pages: 464 words: 116,945

Seventeen Contradictions and the End of Capitalism by David Harvey

accounting loophole / creative accounting, Alvin Toffler, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business climate, California gold rush, call centre, central bank independence, Charles Babbage, classic study, clean water, cloud computing, collapse of Lehman Brothers, colonial rule, company town, cotton gin, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, death from overwork, deindustrialization, demographic dividend, Deng Xiaoping, deskilling, drone strike, end world poverty, falling living standards, fiat currency, first square of the chessboard, first square of the chessboard / second half of the chessboard, Food sovereignty, Frank Gehry, future of work, gentrification, global reserve currency, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, Herbert Marcuse, income inequality, informal economy, invention of the steam engine, invisible hand, Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Just-in-time delivery, knowledge worker, low skilled workers, Mahatma Gandhi, market clearing, Martin Wolf, means of production, microcredit, military-industrial complex, Money creation, Murray Bookchin, new economy, New Urbanism, Occupy movement, peak oil, phenotype, planned obsolescence, plutocrats, Ponzi scheme, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, Savings and loan crisis, scientific management, short selling, Silicon Valley, special economic zone, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, wages for housework, Wall-E, women in the workforce, working poor, working-age population

First, there is a vast array of what we would now consider extra-legal activities, such as robbery, thievery, swindling, corruption, usury, predation, violence and coercion, along with a range of suspicious and shady practices in the market (monopolisation, manipulation, market cornering, price fixing, Ponzi schemes etc.). Second, individuals accumulate wealth by legally sanctioned exchanges under conditions of non-coercive trade in freely functioning markets. Theorists of capital circulation and accumulation typically exclude activities of the first sort as excrescences external to the ‘normal’ and legitimate functioning of the capitalist market.

There are, as we have seen, various adjustments under way, but the more closely these are examined the more they appear as symptoms of the underlying problem rather than as signs of or paths towards long-term solutions. Of course, capital can construct an economy (and to some degree has already done so) based on a fetish world of fantasy and imagination built upon pyramiding fictions that cannot last. One final Ponzi scheme to eclipse all others is a possible scenario. Ironically, the innovations that are available to us in these times are most easily applied to increase rather than dampen speculative activity, as the case of nano-trading on the stock exchange illustrates. Such an economy will, before any ultimate denouement, be subject to periodic volcanic eruptions and crashes.

283 Maddison, Angus 227 Maghreb 174 Malcolm X 291 Maldives 260 Malthus, Thomas 229–30, 232–3, 244, 246, 251 Manchester 149, 159 Manhattan Institute 143 Mansion House, London 201 manufacturing 104, 239 Mao Zedong 291 maquilas 129, 174 Marcuse, Herbert 204, 289 market cornering 53 market economy 198, 205, 276 marketisation 243 Marshall Plan 153 Martin, Randy 194 Marx, Karl 106, 118, 122, 142, 207, 211 and alienation 125, 126, 213 in the British Museum library 4 on capital 220 conception of wealth 214 on the credit system 239 and deskilling 119 on equal rights 64 and falling profits 107 and fetishism 4 on freedom 207, 208, 213 and greed 33 ‘industrial reserve army’ 79–80 and isolation of workers 125 labour theory of value 109 and monetary system reforms 36 monopoly power and competition 135 reality and appearance 4, 5 as a revolutionary humanist 221 and social reproduction 182 and socialist utopian literature 184 and technological innovation 103 and theorists of the political left 54 and the ‘totally developed individual’ 126–7 and world crises xiii; Capital 57, 79–80, 81, 82, 119, 129, 132, 269, 286, 291–2 The Economic and Philosophic Manuscripts of 1844 269, 286 Grundrisse 97, 212–13 Theories of Surplus Value 1 Marxism contradiction between productive forces and social relations 269 ‘death of Marxism’ xii; ecologically sensitive 263 and humanism 284, 286, 287 ‘profit squeeze’ theory of crisis formation 65 traditional Marxist conception of socialism/ communism 91 Marxists 65, 109 MasterCard Priceless 275 Mau Mau movement 291 Melbourne 141 merchants 67 and industrial capital 179 price-gouging customers 54 and producers 74–5 Mercosur 159 Mexican migrants 115, 175, 195–6 Mexico 123, 129, 174 Mexico City riots (1968) x microcredit 194, 198 microfinance 186, 194, 198, 211 Microsoft 131 Middle East 124, 230 Milanovic, Branko 170 military, the capacities and powers 4 dominance 110 and technology 93, 95 ‘military-industrial complex’ 157 mind-brain duality 70 mining 94, 113, 123, 148, 239, 257 MIT (Massachusetts Institute of Technology) 292 Mitchell, David: Cloud Atlas 264 Mitchell, Timothy 122 Modern Times (film) 103 Mondragon 180 monetarism xi monetary wealth and incomes, inequalities in (1920s) x 1071 monetisation 44, 55, 60, 61, 62, 115, 192–3, 198, 235, 243, 250, 253, 261, 262 money abandonment of metallic basis of global moneys 30, 37, 109 circulation of 15, 25, 30–31, 35 coinage 15, 27, 29, 30 commodification of 57 commodity moneys 27–31 creation of 30, 51, 173, 233, 238–9, 240 credit moneys 28, 30, 31, 152 cyber moneys 36, 109–10 electronic moneys 27, 29, 35, 36, 100 and exchange value 28, 35, 38 fiat 8, 27, 30, 40, 109, 233 gap between money and the value it represents 27 global monetary system 46–7 love of money as a possession 34 measures value 25, 28 a moneyless economy 36 oxidisation of 35 paper 15, 27, 29, 30, 31, 37, 40, 45 power of 25, 36, 59, 60, 62, 65–66, 131–6, 245, 266 quasi-money 35 relation between money and value 27, 35 represented as numbers 29–30 and social labour 25, 27, 31, 42, 55, 88, 243 and the state 45–6, 51, 173 storage of value 25, 26, 35 the US dollar 46–7 use value 28 money capital 28, 32, 59, 74, 142, 147, 158, 177, 178 money laundering 54, 109 ‘money of account’ 27–8, 30 monopolisation 53, 145 monopoly, monopolies 77 and competition 131–45, 218, 295 corporate 123 monetary system 45, 46, 48, 51 monopoly power 45, 46, 51, 93, 117, 120, 132, 133–4, 136, 137, 139, 141, 142–3 monopoly pricing 72, 132 natural 118, 132 of state over legitimate use of force and violence 42, 44, 45, 51, 88, 155, 173 see also prices, monopoly monopsony 131 Monsanto 123 Montreal Protocol 254, 259 ‘moral restraints’ 229, 233 mortgages 19, 21, 28, 32, 54, 67, 82, 239 multiculturalism 166 Mumbai 155, 159 Murdoch, Rupert xi Myrdal, Gunnar 150 N NAFTA 159 name branding 31, 139 nano-trading 243 Nation of Islam 291 national debt 45, 226, 227 National Health Service 115 National Labor Relations Board 120 National Security Administration 136 nationalisation 50 nationalism 7, 8, 44, 289 natural resources 58, 59, 123, 240, 241, 244, 246, 251 nature 56 alienation from 263 capital’s conception of 252 capital’s relation to 246–63 commodification of 59 domination of 247, 272 Heidegger on 59, 250 Polanyi on 58 power over 198 process-thing duality 73 and technology 92, 97, 99, 102 Nazis 151 neoclassical economists 109 neocolonialism 143, 201 neoliberal era 128 neoliberal ethic 277 neoliberalisation x, 48 neoliberalism xiii, 68, 72, 128, 134, 136, 176, 191, 234, 281 capitalism 266 consensus 23 counter-revolution 82, 129, 159, 165 political programme 199 politics 57 privatisation 235 remedies xi Nevada, housing in 77 ‘new economy’ (1990s) 144 New York City 141, 150 creativity 245 domestic labour in 196 income inequality 164 rental markets 22 social reproduction 195 Newton, Isaac 70 NGOs (non-governmental organisations) 189, 210, 284, 286, 287 Nike 31 Nkrumah, Kwame 291 ‘non-coincidence of interests’ 25 Nordic countries 165 North America deindustrialisation in 234 food grain exports 148 indigenous population and property rights 39 women in labour force 230 ‘not in my back yard’ politics 20 nuclear weapons 101 Nyere, Julius 291 O Obama, Barack 167 occupational safety and health 72 Occupy movement 280, 292 Ohlin Foundation 143 oil cartel 252 companies 77, 131 ‘Seven Sisters’ 131 embargo (1973) 124 ‘peak oil’ 251–2, 260 resources 123, 240, 257 oligarchy, oligarchs 34, 143, 165, 221, 223, 242, 245, 264, 286, 292 oligopoly 131, 136, 138 Olympic Games 237–8 oppositional movements 14, 162, 266–7 oppression 193, 266, 288, 297 Orwell, George 213 Nineteen Eighty-Four 202 overaccumulation 154 overheating 228 Owen, Robert 18, 184 Oxfam xi, 169–70 P Paine, Tom: Rights of Man 285 Paris 160 riots (1968) x patents 139, 245, 251 paternalism 165, 209 patriarchy 7 Paulson, Hank 47 pauperisation 104 Peabody, George 18 peasantry ix, 7, 107, 117, 174, 190, 193 revolts 202 pensions 134, 165, 230 rights 58, 67–8, 84, 134 people of colour: disposable populations 111 Pereire, Emile 239 pesticides 255, 258 pharmaceuticals 95, 121, 123, 136, 139 Philanthropic Colonialism 211 philanthropy 18, 128, 189, 190, 210–11, 245, 285 Philippines 115, 196 Picasso, Pablo 140–41, 187, 240 Pinochet, Augusto x Pittsburgh 150, 159, 258 planned obsolescence 74 plutocracy xi, xii, 91, 170, 173, 177, 180 Poland 152 Polanyi, Karl 56, 58, 60, 205–7, 210, 261 The Great Transformation 56–7 police 134 brutality 266 capacities and powers 43 powers xiii, 43, 52 repression 264, 280 surveillance and violence 264 violence 266, 280 police-state 203, 220 political economy xiv, 54, 58, 89, 97, 179–80, 182, 201, 206–9 liberal 204, 206, 209 political parties, incapable of mounting opposition to the power of capital xii political representation 183 pollutants 8, 246, 255 pollution 43, 57, 59, 60, 150, 250, 254, 255, 258 Pontecorvo, Gillo 288 Ponzi schemes 21, 53, 54, 243 population ageing 223, 230 disposable 108, 111, 231, 264 growth 107–8, 229, 230–31, 242, 246 Malthus’s principle 229–30 Portugal 161 post-structuralism xiii potlatch system 33 pounds sterling 46 poverty 229 anti-poverty organisations 286–7 and bourgeois reformism 167 and capital 176 chronic 286 eradication of 211 escape from 170 feminisation of 114 grants 107 and industrialisation 123 and population expansion 229 and unemployment 170, 176 US political movement denies assistance to the poor 292–3 and wealth 146, 168, 177, 218, 219, 243 world xi, 170 power accumulation of 33, 35 of capital xii, 36 class 55, 61, 88, 89, 97, 99, 110, 134, 135, 221, 279 computer 105 and currencies 46 economic 142, 143, 144 global 34, 170 the house as a sign of 15–16 of labour see under labour; of merchants 75 military 143 and money 25, 33, 36, 49, 59, 60, 62, 63, 65–6, 245, 266 monopoly see monopoly power; oligarchic 292 political 62, 143, 144, 162, 171, 219, 292 purchasing 105, 107 social 33, 35, 55, 62, 64, 294 state 42–5, 47–52, 72, 142, 155–9, 164, 209, 295 predation, predators 53, 54, 61, 67, 77, 84, 101, 109, 111, 133, 162, 198, 212, 254–5 price fixing 53, 118, 132 price gouging 132 Price, Richard 226, 227, 229 prices discount 133 equilibrium in 118 extortionate 84 food 244, 251 housing 21, 32, 77 land 77, 78, 150 low 132 market 31, 32 and marketplace anarchy 118 monopoly 31, 72, 139, 141 oil 251, 252 property 77, 78, 141, 150 supermarket 6 and value 31, 55–6 private equity firms 101, 162 private equity funds 22, 162 private property and the commons 41, 50, 57 and eradication of usufructuary rights 41 and individual appropriation 38 and monopoly power 134–5, 137 social bond between human rights and private property 39–40 and the state 47, 50, 58, 59, 146, 210 private property rights 38–42, 44, 58, 204, 252 and collective management 50 conferring the right to trade away that which is owned 39 decentralised 44 exclusionary permanent ownership rights 39 and externality effects 44 held in perpetuity 40 intellectual property rights 41 microenterprises endowed with 211 modification or abolition of the regime 14 and nature 250 over commodities and money 38 and state power 40–41, 42–3 underpinning home ownership 49 usufructuary rights 39 privatisation 23, 24, 48, 59, 60, 61, 84, 185, 235, 250, 253, 261, 262, 266 product lines 92, 107, 219, 236 production bourgeois 1 falling value of 107 immaterial 242 increase in volume and variety of 121 organised 2 and realisation 67, 79–85, 106, 107, 108, 173, 177, 179, 180, 221, 243 regional crises 151 workers’ dispossession of own means of 172 productivity 71, 91, 92, 93, 117, 118, 121, 125, 126, 132, 172, 173, 184, 185, 188, 220, 239 products, compared with commodities 25–6 profitability 92, 94, 98, 102, 103, 104, 106, 112, 116, 118, 125, 147, 184, 191–2, 240, 252, 253, 256, 257 profit(s) banking 54 as capital’s aim 92, 96, 232 and capital’s struggle against labour 64, 65 and competition 93 entrepreneurs 24, 104 falling 81, 107, 244 from commodity sales 71 and money capital 28 monopoly 93 rate of 79, 92 reinvestment in expansion 72 root of 63 spending of 15 and wage rates 172 proletarianisation 191 partial 175, 190, 191 ‘property bubble’ 21 property market boom (1920s) 239 growth of 50 property market crashes 1928 x, 21 1973 21 2008 21–2, 54, 241 property rights 39, 41, 93, 135 see also intellectual property rights; private property property values 78, 85, 234 ‘prosumers’ 237 Proudhon, Pierre-Joseph 183 Prozac 248 public goods 38 public utilities 23, 60, 118, 132 Q quantitative easing 30, 233 R R&D ix race 68, 116, 165, 166, 291 racial minorities 168 racialisation 7, 8, 62, 68 racism 8 Rand, Ayn 200 raw materials 16, 17, 148, 149, 154 Reagan, Ronald x, 72 Speech at Westminster 201 Reagan revolution 165–166 realisation, and production 67, 79–85, 106, 107, 108, 173, 177, 179, 180, 221, 243 reality contradiction between reality and appearance 4–6 social 27 Reclus, Elisée 140 regional development 151 regional volatility 154 Reich, Robert 123, 188 religion 7 religious affiliation 68 religious hatreds and discriminations 8 religious minorities 168 remittances 175 rent seeking 132–3, 142 rentiers 76, 77, 78, 89, 150, 179, 180, 241, 244, 251, 260, 261, 276 rents xii, 16–19, 22, 32, 54, 67, 77, 78, 84, 123, 179, 241 monopoly 93, 135, 141, 187, 251 repression 271, 280 autocratic 130 militarised 264 police-state 203 violent 269, 280, 297 wage 158, 274 Republican Party (US) 145, 280 Republicans (US) 167, 206 res nullius doctrine 40 research and development 94, 96, 187 ‘resource curse’ 123 resource scarcity 77 revolution, Fanon’s view of 288 revolutionary movements 202, 276 Ricardo, David 122, 244, 251 right, the ideological and political assault on the left xii; response to universal alienation 281 ‘rights of man’ 40, 59, 213 Rio de Janeiro 84 risk 17, 141, 162, 219, 240 robbery 53, 57, 60, 63, 72 robotisation 103, 119, 188, 295 Rodney, Walter 291 romantic movement 261 Roosevelt, Theodore 131, 135 Four Freedoms 201 Rousseau, Jean-Jacques 213, 214 Ruhr, Germany 150 rural landscapes 160–61 Russia 154 a BRIC country 170, 228 collapse of (1989) 165 financial crisis (1998) 154, 232 indebtedness 152 local famine 124 oligarchs take natural resource wealth 165 S ‘S’ curve 225, 230–31 Saint-Simon, Claude de Rouvroy, comte de 183 sales 28, 31, 187, 236 San Francisco 150 Santiago, Chile: street battles (2006–) 185 Sao Paulo, Brazil 129, 195 savings the house as a form of saving 19, 22, 58 loss of 20, 58 private 36 protecting the value of 20 Savings and Loan Crisis (USA from 1986) 18 savings accounts 5, 6 Scandinavia 18, 85, 165 scarcity 37, 77, 200, 208, 240, 246, 260, 273 Schumpeter, Joseph 98, 276 science, and technology 95 Seattle 196 Second Empire Paris 197 Second World War x, 161, 234 Securities and Exchange Commission 120, 195 security xiii, 16, 121, 122, 165, 205, 206 economic 36, 153 food 253, 294, 296 job 273 national 157 Sen, Amartya 208–11, 281 Development as Freedom 208–9 senior citizens 168 Seoul 84 serfdom 62, 209 sexual hatreds and discriminations 8 Shanghai 153, 160 share-cropping 62 Sheffield 148, 149, 159, 258 Shenzhen, China 77 Silicon Valley 16, 143, 144, 150 silver 27–31, 33, 37, 57, 233, 238 Simon, Julian 246 Singapore 48, 123, 150, 184, 187, 203 slavery 62, 202, 206, 209, 213, 268 slums ix, 16, 175 Smith, Adam 98, 125–6, 157, 185, 201, 204 ‘invisible hand’ 141–2 The Wealth of Nations 118, 132 Smith, Neil 248 social distinction 68, 166 social inequality 34, 110, 111, 130, 171, 177, 180, 220, 223, 266 social justice 200, 266, 268, 276 social labour 53, 73, 295 alienated 64, 66, 88 and common wealth 53 creation of use values through 36 expansion of total output 232 household and communal work 296 immateriality of 37, 233 and money 25, 27, 31, 42, 55, 88, 243 productivity 239 and profit 104 and value 26, 27, 29, 104, 106, 107, 109 weakening regulatory role of 109, 110 social media 99, 136, 236–7, 278–9 social movements 162–3 social reproduction 80, 127, 182–98, 218, 219, 220, 276 social security 36, 165 social services 68 social struggles 156, 159, 165, 168 social value 26, 27, 32, 33, 55, 172, 179, 241, 244, 268, 270 socialism 215 democratic xii; ‘gas and water’ 183 socialism/communism 91, 269 socialist revolution 67 socialist totalitarianism 205 society capitalist 15, 34, 81, 243, 259 civil 92, 122, 156, 185, 189, 252 civilised 161, 167 complex 26 demolition of 56 and freedom 205–6, 210, 212 hope for a better society 218 industrial 205 information 238 market 204 post-colonial 203 pre-capitalist 55 primitive 57 radical transformation of 290 status position in 186 theocratic 62 women in 113 work-based 273 world 204 soil erosion 257 South Africa 84–5, 152, 169 apartheid 169, 202, 203 South Asia labour 108 population growth 230 software programmers and developers 115, 116 South Korea 123, 148, 150, 153 South-East Asia 107–8 crisis (1997–8) 154, 232, 241 sovereign debt crises 37 Soviet Bloc, ex-, labour in 107 Soviet Union 196, 202 see also Russia Spain xi, 51, 161 housing market crash (2007–9) 82–3 spatio-temporal fixes 151–2, 153, 154, 162 spectacle 237–8, 242, 278 speculative bubbles and busts 178 stagnation xii, 136, 161–2, 169 Stalin, Joseph 70 standard of life 23, 175 starvation 56, 124, 246, 249, 260, 265 state, the aim of 156–7 brutality 266, 280 and capital accumulation 48 and civil society 156 curbing the powers of capital as private property 47 evolution of the capitalist state 42 and externality effects 44 guardian of private property and of individual rights 42 and home ownership 49–50 interstate system 156, 157 interventionism 193, 205 legitimate use of violence 42, 44, 45, 51, 88, 155, 173 loss of state sovereignty xii; and money 1, 45–6, 51, 173 ‘nightwatchman’ role 42, 50 powers of 42–5, 47–52, 57–8, 65, 72, 142, 155–9, 209, 295 and private property 47, 50, 58, 59, 146, 210 provision of collective and public goods 42–3 a security and surveillance state xiii; social democratic states 85 war aims 44 state benefits 165 state regulatory agencies 101 state-finance nexus 44–5, 46–7, 142–3, 156, 233 state-private property nexus 88–9 steam engine, invention of the 3 steel industry 120, 121, 148, 188 steel production 73–4 Stiglitz, Joseph 132–4 stock market crash (1929) x Stockholm, protests in (2013) 171, 243 strikes 65, 103, 124 sub-prime mortgage crisis 50 suburbanisation 253 supply and demand 31, 33, 56, 106 supply chain 124 supply-side remedies xi supply-side theories 82, 176 surplus value 28, 40, 63, 73, 79–83, 172, 239 surveillance xiii, 94, 121, 122, 201, 220, 264, 280, 292 Sweden 166, 167 protests in (2013) 129, 293 Sweezy, Paul 136 swindlers, swindling 45, 53, 57, 239 ‘symbolic analysts’ 188 Syntagma Square, Athens 266, 280 T Tahrir Square, Cairo 266 Taipei, Taiwan 153 Taiwan 123, 150, 153 Taksim Square, Istanbul 266, 280 Tanzania 291 tariffs 137 taxation 40, 43, 47, 67, 84, 93–4, 106, 133, 150, 155, 157, 167, 168, 172, 190 Taylor, Frederick 119, 126 Taylorism 103 Tea Party faction 205, 280, 281, 292 technological evolution 95–6, 97, 101–2, 109 technological imperatives 98–101 technological innovation 94–5 technology changes involving different branches of state apparatus 93–4 communicative technologies 278–9 and competition 92–3 constraints inhibiting deployment 101 culture of 227, 271 definition 92, 248 and devaluation of commodities 234 environmental 248 generic technologies 94 hardware 92, 101 humanising 271 information 100, 147, 158, 177 military 93, 95 monetary 109 and nature 92, 97, 99, 102 organisational forms 92, 99, 101 and productivity 71 relation to nature 92 research and development 94 and science 95 software 92, 99, 101 a specialist field of business 94 and unemployment 80, 103 work and labour control 102–11 telephone companies 54, 67, 84, 278 Tennessee 148 Teresa, Mother 284 Thatcher, Margaret (later Baroness) x, 72, 214, 259 Thatcherism 165 theft 53, 60, 61, 63 Thelluson, Peter 226, 227 think tanks 143 ‘Third Italy’ 143 Third World debt crisis 240 Toffler, Alvin 237 tolls 137 Tönnies, Ferdinand 122, 125 tourism ix, 16, 140, 141, 187, 236 medical 139 toxic waste disposal 249–50, 257 trade networks 24 trade unions xii, 116, 148, 168, 176, 184, 274, 280 trade wars 154 transportation 23, 99, 132, 147–8, 150, 296 Treasury Departments 46, 156 TRIPS agreement 242 tropical rainforest 253 ‘trust-busting’ 131 trusts 135 Turin, Italy 150 Turkey 107, 123, 174, 232, 280, 293 Tuscany, Italy 150 Tutu, Archbishop Desmond 284 Twitter 236 U unemployment 37, 104, 258, 273 benefits 176 deliberately created 65, 174 high xii, 10, 176 insurance 175 and labour reserves 175, 231 and labour-saving technologies 173 long-term 108, 129 permanent 111 echnologically induced 80, 103, 173, 274 uneven geographical developments 178, 296 advanced and underserved regional economies 149–50 and anti-capitalist movements 162 asset bubbles 243 and capital’s reinvention of itself 147, 161 macroeconomic processes of 159 masking the true nature of capital 159–60 and technological forms 219 volatility in 244 United Fruit 136 United Kingdom income inequality in 169; see also Britain United Nations (UN) 285 United States aim of Tea Party faction 280 banking 158 Bill of Rights 284 Britain lends to (nineteenth century) 153 capital in (1990s) 154 Constitution 284 consumption level 194 global reserve currency 45–6 growth 232 hostility towards state interventions 167 House of Representatives 206 human rights abuses 202 imperial power 46 indebtedness of students in 194 Indian reservations 249 interstate highway system 239 jobless recoveries after recession 172–3 liberty and freedom rhetoric 200–201, 202 Midwest ‘rust belt’ 151 military expenditures 46 property market crashes x, 21–2, 50, 54, 58, 82–3 racial issues 166 Savings and Loan Crisis (from 1986) 18 social mobility 196 social reproduction 196–7 solidly capitalist 166 steel industry 120 ‘symbolic analysts’ 188 ‘trust-busting’ 131 unemployment 108 wealth distribution 167 welfare system 176 universal suffrage 183 urbanisation 151, 189, 228, 232, 239, 247, 254, 255, 261 Ure, Andrew 119 US Congress 47 US dollar 15, 30, 45–6 US Executive Branch 47 US Federal Reserve xi, 6, 30, 37, 46, 47, 49, 132, 143, 233 monetary policy 170–71 US Housing Act (1949) 18 US Treasury 47, 142, 240 use values collectively managed pool of 36 commodification of 243 commodities 15, 26, 35 common wealth 53 creation through social labour 36 and entrepreneurs 23–4 and exchange values 15, 35, 42, 44, 50, 60, 65, 88 and housing 14–19, 21–2, 23, 67 and human labour 26 infinitely varied 15 of infrastructural provision 78 loss of 58 marketisation of 243 monetisation of 243 of money 28 privatised and commodified 23 provision of 111 and revolt of the mass of the people 60 social demand for 81 usufructuary rights 39, 41, 59 usury 49, 53, 186, 194 utopianism 18, 35, 42, 51, 66, 119, 132, 183, 184, 204, 206–10, 269, 281, 282 V value(s) commodity 24, 25 failure to produce 40 housing 19, 20, 22 net 19 production and realisation of 82 production of 239 property 21 relation between money and value 27, 35 savings 20 storing 25, 26, 35 see also asset values; exchange values; social value; use values value added 79, 83 Veblen, Thorstein: Theory of the Leisure Class 274 Venezuela 123, 201 Vietnam, labour in 108 Vietnam War 290 violence 53, 57, 72, 204–5, 286 against children 193 against social movements 266 against women 193 colonial 289–90, 291 and contemporary capitalism 8 culture of 271 of dispossession 58, 59 in a dystopian world 264 and humanism 286, 289, 291 of the liberation struggle 290 militarised 292 as the only option 290–91 political 280 in pursuit of liberty and freedom 201 racialised 291 state’s legitimate use of 42, 44, 45, 51, 88, 155, 173 of technology 271 and wage labour 207 virtual ecological transfer 256 Volcker, Paul 37 W wages 103 basic social wage 103 falling 80, 82 for housework 115, 192–3 low xii, 114, 116, 186, 188 lower bound to wage levels 175 non-payment of 72 and profits 172 reduction in 81, 103, 104, 135, 168, 172, 176, 178 rising 178 and unskilled labour 114 wage demands 150, 274 wage levels pushed up by labour 65 wage rates 103, 116, 172, 173 wage repression 158–9 weekly 71 see also income Wall Street criticised by a congressional committee 239–40 illegalities practised by 72, 77 and Lebed 195 new information-processing technologies 100 Wall Street Crash (1929) x, 47 Wall-E (film) 271 Walmart xii, 75, 84, 103, 131 war on terror 280 wars 8, 60, 229 currency 154 defined 44 monetisation of state war-making activities 44–5 privatisation of war making 235 resource 154, 260 and state aims 44 state financing of 32, 44, 48 and technology 93 trade 154 world 154 water privatisation 235 wave theory 70 wave-particle duality 70 wealth accumulation of 33, 34, 35, 157, 205 creation of 132–3, 142, 214 disparities of 164–81 distribution of 34, 167 extraction from non-productive activities 32 global 34 the house as a sign of 15–16 levelling up of per capita wealth 171 and poverty 146, 168, 177, 218, 219, 243 redistribution of 9, 234, 235 social 35, 53, 66, 157, 164, 210, 251, 265, 266, 268 taking it from others 132–3 see also common wealth weather futures 60 Weber, Max 122, 125 Weimar Republic 30 welfare state 165, 190, 191, 208 Wells Fargo 61 West Germany 153, 154, 161 Whitehead, Alfred North 97 Wilson, Woodrow 201 Wolf, Martin 304n2 Wollstonecraft, Mary: A Vindication of the Rights of Woman 285 women career versus family obligations 1–2 disposable populations 111 exploitation of 193 housework versus wage labour 114–15 oppression against 193 social struggle 168 trading of 62 violence against 193 in the workforce 108, 114, 115, 127, 174, 230 women’s rights 202, 218 workers’ rights 202 working classes and capital 80 consumer power 81 crushing organisation 81 education 183, 184 gentrified working-class neighbourhoods ix; housing 160 living conditions 292 wage repression and consumption 158–9 working hours 72, 104–5, 182, 272–5, 279 World Bank 16, 24, 100, 186, 245 World Trade Organization 138, 242 WPA programmes (1930s) 151 Wright, Frank Lloyd: Falling Water 16 Wriston, Walter 240 Y YouTube 236 Yugoslavia, former 174 Z Zola, Émile 7


pages: 446 words: 117,660

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future by Paul Krugman

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Andrei Shleifer, antiwork, Asian financial crisis, bank run, banking crisis, basic income, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, bitcoin, blockchain, bond market vigilante , Bonfire of the Vanities, business cycle, capital asset pricing model, carbon footprint, carbon tax, Carmen Reinhart, central bank independence, centre right, Climategate, cognitive dissonance, cryptocurrency, David Ricardo: comparative advantage, different worldview, Donald Trump, Edward Glaeser, employer provided health coverage, Eugene Fama: efficient market hypothesis, fake news, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, frictionless, frictionless market, fudge factor, full employment, green new deal, Growth in a Time of Debt, hiring and firing, illegal immigration, income inequality, index fund, indoor plumbing, invisible hand, it is difficult to get a man to understand something, when his salary depends on his not understanding it, job automation, John Snow's cholera map, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, large denomination, liquidity trap, London Whale, low interest rates, market bubble, market clearing, market fundamentalism, means of production, Modern Monetary Theory, New Urbanism, obamacare, oil shock, open borders, Paul Samuelson, plutocrats, Ponzi scheme, post-truth, price stability, public intellectual, quantitative easing, road to serfdom, Robert Gordon, Robert Shiller, Ronald Reagan, secular stagnation, Seymour Hersh, stock buybacks, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, universal basic income, very high income, We are all Keynesians now, working-age population

The bottom line is that policymakers left the financial industry free to innovate—and what it did was to innovate itself, and the rest of us, into a big, nasty mess. THE MADOFF ECONOMY December 19, 2008 The revelation that Bernard Madoff—brilliant investor (or so almost everyone thought), philanthropist, pillar of the community—was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend. Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole? The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich.

., 248 Internal Revenue Service (IRS), 350 international diplomacy, 244 International Monetary Fund, 97–98, 208 international trade, 243–45, 249–53 arbitration in, 252 backlash from, 244–45 conflicts of interest in, 246–47 and corporate assets, 249 and corruption, 246, 247, 254, 255–56 free trade, 249 literature on, 400 political realism in, 251–52 producer interests vs. consumer interests in, 250 protectionism, 247, 250, 252 reasons for agreements in, 246, 247, 249–50, 255 in recent history, 250–51, 251, 255–56 role of executive branch in, 250, 252–53, 255–56 as rules-based system, 244, 245, 247, 250–51, 252, 254–55, 256 tariffs, 244, 246–48, 252–53, 254–56 trade war, 353, 361, 371–72 and U.S. credibility, 256 investment: as accounting fiction, 228–29 debt-financed, 212 lure of personal wealth in, 93 Madoff’s Ponzi scheme in, 92–94 negative, 230–31, 231 overseas, 228 private, 204, 205, 208 progressive expenditure, 210–11 public “shovel-ready” projects, 116, 133, 205–6, 206 rate of return on, 205 uses of the term, 7 investment-savings, liquidity-money (IS-LM), 109–12, 111 invisible bond vigilante, 160–61 Iran-Contra, 300 Iraq war: based on false premises, 13, 26, 343, 381 failed reconstruction in, 299 support from Very Serious People, 157 unpopularity among voters, 27 Ireland: austerity-with-growth in (1980s), 161 banks in, 179 and Europe, 178 foreign investment in, 228 and recover, 183 irrational behavior, 132, 146 Irrational Exuberance (Shiller), 84 Irwin, Neil, 315, 316 “IS-LMentary” (Krugman), 103, 109–12, 111, 125 Israeli stabilization (1985), 127 Italy: economy of, 188 elections in, 188 Mussolini regime in, 346 “It Can’t Happen, It’s a Bad Idea, It Won’t Last” (Jonung and Drea), 184–85 “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap” (Krugman), 9, 82 Japan: Bank of Japan, 104 financial crisis in, 81–82, 103, 116, 164 jargon, avoiding, 7 Jensen, Michael, 135 jobs: creation of, 120, 293 cuts in, 107, 120 employment benefits, 286, 317 full employment, 96, 114 health insurance covered in, 39 involuntary part-time employment, 60 in knowledge-intensive industries, 292 monopsony power in, 316–17 new geography of, 292 and real earnings, 316 taken by robots, 288–89 work opportunities for less-educated men, 286, 292 see also unemployment Johnson, Lyndon B., 53, 54, 55n Johnston, David Cay, 350 Jones, Alex, 356, 357 Journal of Money, Credit and Banking, 137 JPMorgan Chase, 163 Kaiser Family Foundation, 39, 58 kakistocracy, 350 Kamin, David, 239 Kansas: education in, 293 taxes in, 216, 229, 293 Kavanaugh, Brett, 345, 346, 352 Kentucky, health care in, 68 Kerry, John, 366, 380, 381, 382 Kerry, Teresa Heinz, 380, 381 “ketchup economists,” 136, 141 Keynes, John Maynard, 81, 123, 134, 135, 143, 394, 402 The General Theory of Employment, Interest and Money, 132–33 “The Great Slump of 1930,” 137 Keynesian economics: and business cycle, 276 and Capitol Hill Baby-Sitting Co-op, 137–38 and dysfunctional finance, 147 free-market, 124, 125, 133, 394 macroeconomics, 123, 407–8 as “moderately conservative,” 4, 123, 133, 408 New Keynesian views, 129, 139–40, 143, 145, 147 and the 1980s, 129 opponents of, 4, 95, 124, 133–34, 143 re-embracing, 147–48 “khaki election,” use of term, 13 Khashoggi, Jamal, 330 Kinsley, Michael, 126 Kiyotaki, Nobuhiro, 147 Kleiman, Mark, 48 Klein, Ezra, 51, 356 Klein, Joe, 29 Koch brothers, 60, 303, 331, 336, 355 Kocherlakota, Narayana, 384 Kristol, Irving, 299 “Krugman calculation,” 267–70, 268, 272, 273, 274, 276 K Street project, 283 Kudlow, Larry, 330 Kydland, Finn, 139 Laffer curve, 385 Lancaster, Kelvin, 398 Langone, Ken, 95, 96 language: avoiding jargon, 7 specialized, 393–94 writing in clear English, 6–7 Latvia, slumps in, 162 Lazear, Eddie, 384 Lehman Brothers, 123, 146, 157 Leonhardt, David, 5 Lerner, Abba, 152–54 liberalism, 324 death of, 13 liberal professional economists, 149, 150 libertarians, 5 life expectancy, 199 liquidity, 89, 90 IS-LM, 109–12 liquidity trap, 112 Logic of Collective Action, The (Olson), 354–55 London market, banks lending in, 89 “London Whale” venture, 163 Longman, Phillip, 42 Lucas, Robert, 128, 130, 131, 138–39, 143 Maastricht Treaty, 405 macroeconomics: business cycle vs. long-term growth in, 275–76 and Capitol Hill Baby-Sitting Co-op, 137–38 Dark Age of, 131, 408, 409 as divided field, 123–25, 136–37 false peace in (1985–2007), 142 Keynesian, 123, 407–8 rational-expectation, 128 “saltwater” vs.

Ross, 245 personal savings rate, 88 Peterson, Pete, 193 Piketty, Thomas, 219 Capital in the 21st Century, 238 Pimco bond fund, 83, 89 Pizzagate, 375 Poland: Law and Justice Party in, 358 threats to democracy in, 188, 189, 344, 346, 358, 359, 360 white nationalism in, 346 polarization, 5–9, 291, 297–98, 356 policy discussion, absence of, 13 political action, 355–56 political realism, 251–52 politicization: pressures from the right, 3–4 and racism, 4–5, 226, 301, 307, 308–10, 360 roots of, 2–5 PolitiFact, 386 Ponzi scheme, 92–93 population, aging of, 16 population density, 87 population growth, 225, 271, 272 “populism,” use of term, 351–53 Portugal, economy of, 178 “positive” economics, 1 post-truth politics, 61 poverty: and cuts in benefits, 30 of elderly, 23–24 and health care, 47, 66 precious metals, 411 Prescott, Edward, 139 productivity, 283 and income distribution, 268–69, 272, 273 slowdown in, 267, 289 and technology, 289 and wages, 289 professional conservative economists, 149 profit, appearance of, 92–93 progressive expenditure, categories of, 210–11 propagandists, 149 protectionism, 353 prudence, downside of, 104, 106, 107–8, 117 “public good,” use of term, 354–55 public goods, 30 public health, 355 public works, spending on, 116, 133, 143, 205–6, 206 punditry: author’s rules for, 5–9 honesty about dishonesty, 7–8 staying with easy stuff, 6 talking about motives, 8–9 writing in English, 6–7 Putin, Vladimir, 371 racism: and hate-mongering, 54 interracial marriages, 215 and politicization, 4–5, 226, 301, 307, 308–10, 360 Rajan, Raghuram, 136 Rampell, Catherine, 5 Rand, Ayn, Atlas Shrugged, 219 rationality: assumption of, 134, 138, 139, 144–45, 148 investor irrationality, 135 limitations of, 131, 132 Rawls, John, 3 Reagan, Ronald: and economic growth, 262, 275–76 and health care, 45, 53, 322 as icon of conservative purity, 300, 302 and supply-side economics, 271 and taxes, 7, 19, 215, 299 and Voting Rights Act, 300 Reagan administration: and income inequality, 271 and Iran-Contra, 300 and private contractors, 300 “real business cycle” theory, 139 real estate: housing bubble, 82, 83–85, 86–88 land-use restrictions, 87 recessions: causes of, 138–39, 185 central banks’ roles in, 103–4, 124, 133 demand-side view of, 139 desirability of, 144, 147 “double-dip” (1979–1982), 215 effects of, 126–27 fears of, 81–82 and fiscal policy, 140, 141, 215, 275 and government debt, 124, 142 and printing money, 4, 104, 105 and unemployment insurance claims, 106 Reciprocal Trade Agreements Act (1934), 250, 252, 254–55 “Red-Baiting in the 21st Century” (Krugman), 313–14 red ink, fear of, 107, 116 Regan, Trish, 319, 320 regulation, minimal, 315 Reid, Harry, 28, 29 Reinhardt, Uwe, 35 Reinhart, Carmen, 158, 163 Repealing the Job-Killing Health Care Law Act (2011), 59 Republican Party: campaign (2020), 313 center-right delusion of, 305–7 climate denial of, 337, 365 conspiracy theorizing by, 345–46, 365 corruption in, 335–37, 343, 358, 368 dark side of, 334, 336, 368 democracy undermined by, 367–69 double standards of, 208, 209 double talk of, 225–26 economic doctrine of, 229 facts or logic ignored by, 28, 237, 366 “Flimflam Man” of, 194, 195–97, 362 frauds promoted by, 74–75, 224–26 and health care, 65–66, 69, 70, 71–72, 73–75, 76–77, 309, 338 hostility to science, 335, 337 and immigration, 303 IRS defunded by, 350 lying by, 225–26 and movement conservatism, 8, 297–98, 299–301, 302–4, 307, 343, 368 one-party rule sought by, 358–60 paranoid style in, 345–47 and party loyalty, 67, 150–51, 226, 368 policy analysis shunned by, 73–74, 77 power plays by, 359–60, 369 privatization of public assets as goal of, 338 racism of, 226 radicalization of, 189, 298, 309 realities of, 197 state governments controlled by, 65–66, 68, 77 and Supreme Court, 345, 346, 352 tax plans of, 222, 224–26, 236, 309 Trumpism of, 335–37, 343, 345–46, 359–60, 370–72 voter preferences vs., 309 workable ideas lacking in, 69, 74 retirement, economics of, 15, 22, 23–24, 31–32, 362 retirement accounts: private, 17, 19, 22–24 real rate of return on, 23 Return of Depression Economics, The (Krugman), 82 Reynolds, Alan, 273, 274 Ricardo, David, 289 risk: elimination of, 81 in financial innovation, 90–91 reward vs., 135 Rivlin, Alice, 263 Roach, Stephen, 83, 85 Roberts, David, 307 Roberts, Paul Craig, 273, 274, 279 Robin, Corey, 315–16 robot, defined, 288 Rodgers, Cathy McMorris, 60 Rogers, Will, 297 Rogoff, Ken, 158, 163 Romer, Christina, 234, 236 Romer, David, 139 Romney, Mitt, 51–52, 54, 219, 320 Roosevelt, Franklin D.: and balanced budget, 107 on health care, 46 and reciprocal trade act, 247, 250, 252, 254 and Social Security, 25, 26 Roosevelt, Theodore, 239 Roosevelt (FDR) administration, and international trade, 244 rule of law: disdain of, 252, 256, 301, 347 interpretation and enforcement of, 367–68 rules for research, 399–404 dare to be silly, 401–2, 404 listen to the gentiles, 399–400, 404 question the question, 400–401, 404 simplify, simplify, 402–4 Russia, and trade, 256 Ryan, Jack, 381 Ryan, Paul, 28, 203, 219, 363 as flim-flam man, 194, 195–97, 362 and Medicare, 225 and Ryan plan, 193–94, 195–97, 201–2 super PAC of, 225 Saez, Emmanuel, 219, 234–35, 236, 238–39 safety-net programs, 4, 224, 313, 317, 320, 321, 323, 370 Samuelson, Paul, 124, 403, 407, 408, 410 San Diego, housing in, 87 “sand states,” unemployment in, 170 Santorum, Rick, 303 Sawhill, Isabel, 280 Scaife, Richard Mellon, 380 Schultz, Howard, 212, 308, 310 Schumer, Chuck, 93 Schumpeter, Joseph A., 132, 134, 395 Schwartz, Anna, 133 SeaWorld, 352 secular stagnation, 206 Securities and Exchange Commission, 93 segregationists, 346 Seltzer, Marlene, 166 Senate, role of, 368 September 11, 2001, attacks, aftermath of, 13 Sessions, Pete, 59 Shapiro, Ben, 354, 355, 356, 357 Shiller, Robert, 84, 136, 141, 146 Shleifer, Andrei, 146 Sicko (movie), 44–45 silver and gold coins, 411, 412 “silver-loading,” 71 Simple Art of Murder, The (Chandler), 327 Simpson, Alan, 198, 199, 203, 218 Sinema, Kyrsten, 365 “Skewing of America, The” (Krugman), 259–60 “skills gap,” 159, 166–68, 290 Slemrod, Joel, 277 Smith, Adam, 132, 138, 411 Smith, Noah, 95 smoking, dangers of, 333, 334 Smoot-Hawley Tariff Act (1930), 247 snake oil, peddling, 357 Snow, John, 81 social democracy, 313–14, 317, 320–21, 323 social dysfunction, indicators of, 286 socialism, 219, 313–14, 316, 319–21, 322–24 social justice, 3 social media, see media Social Security: cuts in benefits, 17, 32 expansion of, 30, 32, 212, 240 financial condition of, 16–17, 20, 28–29 guaranteed benefits of, 24 historic success of, 21, 22, 24, 31–32 importance to voters, 14, 26, 31, 306 as independent entity, 20 “Life Expectancy for Social Security” (Web site), 26 percentage of revenues going to benefits, 22 politicization of, 25–27 privatization of, 14–15, 19–21, 22–24, 25–27, 28–29, 32, 35, 302, 306, 361, 377, 378 retirement age for, 199 supported by dedicated tax on payroll earnings, 19 threats to, 16–18, 198, 199, 200, 223, 224 Trump administration’s lies about, 225 trust fund of, 20 Social Security Act (1934), 26 Solow, Bob, 396, 405 Soros, George, 345, 346, 365 Soviet Union: central planning by, 323 economy of, 324 fall of, 177 Spain: anti-establishment forces in, 99 economy of, 178–80, 184 and euro, 177, 178–79, 181, 187, 188 housing bubble in, 181 internal devaluation in, 179 loans to, 182 public debt of, 179 unemployment in, 182, 184 speculation: destructive, 135 short-term, 133 stagflation (1970s), 124, 133 Stalin, Joseph, 239, 324 “State of Macro, The” (Blanchard), 130 statistics, uses and abuses of, 262 Stein, Herbert, 271 Stiglitz, Joseph E., 5, 396–98, 403 “Stimulus Arithmetic” (Krugman), 104, 113–14 stock market bubble, 83, 84, 86 Stokes, Leah, 305, 306 Stone Center for the Study of Socioeconomic Inequality (CUNY), 259 Stross, Charlie, 357 sugar, import quotas on, 250 Summers, Larry, 136, 145–46 “Sum of All Fears, The” (Krugman), 81 supply-side economics, 128, 275–76, 299 Supreme Court, U.S.: on Affordable Care Act, 65, 68, 77 Kavanaugh appointment to, 345, 346, 352 moral authority destroyed, 345, 360 partisanship in, 346 sustainable growth rate, 153–54, 204 Sweden, economy of, 239, 323 Switzerland, health care in, 37 system overhaul, 210, 212 tanning parlors, tax on, 211 tariffs, 244, 246–48, 251, 252–53, 254–56 taxes: carbon tax, 339 corporate, see corporate taxes cutting, 8, 16–17, 19, 20, 116–17, 199, 201, 215–17, 218–20, 224–26, 227–29, 230–33, 231–33, 232, 236–37, 306–7, 351, 361, 370, 371 and debt, 154, 222–23, 224–26 economic effects of, 7, 222–23, 224–26, 233, 236–37 incentive effects of, 154 and income inequality, 238–39 low, 315 on middle class, 221–23 and monopoly power, 236 narrow-gauge, 211 optimal top rates of, 234–35 on payroll, 212 political trade-offs in, 153 on pollution, 339 progressive taxation, 238–40, 323 raising, 185, 196, 199, 219, 229, 380 tariffs, 244, 246–48, 251, 252–53, 254–56 temporary breaks, 222 top marginal income tax rates, 236–37, 236 Trump’s frauds, 348–50 value-added, 154, 212 on the wealthy, see wealthy on working class, 20, 221–23 tax evasion, 349–50, 413, 414 tax liabilities, 414 tax loopholes, 93, 349 Tax Policy Center, 196, 202, 283 tax reform, 26, 198–99 Tea Party, 53–54, 303 technology, and income inequality, 260, 288–90 Tennessee, health care in, 68 tethering, 413–14 Thatcher, Margaret, 22, 23, 128 “That Eighties Show” (Klugman), 124 “Theoretical Framework for Monetary Analysis, A” (Friedman), 144 Thompson, Fred, 47, 52 tobacco companies, 333, 334 Toles, Tom, 333 torture, 300 totalitarianism, 324 trade theory, 399–400, 401, 403 trade war, 353, 361, 371–72 see also international trade transcription costs, 411–14 transportation, greenhouse gases from, 339–40 Treasury, U.S.: on income gains, 279–81 Office of Tax Analysis, 278 partisan functions of, 26 and Social Security, 16 Trichet, Jean-Claude, 161 “Triumph of Macroeconomics, The” (Krugman), 103–5 Trotsky, Leon, 324 trucking industry, 290 Trump, Donald: attacks on media by, 347 attitude toward truth, 364–66 belligerent ignorance of, 246, 307, 337, 345, 346–47, 352 campaigning, 309, 370 contempt for rule of law, 252, 256, 347 corruption of, 335–37, 338, 343, 349, 350, 368, 389 and cronyism, 256, 343 as deal-maker, 348–50 election of (2016), 13, 343, 372, 375, 387–89 family history of, 348–49 foreign dictators admired by, 346–47, 365, 371 humiliating others, 352–53 and inequality, 260, 291 and international trade, 245, 246, 247–48, 249, 252–53, 254–56, 353, 361 laziness of, 352 as liar, 348, 353, 364, 365 on manhood, 370, 371, 372 on neo-Nazis as “very fine people,” 365 and populism, 351–53 and racism, 246, 310, 360 and Republican Party, 335–37, 359, 372 scandals about, 388–89 and socialism, 322–23 State of the Union address (2019), 207–9, 322 supporters scammed by, 353, 372, 389 and taxes, 216, 221–23, 224–26, 227–29, 230–33, 306–7, 308, 350, 361, 371 tax returns of, 359 tough-guy posturing by, 334, 346–47, 370–72 and 2020 election, 227, 347, 361 and the wall, 370, 371 Trump, Fred (father), 348 Trump administration: anti-science views of, 332 as anti-worker, 351–53 appointments to, 352 bad faith of, 151, 332, 365 charlatans and cranks in, 149, 151, 329, 331, 333 climate change deniers in, 329–31, 332–34, 335–37 and collapse of freedom, 187 compared to that of G.


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Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

Affordable Care Act / Obamacare, Alan Greenspan, Bernie Madoff, Black Swan, British Empire, business cycle, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Mahbub ul Haq, means of production, Naomi Klein, Nelson Mandela, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, source of truth, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

When railway companies faltered in the late 1840s, struggling to return 10 per cent on investments, many began to fiddle their books. For example, they treated costs as capital investments rather than as expenses, thereby inflating their profits; and used fresh investments instead of profits to pay out dividends (a strategy now known as a Ponzi scheme, made infamous most recently by Bernie Madoff in 2009). The most notorious perpetrator of deceptive railway accounting was the ‘Railway King’, George Hudson (1800–71), who by 1844 controlled over 1600 kilometres of railway in Britain. Hudson overstated his profits and used shareholder investments to pay dividends.

Crusades 16, 17, 18 currencies 100 da Gama, Vasco 29 da Pisa, Leonardo see Fibonacci da Vinci, Leonardo 7, 27, 32, 47, 60, 65, 80–2, 84, 87–8 Dafforne, Richard 120–3 Dandolo, Enrico 52 Dark Ages dark arts 35, 83 Darwin, Charles 139, 165 Das Kapital (Marx) 165 Dasgupta, Sir Partha 231–2, 237, 238, 239 Datini, Francesco 23–6, 52, 96 de’ Barbari, Jacopo 79 de’ Belfolci, Folco 34, 44 De divina proportione (Pacioli) 66, 82, 84, 85–6 De ludo scacchorum (Pacioli) 87–8 De pictura (Alberti) 60, 117 De quinque corporibus (Piero) 66 De viribus quantitatis (Pacioli) 83 Dean, Graeme W. 203 debit and credit entries 13, 55, 93–4, 100 difficulties 101–2, 122–3 The Decline of the West (Spengler) 167 Defoe, Daniel 127–8 della Francesca, Piero 7, 32, 34, 44–5, 46, 47 mathematical treatises 45, 66, 75 perspective painting 60, 64, 76–7 della Rovere, Giuliano 59 Deloitte, William 145 Deloitte Touche Tohmatsu 217 demand management 185 democracy 15 depreciation 148, 149, 231 Der moderne Kapitalismus (Sombart) 161–2, 171 derivatives market 198, 200 Descartes, René 40 d’Este, Isabella 83, 84, 88 dividends 144, 146, 147, 148, 149, 202 Doge’s Palace 50, 56 Domenici, Pete V. 191 domestic accounts 15–16 double-entry bookkeeping 8, 115, 120, 166 Badoer’s system 55 and capitalism 159–60, 161–75 and decision-making 126–7 earliest surviving 20–1 to improve the mind 125 link with rhetoric 172–3 in modern era 135–6, 249 origins 6–7, 16, 21–2 Pacioli’s definition 92–3 six essential features 20–1 texts on 117, 136 use by Datini 24, 26 Venetian 55, 67, 97–100, 123–7, 131 see also Particularis de computis et scripturis du Pont, Irénée 156 ducats 50, 55 Dürer, Albrecht 79–80 earnings per share (EPS) 219 earth see planet Earth Earth Summit 2012 248–9 East India Company 142 Ebbers, Bernie 213 eco-accounting 249 economic growth 192–3, 225, 227, 233, 242, 245, 248 economics 185 political economy 171 ecosystems 239–40, 247 education 245 Euclid’s Elements 37–8 quadrivium 36, 38, 43 trivium 38, 43 Egypt 35, 36 Eisenstein, Elizabeth 116–17 Elements (Euclid) 37–8, 39, 67, 68, 84 Elgin Marbles 15 Engels, Friedrich 162, 164, 165 England 116, 121, 131, 133, 147 Enron 3, 173, 194–9, 201, 207, 212–13, 214–16, 222–3 environmental accounting 233–8, 245, 247 environmental damage 222–3, 224–5, 232–3, 240, 241–2, 248 equity 21, 243 Erasmus of Rotterdam 68, 84–5 Erlich, Everett 235 Ernst & Young 209, 210, 216, 217 Espeland, Wendy Nelson 172–3 Euclid, Elements 37–8, 39, 67, 68, 75, 84 Eugenius IV, Pope 34 Europe 17, 20, 21, 22–3, 40, 116, 156, 188 accounting associations 153 currencies 25 medieval 26, 70–1 universities 30, 40, 42 vernacular languages 41 European Environment Agency 247 Evans, John H. 173–5 exchange rates 55 externalities 236 factory system 136–7, 138, 139–41, 165, 166 Farolfi ledger 20–1 Fastow, Andrew 213 Fells, J.M. 140–1 Fibonacci 18–19, 75 Fibonacci numbers 19–20 Liber abaci 19–20, 22, 39–41, 63, 66, 67, 75 Financial Accounting Standards Board (US) 206, 213 financial information 203–6 financial statements 5, 143, 144, 146, 200, 205, 214, 215 Fitoussi, Jean-Paul 243–4 Florence 6, 17, 34, 61, 64, 84 abbaco schools 41 bank ledger 20 expansion of commerce 21 Flugel, Thomas 127 Fondaco dei Tedeschi 56 Ford Motor Company 250–1 forests 240, 241 Forster, E.M. 154–5 Forster, Nathaniel 137 France 147 Franciscans 62, 65, 88, 89 Frankfurt Book Fair 95 Frederick II 95 Freiburg 27 Friedman, Milton 221 fund transfers 54 G20 249 Galileo 116, 166 Geijsbeek, John B. 157–8 General Electric 204 The General Theory of Employment (Keynes) 177–8, 179, 183, 185–6 Genoa 6, 17 geometry 36, 37, 38, 63, 73, 75, 81 Germany 56, 68, 183 Gertner, Jon 244 Giovanni, Enrico 244 Giovanni Farolfi & Co. 20 Glitnir 5 Global Biodiversity Outlook 3 (Sukhdev) global financial crisis (2008) 3, 5, 197, 215, 242, 243–4 globalisation, of finance 206–7, 219, 221 Goethe, Johann W. von 128–31 golden ratio 66, 86 Goodwin, Sir Fred 197 governmental accounting 120 grammar 38, 43 Great Depression 177, 178, 179, 180, 227 Greece, ancient 15 mathematics 34–5, 37–8, 61 philosophers 37 green accounting 244 Green Economy Report (Sukhdev) 248–9 Greenspan, Alan 227–8 Gross Domestic Product (GDP) 3, 180–2, 225, 227–30, 232–3, 235, 237–8, 242–3, 246 alternatives to 243–7, 249 failings of 246 Gross National Product (GNP) 1–3, 181, 190, 231 Groves, Eddy 208–9 Guidobaldo, Duke of Urbino 66, 72, 79, 92 Gutenberg, Johann 68, 77 Hagen, Everett 186 Hamilton, Alexander 22 Hammurabi’s Code 14 Haq, Mahbub ul 245 Henry VIII 25 Herodotus 36 HIH 208, 209, 213, 215 Hindu–Arabic arithmetic 34, 41, 62, 67 Hindu–Arabic numerals 18–19, 21, 26–7, 38, 44, 52, 71, 75 Hoenig, Chris 246–7 honeybee pollination 237 Hoover, Herbert 177 Hopwood, Anthony housework, unpaid 229 How to Pay for the War (Keynes) 182–3 Hudson, George 142–3 human capital 231, 248 Human Development Index 245 Humanism (Florence) 43–4, 59–60, 68 Huxley, Aldous 32–3 income measurement 218–19, 226 income statements 5, 202, 203, 219 in ancient Rome 16–17 see also profit and loss accounts India 29, 238 trade/double entry 22 Indonesia 240 industrial revolution 131, 133, 139, 200, 226 inflation 182, 183 information processing 203 Institute of Accountants and Bookkeepers of New York (IABNY) 156, 157 Institute of Chartered Accountants in England and Wales (ICAEW) 153, 205–6 Insull, Samuel 202, 214 Insull Utility Investments 201–2 interest payments 25, 54, 96 international accounting 189, 207 International Accounting Standards Board 207, 214 International Monetary Fund 187 internet 204 inventory 97–9, 101 Islam 22, 39 Italy 6, 7, 16, 19, 28, 167–8 mathematics 34–42, 62 Jerusalem 17 joint stock companies 133, 136, 142, 147, 148 Joint Stock Companies Act 1844 144, 149 Jones, Edward T. 133–6 Jones’ English System of Book-keeping 133–6 journal 99, 100, 101, 103, 118, 203 Julius II, Pope 59 Kennedy, Robert F. 1–3, 229–30, 246 Keynes, John Maynard 8, 176, 177–80, 182–7, 190, 250 Klein, Naomi 221, 233 KPMG 210, 214, 217 Kreuger, Ivar 201 Kreuger & Toll 201 Kublai Khan 18 Kuznets, Simon 2, 177, 180–1, 189, 229 Lanchester, John 4, 198 Landefeld, Steven 228 Landsbanki 5 Latin 35, 41, 63, 71, 72, 73, 74, 116, 220 Lawrence, D.H. 154–5 Lay, Kenneth 195, 196, 197, 212–13, 214 ledgers 20, 93, 99–100, 103–4, 118, 203 14th century 24, 93 Badoer’s 52, 55 balancing 111 closing accounts 111–13 Farolfi 20–1 Lee, G.A. 20–1 Lee, Thomas A. 203 Lehman Brothers 5, 216 Liber abaci (Fibonacci) 19–20, 22, 39–41, 63, 66, 67, 75 limited liability 147–8, 149 Littleton, A.C. 17, 140, 146, 147, 158–9 Liverpool and Manchester Railway 141 Lives of the Most Eminent Painters (Vasari) 46 Living Planet Survey 241–2 Lloyds-HBOS 5 London and North Western Railway 141 Louis XII 82 Machiavelli 30 Mackinnon, Nick 79–80 Madoff, Bernie 142 Madonna and Child with Saints 47 magic 35, 40, 83, 220 Mair, John 118, 125, 130 Malatesta family 33–4, 43 Malthus, Thomas 171 Manchester cotton mill (Engels) 165 Mandela, Nelson 221 Mantua 83, 84 manufacturing 136–41 manuscripts 61, 70, 77 Manutius, Aldus 84 Manzoni, Domenico 118–19 maritime insurance 53 Mark the Evangelist 51–2 marketplace, 15th century 95 markets, impact on politics 221, 228 mark-to-model 213 Marshall Plan 188 Marx, Karl 162, 163–5, 171 mass production 138 mathematics 7, 22, 28, 47, 89–90 ancient Greek 34–5, 37–8, 63 Arab 18–19, 63 and art 85–6 Hindu 39–40 in Italy 34–42 and magic 35, 40, 220 medieval European 63, 251–2 taught as astrology 29–30, 42 universal application 73, 116–17 see also arithmetic Mattessich, Richard 12–13, 186 Maurice, Prince of Orange 120 Maxwell Communications 207 McDonald’s 224 Meade, James 183–4 measurement 23, 218–19 Medici of Florence 26, 64, 80, 168, 171 Mehmed II 57 Mellis, John 121 memorandum (waste book) 99, 101, 118 entering transactions 105–7, 118, 122 merchandise 104 merchant bankers 21, 26, 69 merchants 10, 23, 35, 41 Arab 18–19, 25 Indian 22 Italian 40, 42 Phoenician 36 Venetian 18, 27, 55–6, 69, 94–5, 149 Mesopotamia 12, 13, 14 metaphysics 36–7 Middle Ages 60, 251–2 Milan 30, 34, 47, 61, 80–3 Millennium Ecosystem Assessment 239 Monsanto 222 Monteage, Stephen 124, 126 Morgan, John Pierpont 156 multiplication 74, 75–6 music 36, 38 Naples 50, 61–2 Napoleonic War 145 national accounts 175, 179–88, 190–3, 226–7, 230, 242, 244 natural capital 230–1, 235–9 navigation charts 23 Neighborhood Tree Survey (NY) 241, 244 Netherlands 119, 120 New Deal (Roosevelt) 177, 202 New York Light Company 155 New York Stock Exchange 155, 176, 201 New Zealand 153, 230 Nicholas V, Pope 61 No Royal Road: Luca Pacioli and his times (Taylor) 46–7 Nordhaus, William D. 180, 191, 227 numbers 37, 218, 219–20, 249 Obama, Barack 215, 246 O’Grady, Oswald 208 Oldcastle, Hugh 121, 124 Olmert, Michael 168 One.Tel 208, 209, 213, 215 Organisation for Economic Co-operation and Development (OECD) 190, 242 Organisation for European Economic Co-operation (OEEC) 188 Ormerod, Paul 244 Ottoman Empire 29, 34, 50, 51, 56, 57, 116 Pacioli, Luca 7, 8, 27–8, 34, 35, 161, 219 abbaco mathematics 40, 41 as academic 65, 80, 84, 89 astrologer 42 birth 30 bookkeeping treatise see Particularis de computis and Piero della Francesca 45–6, 47–8 education 43–8 encyclopaedia see Summa de arithmetica on Euclid 84–5 games/tricks 83–4 itinerant teacher 61–6 last years 88–90 and Leonardo da Vinci 80–2, 84 in Milan 80–3 portrait 47, 79–80 and the printing press 66–72 remembered in Sansepolcro 31–2 in Rome 58–61 in Venice 49–58 Paganini, Paganino de 67–8, 71–2, 78, 85 painting 60, 64, 81 Pakistan 224, 245 Paris 23, 50 Particularis de computis et scripturis (Pacioli) 29–30, 78, 90–114, 117–18, 121 and capitalism 163 foundation of modern accounting 30, 75, 131, 157–9, 166 profit calculation 146–7 partnerships 108–9, 147 Patel, Raj 222, , 224 Patient Protection and Affordable Care Act 2010 (US) 246 patronage 59, 67, 70, 72 Paul II, Pope 59 Payen, Jean-Baptiste 139–40 Peking 18 Perspectiva (Witelo) 64 perspective 23, 42, 45, 60, 64, 76–7, 80, 82 Perugia 62–3, 64, 65 Petty, William 180 phi 86 Philip VI 23 philosophy 37, 40 Phoenicians 36 pi 36 Piazza San Marco 56 Pinto cars 250–1 Pisa 6, 17 Pitcher Partners 209, 210, 211–12 plagiarism 63 planet Earth 8–9, 248 accounting for 254 effects of cost-benefit approach 175 health of 224–5, 239 Plato 37 Platonic solids 45, 79, 86 Pliny the Elder 16 pollution 244 Polly Peck International 207 Polo, Marco 18 Ponzi scheme 142 Postlethwayt, Malachy 124 poverty 237, 246, 248, 249 Prato 23–4 Price, Samuel 145 Price Waterhouse 201, 207 PricewaterhouseCoopers 217 principlism 173–4 printing 29, 45, 60, 63, 66–72, 77–8, 90, 115–17 profit 21, 24, 97, 102–3, 127, 146–8, 159, 161, 167, 169 profit and loss accounts 55, 109–11, 112, 166 Pythagoras 35, 36–7 quadrivium 36, 38, 43 quant nerds 220 railways 141–3, 231 Ramsay, Ian 211 Ratdolt, Erhard 68, 116 record-keeping 15 Reformation 33 regulation 206–14, 215 Reid Murray Holdings 207–8 religion 24, 96, 116, 124–5, 220 see also Christian Church; Islam Renaissance 7, 8, 23, 26, 36, 59, 80, 86, 89, 168 art 6, 7, 44, 60, 86 Resurrection (Piero) 32, 33 retained-earnings statements 5, 219 rhetoric 172–3 Rialto 50, 55, 108 Ricardo, David 171 Rich, Jodee 213 Rinieri Fini & Brothers 20 Ripoli Press 70 Robert of Chester 39 Rockefeller, John D. 156 Roman numerals 19, 26–7, 38, 40, 71, 116 Romantic poets, English 131, 154 Rome 58–61, 64, 89 ancient 15–16 Rompiasi family 57, 58, 97 Roosevelt, Franklin D. 177, 178, 181, 202, 214, 215 Rose, Paul L. 71 Ross, Philip 209–10, 211 Rothschild banks 133 Royal Bank of Scotland 173, 197–8 royal estate management 16–17 Rule of Three 38, 41 Russia 153–4 salt 51 Samuelson, Paul A. 191, 227 Sansepolcro 30–4, 43–4, 48, 65, 77, 88–9, 168 Sanuto, Marco 66, 72 Sarbanes, Paul 191 Sarbanes-Oxley Act 2002 212, 215 Sarkozy, Nicolas 242–3, 245 satellite accounts 234–5 scandals/fraud 194–203, 206, 207–12, 215, 225 Schmandt-Besserat, Denise 11–12 Schumpeter, Joseph 169–70 science 35, 37, 40, 42, 67, 76, 116, 166–7 Scotland 27, 147, 150, 153 Scott, Sir Walter 150–1 Scuola di Rialto 58 Second World War 32, 181–5, 187, 227 Securities and Exchange Commission (US) 202–3, 213, 214 Sen, Amartya 243–4, 245 Sforza, Ludovico 80, 81–2, 85, 86, 168 Sikka, Prem 216, 217 Silberman, Mark 213 Simons, James 220 Sistine Chapel 65 Sixtus IV, Pope 59 Skidelsky, Robert 178, 182, 187 Skilling, Jeffrey K. 196, 197, 212, 214 Smith, Adam 171 social sciences 171, 175 socialism 171 Society of Accountants, Edinburgh 152 Sombart, Werner 161–2, 164, 165–6, 166–8, 169, 170, 171–2, 173 Spain 22, 39 Spengler, Oswald 167 Sri Lanka 232–3, 240 State of the USA 246 Stevin, Simon 120, 121, 166, 169 Stiglitz, Joseph 243–4 Stiglitz-Sen-Fitoussi Commission 243–4 stock markets 143 stocktaking 166 Stone, Sir Richard 183–5, 188–9, 190 sub-prime mortgages Sukhdev, Pavan Summa de arithmetica (Pacioli) 57, 61, 62–3, 64, 72–7, 80, 82 printing 66–8, 71–2 publication 32, 77–9 sustainability 232, 243, 249 System of Integrated Environmental and Economic Accounting (UN) 234 System of National Accounts (UN) 189–90, 247 tabulae rationum 16 Taleb, Nassim N. 220 tariffs 63 Tartaglia, Nicholas 76 Taylor, R.


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Mastering Ethereum: Building Smart Contracts and DApps by Andreas M. Antonopoulos, Gavin Wood Ph. D.

air gap, Amazon Web Services, bitcoin, blockchain, business logic, continuous integration, cryptocurrency, Debian, digital divide, Dogecoin, domain-specific language, don't repeat yourself, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, functional programming, Google Chrome, information security, initial coin offering, intangible asset, Internet of things, litecoin, machine readable, move fast and break things, node package manager, non-fungible token, peer-to-peer, Ponzi scheme, prediction markets, pull request, QR code, Ruby on Rails, Satoshi Nakamoto, sealed-bid auction, sharing economy, side project, smart contracts, transaction costs, Turing complete, Turing machine, Vickrey auction, Vitalik Buterin, web application, WebSocket

The overflow-free version of the contract is: 1 library SafeMath { 2 3 function mul(uint256 a, uint256 b) internal pure returns (uint256) { 4 if (a == 0) { 5 return 0; 6 } 7 uint256 c = a * b; 8 assert(c / a == b); 9 return c; 10 } 11 12 function div(uint256 a, uint256 b) internal pure returns (uint256) { 13 // assert(b > 0); // Solidity automatically throws when dividing by 0 14 uint256 c = a / b; 15 // assert(a == b * c + a % b); // This holds in all cases 16 return c; 17 } 18 19 function sub(uint256 a, uint256 b) internal pure returns (uint256) { 20 assert(b <= a); 21 return a - b; 22 } 23 24 function add(uint256 a, uint256 b) internal pure returns (uint256) { 25 uint256 c = a + b; 26 assert(c >= a); 27 return c; 28 } 29 } 30 31 contract TimeLock { 32 using SafeMath for uint; // use the library for uint type 33 mapping(address => uint256) public balances; 34 mapping(address => uint256) public lockTime; 35 36 function deposit() public payable { 37 balances[msg.sender] = balances[msg.sender].add(msg.value); 38 lockTime[msg.sender] = now.add(1 weeks); 39 } 40 41 function increaseLockTime(uint256 _secondsToIncrease) public { 42 lockTime[msg.sender] = lockTime[msg.sender].add(_secondsToIncrease); 43 } 44 45 function withdraw() public { 46 require(balances[msg.sender] > 0); 47 require(now > lockTime[msg.sender]); 48 balances[msg.sender] = 0; 49 msg.sender.transfer(balance); 50 } 51 } Notice that all standard math operations have been replaced by those defined in the SafeMath library. The TimeLock contract no longer performs any operation that is capable of under/overflow. Real-World Examples: PoWHC and Batch Transfer Overflow (CVE-2018–10299) Proof of Weak Hands Coin (PoWHC), originally devised as a joke of sorts, was a Ponzi scheme written by an internet collective. Unfortunately it seems that the author(s) of the contract had not seen over/underflows before, and consequently 866 ether were liberated from its contract. Eric Banisadr gives a good overview of how the underflow occurred (which is not too dissimilar to the Ethernaut challenge described earlier) in his blog post on the event.

Note Of course, there are centralized alternatives to these suggestions: one can add a maintenanceUser who can come along and fix problems with DoS-based attack vectors if need be. Typically these kinds of contracts have trust issues, because of the power of such an entity. Real-World Examples: GovernMental GovernMental was an old Ponzi scheme that accumulated quite a large amount of ether (1,100 ether, at one point). Unfortunately, it was susceptible to the DoS vulnerabilities mentioned in this section. A Reddit post by etherik describes how the contract required the deletion of a large mapping in order to withdraw the ether. The deletion of this mapping had a gas cost that exceeded the block gas limit at the time, and thus it was not possible to withdraw the 1,100 ether.

Thus, specifying a block number at which to change a contract state can be more secure, as miners are unable easily to manipulate the block number. The BAT ICO contract employed this strategy. This can be unnecessary if contracts aren’t particularly concerned with miner manipulations of the block timestamp, but it is something to be aware of when developing contracts. Real-World Example: GovernMental GovernMental, the old Ponzi scheme mentioned above, was also vulnerable to a timestamp-based attack. The contract paid out to the player who was the last player to join (for at least one minute) in a round. Thus, a miner who was a player could adjust the timestamp (to a future time, to make it look like a minute had elapsed) to make it appear that they were the last player to join for over a minute (even though this was not true in reality).


pages: 497 words: 123,718

A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption by Steven Hiatt; John Perkins

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "World Economic Forum" Davos, accelerated depreciation, addicted to oil, airline deregulation, Andrei Shleifer, Asian financial crisis, Berlin Wall, big-box store, Bob Geldof, book value, Bretton Woods, British Empire, capital controls, centre right, clean water, colonial rule, corporate governance, corporate personhood, deglobalization, deindustrialization, disinformation, Doha Development Round, energy security, European colonialism, export processing zone, financial deregulation, financial independence, full employment, global village, high net worth, land bank, land reform, large denomination, liberal capitalism, Long Term Capital Management, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, military-industrial complex, moral hazard, Naomi Klein, new economy, North Sea oil, offshore financial centre, oil shock, Ponzi scheme, race to the bottom, reserve currency, Ronald Reagan, Scramble for Africa, Seymour Hersh, statistical model, structural adjustment programs, Suez crisis 1956, Tax Reform Act of 1986, too big to fail, trade liberalization, transatlantic slave trade, transfer pricing, union organizing, Washington Consensus, working-age population, Yom Kippur War

Ghaith Pharaon, the son of an adviser to King Fahd, was also a BCCI investor as well as a front man for the bank’s illegal purchase of three U.S. banks. He got loans of $300 million. The loans of the Arab backers were written off the books or paid on paper by moving money among offshore banks. BCCI was, in effect, a huge Ponzi scheme. While the Pakistani bankers and their friends took money out, money was paid in by 1.4 million depositors, many of them South Asian small businesspeople or immigrants. The Arabs’ interest in the bank was more than financial. A classified CIA memo on BCCI in the mid-1980s said that “its principal shareholders are among the power elite of the Middle East, including the rulers of Dubai and the United Arab Emirates, and several influential Saudi Arabians.

He quit to go to work for Price Waterhouse on the BCCI account.13 It wasn’t until 1991 that Price Waterhouse UK told the full truth. At the request of the Bank of England, PW wrote the confidential Sandstorm Report, which detailed the phony records and shell companies, the use of Middle Eastern nominees, the Ponzi schemes. Another failure in oversight was the work of a committee from eight countries set up in 1987 by the Basel Committee, the central club of the world’s big banks, to look at BCCI’s operations in the wake of rumors of funny dealings and big losses. The committee was next to useless: It took no action even after the Tampa charges became public knowledge.

Index Abacha, Sani 44, 125 Abedi, Agha Hasan 69, 70, 75, 77, 86, 87 Abu Dhabi 69, 73, 75, 76 Adham, Kamal 75, 86, 87, 88 Afghanistan 26 drug trade in 70 civil war in 70–71 African Development Bank 251 Africa Oil Policy Initiative Group 119 Akbayan 192–93 Alamieyeseigha, Diepreye 121, 123 Algeria 15, 200, 266 Allende, Salvador 27 al-Qaeda 77, 89 and offshore banks 24 al-Taqwa Bank 71, 89 Altman, Robert A. 78, 79, 86, 88 American Express Co. 268 American Mineral Fields 99 Amin, Idi 27 Annan, Kofi 126 AngloGold 244 Anglo-Iranian Oil Company 14 Angola 27, 95 foreign debt 243, 244 Aquino, Benigno 26 Aquino, Corazon 190 Arbusto Energy, Inc. 76 Argentina 236 defiance of IMF 273 foreign debt 228, 230, 233, 241, 244, 273 popular movements in 276 World Bank lending in 169–73 Asari, Alhaji 121, 123, 128–29 Asian “tiger” economies 21, 229, 257n16, 258n27 Azerbaijan 200 Bahamas, as offshore banking haven 45, 89 Baker, Howard 100 Baker, James 239, 256n12 Baker Plan 228, 239–40 Balfour Beatty 211 Banca del Gottardo 71 Banca Nazionale del Lavoro 72 Banco Ambrosiano 71 Bank of America 69–70, 74, 77 Bank of England 84 Bank of Credit and Commerce International 24 accountants and 83–84, 86 arms trade and 72–73, 90 CIA and 69, 70, 71–72, 73, 76 drug trade and 70, 80, 87, 90 indictments 86–88 Iran-Contra 72 money laundering 69, 79–81, 90 operations 73–75, 86 owners 69–70, 75, 76 as Ponzi scheme 75 terrorism and 70, 72, 73, 88–90 U.S. operations 77–79 Bank of New York-Inter-Maritime Bank 83, 88–89 Barrick Gold Corp. 99, 244 Bath, James R. 76 Bechtel Corp. 3, 99, 138, 278 Belgium 101, 104 Bello, Walden 186–87, 273 Ben Barka, Medhi 26 Benin, foreign debt of 249 Berlusconi, Silvio 54 Bernabe, Riza 191 “big-box” stores, campaigns against 278 bin Faisal al-Saud, Prince Turki 75, 78 bin Laden family enterprises 71–72, 89 bin Laden, Haydar Mohamed 89 bin Laden, Osama 26, 77, 88, 89, 42 and BCCI 71 Binladen, Yeslam 89 bin Mahfouz, Khalid 76, 77, 78, 86, 87, 88, 89 bin Sultan al-Nahyan, Sheikh Zayed 69, 75 Blair, Tony 219, 250 Blandón, José 80 Blum, Jack 79–81, 85–86 Bolivia 236, 273 foreign debt 230, 246, 247, 249 gas industry 154, 208 water privatization in 277 Boro, Isaac 122 Brady, Nicholas 80, 256n12 Brady Plan 221, 227, 228, 240–41, 259n35 Brazil 18, 27, 130, 208, 216, 236 foreign debt 227, 228, 230, 241, 244 Bretton Woods agreements 63 Bretton Woods institutions see World Bank, International Monetary Fund British Gas 139 British Petroleum 139, 144, 153 British Virgin Islands, as offshore banking haven 54 Brown & Root 99 Brown, Gordon 126, 127, 219, 250 Burkina Faso, foreign debt of 246, 249 Burundi 95, 247, 249 Bush, George H.W., and administration 27–28, 69, 72, 77, 80, 87, 88, 91n10, 100, 138, 206, 271, 272 Bush, George W., and administration 66, 271, 278 and Iraq War 13, 28 Bush Agenda, The (Juhasz) 4, 275 Cabot Corporation 104, 112n32 Cameroon, foreign debt of 249 Canada 99, 101, 201, 268, 271 Canadian Export Development Corp. 201, 202, 203, 204, 206 capital flight 24, 43–44, 231–36, 253, 258n27 Carter, Jimmy 76, 140 Casey, William 70, 82, 90 Cavallo, Domingo Felipe 238 Cayman Islands, as offshore banking haven 65, 72, 73, 74, 75, 86 Center for Global Energy Studies 145 Center for Strategic and International Studies 119, 120 Central African Republic 231 Central Intelligence Agency 3, 5, 15 Afghan rebels and 70–71 BCCI and 69, 70, 71–72, 73, 76, 78, 79–82, 85 Saudi intelligence services and 75 Chad, foreign debt of 249 Chavez, Hugo 3, 25, 273 Cheney, Dick 28, 133 Chevron Oil 135, 138, 139, 144, 153 in Nigeria 123–24 Chile 236 1973 coup in 27 China 4, 229, 236 foreign debt 222–23 Third World resources and 5, 117–18, 120–21, 124, 126–27, 130 Chomsky, Noam Hegemony or Survival 4 Christian Peacemaker Team 96, 106–8 Citibank, Citigroup 75, 100, 130, 138, 226, 238, 268 Clifford, Clark 78–79, 85, 86, 88 Clinton, Bill, and administration 119, 120, 126, 212, 271 Coalition of Immokalee Workers 272, 280 COFACE 201, 205, 212 Cogecom 100 cold war 4 and decolonization 16–17 Colombia, human rights in 107 colonialism, decline of formal 13–14 coltan: efforts to control 5, 26, 95 shortages of 95 uses for 94 Commission for Africa 251 Communism: appeal of 14 fall of 4, 13, 27, 137–38, 238 Confessions of an Economic Hit Man (Perkins) 1–4, 6, 17 Congo, Democratic Republic of (Zaire): civil war in 26, 94–96, 108n3 corruption in 24, 254 foreign debt 220, 230, 247, 249 human rights in 107–8 rape as a weapon of war in 93, 96–98 Western role in 98–105, 109n4, 111n29 World Bank and 158 Congo Republic 230, 247, 249 cooperatives 276–77 corporations, as legal persons 277 CorpWatch 278 corruption: culture of 51–54 IMF/World Bank and 24–25, 157–74 offshore banking and 44–45, 52- power and 24 privatization and 24–25, 256n12 COSEC 209–10 Council on Foreign Relations 119–20 dam projects, 209–12 Dar al-Mal al-Islami 89 Daukoru, Edmund 125–27, 128 Davos see World Economic Forum DeBeers Group 101, 103 decolonization 13, 16–17 debt/flight cycle 231–36, 253, 258n27 debt relief, campaigns for 246, 252–55, 268 in U.S. 235 debt, Third World 32, 35 amount of relief 224–29 banks and 226–27, 229, 232–34 business loans 35–37, 227 cold war strategy and 17 corruption and 230, 231, 232, 253, 254, 257n23 1982 crisis 39, 55 disunity among debtor nations 237–39 dubious debts and 230, 235, 247, 253, 257n23, 261n68 growth of 18–19, 181, 229–36 as means of control 17, 23, 183–84 payments on 19, 190–91, 223, 228, 231, 247–48, 275 relief plans 220–22, 225–29, 239–52, 274 size of 221–24, 259n37, 260n46 social/economic impacts of 190–91, 231–36, 247–48 democracy: debt crisis and 236 economic reform and 276–79 global justice and 279–81 in Iraq 151–54 Deutsche Bank 226 drug trade 70, 80, 87 Dubai 73 Dulles, Alan 15 Eagle Wings Resources International 104 East Timor 205 economic development strategies: “big projects” and 16–17 debt-led 18–19 state-led 16–17, 19 economic forecasting 3 economic hit men 5 definition 1, 3, 18 John Perkins and 1–4, 17 types of 5, 18 Ecuador 236, 266 foreign debt 244 Egypt 14 Suez Crisis 15–16 Eisenhower, Dwight, and administration 15 elites, wealthy 4, 18, 57, 176, 183, 228, 232, 253 use of tax havens 43–44, 54–56, 65–66, 226, 232–34 El Salvador 26 empire see imperialism Eni SpA 144, 153 Enron 53, 54, 208–9 Ethiopia 230, 249 European Union 51 agricultural subsidies 22 environment degradation: development projects and 199, 200–211, 257n23 oil production and 115–16 export credit agencies: arms exports and 204–5 campaigns against 209–16 corruption and 200, 202–3, 205, 207–8 debt and 200 environmental effects 199, 200–211 nuclear power and 202, 205–6 operation of 197–201 secrecy of 205, 210–12 size of 201 World Bank and 199, 201, 202, 204 Export Credit Group 210, 215 Export Credits Guarantee Department 201, 205, 211 Export Finance and Investment Corp. 203, 204 export processing zones 178 Export Risk Guarantee 203, 211, 213 ExxonMobil 144 fair trade movement 280 Faisal, Mohammad al-89 Faux, Jeff Global Class War, The 4 Federal Bureau of Investigation 71 Federal Reserve Bank of New York 87 Federal Reserve System 78, 82, 88 Ferguson, Niall 13 First American Bankshares 78, 79, 82, 83, 85, 88 First Quantum Materials 101 First, Ruth 26 Focus on the Global South 187, 273 foreign aid 19 in Congo civil war 99–100 France 236, 244 empire 13 Suez Crisis and 15 free trade 4, 19, 21–23, 268, 271 British development and 21 U.S. development and 21 Free Trade Area of the Americas 271 Friends of the Earth 104, 269 G8 summits 212, 213, 219–20, 221, 246, 250, 271, 275 Gambia 243, 249 García, Alan 74 Gates, Robert 85 Gécamines 100, 104 General Agreement on Tariffs and Trade agricultural trade 186–87 establishment of 267 TRIPS 23 Uruguay Round 23, 267 General Union of Oil Employees 135–36, 141–44 Georgia 207 Germany 212, 213, 216, 236 export credit agency 201, 202, 203, 205, 206, 207, 209–11, 212, 215–16 Green Party 206, 215 Ghana 16 development projects in 16, 207 foreign debt 230, 247, 249 impact of IMF SAP 5, 22 Giuliani, Carlo 271 Global Awareness Collective 278 Global Class War, The (Faux) 4 Global Exchange 278 globalization 3 alternatives to corporate 275–79 economic 176–79, 230, 236 impacts of 185–90, 234, 236, 263–65 of the financial system 55, 63–66 Globalization and Its Discontents (Stiglitz) 3, 4 Global justice movement: achievements of 276–79 campaigns 269–72, 274–75 in Global North 268–69, 271–72, 274 in Global South 271–74 origins of 268–69 proposals of 275–79 protests by 265–66, 270–71 Global South see Third World Gonzalez, Henry 72, 90 Gorbachev, Mikhail 137 Goulart, João 27 Groupement pour le Traitment des Scories du Terril de Lubumbashi 104 Guatemala 14, 236 Arbenz government 26 Guinea, foreign debt of 249 Guinea-Bassau 26, 247, 249 Guyana: export credit agencies and 203 environmental problems 203 foreign debt 241, 243, 244, 246, 247, 249 Haiti 236, 249 World Bank and 158 Halliburton 3, 133, 278 Hankey, Sir Maurice 145 Harken Energy Corp. 77, 78 Heavily Indebted Poor Countries initiative 221, 225, 226, 230, 242–48, 275 conditions of 243–45 results of 248–50 Hegemony or Survival (Chomsky) 4 Hekmatyar, Gulbuddin 70 Helms, Richard 82 Henwood, Doug 23, 177–79 Heritage Foundation 121 Heritage Oil and Gas 100 Hermes Guarantee 201, 202, 203, 205, 206, 207, 209, 211, 212, 215–16 Honduras, foreign debt of 249 Hope in the Dark (Solnit) 281 Hungary, Soviet intervention in 16 Hussein, Saddam 28, 90, 141–42 and BCCI 72 Hutu people 94–96 Hypovereinsbank 209 Ijaw people 116, 121–23, 128 Illaje people 123 immigrant rights movement 281 imperialism 13–14 coups d’état and 27 divide-and-rule tactics 25, 26, 265 post-cold war changes 4–5 pressure on uncooperative countries 25, 142 resistance to 28, 115–17, 121–30, 143–44, 151–54, 176, 191–92, 265–66 resources and 98–106, 118–21, 133–34, 136, 139–40, 145 as system of control 17–28, 176 use of force 5, 25–28, 111n22, 113–14, 115–17, 123, 111n22 India 16, 119, 229, 236, 266 foreign debt 222, 223 export credit agencies and 206, 208 Maheshwar Dam 209–10 Indonesia 236 corruption in 202–3 export credit agencies and 200, 202–3, 205, 207, 216 foreign debt 228, 230, 244 inequality 44 Institute for Policy Studies 278 International Bank for Reconstruction and Development 157 International Development Association 157, 242 International Forum on Globalization 266 International Monetary Fund 3, 4, 19, 135, 275 conflicts of interest 244 debt relief and 221–22, 224, 226, 237, 240, 243–46, 250–51, 252 Iraq and 151–53 Malaysia and 273 neoliberalism and 176–79, 222 offshore banking and 43, 234 protests against 266 structural adjustment programs 22, 23, 245, 265–66 Rwanda and 100 Uganda and 100 International Tax and Investment Center 134–35, 138–39, 144–54 International Trade Organization 267 Iran 14, 90, 145, 200 coup against Mossadegh 14–15 nationalization of oil industry 14 Iran-Contra affair 71–72 Iraq: BCCI and 72 foreign debt 152 Gulf War and 28, 72, 140, 141, 146 human rights in 105–6 oil production and reserves 135–36, 139–54 production sharing agreements in 147–54 sanctions against 72, 142 social conditions in 135, 142, 143 U.S. occupation of 28, 140, 141–42, 146, 250, 275, 278 Israel: and Suez Crisis 15 Yom Kippur War and 17 Ivory Coast 230 foreign debt 244, 249 “jackals” 25–26 James, Deborah 273 Japan 216, 236 Japan Bank for International Cooperation 201, 202, 203, 241 Jersey 88 banking boom in 46–47 impact on island 46, 51–52, 56–62 as offshore banking haven 43, 45, 56–61 Johnson, Chalmers Sorrows of Empire 4 Jordan 241, 266 Jordan, Vernon 100 JPMorganChase 226, 238 Jubilee South 190 Jubilee 2000 268 Juhasz, Antonia Bush Agenda, The 4, 275 Juma’a, Hassan 135–36, 140, 142–44, 154 Kabila, Joseph 96 Kabila, Laurent 94, 96, 99 Kagame, Paul 94, 98–99 ties to U.S. 99 Kazakhstan 138, 139, 144, 150 Keating, Charles 83 Kenya 236 foreign debt 243, 244 Kerry, John 76 investigation of BCCI 79–83, 87, 89 Kirchner, Nestor 273 Korea, Republic of 229, 272 Korten, David When Corporations Rule the World 4 KPMG 52 Krauthammer, Charles 13 Krushchev, Nikita 16 Kurdistan 211–12, 214 Kuwait 133, 141, 146, 152, 154 labor exports 235–36 Lake, Anthony 119–20 Lance, Bert 77 Lawson, Nigel 242 Lawson Plan 221, 242 Lee Kyung Hae 272 Liberia, World Bank lending to 159–67 Liberty Tree Foundation 276 Li Zhaoxing 117–18, 124 Lu Guozeng 117 Lumumba, Patrice 26 Luxembourg, as offshore banking haven 72, 73, 74 Madagascar, foreign debt of 249 Mahathir, Mohamad 273 Malawi 254 foreign debt 243, 249 Malaysia 41–43, 229 defiance of IMF 273 Mali, foreign debt of 246, 249 Marcos, Ferdinand 31, 48, 175, 176, 181–85 markets, corporate domination of 16 Martin, Paul 54 mass media, manipulation of 25 Mauritania, foreign debt of 247, 249 McKinney, Cynthia; hearing on Congo 98–99, 110n11 McLure, Charles 137–39 mercenaries: in Congo 111n22 in Nigeria 5, 25–26, 113–14, 115–17 Mexico 207, 256n14, 273 foreign debt 55, 227, 228, 230, 233, 240–41, 244 labor exports 236 Zapatista uprising 272 Middle East, and struggle for oil 27–28 military-industrial complex 99 military interventions 27–28 Mizban, Faraj Rabat 141 Mitterand Plan 221 Mobutu Sese Seko 24, overthrow of 94 Mondlane, Eduardo 26 Mongolia 207 Morales, Evo 277 Morganthau, Robert 69, 84–87 Moscow, John 58, 87 Mossadegh, Mohammad 3, 14–15, 27 Movement for the Emancipation of the Niger Delta 122–24, 129 Movimento dos Trabalhadores Rurais Sem Terra (Landless Workers’ Movement) 272 Mozambique 26, 27, 230 foreign debt 241, 246, 249 Mueller, Robert 87 mujahadeen (Afghanistan): and BCCI 70 and drug trade 70 Mulroney, Brian 100 Multilateral Agreement on Investment 269–70, 281 Multilateral Debt Relief Initiative 222, 225, 230, 250–52 Multilateral Investment Agreement 269 multinational corporations: export credit agencies and 209–11 export processing zones and 178 globalization, pressure for 138, 268, 275 mercenaries, use of 25–26, 111n22, 113–14, 115–17, 123 resources and 101–6, 111n29, 112n31, 112n32 scandals 5 transfer mispricing by 49–51 offshore banks, use of 24, 49–51 patents, control of 23 Museveni, Yoweri 95 Myanmar, foreign debt of 230 Nada, Youssef Mustafa 71–72 Namibia 95 export credit agencies and 207 Nasser, Gamal Abdel 15–16 National Commercial Bank of Saudi Arabia 88–89 National Family Farm Coalition 272 nationalism: pan-Arab 15 Iranian 14 Nehru, Jawaharlal 16 neocolonialism see imperialism neoliberalism 4, 19 critique of 176–79, 190–92, 234, 236 defined 176–77 economic development and 176–79, 232 economic strategies 178–81, 222, 230, 231, 236 Netherlands, overseas empire of 13 Newmont Mining Corp. 244 New World Order 27–28 Nicaragua 207 foreign debt 225, 230, 247, 249 U.S. proxy war against 26, 27, 79 Nicpil, Liddy 190–91, 192 Nidal, Adu 73 Niger, foreign debt of 241, 249 Niger Delta People’s Volunteer Force 121, 123 Niger Delta Volunteer Service 122 Niger Delta region: attack on oil platforms 116–17 as “Next Gulf” 118–21 pollution from oil production 115–16 struggle against Shell 115–16, 121–24 Nigeria 200, 266 China and 117–18 colonial rule 115 corruption in 44–45, 230 foreign debt 223, 230, 233, 243, 244 oil production 115–16, 125–27 World Bank lending in 158, 167–69 Nkrumah, Kwame 16 nongovernmental organizations 239, 250 Noriega, Manuel 80 and BCCI 72, 79 North American Free Trade Agreement 4, 268, 272 nuclear power 205–6, 210 Obasanjo, Olusegun 125, 127 Obiang, Teodoro 48 O’Connor, Brian 144–45 OECD Watch 105 offshore banking havens: arms trade and 71–73 campaign against 62–64 central role in world trade 44, 47–48, 64–65 corruption and 24, 44–45, 52–56, 64, 231–33, 253 drug trade and 70 extraction of wealth 43, 54–56, 64–65, 226, 231–33, 253, 258n58 financial centers and 234, ignored by academia 44, 234 secrecy and 47–48, 53, 66 tax evasion and 43, 48, 49–51, 54, 57–59, 64–65, 226, 232 terrorism and 71, 88 Ogoni people 122–23, 125 Okadigbo, Chuba 116 Okonjo-Iweala, Ngozi 118 Okuntimo, Paul 123 Oil Change International 278 oil price spikes 236 oil production and reserves: future shortages of 28, 140 Indonesia 207 Iraqi 135–36, 144–54 Nigerian 113–14, 128–29 strategies to control 25–26, 27–28, 139–40 OM Group, Inc. 104, 112n31 OPEC 125–26, 128 1973 oil embargo by 17 dollar deposits in First World 17–18 Organisation for Economic Co-operation and Development 135, 269 “Action Statement on Bribery” 216 export credit agencies and 210, 215 Guidelines for Multinational Enterprises 101, 102, 105–6, 112n31 “OECD Arrangement” 215 Overseas Private Investment Corp. 204, 206–9 Oxfam 43, 62–63, 250 Pakistan 90 Afghan mujahadeen and 70–71 BCCI and 70 export credit agencies and 207 foreign debt 244 Panama 3, 26, 72 as offshore banking haven 73, 74 Papua New Guinea: export credit agencies and 204 mining and environmental problems 204 Paris Club of creditors 220, 225–26, 227, 228, 242, 252 Peru 74 foreign debt 241 impact of IMF SAP 22 petrodollars, recycling of 17–18 Perkins, John 19 Confessions of an Economic Hit Man 1–2, 17 Pharaon, Ghaith 76, 77, 86, 87, 88 Philippines, the 31–34, 35–36 corruption in 181–82 democratic movements in 182–85, 236 economic decline in 187–89 emigration from 189, 236 foreign debt 181, 190–91, 230, 241, 244 Marcos regime 31, 34, 175, 176, 180–85, 261n61 martial law in 180–85 social conditions in 179–80, 185–86, 189–91 U.S. rule 175–76 World Bank and 158, 178–81 Pinochet, General Augusto 27, 45–46, 48 PLATFORM 140, 156n28 Portugal 209–10 Posada Carriles, Luis 26 poverty reduction strategy programs see structural adjustment programs Price Waterhouse 83–84 privatization 191 production sharing agreements 147–54 protectionism 21, 181, 186–87 proxy wars 27, 70–71 Public Citizen 269, 273 public utilities, privatization of 191, 261n61, 277 Rahman, Masihur 85 Reagan, Ronald, and administration 19, 79, 87, 136–37, 239 Iran-Contra affair 72 Rich, Marc 90 Rights and Accountability in Development 101, 104, 105 Rio Tinto Zinc 204 Ritch, Lee 79–80 Robson, John 138 Roldós, Jaime 3, 26 Roosevelt, Kermit 15 Rumsfeld, Donald 138 rural economic development 183, 186–87 Russia: debt relief and 225 oil industry 154 transition to capitalism 137–39, 258n28 Rutledge, Ian 149 Rwanda 94–96, 98, 249 massacre in 94, 99 SACE 201 Sachs Plan 221 Saleh, Salim 95 Saõ Tomé, foreign debt of 247, 249 Saud al-Fulaij, Faisal 86, 87 Saudi Arabia 3, 88 and BCCI 70, 75 Saro-Wiwa, Ken 125–26 Scholz, Wesley S. 104 Scowcroft, Brent 72 Senegal 16, 249 Senghor, Léopold 16 September 11, 2001, terrorist attacks 71 Shell Oil 144 Nigeria and 113–15, 122, 123, 125–29 at World Economic Forum 127 Shinawatra, Thaksin 54 Sierra Club 269 Sierra Leone 247 SmartMeme 276 Solnit, Rebecca Hope in the Dark 281 Somalia 251 Sorrows of Empire (Johnson) 4 South Africa 236 military interventions 27 Truth and Reconciliation Commission 26 Soviet Union 13, 14 de-Stalinization 16 Hungary, intervention in 16 influence in Third World 14 U.S. and 137 Stephens, Jackson 76, 77 Stiglitz, Joseph 24 Globalization and Its Discontents 3, 4 structural adjustment programs (SAPs) 19, 229–30 in Ghana 5, 22 in Peru 22 in the Philippines 176–79, 183–85, 190–92 in Zambia 22 Sudan 230, 251 Suharto 200, 202–3 Syria 211 Switzerland, as offshore banking haven 45, 65, 72 Taco Bell, boycott of 280 Tanzania, foreign debt of 247, 249 tax evasion 43, 48, 49–51, 54, 57–59, 64–65 Tax Foundation 137–38 tax havens see offshore banking havens Tax Justice Network 63 Tax Reform Act of 1986 138 Tenke Mining 99 terrorism: as EHM strategy 26, 72 financing of 42, 88–89 inequality and 44 Islamist 71–72, 89 Palestinian 73 Thatcher, Margaret 19, 138 Third World: as commodity producers 17, 23 conditions in 5, 96–97, 106–8, 116, 179–80, 185–90, 234, 236 development strategies 176–79 divisions among countries 265–68 elites in 25, 28, 43–44, 176, 226, 232–34 emergence of 14 lack of development in 232, 237 terms of trade and 22, 178–79 Third World Network 269 Tidewater Inc. 113 Torrijos, Omar 3, 26 Total S.A. 144, 153 trade unions 135–36, 141–44, 180, 186, 269, 274 transfer mispricing 49–51 cost to Third World 50 Transparency International 45 Turkey: export credit agencies and 206 Ilisu Dam 211–14 Turkmenistan 200 Uganda 94–96 foreign debt 241, 246, 249 Union Bank of Switzerland 57, 58, 77, 226, 250 United Arab Emirates 69, 73 United Fruit Company 15 United Kingdom 213 NCP for Congo 102–3 empire 13–14, 115, 129, 145 Iran and 14–15 Iraq occupation and 146, 151, 152 offshore banking and; Suez Crisis and 15 United Nations: trade issues and 265, 276 Panel of Experts, Congo 100–106, 112n32 United Nations Conference on Trade and Development 220, 265, 267 United States: agricultural subsidies 22 aid 98 as empire 13, 28 cold war strategy of 16, 17, 24, 26 in Congo 99, 104, 105 debt-led development strategy of 176–79 Iran coup and 14–15 Iraqi oil and 133–34, 136, 139–40 Iraq wars 72, 133, 141–42 Islamists and 26 Nigerian oil and 118–21 Philippines and 175–76, 180 strategic doctrines 27–28, 118–19 support of Contras 72 trade deficit 23 trade policies 267 U.S.


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The Laundromat : Inside the Panama Papers, Illicit Money Networks, and the Global Elite by Jake Bernstein

Albert Einstein, banking crisis, Berlin Wall, bitcoin, blockchain, blood diamond, British Empire, central bank independence, Charlie Hebdo massacre, clean water, commoditize, company town, corporate governance, cryptocurrency, Deng Xiaoping, Donald Trump, Edward Snowden, fake news, Fall of the Berlin Wall, high net worth, income inequality, independent contractor, Julian Assange, Laura Poitras, liberation theology, mega-rich, Mikhail Gorbachev, new economy, offshore financial centre, optical character recognition, pirate software, Ponzi scheme, profit motive, rising living standards, Ronald Reagan, Seymour Hersh, Skype, traveling salesman, WikiLeaks

Mossfon’s research revealed that despite Curatola’s public denials, USA Corporate Services had sold Vanderbelt to him. In the process, it had provided the tools for the biggest Ponzi scheme in Argentinian history. Collectively more than four hundred people lost $90 million. The local media dubbed Curatola “the Argentinian Madoff.”18 Escobar wrote to New York, asking USA Corporate, which had created the company, for its due diligence. This was the first that USA Corporate had heard of the Ponzi scheme. Mossfon resigned as registered agent, grateful that Curatola hadn’t requested the firm’s nominee directors for his company. Argentinian authorities sentenced Curatola to five years in prison but paroled him after two.

The deal was finalized a month after Safra’s funeral.13 HSBC’s $9.84 billion purchase of Republic doubled its private banking business overnight, increasing assets under management to $122 billion.14 Prior to his death, Safra had shaved $450 million off the asking price when HSBC discovered that Republic had known about a Japanese Ponzi scheme run through its trading accounts but failed to promptly notify regulators.15 U.S. regulators eventually slapped the bank with a $700 million fine.16 Even with the fine, the deal quickly produced the money pot HSBC envisioned. In 1999, its global private banking operation had earned pretax profits of $180 million.


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The End of Money: Counterfeiters, Preachers, Techies, Dreamers--And the Coming Cashless Society by David Wolman

addicted to oil, Bay Area Rapid Transit, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, Kickstarter, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, Money creation, money: store of value / unit of account / medium of exchange, offshore financial centre, P = NP, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs, WikiLeaks

“Some economists worry about the quality and quantity of money in the economy,” said Todd. “Bernard and the Liberty Dollar people are basically operating in that reality. But it’s distorted as they practice it.” One prong of the government’s case against von NotHaus, Todd explained, is that the whole thing was a Ponzi scheme. Nestled within the discounts for signing up users, commissions, price differences between silver bought and sold, adjustable base value, and re-minting fees for a MoveUp are red flags that indicate, in the words of the prosecutors, “a scheme and artifice to defraud.” Von NotHaus vehemently denies this, of course, saying that the Liberty Dollar is a single-tier referral system, just like when people put an Amazon.com button on their websites and get a small percentage from referred sales.

See also Police Leapfrog scenario Learning Channel Legal Tender Lens array Libertarians Liberty Dollar discounts for Move Up mechanism for Liberty Services Liliuokalani (Queen) Liquid assets Loans Locke, John Longshot magazine Lott, Trent Lydia (Greek kingdom) McDonald’s Madoff, Bernie Malawi Malaysia Maldives Mann, Ronald Manta currency Mark of the Beast Mark Twain Mas, Ignacio Massachusetts Bay Colony MasterCard Media Mercy Corp Metals, prices of Mexico Microchips Migrant laborers Military Review Millennium Prize Problems Minority Report (film) Mint.com Monetary sovereignty Money creation of definition of vs. equity faith in value of(see also Currencies; confidence in) and feces functions of hoarding language of minting mobile money (see also Cellphones: used for money transactions) money clips money illusion money supply new ideas about origin of and religion as representing pure interaction and states/governments various objects as See also Cash; Coins; Currencies; Digital money; Electronic money; Paper money; Saving(s) Money Illusion, The (Fisher) Money laundering M-Pesa service Mundell, Robert Musulin, Toni Napoleonic Wars Natural disasters Nazism Netherlands New Jersey Transit train Newton, Sir Isaac New Yorker, The New York Times New Zealand Nicaragua Nickel Nigeria Nixon, Richard Non-native’s Tipping Anxiety NORFED North Korea Norway Nuclear weapons Numismatists/notaphilists Obama, Barack Oil prices Onion, The Organization for Economic Cooperation and Development Organization for Security and Cooperation in Europe Oyster cards Pain Panama Paper money burning constitutionality of as contaminated high-denomination banknotes and history/identity of issuing country inks used for legacy features of U.S. paper money manufacturing $1 bills $100 bills origin of plastic banknotes printing redeem-ability of redesign/reissue of security features for (see also Security issues) in seventeenth century Europe size of stashing varieties of See also Cash; Dollar currency Papua New Guinea Paul, Ron Pawn Stars (reality show) Payday lenders Payment technologies and small-value transactions See also Cellphones: used for money transactions; Credit cards; PayPal PayPal Pearl Harbor Survivors Association Peer-to-peer transactions Pennies Peru Peso currency Pew Research Center Philippines Central Bank Philosophy of Money, The (Simmel) Placebo effect Plasectomy Platinum Poland Police Polo, Marco Ponzi schemes Portugal Pound sterling currency Poverty. See also under Cash Power grid Precious metals. See also Gold; Platinum; Silver Presley, Telle Prices. See also Inflation Priming (psychological) Privacy issues Progressives (political) Promissory notes Prostitution P versus NP problem Pyramid schemes Quicken software Raghubir, Priya Ramsey, Dave Rapture Regulations Rejection, feelings of Religion.


pages: 249 words: 77,342

The Behavioral Investor by Daniel Crosby

affirmative action, Asian financial crisis, asset allocation, availability heuristic, backtesting, bank run, behavioural economics, Black Monday: stock market crash in 1987, Black Swan, book value, buy and hold, cognitive dissonance, colonial rule, compound rate of return, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, disinformation, diversification, diversified portfolio, Donald Trump, Dunning–Kruger effect, endowment effect, equity risk premium, fake news, feminist movement, Flash crash, haute cuisine, hedonic treadmill, housing crisis, IKEA effect, impact investing, impulse control, index fund, Isaac Newton, Japanese asset price bubble, job automation, longitudinal study, loss aversion, market bubble, market fundamentalism, mental accounting, meta-analysis, Milgram experiment, moral panic, Murray Gell-Mann, Nate Silver, neurotypical, Nick Bostrom, passive investing, pattern recognition, Pepsi Challenge, Ponzi scheme, prediction markets, random walk, Reminiscences of a Stock Operator, Richard Feynman, Richard Thaler, risk tolerance, Robert Shiller, science of happiness, Shai Danziger, short selling, South Sea Bubble, Stanford prison experiment, Stephen Hawking, Steve Jobs, stocks for the long run, sunk-cost fallacy, systems thinking, TED Talk, Thales of Miletus, The Signal and the Noise by Nate Silver, Tragedy of the Commons, trolley problem, tulip mania, Vanguard fund, When a measure becomes a target

It is perhaps no surprise to learn that meditation can reduce anxiety, but the literature suggests that it can also rewire the way that we think about and anticipate rewards. Seeking out rewards is a universal human behavior, but taken to the extreme, greed can be becoming all consuming, leading to everything from lower ratings of subjective well-being to Ponzi schemes of the Madoff variety. A study by Kirk, Brown and Downar that matched 34 meditators with 44 matched controls found that those who meditated showed lower neural activations in the caudate nucleus and ventromedial prefrontal cortex during reward anticipation when compared to their less enlightened peers.

The positive feedback loop that Zimbardo experienced behaviorally occurs everywhere – from financial markets to marriages to nature – and can be defined as an event that is amplified by the very event that gave rise to it. Chemical reactions cause heat that catalyzes further reactions. One cow moving causes three cows to move which causes a stampede. Ponzi schemes are better able to attract new victims as they grow and have an increased ability to make false payments. Zimbardo set the loop in motion by assigning status to the guards and prisoners, who then began to engage in guard-like and prisoner-like behavior, which further enhanced the reality of the whole enterprise.


pages: 183 words: 17,571

Broken Markets: A User's Guide to the Post-Finance Economy by Kevin Mellyn

Alan Greenspan, banking crisis, banks create money, Basel III, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, bond market vigilante , Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, business cycle, buy and hold, call centre, Carmen Reinhart, central bank independence, centre right, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, compensation consultant, corporate governance, corporate raider, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, currency risk, disintermediation, eurozone crisis, fiat currency, financial innovation, financial repression, floating exchange rates, Fractional reserve banking, Glass-Steagall Act, global reserve currency, global supply chain, Home mortgage interest deduction, index fund, information asymmetry, joint-stock company, Joseph Schumpeter, junk bonds, labor-force participation, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, market bubble, market clearing, Martin Wolf, means of production, Michael Milken, mobile money, Money creation, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nixon triggered the end of the Bretton Woods system, Paul Volcker talking about ATMs, Ponzi scheme, profit motive, proprietary trading, prudent man rule, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, rising living standards, Ronald Coase, Savings and loan crisis, seigniorage, shareholder value, Silicon Valley, SoftBank, Solyndra, statistical model, Steve Jobs, The Great Moderation, the payments system, Tobin tax, too big to fail, transaction costs, underbanked, Works Progress Administration, yield curve, Yogi Berra, zero-sum game

The collective delusion of the housing bubble and market forces would not suffice as an explanation for such a calamity. However, there was no single person or group of identifiable individuals to put in the dock, as Ken Lay and Jeff Skilling had been after the collapse of Enron. The discovery and prosecution of Bernie Madoff was a poor substitute, since his Ponzi scheme far predated the bubble and had nothing to do with it. No, finance and, more broadly, greed, were to blame. The general public were of course victims, and the political class would avenge them and see that never again would something like the meltdown be allowed to occur. The first order of business, though, was to get back to the world of growth and debt-driven prosperity that after a quarter century everyone took as normal, even as a birthright.

., 139 Finance-driven economy, 1, 72 anti-capitalism, 2 capitalism, 1 chronic debt crisis, 22 corporate America, 20 current movie artificial bank earnings, 7 asset prices, 6 banking implosions, 6 borrowers and investors connection, 10 borrowing demand, 7 catastrophic financial bubble, 10 civilization, 10 corporatism, 9 democratic crony capitalism, 9 Dodd-Frank act, 8 economic growth and social stability, 10 financial repression, 9 Glass-Steagall Act, 8 human ingenuity, 10 interbank funding markets, 6 low interest rates and easy money, 6 market collapse, 10 money market, 6 overexuberence, 6 overinvestment and speculation, 6 pre-crisis conditions, 8 printing money, 7 private capital, 7 167 168 Index Finance-driven economy (continued) profitability, 7 quantitative easing, 8 recovery, 8 regulation, 8 regulatory capital rules, 8 resources and tools, 9 shell-shocked enterprises and households, 8 end of employment, 21–22 financial leverage magic and poison CEO class, 14–15 consumer debt, 15–16 disconnection problem, 11–12 market bargain, 10 real economy, 10 wealth financialization, 13–14 working capital, 11 global financial crisis, 2 Great Moderation, 16–18 Great Panic, 18–19 household sector agony, 19–20 investor class, 22 Marx, Karl asset bubble, 5 cash nexus, 4 dot-com bubble, 5 economic revolution, 3 First World War, 4 free markets, 3 French Revolution, 3 globalization, 3 Great Depression, 5 liberalism, 3 normalcy, 4 overproduction and speculation, 3 Wall Street, 4, 5 revolutionary socialism, 2 sovereign debt, 8, 22 Finance reconstruction, 142 bank bashing, 146 “bankers”, 142 business model, challenges, 145 Citigroup, 145 cyclical businesses, 143 government management, 142 legitimacy bonus culture, 148–150 privileged opportunity, longestablished bank, 146 short-term share-price manipulation, 148 state and legal systems, 147 stock price, 147 mark-to-market price, 144 “producers”, 143 profession, definition, 163 prudence, 145, 161–163 root-and-branch transformation, 145 talent pool, 144 “the race for talent”, 143 trust cash management, 160 Financial Market Meltdown, 159 FSA, 159 hackneyed term, 159 information asymmetry, 159 non-bank financial service provider, 161 oversold/up-sold products, 159 utility Anglo-Saxon-type banking systems, 156 big data tools, 158 bills-of-exchange market, 150 branch and payment services, 157 clearinghouse creation, 158 core banking, 154 economic value transmission, 150 exchange of claims, 151 fee-income growth, 155 fiat money system, 151 financial intermediation, 150 financial transactions, 157 flexible contractor/subcontractor relationship, 158 information technology, 156 “liquidity premium”, 152 multidivisional/M-form organization, 153 non-interest income, 155 old-media companies, 157 Index overhead value analysis, 154 “privileged opportunity”, 152 quill pen–era practice, 158 sheer utility value, 155 silos, product business, 153 transaction accounts, 152 venture capital industry, 142 “War for Talent”, 143 Financial crises, 23 affordable housing, 24 banking “transmission” mechanism, 43 Basel III process, 50–51 basel process, 27–28 consumer banking(see Consumer banking) Dodd-Frank, 49–50 domestic banking system, 38 European Union, 51–53 FDIC, 40 finance-driven economy’s leverage machine, 43 Financial Market Meltdown, 25 GDP, 38 Government Policy and Central Banks, market meltdown(see Regulation process) government policy failure, 45 “government-sponsored” public companies, 24 Great Depression, 44 GSEs, 24 legal missteps, 47–48 New Deal, 43 panic-stricken markets, 40 political missteps, 45–47 Ponzi scheme, 42 postwar financial order, 25–27 printing money, 38 private profits and socialized losses, 40 private-sector demand, 43 public-sector demand, 42 quantitative approach, 25 TARP, 39 too-big-to-fail institutions, 41 Triple A bonds, 41 US Federal Reserve System, 38 Financial liberalization, 89 Financial Market Meltdown, 25, 61, 89, 109, 159 Financial repression, 9, 78, 111 Financial Services Authority (FSA), 60, 159 Food and Drug Administration (FDA), 69 Fordism, 68 Free-market capitalism, 89 Free markets, 3 French Revolution, 3 Front-end trading systems, 107 FSA.See Financial Services Authority G GDP, 11 “Giro” payments systems, 151 Global imbalance, 96 Globalization, 3 Global whirlwinds, 93 Asia, finance movement cultural differences, 110–111 Financial Market Meltdown, 109 Interest Equalization Tax, 109 language, law, and business culture, 109 primacy, 109 austerity(see Austerity) British Empire, 30 Chimerica, 97 China and United States cross-Pacific economy, 97 foreign interference and aggression, 98 headline growth rates, 97 repression revolution and series, 97–98 Second World War, 98 Smoot-Hawley Tariff, 98 surpluse trade, 97 sustainable development, 98 Chinese ascendancy, 113 clearing and settlement bottleneck, 106–107 Dynastic China, 112 169 Download from Wow!


pages: 289 words: 77,532

The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders by Kate Kelly

"Hurricane Katrina" Superdome, Alan Greenspan, Bakken shale, bank run, Bear Stearns, business cycle, commodity super cycle, Credit Default Swap, diversification, fixed income, Gordon Gekko, index fund, light touch regulation, locking in a profit, London Interbank Offered Rate, Long Term Capital Management, margin call, oil-for-food scandal, paper trading, peak oil, Ponzi scheme, proprietary trading, risk tolerance, Ronald Reagan, side project, Silicon Valley, Sloane Ranger, sovereign wealth fund, supply-chain management, the market place

In the past, though, he had at least operated from one of its better-reputed offices, the Southern District of New York, where the miscreants included mobsters, terrorists, and white-collar criminals like Marc Rich who actually feared facing consequences for their actions. At the CFTC, Meister was now running a division that had lacked a permanent head for two and a half years and was known mainly for its exposure of small-fry Ponzi schemes and other retail fraud matters. Overall, it was really petty stuff. Since enforcement matters hadn’t even been listed on Gensler’s mental Post-it Note at the outset, he told Meister that if he joined the CFTC, the entire oversight program would be his to run, without undue interference from the boss.

Unmentioned but present in the public mind were fears that spikes in the price of wheat and other foods had sparked revolution in the Middle East in 2011, and that commodity index investing had contributed to high agricultural costs and the resultant global food crisis in general. Satisfied that his pet issue might finally come to fruition, Chilton announced his own plans to step down toward the end of 2013. He was writing a book on Ponzi schemes and eager to continue his television career. “It wouldn’t surprise me in the least if it was challenged legally,” Chilton said of the new speculative curbs, “but I think it’s a bulletproof rule.” But in an interview with Bloomberg news, he eviscerated the industry lobbying that had undermined his efforts at reform.


pages: 232 words: 71,965

Dead Companies Walking by Scott Fearon

Alan Greenspan, bank run, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, book value, business cycle, Carl Icahn, corporate raider, cost per available seat-mile, creative destruction, crony capitalism, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, Golden Gate Park, hiring and firing, housing crisis, index fund, it's over 9,000, Jeff Bezos, John Bogle, Joseph Schumpeter, Larry Ellison, late fees, legacy carrier, McMansion, moral hazard, multilevel marketing, new economy, pets.com, Ponzi scheme, Ronald Reagan, short selling, short squeeze, Silicon Valley, Snapchat, South of Market, San Francisco, Steve Jobs, survivorship bias, Upton Sinclair, Vanguard fund, young professional

When my friend tried to sell me on investing in one of Madoff’s “feeder” funds, it took me less than an hour to spot three very troubling issues with his operation. But most people failed to investigate Madoff’s business at all before investing. They assumed that someone so prestigious had to be aboveboard. He was friends with senators. He was the former chairman of NASDAQ. The idea that a man of his stature was running a $50 billion Ponzi scheme was unthinkable, so investors gave him fortunes without a second thought. If they’d only taken a few moments to study his business practices, they could have easily identified the same potential problems I saw. These red flags weren’t hidden from view. In fact, several years before Madoff’s arrest, a whistleblower sent the Securities and Exchange Commission a fifty-page report detailing the obvious fraud.

There was no way it could return goods that didn’t sell to the manufacturers. So where did it all go? Back onto the truck and straight to the next store on its delivery schedule. That next store would then stock this rejected junk and pass its poor-selling goods on to the subsequent one and so on and so on. It was a kind of inventory Ponzi scheme. The company was relying solely on new store growth to boost its revenues. But because of that excessive growth, it couldn’t possibly bring in enough desirable new merchandise for all those locations, so it was reduced to rotating an increasingly unsellable backlog of crap among its outlets. Less than twelve months after my trip to Northgate Mall, Value Merchants filed for bankruptcy.


pages: 244 words: 73,700

Cultish: The Language of Fanaticism by Amanda Montell

barriers to entry, behavioural economics, BIPOC, Black Lives Matter, classic study, cognitive dissonance, coronavirus, COVID-19, Donald Trump, en.wikipedia.org, epigenetics, fake news, financial independence, Girl Boss, growth hacking, hive mind, Jeff Bezos, Jeffrey Epstein, Keith Raniere, Kickstarter, late capitalism, lockdown, loss aversion, LuLaRoe, Lyft, multilevel marketing, off-the-grid, passive income, Peoples Temple, Phoebe Waller-Bridge, Ponzi scheme, prosperity theology / prosperity gospel / gospel of success, QAnon, Ronald Reagan, Russell Brand, Sapir-Whorf hypothesis, Search for Extraterrestrial Intelligence, side hustle, Silicon Valley, Skype, Social Justice Warrior, Stanford prison experiment, Steve Jobs, sunk-cost fallacy, tech bro, the scientific method, TikTok, uber lyft, women in the workforce, Y2K

schemes both pyramid and Ponzi: Christopher Jarvis, “The Rise and Fall of Albania’s Pyramid Schemes,” Finance & Development 37, no. 1 (March 2000), https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm; Antony Sguazzin, “How a ‘Giant Ponzi Scheme’ Destroyed a Nation’s Economy,” Bloomberg, February 27, 2019, https://www.bloomberg.com/news/articles/2019-02-28/how-a-giant-ponzi-scheme-destroyed-a-nation-s-economy. pyramid schemes don’t announce themselves as such: Bridget Casey, “Your Gifting Circle Is a Pyramid Scheme,” Money After Graduation, August 24, 2015, https://www.moneyaftergraduation.com/gifting-circle-is-a-pyramid-scheme/.


pages: 245 words: 75,397

Fed Up!: Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader by Colin Lancaster

"World Economic Forum" Davos, Adam Neumann (WeWork), Airbnb, Alan Greenspan, always be closing, asset-backed security, beat the dealer, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, Black Monday: stock market crash in 1987, bond market vigilante , Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, buy the rumour, sell the news, Carmen Reinhart, Chuck Templeton: OpenTable:, collateralized debt obligation, coronavirus, COVID-19, creative destruction, credit crunch, currency manipulation / currency intervention, deal flow, Donald Trump, Edward Thorp, family office, fear index, fiat currency, fixed income, Flash crash, George Floyd, global macro, global pandemic, global supply chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Growth in a Time of Debt, housing crisis, index arbitrage, inverted yield curve, Jeff Bezos, Jim Simons, junk bonds, Kenneth Rogoff, liquidity trap, lockdown, Long Term Capital Management, low interest rates, low skilled workers, margin call, market bubble, Masayoshi Son, Michael Milken, Mikhail Gorbachev, Minsky moment, Modern Monetary Theory, moral hazard, National Debt Clock, Nixon triggered the end of the Bretton Woods system, Northern Rock, oil shock, pets.com, Ponzi scheme, price stability, proprietary trading, quantitative easing, Reminiscences of a Stock Operator, reserve currency, Ronald Reagan, Ronald Reagan: Tear down this wall, Sharpe ratio, short selling, short squeeze, social distancing, SoftBank, statistical arbitrage, stock buybacks, The Great Moderation, TikTok, too big to fail, trickle-down economics, two and twenty, value at risk, Vision Fund, WeWork, yield curve, zero-sum game

The returns were literally too good to be true. It originated in Minneapolis with the Petters scams.3 A guy was pitching one of the funds as an investment opportunity. But the Rabbi was on it and told us to stay away. When the tide went out, it was left lying on the beach. It was exposed as a total fraud, a Ponzi scheme. Everything went to zero. This Los Angeles guy had put all of his friends and family into it, for a small finder’s fee of course. He went into a great depression. He never understood why the promoters had paid him so much money to raise capital when they had such great returns. He never recovered.

“The markets have morphed into a funny parallel universe. A twisted central-bank-driven reality. In the big public markets, people just chase risk. The markets are flush with cash. We just flood them with liquidity. The credit markets trade as if no one will ever default.” I tell him that sixty Ponzi schemes were unearthed this year by the Securities and Exchange Commission (SEC). Sixty fucking mini-Madoffs running around stealing investors’ funds, the largest amount since the GFC. When the markets are flush with cash and people are hungry for yield, the fraudsters come out of the woodwork. They want their fair share.


pages: 459 words: 138,689

Slowdown: The End of the Great Acceleration―and Why It’s Good for the Planet, the Economy, and Our Lives by Danny Dorling, Kirsten McClure

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Anthropocene, Berlin Wall, Bernie Sanders, Boeing 747, Boris Johnson, British Empire, business cycle, capital controls, carbon tax, clean water, creative destruction, credit crunch, Donald Trump, drone strike, Elon Musk, en.wikipedia.org, Extinction Rebellion, fake news, Flynn Effect, Ford Model T, full employment, future of work, gender pay gap, global supply chain, Google Glasses, Great Leap Forward, Greta Thunberg, Henri Poincaré, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, It's morning again in America, James Dyson, Jeremy Corbyn, jimmy wales, John Harrison: Longitude, Kickstarter, low earth orbit, Mark Zuckerberg, market clearing, Martin Wolf, mass immigration, means of production, megacity, meta-analysis, military-industrial complex, mortgage debt, negative emissions, nuclear winter, ocean acidification, Overton Window, pattern recognition, Ponzi scheme, price stability, profit maximization, purchasing power parity, QWERTY keyboard, random walk, rent control, rising living standards, Robert Gordon, Robert Shiller, Ronald Reagan, School Strike for Climate, Scramble for Africa, sexual politics, Skype, Stephen Hawking, Steven Pinker, structural adjustment programs, Suez crisis 1956, the built environment, Tim Cook: Apple, time dilation, transatlantic slave trade, trickle-down economics, very high income, wealth creators, wikimedia commons, working poor

For instance, they lend to the federal government, buying up part of the U.S. national debt, and in doing so some of their money is, in turn, lent to university students as federal loans. Those students who pay back their loans with interest should, so the theory goes, more than offset those who fail to, and so the federal government can afford in future to pay back the rich individual, with interest added. But eventually such a giant Ponzi scheme has to fail, because only a tiny minority can ever be rich if we live our lives this way. The rich may not have realized the long-term folly for them of lending money to people to get an education and learn how the world works better than the rich understand, people who are usually so focused on short-term profit maximization.

Department of the Treasury, “Fiscal Service, Federal Debt: Total Public Debt [GFDEBTN],” retrieved from FRED, Federal Reserve Bank of St. Louis, accessed 29 December 2018, https://fred.stlouisfed.org/series/GFDEBTN.) Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi arrived in the United States in 1903 from Italy. If you are interested in Ponzi schemes and where such flights of fancy can lead, look him up. In a fast-changing world, many of his schemes initially worked; but none worked for very long. In a world of slowdown there should be fewer chances of any of the schemes of such gamblers getting off the ground. The only reason we know Ponzi’s name is that his many schemes failed in his lifetime, often spectacularly.

See also carbon emissions On the Origin of Species (Darwin), 189 optimism, 299, 301, 312, 319 Organisation for Economic Cooperation and Development (OECD), 310–11 Oswald, Andrew, 243–44, 304–5 Pakistan, 165, 167, 168 paleoclimatology, 123 Palmerston, Henry John Temple, 3rd Viscount, 283 Paris, 26, 263, 324 patriarchy, 319 peak human, 317 pendulums, 5, 29–30, 34–36, 35, 336 phase portraits, 29–36, 35, 336 phase space, 32 Philippines, 172, 173, 174 Piñero, Sebastión, 312 Pinker, Steven, 265–66 Planet of the Apes, 298, 365n22 Poincaré, Henri, 32 political change, 276–83; decline in number of-isms, 276; Democratic Party in New York State, 277–79, 278; London and the Conservative Party, 281–83, 282; populism and, 277; rate of autocratization, 276–77; women and, 276 Ponzi schemes, 63 population, 140–79; Africa, 157–61, 169; baby booms and, 104–5, 143, 147; beginning of slowdown (1968), 25–26, 141, 144–45, 146, 340n8; birth rates, 153, 307–13, 308; British Isles, 161–65, 164; carbon emissions and, 102–3, 106–9, 107; change versus rate of change, 27–29, 28, 36; China, 154–57, 156; colonization and, 103, 145, 147; diseases and, 147, 148, 174; Eurasia, 171–74, 172, 173; famines and, 155, 162, 166, 168, 174; fastest period of growth, 315–16; fertility (see fertility); growth transforming to slowdown and extinction (example), 12–15, 13; immigration and, 318; Indian subcontinent, 165–68, 167; interruptions in growth, 147–49, 148; of largest cities, 323–24; Oceania, 174–77, 176; poverty and instability and, 105–6; predictions of slowdown, 140–42; reduction in total numbers, 214; ROXY indexes, 326–29, 328; stabilization, 18–22, 20, 143–44; United States, 149–54, 151; World War II and, 147 Population Bomb (Ehrlich), 3, 7 Population 10 Billion (Dorling), 142 populism, 277 Portugal, fertility, 223, 224 Poverty and Progress (Wilkinson), 289 Pren, Karen, 153–54 printing, 65–66, 72–74.


pages: 611 words: 130,419

Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller

agricultural Revolution, Alan Greenspan, Albert Einstein, algorithmic trading, Andrei Shleifer, autism spectrum disorder, autonomous vehicles, bank run, banking crisis, basic income, behavioural economics, bitcoin, blockchain, business cycle, butterfly effect, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, central bank independence, collective bargaining, computerized trading, corporate raider, correlation does not imply causation, cryptocurrency, Daniel Kahneman / Amos Tversky, debt deflation, digital divide, disintermediation, Donald Trump, driverless car, Edmond Halley, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fake news, financial engineering, Ford Model T, full employment, George Akerlof, germ theory of disease, German hyperinflation, Great Leap Forward, Gunnar Myrdal, Gödel, Escher, Bach, Hacker Ethic, implied volatility, income inequality, inflation targeting, initial coin offering, invention of radio, invention of the telegraph, Jean Tirole, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, litecoin, low interest rates, machine translation, market bubble, Modern Monetary Theory, money market fund, moral hazard, Northern Rock, nudge unit, Own Your Own Home, Paul Samuelson, Philip Mirowski, plutocrats, Ponzi scheme, public intellectual, publish or perish, random walk, Richard Thaler, Robert Shiller, Ronald Reagan, Rubik’s Cube, Satoshi Nakamoto, secular stagnation, shareholder value, Silicon Valley, speech recognition, Steve Jobs, Steven Pinker, stochastic process, stocks for the long run, superstar cities, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, traveling salesman, trickle-down economics, tulip mania, universal basic income, Watson beat the top human players on Jeopardy!, We are the 99%, yellow journalism, yield curve, Yom Kippur War

The ad featured recent auction prices of oranges from the region as well as text about how fashionable the area was.12 In response to complaints about such marketing, the individual states of the United States put into place over the period 1911–33 a series of “blue sky laws” prohibiting the selling of “speculative schemes which have no more basis than so many feet of ‘blue sky.’ ”13 Mr. Ponzi and His Other Scheme In 1926, Charles Ponzi, who is said to have invented the Ponzi scheme in 1920, was released from jail. (Also called a circulation scheme, a Ponzi scheme is a fraudulent investment fund that pays off early investors with money raised from later investors, creating a false impression of profits to lure yet more victims.) Soon thereafter, Ponzi went back to jail for violating Florida’s blue-sky law. During the Florida land boom, he began selling small parcels of Florida land to investors without disclosing that the land was under water, in a swamp.14 Ponzi’s name, and the story of unwitting investors buying land in a swamp, went viral with his circulation scheme, and it remains famous even today, but his name is not so attached to the swamp narrative.

See also monetary policy policymakers: creating and disseminating counternarratives, 278; narrative studies to infer motivations of, 281, 321n14 poliomyelitis enterovirus epidemic, 295–96 Pollack, Andrew, 204 Polletta, Francesca, 32 Pomperipossa in the World of Money (Lindgren), 49 Ponzi, Charles, 220–21 Ponzi scheme, 220 populism: inflation after World War I and, 245; opposition to gold standard and, 166 portfolio insurance, 93 post-traumatic stress disorder (PTSD), 57 “postwar,” 242–43 Pound, John, 298 poverty: decreasing basic-needs charity in today’s US, 272; Depression-era attitudes toward, 143; Dust Bowl and, 131; nineteenth-century moral views of, 117; technological advances creating, 178 poverty-chic culture, 143, 148, 149 power age, 183 predicting economic events.


pages: 491 words: 141,690

The Controlled Demolition of the American Empire by Jeff Berwick, Charlie Robinson

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, airport security, Alan Greenspan, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, bank run, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, bitcoin, Black Lives Matter, bread and circuses, Bretton Woods, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cass Sunstein, Chelsea Manning, clean water, cloud computing, cognitive dissonance, Comet Ping Pong, coronavirus, Corrections Corporation of America, COVID-19, crack epidemic, crisis actor, crony capitalism, cryptocurrency, dark matter, deplatforming, disinformation, Donald Trump, drone strike, Edward Snowden, Elon Musk, energy transition, epigenetics, failed state, fake news, false flag, Ferguson, Missouri, fiat currency, financial independence, George Floyd, global pandemic, global supply chain, Goldman Sachs: Vampire Squid, illegal immigration, Indoor air pollution, information security, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jeff Bezos, Jeffrey Epstein, Julian Assange, Kickstarter, lockdown, Mahatma Gandhi, mandatory minimum, margin call, Mark Zuckerberg, mass immigration, megacity, microapartment, Mikhail Gorbachev, military-industrial complex, new economy, no-fly zone, offshore financial centre, Oklahoma City bombing, open borders, opioid epidemic / opioid crisis, pill mill, planetary scale, plutocrats, Ponzi scheme, power law, pre–internet, private military company, Project for a New American Century, quantitative easing, RAND corporation, reserve currency, RFID, ride hailing / ride sharing, Saturday Night Live, security theater, self-driving car, Seymour Hersh, Silicon Valley, smart cities, smart grid, smart meter, Snapchat, social distancing, Social Justice Warrior, South China Sea, stock buybacks, surveillance capitalism, too big to fail, unpaid internship, urban decay, WikiLeaks, working poor

Sounding the Alarm For the Death of the Dollar No country on earth has the kind of massive printing press that the Federal Reserve and the Treasury of the United States have to manufacture United States dollars either physically through the printing of sheets of currency that is sliced into rectangles in order to fit nicely in everyone’s wallet or to digitally print currency in online ledgers that the Fed then loans into existence with the attachment of interest in order to perpetuate the Ponzi scheme that is the American monetary policy. The American Empire has been slowly debasing their own currency for decades, but they have a nice and normalized term for this kind of theft of purchasing power stolen from the people. They call it inflation, as in the inflation of the money supply and subsequent deflation of the value.

This is known as the fiat currency system, and it is designed to force the central bank to constantly create more and more money in order for it to work. As more money is created and injected into the system, the value of the money shrinks a little bit each time because the supply is increased. This is how citizens lose 96.1% of the value of the United States dollar over a century. People can also classify this system as a Ponzi scheme, or a pyramid scheme because new money is always needed to pay off the previous investors. Once the flow of new money stops, the pyramid collapses. Once the Federal Reserve stops printing money, the value of the money outstanding stops devaluing. If they remove money from the system then the value of the outstanding money actually goes up because the supply is being reduced, which is a good thing, unless one has borrowed a ton of money at a certain interest rate.

They are only six decades removed from their leader rounding up and executing 73,000,000 of his own people for having the audacity to be educated, and they are certainly headed down an Orwellian rabbit hole with their new social media ranking service that issues points for towing the party line, and removes points for speaking out about the government.96 They have some rather large domestic social issues that need to be ironed out, but their openness to business and trade, combined with their plans for developing global marketplaces throughout Eurasia, Africa, and South America make them a horse to bet on for the long term. The Media’s Role in Demonizing China The American corporate media has begun the push to sell the population that the new threat to freedom and democracy is China, as the United States government simultaneously sells them trillions of dollars of sovereign debt to finance the Ponzi scheme the Federal Reserve has been running for over a hundred years. China has always been there. This is not a new threat. They did not come down from Zeta Reticuli and start a civilization a decade ago, they have been right where they are for the past 36 centuries. They never pushed into Europe, they never tried to colonize India, and they did not ship all of their prisoners to Australia.


pages: 278 words: 82,069

Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover by Katrina Vanden Heuvel, William Greider

Alan Greenspan, Asian financial crisis, banking crisis, Bear Stearns, Bretton Woods, business cycle, buy and hold, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, declining real wages, deindustrialization, Exxon Valdez, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, full employment, Glass-Steagall Act, green new deal, guns versus butter model, housing crisis, Howard Zinn, Hyman Minsky, income inequality, information asymmetry, It's morning again in America, John Meriwether, junk bonds, kremlinology, Long Term Capital Management, low interest rates, margin call, market bubble, market fundamentalism, McMansion, Michael Milken, Minsky moment, money market fund, mortgage debt, Naomi Klein, new economy, Nixon triggered the end of the Bretton Woods system, offshore financial centre, payday loans, pets.com, plutocrats, Ponzi scheme, price stability, pushing on a string, race to the bottom, Ralph Nader, rent control, Robert Shiller, Ronald Reagan, Savings and loan crisis, savings glut, sovereign wealth fund, structural adjustment programs, subprime mortgage crisis, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, wage slave, Washington Consensus, women in the workforce, working poor, Y2K

This new debt paper was then peddled to investors, who used it as collateral for “margin” loans to buy yet more stocks and bonds. At each change of hands, fees and underwriting charges added to the total claims on the original shaky mortgages. The result was a frenzied bid-ding up of prices for a bewildering maze of arcane securities that neither buyers nor sellers could accurately value. Giant Ponzi scheme? Not to worry, responded the Wall Street geniuses. By spreading risks among more people, the miracle of “diversity” was actually turning bad loans into good ones. Anyway, banks were buying insurance policies against default, which in turn were transformed into a set of even murkier securities called “credit default swaps” and marketed to hedge funds, pension managers and in some cases back to the banks that were being insured in the first place.

The cause of the financial markets meltdown is simple: powerful greed fanned by fraud and reckless risk transfers. Wall Street wanted something for nothing. This fairy tale was written by an army of Wall Street lobbyists who tore down regulations and safeguards meant to protect savers and shareholders. The financial black belts who made billions from this Ponzi scheme deserve the brunt of law enforcement. But deregulation meant there was very little law, much less enforcement. Instead, the socialist superman has swept down to New York City from Washington to bail out casino capitalism on Wall Street, which is spewing forth ever more kryptonite. Every time Congress has acted in haste, it has led to a boon-doggle, from the $3 billion synthetic fuels legislation of 1980 to the Iraq War resolution of 2002.


pages: 302 words: 86,614

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja, Myron Scholes, Mohamed El-Erian

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Asian financial crisis, asset allocation, asset-backed security, backtesting, Bear Stearns, Bernie Madoff, book value, Bretton Woods, business process, call centre, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, en.wikipedia.org, family office, financial engineering, fixed income, global macro, high net worth, high-speed rail, impact investing, interest rate derivative, Isaac Newton, Jim Simons, junk bonds, Long Term Capital Management, managed futures, Marc Andreessen, Mark Zuckerberg, merger arbitrage, Michael Milken, Myron Scholes, NetJets, oil shock, pattern recognition, Pershing Square Capital Management, Ponzi scheme, proprietary trading, quantitative easing, quantitative trading / quantitative finance, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, Savings and loan crisis, short selling, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, stock buybacks, systematic bias, systematic trading, tail risk, two and twenty, zero-sum game

AHL was up in 2008 but was down 17 percent in 2009, and in 2010 was still 3.7 percent below its high-water mark. Man’s fees suffered accordingly; in March 2010, fees amounted to $97 million, down from $358 million the year before. In addition, RMF, Man’s fund-of-funds business, lost $360 million in the collapse of Bernard Madoff’s Ponzi scheme, and others strategies suffered significant losses as well. In the face of these losses, Man’s CEO Peter Clarke began the search for new assets. GLG was the first place he turned, and he found receptive listeners. Between the market turmoil of 2008 and Coffey’s departure, GLG’s stock price tanked, and the amount of assets under management fell to $17.3 billion, reportedly threatening to put GLG in breach of a covenant on a $570 million loan from Citigroup.

This legislation, he said, “should require registration of private funds with the SEC; provide that each such fund and its investment manager be subject to SEC inspection and enforcement authority, just as mutual funds and registered investment advisers are; require custody and audit protections to prevent theft, Ponzi schemes, and fraud; should also require robust disclosures to investors, counterparties, and lenders; require that private funds provide basic census data in an online publicly available form; require that they implement anti–money laundering programs, just as broker-dealers, banks, and open-end investment companies must do; and, for larger funds, require the adoption of risk management plans to identify and control material risks, as well as plans to address orderly wind-downs.


pages: 302 words: 80,287

When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle by Scott Wapner

activist fund / activist shareholder / activist investor, AOL-Time Warner, asset allocation, Bear Stearns, Bernie Madoff, Carl Icahn, corporate governance, corporate raider, Credit Default Swap, deal flow, independent contractor, junk bonds, low interest rates, Mark Zuckerberg, Michael Milken, multilevel marketing, Pershing Square Capital Management, Ponzi scheme, price discrimination, Ronald Reagan, short selling, short squeeze, Silicon Valley, Tim Cook: Apple, unbiased observer

Sohn set out to debunk the core of Ackman’s claims—that Herbalife preyed on thousands, if not millions, of unsuspecting people, mostly lower-income Hispanic immigrants who had joined with the idea of making big money but were left financially destroyed in what amounted to an elaborate scam. “The initial short thesis was this is essentially a Ponzi scheme. No one is making any money off of it and everyone does it for the business opportunity,” Sohn said. “There are no real customers. It’s illegal.” Sohn spent $25,000 to commission a survey in both English and Spanish to make sure it was an accurate representation of Herbalife’s customer base. The survey’s first question, posed only to Herbalife distributors, read, “Would you recommend becoming an Herbalife distributor to family and friends?”

., 28, 153 Perrica, Xenia, 145–146 Pershing Square Capital Management, 5, 14, 70, 71, 75, 143, 145, 164 advisory board of, 153 assets growth/decline of, 37, 181, 210 holdings in 2016, 209 investment committee of, 16, 72 IPO of, 180 launching of, 36, 211 long-term incentive program of, 210 performance in 2015, 180, 181–182 returns in 2014, 166 as underperforming, 40 video made about Herbalife’s distributors, 196–197 Pershing Square Holdings, 180 philanthropy, 7, 212 Philidor Rx Services, 172–173, 174, 175 Philip Morris Cos., 126 Phillips Petroleum, 122–123 Pickens, T. Boone, 121, 122 Pitt, Harvey, 146 Platform Specialty Products, 182 Ponzi schemes, 135. See also pyramid schemes Porter, Michael, 153 Post Holdings, 148 “Preliminary Report on Bill Ackman” (Dietz), 5–9 Pre-Paid Legal Services, 3031, 32, 33 PricewaterhouseCoopers (PwC), 133, 139–140 Protess, Ben, 96 proxy fights, 38, 72, 118, 119, 120, 126, 128, 215 put options, 148–149, 178, 215 pyramid schemes, 13, 14, 19, 44, 138, 181 laws concerning, 17, 75, 112 and recruiting, 149 See also Herbalife: as pyramid scheme Ramey, Tim, 83, 132, 133, 200 Ramirez, Edith, 142, 143, 144, 189–190, 196, 198 Rausch, George, 28 Reagan, Ronald, 43 Real Bill Ackman, The (website), 178 “Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Industry Concentration, The,” 214 real estate investment trusts (REIT), 29, 30, 33 recessions, 119.


pages: 282 words: 81,873

Live Work Work Work Die: A Journey Into the Savage Heart of Silicon Valley by Corey Pein

"World Economic Forum" Davos, 23andMe, 4chan, affirmative action, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, Anne Wojcicki, artificial general intelligence, bank run, barriers to entry, Benevolent Dictator For Life (BDFL), Bernie Sanders, Big Tech, bitcoin, Bitcoin Ponzi scheme, Build a better mousetrap, California gold rush, cashless society, colonial rule, computer age, cryptocurrency, data is the new oil, deep learning, digital nomad, disruptive innovation, Donald Trump, Douglas Hofstadter, driverless car, Elon Musk, Evgeny Morozov, Extropian, fail fast, fake it until you make it, fake news, gamification, gentrification, gig economy, Google bus, Google Glasses, Google X / Alphabet X, Greyball, growth hacking, hacker house, Hacker News, hive mind, illegal immigration, immigration reform, independent contractor, intentional community, Internet of things, invisible hand, Isaac Newton, Jeff Bezos, job automation, Kevin Kelly, Khan Academy, Larry Ellison, Law of Accelerating Returns, Lean Startup, life extension, Lyft, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Menlo Park, minimum viable product, move fast and break things, mutually assured destruction, Neal Stephenson, obamacare, Parker Conrad, passive income, patent troll, Patri Friedman, Paul Graham, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, platform as a service, plutocrats, Ponzi scheme, post-work, public intellectual, Ray Kurzweil, regulatory arbitrage, rent control, RFID, Robert Mercer, rolodex, Ronald Reagan, Ross Ulbricht, Ruby on Rails, Sam Altman, Sand Hill Road, Scientific racism, self-driving car, selling pickaxes during a gold rush, sharing economy, side project, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Singularitarianism, Skype, Snapchat, Social Justice Warrior, social software, software as a service, source of truth, South of Market, San Francisco, Startup school, stealth mode startup, Steve Bannon, Steve Jobs, Steve Wozniak, TaskRabbit, tech billionaire, tech bro, tech worker, TechCrunch disrupt, technological singularity, technoutopianism, telepresence, too big to fail, Travis Kalanick, tulip mania, Tyler Cowen, Uber for X, uber lyft, ubercab, unit 8200, upwardly mobile, Vernor Vinge, vertical integration, Virgin Galactic, X Prize, Y Combinator, Zenefits

By 2013, when the goldbugs, money launderers, and Wall Street speculators joined the Bitcoin frenzy, Kenna had become a charter member of the “Bitcoin millionaires’ club,” and his distaste for “unethical” business practices had evolved. He now argued that the marketing of Ponzi schemes should be permitted so long as the terms were clearly stated. It was all in good fun, like a friendly game of poker. Of course, Bitcoin itself was a Ponzi scheme. As with so many other Bitcoin companies before it, Tradehill collapsed in a morass of litigation. Kenna was “pulling my hair out … not sleeping,” and once more left holding the bag. “I was, like, completely broke and I needed somewhere to live in San Francisco, which is horrible,” Kenna recalled in a video interview with a Bitcoin blogger.


pages: 332 words: 81,289

Smarter Investing by Tim Hale

Albert Einstein, asset allocation, buy and hold, buy low sell high, capital asset pricing model, classic study, collapse of Lehman Brothers, corporate governance, credit crunch, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, fiat currency, financial engineering, financial independence, financial innovation, fixed income, full employment, Future Shock, implied volatility, index fund, information asymmetry, Isaac Newton, John Bogle, John Meriwether, Long Term Capital Management, low interest rates, managed futures, Northern Rock, passive investing, Ponzi scheme, purchasing power parity, quantitative easing, random walk, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, South Sea Bubble, technology bubble, the rule of 72, time value of money, transaction costs, Vanguard fund, women in the workforce, zero-sum game

Ask anyone whose capital was guaranteed by Lehman Brothers (around $8 billion of investors’ money was allegedly in these structures). Hedge funds failed to deliver their ‘skill-based’ returns and were revealed in the main to be selling market exposures at usurious prices, enriching themselves at the expense of gullible investors. No more gullible than those professionals who ‘approved’ and invested in Madoff’s $50 billion Ponzi scheme, uncovered at the back end of 2008 – that list is long and undistinguished. The time has come for transparency, value for money and the fulfilment of the fiduciary responsibility of all in the industry including fund managers, product development and marketing teams, and advisers. The outlook for impartial fee-based advice and evidence-based, transparent passive investing has never been so promising, or important to us.

Tip 6: If it looks too good to be true, it probably is There are no dead certainties in investing apart from the fact that any product that appears to deliver great returns with low risks has a high chance of disappointment, usually in the form of a material reduction in the value of your investment. There are two main types of products that fall into this category: a fraud wrapped up in a good story, and a bet wrapped up in a good story. Beware the snake-oil salesman. The recent Ponzi scheme fraud perpetrated by Madoff was a classic case of someone with the ‘gift of the gab’, a semblance of credibility, a complex strategy that few investors understood (apparently a split strike conversion strategy, whatever that is) and an air of exclusivity and secrecy. The second is usually something that sounds so fantastic that you get sucked into the upside and blinded to the risks (e.g. the true cases of firms peddling freeholds to apartment blocks in Beirut at the height of the troubles there, or repossessed homes in Florida).


pages: 285 words: 86,174

Twilight of the Elites: America After Meritocracy by Chris Hayes

"Hurricane Katrina" Superdome, "World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, barriers to entry, Bear Stearns, Berlin Wall, Bernie Madoff, carried interest, circulation of elites, Climategate, Climatic Research Unit, collapse of Lehman Brothers, collective bargaining, creative destruction, Credit Default Swap, dark matter, David Brooks, David Graeber, deindustrialization, Fall of the Berlin Wall, financial deregulation, fixed income, full employment, George Akerlof, Gunnar Myrdal, hiring and firing, income inequality, Jane Jacobs, jimmy wales, Julian Assange, Kenneth Arrow, Mark Zuckerberg, mass affluent, mass incarceration, means of production, meritocracy, meta-analysis, military-industrial complex, money market fund, moral hazard, Naomi Klein, Nate Silver, peak oil, plutocrats, Ponzi scheme, post-truth, radical decentralization, Ralph Waldo Emerson, rolodex, Savings and loan crisis, The Spirit Level, too big to fail, University of East Anglia, Vilfredo Pareto, We are the 99%, WikiLeaks, women in the workforce

These were the guys in charge, the ones tasked with rescuing the entire global financial system, and nothing about their vague and contradictory answers to simple questions projected competence or good faith. Washington managed to pass the bailout for the financial sector, and while Wall Street would soon return to glory, wealth, and profitability, the rest of us would come to learn in gruesome detail all the ways in which the source of its prosperity had, in fact, been the largest Ponzi scheme in the history of human civilization. The cumulative effect of these scandals and failures is an inescapable national mood of exhaustion, frustration, and betrayal. At the polls, we see it in the restless, serial discontent that defines the current political moment. The last three elections, beginning in 2006, have operated as sequential backlashes.

We know that various tribunes of officialdom spin and dissemble, but we are not, as a rule, disposed to think they are engaged in a comprehensive, systematic cover-up of some monstrously destructive hidden agenda. Because revelations of systemic deception erode our most basic, default expectation of good faith, they play an outsize role in producing a crisis of authority. Each exposure of previously secret misdeeds—steroid use, Ponzi schemes, rigged intelligence—produces an acute and debilitating psychological effect. Vertigo sets in, similar to that experienced by a spouse who, after decades of what he thought was a happy, loyal marriage, discovers his wife has been cheating all along. Suddenly we realize we live in a world entirely more depraved than the one we thought we inhabited.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, asset allocation, Basel III, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamond, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, fear index, financial engineering, financial innovation, Flash crash, forward guidance, Garrett Hardin, Gini coefficient, Glass-Steagall Act, global reserve currency, high net worth, High speed trading, hindsight bias, hype cycle, income inequality, inflation targeting, interest rate swap, inverted yield curve, Isaac Newton, Jaron Lanier, John Perry Barlow, joint-stock company, joint-stock limited liability company, junk bonds, Kodak vs Instagram, Kondratiev cycle, Large Hadron Collider, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, low interest rates, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Ponzi scheme, precautionary principle, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, trickle-down economics, two and twenty, Two Sigma, Tyler Cowen, Washington Consensus, wealth creators, working poor, yield curve

He ran a series of investment funds that offered returns whose consistency, never failing to offer double-digit returns, should have been extremely suspect—in fact it was this very consistency that raised the suspicions about Madoff. When Madoff’s frauds were exposed in 2008, it turned out that he had been running a classic Ponzi scheme, in which the new money being paid into the funds is given directly to older customers, to make it look as if the investments are successful. After his arrest Madoff said that the Ponzi scheme had been running since 1991 and that he had never made any real investments with his clients’ money. He pled guilty to eleven felonies in March 2009 and was sentenced to 150 years in jail. Manias, Panics, and Crashes An amusing book by the economist Charles Kindleberger, who as I said in Part I is something of an intellectual hero of mine.


pages: 262 words: 83,548

The End of Growth by Jeff Rubin

Alan Greenspan, Anthropocene, Ayatollah Khomeini, Bakken shale, banking crisis, Bear Stearns, Berlin Wall, British Empire, business cycle, call centre, carbon credits, carbon footprint, carbon tax, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, deal flow, decarbonisation, deglobalization, Easter island, energy security, eurozone crisis, Exxon Valdez, Eyjafjallajökull, Fall of the Berlin Wall, fiat currency, flex fuel, Ford Model T, full employment, ghettoisation, Glass-Steagall Act, global supply chain, Hans Island, happiness index / gross national happiness, housing crisis, hydraulic fracturing, illegal immigration, income per capita, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jevons paradox, Kickstarter, low interest rates, McMansion, megaproject, Monroe Doctrine, moral hazard, new economy, Occupy movement, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, proprietary trading, quantitative easing, race to the bottom, reserve currency, rolling blackouts, Ronald Reagan, South China Sea, sovereign wealth fund, subprime mortgage crisis, The Chicago School, The Death and Life of Great American Cities, Thomas Malthus, Thorstein Veblen, too big to fail, traumatic brain injury, uranium enrichment, urban planning, urban sprawl, women in the workforce, working poor, Yom Kippur War, zero-sum game

When the world’s annual fuel bill was less than $800 billion, oil-importing nations like the United States clocked healthy economic growth year after year. Now that the world is spending more than $3 trillion a year on oil, those same economies are floundering. This isn’t a coincidence. Triple-digit oil prices turn the sovereign debt market into something resembling a giant Ponzi scheme. The investors who are buying the bonds that allow governments to roll over the debt amassing in the financial system are essentially making larger and larger bets on future economic growth. But as oil prices climb higher, the prospects for that growth become ever more tenuous. It’s like doubling down just as the odds are turning against you.

Judging by the protesters in the Occupy movement, a significant segment of our society has lost faith in the merits of unregulated capitalism. To them, a Rolex isn’t a sign that the wearer is an investment banker worthy of respect. Instead, it signals that the person who owns it may be about to break another securities law or make millions engineering a Ponzi scheme that will bilk suckers out of their life savings. As always, virtue is in the eye of the beholder. If values change, wearing a diamond-encrusted watch may someday send the wrong message. Consumer spending doesn’t necessarily have to be conspicuous to be unsatisfying. As per capita income increased in the postwar era, it stoked expectations of ever-larger increases in future consumption.


pages: 595 words: 143,394

Rigged: How the Media, Big Tech, and the Democrats Seized Our Elections by Mollie Hemingway

2021 United States Capitol attack, active measures, Affordable Care Act / Obamacare, Airbnb, Bernie Sanders, Big Tech, Black Lives Matter, coronavirus, corporate governance, COVID-19, critical race theory, defund the police, deplatforming, disinformation, Donald Trump, fake news, George Floyd, global pandemic, illegal immigration, inventory management, lab leak, lockdown, machine readable, Mahatma Gandhi, Mark Zuckerberg, military-industrial complex, obamacare, Oculus Rift, Paris climate accords, Ponzi scheme, power law, QR code, race to the bottom, Ronald Reagan, Silicon Valley, Snapchat, statistical model, tech billionaire, TikTok

Paradigm would later develop a business relationship with another investment firm, Stanford Capital, managing a “jointly branded” $50 million fund for the two firms. That arrangement became an issue when Stanford Capital was exposed as a “$7 billion Ponzi scheme.”33 Allen Stanford is now serving a 110-year prison sentence, but the Bidens didn’t face any charges of wrongdoing for their involvement with his firm. Though not on the hook for the Ponzi scheme, the Bidens were still implicated in messy litigation regarding their tenure with Paradigm. Former business partner Anthony Lotito Jr. sued the pair over allegations of fraud and breach of fiduciary duty for shutting him out of the deal to purchase Paradigm.

RealClearPolitics, December 12, 2019, https://www.realclearpolitics.com/video/2019/12/12/matt_gaetz_why_would_burisma_hire_hunter_biden_after_history_of_crack_cocaine_use.html. 23. Ibid. 24. Entous, “Will Hunter Biden Jeopardize His Father’s Campaign?” 25. Ibid. 26. Ibid. 27. Ibid. 28. Ibid. 29. Ibid. 30. Ibid. 31. Ibid. 32. Ibid. 33. “Allen Stanford Found Guilty in $7bn Ponzi Scheme,” BBC, March 6, 2012, https://www.bbc.com/news/world-us-canada-17274724. 34. Jenny Strasburg and Thom Weidlich, “Biden’s Son Sues Ex-Partner Lobbyist, with Senator’s Brother, Alleges Fraud in Fund Buyout,” Washington Post, February 21, 2007, https://www.washingtonpost.com/archive/business/2007/02/21/bidens-son-sues-ex-partner-span-classbankheadlobbyist-with-senators-brother-alleges-fraud-in-fund-buyoutspan/6e774f6d-b02d-4199-8664-7ebe44523563/. 35.


pages: 332 words: 91,780

Starstruck: The Business of Celebrity by Currid

barriers to entry, Bernie Madoff, Big Tech, Donald Trump, income inequality, index card, industrial cluster, Mark Zuckerberg, Metcalfe’s law, natural language processing, place-making, Ponzi scheme, post-industrial society, power law, prediction markets, public intellectual, Renaissance Technologies, Richard Florida, Robert Metcalfe, Robert Solow, rolodex, search costs, shareholder value, Silicon Valley, slashdot, Stephen Fry, the long tail, The Theory of the Leisure Class by Thorstein Veblen, transaction costs, Tyler Cowen, upwardly mobile, urban decay, Vilfredo Pareto, Virgin Galactic, winner-take-all economy

Contrast this with sports, and to a greater extent with Hollywood, where an audience and visual persona is part of a star’s dossier of success.21 Financial celebrity emerges at times, but it is usually predicated on two conditions: when someone has done something really bad or when someone has actively created a persona that transcends his or her talent. Financial celebrities tend to be cultivated through notoriety. The 1991 Salomon Brothers’ outrage when trader Paul Mozer was found to be submitting false bids to buy U.S. Treasury Department bonds or the $50 billion Ponzi scheme that Bernie Madoff was busted for in 2009 were some of the most speculated about and discussed scandals of their time. Madoff’s private life was endlessly dissected in Vanity Fair and even Tatler, including a tell-all by his secretary and an examination of his privileged (and now broke) social circle.

Ono, Yoko Oppenheimer, Jerry Oscars, see Academy Awards Owl and Weasel (newsletter) Oxford University Page, Larry Pakistan Palencia, Francisco Palin, Sarah Paltrow, Gwyneth paparazzi Paramount Pictures Pareto Principle Paris Park City (Utah) Parliament, British participatory culture path dependency Pattinson, Robert Peake, John Penguin Press Penn, Sean People for the Ethical Treatment of Animals (PETA) People magazine PepsiCo PerezHilton.com; see also Hilton, Perez personal digital assistant (PDA) applications Pew Research Center Peyton-Jones, Julia Phoenix, River Physical Impossibility of Death in the Mind of Someone Living, The (Hirst) Picasso, Pablo Pinsky, Drew Pitt, Brad Pittsburgh Playboy Polaroid Scene Politico newspaper and blog politics; academic; British; celebrity residual in; geography of stardom and; networks in Ponzi schemes pop art Popeye Series (Koons) Pop Idol (TV show) Pop magazine Portman, Natalie Posen, Zac Price, Katie (“Jordan”) Princeton University Proenza fashion house Project Runway (TV show) publicists; democratic celebrities and; fees of; geography of stardom and; lack of, in Bollywood Puppy (Koons) Putnam, Robert Queen Latifah Radar magazine Rainie, Lee RateMyProfessors.com Ravid, Gilad RCA Records Reader, The (film) reality TV; British; financial celebrities on; narcissism of; relative celebrities on; stars of; see also specific shows Real Madrid Real World, The (TV show) Reed, David Reed, Lou Reid, Tara Rein, Irving Reinhardt, Doug relative celebrities; in academia; in art world; characteristics of,; mainstream celebrities versus; networks of Reliance film company Renaissance Technologies Republican Party residual, see celebrity residual Reuters Reynolds, Jamie Richards, Mark Richter, Gerhard Ripa, Kelly Ritchie, Guy Rivera, Mariano Roberts, Julia Rodarte fashion house Rodriguez, Alex (A-Rod) ROFLCon Rogers and Cowan Rolling Stone Roman Empire Romer, Paul Ronaldinho (Ronaldo de Assis Moreira) Ronaldo, Cristiano Ronson, Samantha Rose, Jessica Rosen, Sherwin Rosenfield, Stan Ross, Andrew Roubini, Nouriel Rousing, Hans Rousseau, Jean-Jacques Royal Festival Hall (London) Ruscha, Ed Ruth, Babe Saatchi, Charles Sachs, Jeffrey Salomon, Rick Salomon Brothers Samuels, David Sandler, Adam San Francisco 49ers São Paulo, traffic in Schouler fashion house Schroeder, Alice Science magazine Scientific American Scientologists Scorsese, Martin Scotland Seacrest, Ryan Seattle Mariners Secret Service Sedgwick, Edie Seipp, Catherine Senate, U.S.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"there is no alternative" (TINA), "World Economic Forum" Davos, 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Alan Greenspan, Albert Einstein, Alfred Russel Wallace, Anthropocene, Anton Chekhov, Asian financial crisis, banking crisis, Bear Stearns, Berlin Wall, bitcoin, bond market vigilante , Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, digital divide, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial engineering, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, geopolitical risk, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, Great Leap Forward, Greenspan put, happiness index / gross national happiness, high-speed rail, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), it is difficult to get a man to understand something, when his salary depends on his not understanding it, It's morning again in America, Jane Jacobs, John Maynard Keynes: technological unemployment, junk bonds, Kenneth Rogoff, Kevin Roose, knowledge economy, knowledge worker, Les Trente Glorieuses, light touch regulation, liquidity trap, Long Term Capital Management, low interest rates, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, middle-income trap, Mikhail Gorbachev, military-industrial complex, Minsky moment, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, PalmPilot, passive income, peak oil, peer-to-peer lending, pension reform, planned obsolescence, plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Robert Solow, Ronald Reagan, Russell Brand, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, Stephen Fry, systems thinking, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

Default, debt forgiveness, or inflation wipe out savings designed to finance future needs, such as retirement. This results in additional claims on the state to cover the shortfall. Alternatively, it reduces the future expenditure of the saver, which crimps consumption. Ultimately, excessive debt resembles a Ponzi scheme. Nations, businesses, and individuals need to borrow ever-increasing amounts to repay existing borrowings and maintain economic growth. In the half-century leading up to 2008, the amount of debt needed to create US$1 of GDP in the US increased from US$1–2 to US$4–5. This rapid rise is unsustainable, given an aging population, slower growth, and low inflation.

William Grieder, Secret of the Temple: How the Federal Reserve Runs the Country, Simon & Schuster, 1987. John Kay, The Truth about Markets: Why Some Nations Are Rich but Most Remain Poor, Penguin, 2004. Vivek Kaul, Easy Money: Evolution of the Global Financial System to the Great Bubble Burst, Sage Publications, 2014. ——, Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System, Sage Publications, 2014. Stephen D. King, When the Money Runs Out: The End of Western Affluence, Yale University Press, 2013. Graeme Maxton, The End of Progress: How Modern Economics Has Failed Us, John Wiley, 2011. Johan van Overtveldt, The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionised Economics and Business, Agate Books, 2007.


pages: 345 words: 87,745

The Power of Passive Investing: More Wealth With Less Work by Richard A. Ferri

Alan Greenspan, asset allocation, backtesting, Benchmark Capital, Bernie Madoff, book value, buy and hold, capital asset pricing model, cognitive dissonance, correlation coefficient, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, endowment effect, estate planning, Eugene Fama: efficient market hypothesis, fixed income, implied volatility, index fund, intangible asset, John Bogle, junk bonds, Long Term Capital Management, money market fund, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, Ponzi scheme, prediction markets, proprietary trading, prudent man rule, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Sharpe ratio, survivorship bias, Tax Reform Act of 1986, too big to fail, transaction costs, Vanguard fund, yield curve, zero-sum game

It is a tragedy when poor investment decisions cripple the ability of a nonprofit organization to help others. Bernie Madoff had almost everyone fooled that he was a top hedge fund manager. He took everyone’s money, literally, and his high reported returns kept rolling in regardless of the amount he managed. Many nonprofits lost millions of dollars when Madoff’s Ponzi scheme collapsed. Other organizations lost a large portion of their assets during the global recession because the investment committees made ill-timed asset allocation decisions. These mistakes didn’t happen to organizations that adopted and maintained a prudent passive management strategy. Your organization is important.

See Price-earnings ratio (P/E) Pennings, Joost Pension funds: legal acts governing small plans social security and trustees for Pensions & Investments Performance monitoring Performance studies. See Early performance studies Permanent loss Persistence of performance academic studies: bond funds Carhart’s work Fama and French “Hot Hands” study Personal trust(s): fiduciary investing and taxes and Pioneering Portfolio Management (Swensen) Plain vanilla index Policy changes Ponzi scheme Poor accounting Portfolio choices: bottom line and changing the model efficient portfolios fund selection strategies modeling the active bet modifications to model portfolios of active funds quantifying of random portfolio results real-world test relative performance model short-term/long-term Portfolio management: annual evaluation debate on facts about objective of options for Portfolio Selection: Efficient Diversification of Investments (Markowitz) Portfolio theory, modern Positive period weighting Predictors of top performance: fund expenses as qualitative factors as ratings as Pre-inflation return Price-earnings ratio (P/E): growth/value stocks portfolio returns and Price-to-book (P/B) Price-to-cash-flow Price Waterhouse Private trust management: categories of trusts restatement of trusts (third) taxes and UPIA and active management UPIA and passive investing Procrastinating non-index investors: changing/staying the course definition of endowment effect and land of the lost modern portfolio theory and veering off course Prospect theory Prudence, elements of Prudent Investor Act: A Guide to Understanding, The (Simon) Prudent Investor Rule Prudent Man Rule “Purity Hypothesis, The” Qualitative factors, performance and Random walk Random Walk Down Wall Street, A (Malkiel) Rating methods, performance and Real estate Real Estate Investment Trust Act Real Estate Investment Trusts (REITs) Real return Rebalancing portfolio Recovery, market Registered investment advisor (RIA) Reinganum, Marc REITs.


pages: 319 words: 89,192

Spooked: The Trump Dossier, Black Cube, and the Rise of Private Spies by Barry Meier

Airbnb, business intelligence, citizen journalism, Citizen Lab, commoditize, coronavirus, corporate raider, COVID-19, digital map, disinformation, Donald Trump, fake news, false flag, forensic accounting, global pandemic, Global Witness, index card, Jeffrey Epstein, Julian Assange, Londongrad, medical malpractice, NSO Group, offshore financial centre, opioid epidemic / opioid crisis, Ponzi scheme, Ronald Reagan, Russian election interference, Silicon Valley, Silicon Valley startup, Skype, SoftBank, sovereign wealth fund, Steve Jobs, WikiLeaks

For years, executives of Kroll (which changed its name to Kroll Inc. in 2001) liked to boast to reporters about what they called their “Hall of Slime,” a kind of imaginary rogues’ gallery of the worst actors the firm had investigated. As it turned out, Jules Kroll’s company had counted one of the slimiest operators of the 2000s among its clientele. He was a financial con man and money launderer named R. Allen Stanford, who ran a massive Ponzi scheme that collapsed in 2009, costing investors hundreds of millions of dollars. The role played by Kroll Inc. in protecting Stanford from scrutiny would emerge in the scandal’s aftermath. One former FBI agent told Vanity Fair magazine that Kroll operatives acted as front men for Stanford, defending his reputation while law enforcement officials were trying to learn if his bank was laundering money.

A construction industry trade group that wanted to invest money in Stanford’s bank hired Kroll Inc. to conduct a due diligence review of it. A Kroll executive allegedly never informed the group that Stanford was a client and sent it a glowing report attesting to his bank’s financial soundness. Two months later, Stanford’s Ponzi scheme collapsed, wiping out the group’s $2.5 million investment. It subsequently sued Kroll Inc., which denied liability, and the case was settled before trial. For his part, Jules Kroll later described the Stanford episode as “clearly a blemish.” BY THE LATE 2000S, Jules Kroll was a millionaire many times over.


pages: 332 words: 93,672

Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy by George Gilder

23andMe, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, AlphaGo, AltaVista, Amazon Web Services, AOL-Time Warner, Asilomar, augmented reality, Ben Horowitz, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bob Noyce, British Empire, Brownian motion, Burning Man, business process, butterfly effect, carbon footprint, cellular automata, Claude Shannon: information theory, Clayton Christensen, cloud computing, computer age, computer vision, crony capitalism, cross-subsidies, cryptocurrency, Danny Hillis, decentralized internet, deep learning, DeepMind, Demis Hassabis, disintermediation, distributed ledger, don't be evil, Donald Knuth, Donald Trump, double entry bookkeeping, driverless car, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fake news, fault tolerance, fiat currency, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, floating exchange rates, Fractional reserve banking, game design, Geoffrey Hinton, George Gilder, Google Earth, Google Glasses, Google Hangouts, index fund, inflation targeting, informal economy, initial coin offering, Internet of things, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, Jim Simons, Joan Didion, John Markoff, John von Neumann, Julian Assange, Kevin Kelly, Law of Accelerating Returns, machine translation, Marc Andreessen, Mark Zuckerberg, Mary Meeker, means of production, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, move fast and break things, Neal Stephenson, Network effects, new economy, Nick Bostrom, Norbert Wiener, Oculus Rift, OSI model, PageRank, pattern recognition, Paul Graham, peer-to-peer, Peter Thiel, Ponzi scheme, prediction markets, quantitative easing, random walk, ransomware, Ray Kurzweil, reality distortion field, Recombinant DNA, Renaissance Technologies, Robert Mercer, Robert Metcalfe, Ronald Coase, Ross Ulbricht, Ruby on Rails, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Singularitarianism, Skype, smart contracts, Snapchat, Snow Crash, software is eating the world, sorting algorithm, South Sea Bubble, speech recognition, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, stochastic process, Susan Wojcicki, TED Talk, telepresence, Tesla Model S, The Soul of a New Machine, theory of mind, Tim Cook: Apple, transaction costs, tulip mania, Turing complete, Turing machine, Vernor Vinge, Vitalik Buterin, Von Neumann architecture, Watson beat the top human players on Jeopardy!, WikiLeaks, Y Combinator, zero-sum game

• • • Tuur Demeester’s disdainful voice flared over the Skype link from Belgium to the classroom in Guatemala. The wide screen showed a young man with a conservative haircut and a studious, collegiate appearance. I had presumed to suggest that perhaps his precious bitcoin currencies might prove to be a Ponzi scheme, with the bellwether “miners” getting rich and the latecomers getting fleeced. It was May 2014, early in my plunge into the international bitcoin hacker community. I was in Guatemala to receive an honorary doctorate from the Universidad Francisco Marroquín. There in a deep ravine that cleaves the volcanic “Zone Ten” in Guatemala City, I was feeling a system of the world quake under my feet.

They spent $100,000 on the business plan and stashed $400,000 in bitcoins. The $400,000 soared to a bitcoin value of $4 million. Filling their wallet without even writing code, they provided the model for close to 1,500 blockchain companies over the subsequent five years. In response to my question about bitcoin-as-Ponzi-scheme, Demeester sneered, “If it were a Ponzi it would crash when it was discredited by setbacks. Bitcoin has endured continual frauds and flareouts and come back stronger every time.” I knew it was true—both the shocking setbacks, frauds, and scams surrounding bitcoin and the irrepressible resilience, the cornucopian comebacks stemming from a so-far impregnable core.


pages: 561 words: 157,589

WTF?: What's the Future and Why It's Up to Us by Tim O'Reilly

"Friedman doctrine" OR "shareholder theory", 4chan, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Alvin Roth, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, barriers to entry, basic income, behavioural economics, benefit corporation, Bernie Madoff, Bernie Sanders, Bill Joy: nanobots, bitcoin, Blitzscaling, blockchain, book value, Bretton Woods, Brewster Kahle, British Empire, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, carbon tax, Carl Icahn, Chuck Templeton: OpenTable:, Clayton Christensen, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, computer vision, congestion pricing, corporate governance, corporate raider, creative destruction, CRISPR, crowdsourcing, Danny Hillis, data acquisition, data science, deep learning, DeepMind, Demis Hassabis, Dennis Ritchie, deskilling, DevOps, Didi Chuxing, digital capitalism, disinformation, do well by doing good, Donald Davies, Donald Trump, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, Filter Bubble, Firefox, Flash crash, Free Software Foundation, fulfillment center, full employment, future of work, George Akerlof, gig economy, glass ceiling, Glass-Steagall Act, Goodhart's law, Google Glasses, Gordon Gekko, gravity well, greed is good, Greyball, Guido van Rossum, High speed trading, hiring and firing, Home mortgage interest deduction, Hyperloop, income inequality, independent contractor, index fund, informal economy, information asymmetry, Internet Archive, Internet of things, invention of movable type, invisible hand, iterative process, Jaron Lanier, Jeff Bezos, jitney, job automation, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Zimmer (Lyft cofounder), Kaizen: continuous improvement, Ken Thompson, Kevin Kelly, Khan Academy, Kickstarter, Kim Stanley Robinson, knowledge worker, Kodak vs Instagram, Lao Tzu, Larry Ellison, Larry Wall, Lean Startup, Leonard Kleinrock, Lyft, machine readable, machine translation, Marc Andreessen, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, McMansion, microbiome, microservices, minimum viable product, mortgage tax deduction, move fast and break things, Network effects, new economy, Nicholas Carr, Nick Bostrom, obamacare, Oculus Rift, OpenAI, OSI model, Overton Window, packet switching, PageRank, pattern recognition, Paul Buchheit, peer-to-peer, peer-to-peer model, Ponzi scheme, post-truth, race to the bottom, Ralph Nader, randomized controlled trial, RFC: Request For Comment, Richard Feynman, Richard Stallman, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Coase, Rutger Bregman, Salesforce, Sam Altman, school choice, Second Machine Age, secular stagnation, self-driving car, SETI@home, shareholder value, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart contracts, Snapchat, Social Responsibility of Business Is to Increase Its Profits, social web, software as a service, software patent, spectrum auction, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, stock buybacks, strong AI, synthetic biology, TaskRabbit, telepresence, the built environment, the Cathedral and the Bazaar, The future is already here, The Future of Employment, the map is not the territory, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Fadell, Tragedy of the Commons, transaction costs, transcontinental railway, transportation-network company, Travis Kalanick, trickle-down economics, two-pizza team, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, US Airways Flight 1549, VA Linux, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, yellow journalism, zero-sum game, Zipcar

As the near collapse of the world economy in 2008 demonstrated, it is clear that regulatory agencies haven’t been able to keep up with the constant “innovations” of the financial sector pursuing profit without regard to the consequences. There are some promising signs. For example, in the wake of Ponzi schemes like those of Bernie Madoff and Allen Stanford, the SEC instituted algorithmic models that flag for investigation hedge funds whose results meaningfully outperform those of peers using the same stated investment methods. But once flagged, enforcement still goes into a long loop of investigation and negotiation, with problems dealt with on a haphazard, case-by-case basis.

He went on from there, along with others, to come up with the analogous concept of the Long Now. We need to think about the long now and the big here, or one day our society will enjoy neither. It’s very easy to make local optimizations, but they eventually catch up with you. Our economy has many elements of a Ponzi scheme. We borrow from other countries to finance our consumption, and we borrow from our children by saddling them with debt, using up nonrenewable resources, and failing to confront great challenges in income inequality, climate change, and global health. Every new company trying to invent the future has to think long-term.

See also financial markets Slaughter, Anne-Marie, 309 Sloan Management Review, MIT, 153 Sloss, Benjamin Treynor, 123 Smart Disclosure and smart contracts, 180 smartphones, xiii, 76, 128 Android operating system, 52 difficulty doing repairs, 338 iPhone, xiii, 32, 101, 128, 136 navigation/location tracking, 83–84 and sensors, 40, 41, 85 thick marketplace for, 133 Smith, Adam, 262 Smith, Jeff, 349 SNAP (Supplemental Nutrition Assistance Program), 140–42, 266 social capital, 345–50 social infrastructure AI as part of, 353–54 business intent to make money vs., 240–41 corporate control of media content vs., 226–28 fighting fake news with, 218–20 Ponzi scheme elements, 355–56 tools for building, 220–24 social media, 96–97, 207. See also individual platforms “Social Responsibility of Business Is to Increase Its Profits” (Friedman), 240 software, 15, 35 continuous improvement process, 30, 119–21, 122 and DevOps, 121–23 generative design, 327–28 MapReduce, 325 as organizational structure, 113–19 Perl, 10–11, 15, 16–17, 120–21 programmers as managers of, 153–54 RegTech, 175 for scheduling employees or ICs, 193 See also Microsoft; open source software “Software Above the Level of a Single Device” (O’Reilly), 31 solar energy, 326–27 Solomon, Jake, 141–43 Sony, 351 Soros, George, 210, 236 South by Southwest conference, 148–49 Southwest Airlines, 48–49 Spafford, George, 122 Spence, Michael, 67 sports and rewriting rules, 266–67 Spotify, 116 “Spy Who Fired Me, The” (Kaplan), 193 SRE (Site Reliability Engineer), 123, 146–47 Stallman, Richard, 6, 71, 72 stand-up meetings, 118 Stanton, Brandon, 370–71, 372 startups, 41, 186, 247, 275, 279, 282–85, 316 Steinberg, Tom, 146 Stern, Andy, 305 Sternberg, Seth, 332–33 “Stevey’s Platform Rent” (Yegge), 111–13 Stiglitz, Joseph, 255, 261, 266, 272–73 stock buybacks, 242–44, 245, 256 stock options, 247, 279–80 Stoppard, Tom, xii Stout, Lynn, 292 Strickler, Yancey, 292 Strine, Leo, 292 structural literacy, 343–44 success as a by-product, 353.


pages: 566 words: 163,322

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

"World Economic Forum" Davos, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, driverless car, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, financial engineering, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, global macro, Goodhart's law, guns versus butter model, hiring and firing, hype cycle, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Japanese asset price bubble, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, Larry Ellison, lateral thinking, liberal capitalism, low interest rates, Malacca Straits, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, megacity, megaproject, Mexican peso crisis / tequila crisis, middle-income trap, military-industrial complex, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, open immigration, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, tacit knowledge, tech billionaire, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, work culture , working-age population

With a growing supply of workers to fund a limited number of pensioners, Bismarck’s retirement plan—which taxed the young to pay pensions to the old—worked fine. Circumstances have reversed. Working-age populations are stagnating, but the Bismarckian “pay as you go” retirement plans remain the standard, even though various critics say they have become unsustainable Ponzi schemes. It’s not possible to recruit enough young contributors to pay for the pensions of retirees, who have become a bit too comfortable with these plans. While I was visiting Vienna in October 2013, a vibrant Austrian hotel manager told me in a casual chat that, still fit at 58, she was looking forward to her retirement in two years, when she said she would be entitled to public pension benefits nearly equal her last salary.

This “collateralized lending” works as long as borrowers short on income can keep getting new loans to cover their old loans—based on the rising price of the property or other assets they have offered up as collateral. By 2013, a third of the new loans in China were going to pay off old loans, a merry-go-round that would stop as soon as housing prices started to fall. That October Bank of China chairman Xiao Gang warned that the shadow banking system was starting to resemble a “Ponzi scheme,” with loans based on “empty real estate” that would never generate enough return to repay investors. At the March 2013 party congress, Wen Jiabao stepped down as premier, and as he left, he issued new warnings about China’s dire imbalances, saying there was a “growing conflict between downward pressure on economic growth and excess production capacity.”

Roy, Amlan. “Indonesia: Are Good Demographics Adequate for Growth and Investments?” Credit Suisse Demographics Research, March 9, 2015. ——. “A Perspective on Migration: Past to Present.” Credit Suisse Demographic Research, September 30, 2015. Salsman, Richard M. “Social Security Is Much Worse Than a Ponzi Scheme—and Here’s How to End It.” Forbes, September 27, 2011. Saltar, Daniel. “The Focal Point: New Russia—New Focus.” Renaissance Capital, October 21, 2013. Schneider, Jim, et al. “Fortnightly Answers Questions: Where Is Everybody Going?” Goldman Sachs Research, September 3, 2015. Shedlock, Michael. “47% of Chinese Billionaires Want to Leave China Within 5 Years.”


pages: 360 words: 101,038

The Revenge of Analog: Real Things and Why They Matter by David Sax

Airbnb, barriers to entry, big-box store, call centre, cloud computing, creative destruction, death of newspapers, declining real wages, delayed gratification, dematerialisation, deskilling, Detroit bankruptcy, digital capitalism, digital divide, Elon Musk, Erik Brynjolfsson, game design, gentrification, hype cycle, hypertext link, informal economy, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, Kickstarter, knowledge economy, low cost airline, low skilled workers, mandatory minimum, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, military-industrial complex, Minecraft, new economy, Nicholas Carr, off-the-grid, One Laptop per Child (OLPC), PalmPilot, Paradox of Choice, Peter Thiel, Ponzi scheme, quantitative hedge fund, race to the bottom, Rosa Parks, Salesforce, Second Machine Age, self-driving car, Sheryl Sandberg, short selling, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Steve Jobs, technoutopianism, TED Talk, the long tail, Travis Kalanick, Tyler Cowen, upwardly mobile, warehouse robotics, Whole Earth Catalog, work culture

All summer long, Kaps harangued Polaroid to let him buy the factory, but the company was deaf to his offer. Then, on September 24, the FBI and IRS agents raided the offices of Petters Group Worldwide, the Minnesota investment company that had owned Polaroid since 2005 but was actually running a $3.4 billion Ponzi scheme. Kaps got a call from someone who had been granted power of attorney over Polaroid’s affairs. “You have one week,” he told Kaps. Kaps scraped together €180,000 to buy the equipment in the Dutch plant, and took over the building’s lease. He bought all the remaining Polaroid film stock, and used the profits from its resale to finance the revival of the plant, at a total cost of €4 million.

“Leadership in Black and White—How a Manufacturer Profits in a Declined Analogue Film Industry.” vivianeli.com, April 15, 2015. Lomography. LOMO Life: The Future Is Analogue. Thames & Hudson, 2013. “Minnesota’s Pohlads Acquire Polaroid Majority Stake.” Pioneer Press, December 27, 2014. Phelps, David. “Five Years Later: Tom Petters’ Ponzi Scheme.” Star Tribune, September 23, 2013. Renfroe, Don. “Fans of ‘Analog’ Photography Keep the Faith.” Des Moines Register, January 19, 2015. Rizov, Vadim. “Kodak’s Back in Action and Making Film Stock Again.” Dissolve, September 4, 2013. Swart, Sharon, and Carolyn Giardina. “Film Fighters, All in One Frame.”


pages: 443 words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay by Guy Standing

"World Economic Forum" Davos, 3D printing, Airbnb, Alan Greenspan, Albert Einstein, Amazon Mechanical Turk, anti-fragile, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Big bang: deregulation of the City of London, Big Tech, bilateral investment treaty, Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cashless society, central bank independence, centre right, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, commons-based peer production, credit crunch, crony capitalism, cross-border payments, crowdsourcing, debt deflation, declining real wages, deindustrialization, disruptive innovation, Doha Development Round, Donald Trump, Double Irish / Dutch Sandwich, ending welfare as we know it, eurozone crisis, Evgeny Morozov, falling living standards, financial deregulation, financial innovation, Firefox, first-past-the-post, future of work, Garrett Hardin, gentrification, gig economy, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, housing crisis, income inequality, independent contractor, information retrieval, intangible asset, invention of the steam engine, investor state dispute settlement, it's over 9,000, James Watt: steam engine, Jeremy Corbyn, job automation, John Maynard Keynes: technological unemployment, labour market flexibility, light touch regulation, Long Term Capital Management, low interest rates, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, means of production, megaproject, mini-job, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Kinnock, non-tariff barriers, North Sea oil, Northern Rock, nudge unit, Occupy movement, offshore financial centre, oil shale / tar sands, open economy, openstreetmap, patent troll, payday loans, peer-to-peer lending, Phillips curve, plutocrats, Ponzi scheme, precariat, quantitative easing, remote working, rent control, rent-seeking, ride hailing / ride sharing, Right to Buy, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Altman, savings glut, Second Machine Age, secular stagnation, sharing economy, Silicon Valley, Silicon Valley startup, Simon Kuznets, SoftBank, sovereign wealth fund, Stephen Hawking, Steve Ballmer, structural adjustment programs, TaskRabbit, The Chicago School, The Future of Employment, the payments system, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, too big to fail, Tragedy of the Commons, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, Y Combinator, zero-sum game, Zipcar

These loans became ‘investment products’, assets created by bundling loans together and treating debt repayments as an income yield. Financial corporations bought the assets and borrowed against them to make more profit, paving the way for the unravelling that precipitated the crash. The same mechanism is being used by financial firms today. It is a Ponzi scheme, a sleight of hand that creates a vehicle for generating rental income, until the resultant bubble bursts, as similar bubbles have burst with impressive frequency since the 1980s.32 If nothing else, the rentier economy creates a rollercoaster ride, causing havoc and misery in its wake. THE GREAT GATSBY CURVE Adam Smith, father of mainstream economics, suggested that a man ‘must be rich or poor according to the quantity of labour which he can command’.

Scott 1 ‘follow-on’ patenting 1 Ford, Henry 1, 2 Ford Motor Company 1 foreign direct investment 1, 2 ‘forum shopping’ 1 fossil fuel industry 1 Foucault, Michel 1 Foxconn 1, 2 fracking 1, 2 Freelancer.com 1 Freelancers Union 1 ‘freelancing’ 1, 2, 3, 4, 5, 6, 7 Friedman, Milton 1, 2, 3, 4 Gates, Bill 1, 2 GATT (General Agreement on Tariffs and Trade) 1, 2 General Electric 1, 2 General Motors 1, 2 Getaround 1 Giddens, Anthony 1 Gigwalk 1 Gilded Age 1, 2 Gilead 1, 2 GiveDirectly 1 Global Transformation 1, 2, 3, 4, 5, 6, 7 Goldman Sachs 1, 2, 3, 4, 5 Goodwin, Fred 1 Google 1, 2, 3, 4, 5, 6 GPFG (Government Pension Fund Global, Norway) 1, 2 Gramsci, Antonio 1 Great Convergence 1, 2 ‘Great Gatsby Curve’ 1 Great Transformation 1, 2, 3 Greenspan, Alan 1 Griffin Schools Trust 1 Grillo, Beppe 1 Guardian, The 1, 2 guilds 1, 2, 3 Gunster, Gerry 1 Guy, Gillian 1 Haldane, Andrew 1 Hamilton, Alexander 1 Hammurabi, King 1 Handy 1 Harberger, Arnold 1 Hardin, Garrett 1 Harris, John 1 Hartwick, John 1 Hartwick’s Rule of Inter-Generational Equity 1, 2, 3, 4, 5 Hartz IV welfare reform 1 Hassle.com 1 Hawking, Stephen 1 Hayek, Friedrich 1, 2, 3, 4 Health and Social Care Act (2012) 1 ‘helicopter money’ 1 ‘help-to-buy’ scheme 1 Henry III, King 1 heteromation 1 Hilferding, Rudolf 1 Hitler, Adolf 1 HITs (Human Intelligence Tasks) 1 Hobson, John 1 Hollande, François 1 Homejoy 1 homelessness 1, 2, 3 hoovering (of patents) 1 household debt 1, 2, 3, 4 housing debt 1 Hurd, Nick 1 Husson, Michel 1 Hutton, Will 1 ICSID (International Centre for the Settlement of Investment Disputes) 1, 2 ‘idea-intensive’ firms 1 Illich, Ivan 1 ILO (International Labour Organization) 1 IMF (International Monetary Fund) 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 Independent, The 1 individualisation 1 ‘industrial time’ regime 1 Inequality 1 inheritance tax 1 Institute for Fiscal Studies 1, 2, 3 Institute of Economic Affairs 1, 2 intellectual commons 1, 2 intellectual property branding 1 and commons 1 copyright 1 and lies of rentier capitalism 1 and lobbying 1 and revolt of precariat 1, 2, 3 trade and investment treaties 1 see also patents International Association of Political Consultants 1 International Energy Agency 1 ‘inversion deals’ 1 Investment Court System 1 ‘investment plan for Europe’ 1 IOM (International Organization for Migration) 1 IPSE (Association of Independent Professionals and the Self Employed) 1 ISA (individual savings allowance) 1 ISDS (Investor–State Dispute Settlement) 1, 2, 3, 4 ITN (Independent Television News) 1 Jackson, Michael 1 James I, King 1 Jefferson, Thomas 1, 2 Jobs (Jumpstart Our Businesses) Act (2012) 1 John, King 1 Johnson, Boris 1, 2 Jospin, Lionel 1 JP Morgan 1, 2 Juncker, Jean-Claude 1 Kalanick, Travis 1 Kay, John 1 Kennedy, John F. 1 Kent Reliance 1 Keynes, John Maynard 1, 2, 3, 4 Kids Company 1 King, Martin Luther 1 King, Matt 1 Kingfisher 1 Kinnock, Neil 1 Kinnock, Stephen 1 Klaus, Václav 1 Koch, Charles 1, 2 Koch, David 1 Kondratieff ‘long waves’ theory 1 Kraft 1 Krytyka Polityczna (Political Critique) network 1 Kwarteng, Kwasi 1 labourism 1, 2, 3, 4, 5 Lady Gaga 1 Lancers 1 landlord debt 1 Lansley, Andrew 1, 2 Laplanche, Renaud 1 Lauderdale, Earl of 1 Lauderdale Paradox 1, 2 Lawson, Nigel 1 Lazzarato, Maurizio 1 Leader’s Group 1 Lebedev, Evgeny 1 Lee, John 1 Legal and General Property 1 Legal Services Act (2007) 1 Lehman Brothers 1, 2 Lending Club 1, 2 Lenin, Vladimir 1 library services 1 Lidl 1 lies of rentier capitalism 1, 2, 3 LinkedIn 1, 2 living wage 1, 2, 3, 4 Lloyds Banking Group 1, 2 lobbying 1, 2 Lobbying Act (2014) 1 London Debt Agreement (1953) 1 London Economic Conference (1933) 1 Long-Term Capital Management 1 ‘Luddites’ 1 Lyft 1, 2, 3 McKinsey Global Institute 1, 2, 3, 4, 5 Macmillan, Harold 1 McNamara, Robert 1 Magna Carta (1215) 1, 2, 3, 4, 5, 6, 7, 8, 9 Mail on Sunday 1 Major, John 1, 2, 3 Malaysia Square (London) 1 Malthus, Thomas 1 Manafort, Paul 1 Mandelson, Peter 1 ‘market exclusivity’ 1 Marshall, Paul 1 Marshall Plan 1 Marx, Karl 1, 2 Mason, Paul 1, 2, 3, 4 mass media 1, 2, 3, 4 MeasureOne 1 Medallion Financial 1 mental health 1 Messina, Jim 1, 2 Met Patrol Plus 1 Metro 1 Microsoft 1 migration 1, 2, 3, 4, 5, 6 Milburn, Alan 1, 2, 3 Miliband, Ed 1, 2 Milner, Yuri 1 Miłosz, Czesław 1 Milstein, César 1 Mincome 1 minimum wage 1, 2, 3, 4, 5, 6 Mirrlees, James 1 Mises, Ludwig von 1, 2 Mishel, Lawrence 1 Mitterrand, François 1 Money Advice Trust 1 Monitor 1 Mont Pelerin Society (MPS) 1, 2, 3 Monti, Mario 1, 2, 3 ‘moonlighters’ 1 moral hazards 1, 2, 3 Motorola 1 MoVimento 1 Stelle (M 2S) 3 MPC (Monetary Policy Committee) 1 Mugabe, Robert 1 Murdoch, Rupert 1, 2, 3, 4 Murphy, Richard 1 NAFTA (North American Free Trade Agreement) 1, 2 NAIRU (nonaccelerating inflation rate of unemployment) 1 Nash, John 1, 2 National Audit Office 1, 2 National Council for Voluntary Organisations 1 National Crime Agency 1 National Gallery 1 National Parks and Access to the Countryside Act (1949) 1 National Trust 1 Nationwide Building Society 1 ‘natural capital’ 1 Neo-liberalism 1, 2 and commons 1, 2, 3, 4, 5, 6, 7 and democracy 1, 2, 3 and occupational dismantling 1 and revolt of precariat 1, 2, 3, 4, 5, 6 and shaping of rentier capitalism 1, 2 and subsidies 1, 2, 3, 4 New Labour 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 New Scotland Yard 1 Newman, Maurice 1 News of the World 1 NGOs (non-governmental organisations) 1 NHS (National Health Service) 1, 2, 3 Nine Elms development (London) 1, 2 ‘non-dom’ status 1, 2 North Sea oil 1, 2, 3 North York Moors National Park Authority 1 Northern Rock 1, 2 O’Neill, Jim 1 Obama, Barack 1, 2, 3 Observer, The 1, 2 Occidental Petroleum 1 occupational dismantling 1 Occupy Movement 1, 2, 3, 4 ODI (Overseas Development Institute) 1 OECD (Organisation for Economic Co-operation and Development) 1, 2, 3, 4, 5, 6, 7, 8, 9 Ofcom 1 Office for Budget Responsibility 1, 2 offshore tax havens 1, 2, 3, 4, 5 Oil Change International 1 Ola Cabs 1, 2 Olympic Park (Stratford) 1 on-call employees 1 on-demand economy 1, 2, 3 online dispute resolution 1 ONS (Office of National Statistics) 1, 2, 3, 4 OPEC (Organization of Petroleum Exporting Countries) 1 Optum 1 Osborne, George 1 Ostrom, Elinor 1 Oxfam 1 PAC (Parliamentary Accounts Committee) 1 PACs (Political Action Committees) 1 Paine, Thomas 1 Panama Papers 1 Paolozzi, Sir Eduardo 1 Paris Convention for the Protection of Industrial Property (1883) 1 ‘participation income’ system 1 party politics 1 ‘pass-through’ structures 1 patent boxes 1 patents 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 see also intellectual property Paulson, Henry 1 payday loans 1 PayPal 1 peer-to-peer lending 1, 2, 3 PeoplePerHour 1 PEP (Personal Equity Plan) 1 Perkins, Adam 1 Permanent Wyoming Mineral Trust Fund 1 Personal Responsibility and Work Opportunity Reconciliation Act (1996) 1 PFI (private finance initiative) 1, 2, 3 Pfizer 1, 2 Pharmac 1 Philip Morris International 1, 2, 3 Phillips, A. W. 1 Phillips curve 1 ‘pig cycle’ effects 1 Piketty, Thomas 1, 2 Pinochet, Augusto 1, 2, 3 platform debt 1 Plato 1 plutocracy 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 Polanyi, Karl 1 policing 1 political consultancy 1 Politico magazine 1 Ponzi schemes 1 Poor Law Amendment Act (1834) 1 POPS (privately owned public spaces) 1 Portfolio Recovery Associates 1 ‘postcapitalism’ 1 poverty traps 1, 2, 3 precariat and commons 1, 2, 3, 4, 5 and debt 1, 2 and democracy 1, 2 emergence of 1 growth of 1, 2 and rentier platforms 1, 2, 3 revolt of see revolt of precariat predatory creditors 1 ‘primitive rebel’ phase 1 Private Landlords Survey (2010) 1 privatisation and commons 1, 2, 3, 4, 5, 6, 7, 8, 9 and debt 1, 2 and democracy 1 and neo-liberalism 1 and rentier platforms 1 and revolt of precariat 1 and shaping of rentier capitalism 1, 2, 3, 4, 5, 6, 7 professionalism 1 ‘profit shifting’ 1 Property Law Act (1925) 1 Proudhon, Pierre-Joseph 1 Public and Commercial Services Union 1 PricewaterhouseCoopers (PwC) 1, 2, 3. 4, 5, 6 QE (quantitative easing) 1, 2, 3, 4, 5, 6 Quayle, Dan 1 QuickQuid 1 Reagan, Ronald 1, 2 reCAPTCHA security system 1 ‘recognition’ phase 1 ‘redistribution’ phase 1 Regeneron Pharmaceuticals 1 rentier platforms and automation 1 and cloud labour 1 and commodification 1 and ‘concierge’ economy 1 ecological and safety costs 1 and occupational dismantling 1 and on-call employees 1 and precariat 1, 2, 3 and revolt of precariat 1, 2 and ‘sharing economy’ 1, 2, 3, 4 and underpaid labour 1 and venture capital 1 rentiers ascendency of 1, 2 and British Disease 1 classical images of 1 and commons see commons and debt 1, 2, 3, 4, 5, 6, 7 and democracy 1, 2, 3, 4, 5, 6, 7 digital/tasking platforms see rentier platforms ‘euthanasia’ of 1, 2, 3, 4, 5, 6, 7 lies of rentier capitalism 1, 2, 3 revolt of precariat see revolt of precariat shaping of see shaping of rentier capitalism subsidies for 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 ‘representation’ phase 1 ‘repression effect’ 1 Research of Gartner 1 revolt of precariat and basic income systems 1 and commons 1, 2, 3, 4, 5 ‘euthanasia’ of rentiers 1, 2, 3, 4, 5 inequality of rentier capitalism 1, 2, 3 and intellectual property 1, 2, 3 and neo-liberalism 1, 2, 3, 4, 5, 6 organisational forms 1 potential growth of movement 1 progressive political reengagement 1, 2 and rentier platforms 1, 2 rights as demands 1 sovereign wealth funds 1 wage and labour regulation 1, 2 ‘right to buy’ schemes 1, 2, 3, 4 Robbins, Lionel 1 Rockefeller, David 1 Rockefeller, John D. 1 Rolling Stone 1 Romney, Mitt 1 Roosevelt, Franklin D. 1 Ross, Andrew 1 Ross, Michael 1 Rothermere, Viscount 1, 2 Royal Bank of Scotland 1, 2 Royal Mail 1 Royal Parks 1 Rubin, Robert 1, 2 Rudd, Amber 1 Ruralec 1 Ryan, Conor 1 Sainsbury, Lord 1 Samsung 1, 2, 3 Sanders, Bernie 1, 2, 3 Sassen, Saskia 1 school–business partnerships 1 Schröder, Gerhard 1 Schwab Holdings 1 Schwarz, Dieter 1 Scottish Water 1 Second Gilded Age 1, 2, 3 Securitas 1 securitisation 1, 2, 3 selective tax rates 1 Selma 1 shaping of rentier capitalism branding 1 Bretton Woods system 1, 2, 3 and copyright 1 and ‘crony capitalism’ 1, 2, 3 dispute settlement systems 1, 2, 3 global architecture of rentier capitalism 1 lies of rentier capitalism 1 and neo-liberalism 1, 2 patents 1 and privatisation 1, 2, 3, 4, 5, 6, 7 and ‘shock therapy’ 1, 2 trade and investment treaties 1 ‘sharing economy’ 1, 2, 3, 4, 5, 6 Shelter 1 ‘shock therapy’ 1, 2, 3, 4 Shore Capital 1 Sierakowski, Slawomir 1, 2, 3, 4 silicon revolution 1 Simon, Herbert 1 Sirius Minerals 1 Skoll Centre for Social Entrepreneurship 1 Sky UK 1, 2 SLABS (student loan asset-backed securities) 1, 2 Slim, Carlos 1, 2 Smith, Adam 1 Snow, John 1 Social Care Act (2012) 1 social commons 1, 2, 3 social dividend systems 1, 2 social housing 1 ‘social income’ 1, 2, 3, 4, 5, 6, 7, 8 social strike 1 SoFi (Social Finance) 1 Solidarność (Solidarity) movement 1 South West Water 1 sovereign wealth funds 1 spatial commons 1, 2 Speenhamland system 1, 2, 3 Spielberg, Steven 1 Springer 1 ‘squeezed state’ 1 Statute of Anne (1710) 1 Statute of Monopolies (1624) 1 StepChange 1 Stevens, Simon 1 ‘strategic’ debt 1 strike action/demonstrations 1, 2, 3 student debt 1, 2 subsidies 1 and austerity 1, 2 and bank ‘bailouts’ 1 and charities 1 and ‘competitiveness’ 1 direct subsidies 1 and moral hazards 1 and ‘non-dom’ status 1 and quantitative easing 1, 2 for rentiers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 selective tax rates 1 and sovereign wealth funds 1 subsidised landlordism 1 tax avoidance and evasion 1 tax breaks 1, 2, 3, 4, 5 tax credits 1 Summers, Larry 1, 2 Sun, The 1, 2 Sunday Telegraph 1 Sunday Times 1 Sutton Trust 1 ‘sweetheart deals’ 1 tasking platforms see rentier platforms TaskRabbit 1, 2, 3, 4, 5 Tatler magazine 1 tax avoidance/evasion 1 tax breaks 1, 2, 3, 4, 5 tax credits 1, 2, 3 Tax Justice Network 1 Tax Research UK 1 Taylor & Francis 1 Tennessee Valley Authority 1 ‘tertiary time’ regime 1 Tesco 1 Texas Permanent School Fund 1 Textor, Mark 1 Thames Water 1 Thatcher, Margaret 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 The Bonfire of the Vanities 1 The Constitution of Liberty 1 The General Theory of Employment, Interest and Money 1 The Innovator’s Dilemma 1 think tanks 1 ‘thinner’ democracy 1 ‘Third-Way’ thinking 1, 2, 3 Times, The 1 TISA (Trade in Services Agreement) 1 Tottenham Court Road underground station 1 TPP (Trans-Pacific Partnership) 1, 2, 3 Trades Union Congress 1, 2 ‘tragedy of the commons’ 1 ‘tranching’ of loans 1 Treaty of Detroit (1950) 1, 2 Treuhand 1 TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) 1, 2, 3, 4 trolling (of patents) 1 Trump, Donald 1, 2 TTIP (Trans-Atlantic Trade and Investment Partnership) 1, 2, 3, 4 Turnbull, Malcolm 1 Turner, Adair 1 Twain, Mark 1 Uber 1, 2, 3, 4, 5, 6, 7 ‘ultra-loose’ monetary policy 1 underpaid labour 1 UNESCO (UN Educational, Scientific and Cultural Organization) 1 UNHCR (UN refugee agency) 1 Unison 1 Unite 1 UnitedHealth Group 1 universal credit scheme 1 universal justice 1 UpCounsel 1 Upwork 1, 2 Uruguay Round 1, 2, 3 USPTO (US Patent and Trademark Office) 1 Vattenfall 1 Veblen, Thorstein 1 venture capital 1 Veolia 1 Vero Group 1 Victoria, Queen 1 Villeroy de Galhau, François 1 Vlieghe, Gertjan 1 Warner Chappell Music 1 Watt, James 1 welfare abuse/fraud 1 Wilde, Oscar 1 Wilson, Fergus 1 Wilson, Judith 1 WIPO (World Intellectual Property Organization) 1, 2, 3, 4, 5, 6 Wolf, Martin 1, 2 Wolfe, Tom 1 Wonga 1, 2 Work Capability Assessment 1 Work Programme 1 World Bank 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 World Economic Forum 1 world heritage sites 1 Wriglesworth Consultancy 1 WTO (World Trade Organization) 1, 2, 3, 4, 5, 6 Y Combinator 1 Yanukovych, Viktor 1 Yukos 1 de Zayas, Alfred-Maurice 1 van Zeeland, Marcel 1 Zell, Sam 1 zero-hours contracts 1, 2, 3 Zipcar 1 Copyright First published in Great Britain in 2016 by Biteback Publishing Ltd Westminster Tower 3 Albert Embankment London SE1 7SP Copyright © Guy Standing 2016 Guy Standing has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this work.


pages: 329 words: 97,834

No Regrets, Coyote: A Novel by John Dufresne

Alan Greenspan, Albert Einstein, always be closing, fear of failure, illegal immigration, index card, mirror neurons, Ponzi scheme, Ronald Reagan, young professional

I put on my incredulous face and shrugged, like, What-the-hell-are-you-doing? Carlos said there was no lack of suspects. Mickey had stolen money from the mob, from the Russians, from an Israeli defense organization, from the school board, from the Hadassah, from a host of banking CEOs, and from thousands of small investors. The thing about running a Ponzi scheme is if you’re not going to go to jail, you have to keep at it. And then Carlos told me that Kevin Shanks had been missing in action for a week. I dropped some Optivar into my stinging eyes. Dad returned from his second pass at the buffet, this time with coconut fried chicken tenders and broccoli florets.

Bay wondered if this meant she had left rehab and let herself in or if she’d taken it weeks ago, and he just hadn’t noticed. I told him to take an inventory. We talked about the late Mickey Pfeiffer, of course. The story was all over the news. What those last few minutes of his life must have been like. Christ! The Feds had taken over the investigation of the Ponzi scheme and the murder/kidnap. I didn’t want to think that the people after me were the people after Mickey. Bay said he thought Mickey was a simple man despite his audacious opulence. He wanted what we all want: respect, attention, affection, security, and control. He figured the surest way to get all that was to buy it.


pages: 328 words: 96,678

MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them by Nouriel Roubini

"World Economic Forum" Davos, 2021 United States Capitol attack, 3D printing, 9 dash line, AI winter, AlphaGo, artificial general intelligence, asset allocation, assortative mating, autonomous vehicles, bank run, banking crisis, basic income, Bear Stearns, Big Tech, bitcoin, Bletchley Park, blockchain, Boston Dynamics, Bretton Woods, British Empire, business cycle, business process, call centre, carbon tax, Carmen Reinhart, cashless society, central bank independence, collateralized debt obligation, Computing Machinery and Intelligence, coronavirus, COVID-19, creative destruction, credit crunch, crony capitalism, cryptocurrency, currency manipulation / currency intervention, currency peg, data is the new oil, David Ricardo: comparative advantage, debt deflation, decarbonisation, deep learning, DeepMind, deglobalization, Demis Hassabis, democratizing finance, Deng Xiaoping, disintermediation, Dogecoin, Donald Trump, Elon Musk, en.wikipedia.org, energy security, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, eurozone crisis, failed state, fake news, family office, fiat currency, financial deregulation, financial innovation, financial repression, fixed income, floating exchange rates, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, future of work, game design, geopolitical risk, George Santayana, Gini coefficient, global pandemic, global reserve currency, global supply chain, GPS: selective availability, green transition, Greensill Capital, Greenspan put, Herbert Marcuse, high-speed rail, Hyman Minsky, income inequality, inflation targeting, initial coin offering, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invention of movable type, Isaac Newton, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, junk bonds, Kenneth Rogoff, knowledge worker, Long Term Capital Management, low interest rates, low skilled workers, low-wage service sector, M-Pesa, margin call, market bubble, Martin Wolf, mass immigration, means of production, meme stock, Michael Milken, middle-income trap, Mikhail Gorbachev, Minsky moment, Modern Monetary Theory, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Mustafa Suleyman, Nash equilibrium, natural language processing, negative equity, Nick Bostrom, non-fungible token, non-tariff barriers, ocean acidification, oil shale / tar sands, oil shock, paradox of thrift, pets.com, Phillips curve, planetary scale, Ponzi scheme, precariat, price mechanism, price stability, public intellectual, purchasing power parity, quantitative easing, race to the bottom, Ralph Waldo Emerson, ransomware, Ray Kurzweil, regulatory arbitrage, reserve currency, reshoring, Robert Shiller, Ronald Reagan, Salesforce, Satoshi Nakamoto, Savings and loan crisis, Second Machine Age, short selling, Silicon Valley, smart contracts, South China Sea, sovereign wealth fund, Stephen Hawking, TED Talk, The Great Moderation, the payments system, Thomas L Friedman, TikTok, too big to fail, Turing test, universal basic income, War on Poverty, warehouse robotics, Washington Consensus, Watson beat the top human players on Jeopardy!, working-age population, Yogi Berra, Yom Kippur War, zero-sum game, zoonotic diseases

The cryptocurrency industry leverages a network of shady business connections, bought influencers and pay-for-play media outlets to perpetuate a cult-like ‘get rich quick’ funnel designed to extract new money from the financially desperate and naive.”30 Indeed, Dogecoin after a remarkable rally in 2021 lost about 90 percent of its value. A lot of crypto consists of mostly manipulative Ponzi schemes. If we want to revamp a centralized financial system with safeguards and supervision, we don’t need crypto or blockchain. Artificial intelligence, machine learning, big data, 5G, and the Internet of Things can speed transactions, lower costs, and increase reliability. These centralized fintech tools and firms collect and process detailed financial data at blistering speeds without any use of blockchain.

The role of the US dollar as the major global reserve currency faces growing challenges coming from China and Russia. The world’s third major currency, the euro, careens on instability if not collapse in a splintering European Monetary Union. As fiat currencies ebb, the current meteoric rise of crypto alternatives threatens to replace them with speculative Ponzi schemes, with severely unstable systemic effects. Nothing poses a more clear and present danger to the current banking system than innovation from within. Central bank digital currencies may cut banks out of the payment system that sustains them. Weakness, or even the perception of weakness, may bring banks to their knees.


pages: 97 words: 31,550

Money: Vintage Minis by Yuval Noah Harari

23andMe, agricultural Revolution, algorithmic trading, AlphaGo, Anne Wojcicki, autonomous vehicles, British Empire, call centre, credit crunch, DeepMind, European colonialism, Flash crash, Ford Model T, greed is good, job automation, joint-stock company, joint-stock limited liability company, lifelogging, low interest rates, Nick Bostrom, pattern recognition, peak-end rule, Ponzi scheme, self-driving car, Suez canal 1869, telemarketer, The future is already here, The Future of Employment, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, Watson beat the top human players on Jeopardy!, zero-sum game

Banks are allowed to loan $10 for every dollar they actually possess, which means that 90 per cent of all the money in our bank accounts is not covered by actual coins and notes. If all of the account holders at Barclays Bank suddenly demand their money, Barclays will promptly collapse (unless the government steps in to save it). The same is true of Lloyds, Deutsche Bank, Citibank, and all other banks in the world. It sounds like a giant Ponzi scheme, doesn’t it? But if it’s a fraud, then the entire modern economy is a fraud. The fact is, it’s not a deception, but rather a tribute to the amazing abilities of the human imagination. What enables banks – and the entire economy – to survive and flourish is our trust in the future. This trust is the sole backing for most of the money in the world.


pages: 102 words: 33,345

24/7: Late Capitalism and the Ends of Sleep by Jonathan Crary

augmented reality, Berlin Wall, dematerialisation, Dissolution of the Soviet Union, Fall of the Berlin Wall, invention of movable type, Kevin Kelly, late capitalism, Lewis Mumford, mass incarceration, megacity, planetary scale, planned obsolescence, Ponzi scheme, vertical integration

Lenin, Trotsky, and their cohort made use of every communications technology at hand in 1917, but they never elevated them to privileged and sacrosanct determinants of an entire constellation of historical events, as some cyberactivists have done in extolling the role of social media in recent political movements and uprisings. Once there is mystification and the attribution of quasi-magical capabilities to networks, it becomes like faith in a Ponzi scheme that will automatically pay off on behalf of the weak and oppressed. The myths of the egalitarian and empowering nature of this technology have been cultivated for a reason. Police agencies of the global order can only be gratified by the willingness of activists to concentrate their organizing around internet strategies, by which they voluntarily kettle themselves in cyberspace, where state surveillance, sabotage, and manipulation are far easier than in lived communities and localities where actual encounters occur.


pages: 388 words: 106,138

The Song Machine: Inside the Hit Factory by John Seabrook

AOL-Time Warner, barriers to entry, financial independence, game design, peer-to-peer, Ponzi scheme, Russell Brand, Saturday Night Live, Steve Jobs, technoutopianism, the long tail, trade route

“He would take us to his steakhouse”—Pearl Steakhouse, in downtown Orlando. “We would be driven around on a bus, which on the side said ‘Backstreet Boys.’ And when the door opened, we had kids all over the place!” Is it possible that no one who was associated with Pearlman suspected his whole operation was in reality a giant Ponzi scheme? Pearlman was using the money from Backstreet Boys and ’N Sync to pay off investors in his other fraudulent businesses—the blimps, airplanes, and a massive insurance business scam. The forty-seven planes Pearlman claimed to own didn’t actually exist. In fact, he had only one plane, and the fleet depicted in the brochures for Trans Con (the name took on a whole new meaning, when Pearlman’s scheme finally came to light) was actually made of model airplanes, photographed to look real.

Our managers are driving Jaguars, and we’re sharing hotel rooms. Something’s not right.’ ” Jive managed to get the lawsuit settled quickly. The terms were not disclosed, but Pearlman had reportedly received $30 million, and one-sixth of whatever the Backstreet Boys earned in the future, which was what allowed him to keep his Ponzi scheme afloat for another eight years. “It’s ridiculous,” Brian Littrell said, of the settlement. “He’s doing no work.” The band in return got to break its contract with Big Poppa. By the time Millennium came out, they were free. Henceforth, in the official Backstreet Boys press-kit bio, there would be no mention of Pearlman.


pages: 339 words: 109,331

The Clash of the Cultures by John C. Bogle

Alan Greenspan, asset allocation, buy and hold, collateralized debt obligation, commoditize, compensation consultant, corporate governance, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, estate planning, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, Hyman Minsky, income inequality, index fund, interest rate swap, invention of the wheel, John Bogle, junk bonds, low interest rates, market bubble, market clearing, military-industrial complex, money market fund, mortgage debt, new economy, Occupy movement, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, Ponzi scheme, post-work, principal–agent problem, profit motive, proprietary trading, prudent man rule, random walk, rent-seeking, risk tolerance, risk-adjusted returns, Robert Shiller, seminal paper, shareholder value, short selling, South Sea Bubble, statistical arbitrage, stock buybacks, survivorship bias, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, Vanguard fund, William of Occam, zero-sum game

Bring the opacity of today’s derivatives trading into the bright sunlight of transparency and openness, with public reporting of all transactions. Develop much stronger rules that would preclude—or at least minimize—obvious malfeasance such as insider trading, conflicts of interest, and the remarkably widespread Ponzi schemes that we’ve recently witnessed. Yes, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 attempted to deal with some of these issues. Certainly derivative transparency will be a plus, as will new requirements for banks’ capital. But after all the horse trading between Democrats and Republicans—and reformers, bankers, and lobbyists—I fear that its complex, obtuse regulations (some 170 separate rules are still being developed) involved in limiting proprietary trading by banks makes me wish we’d taken the simple step of restoring the separation of deposit taking banks from investment banks.

The Securities and Exchange Commission The SEC too often failed to live up to its purpose: the protection of the interests of investors. Failure to rectify the, at best, misleading financial disclosures of many of our largest corporations, rarely seemed to catch the SEC’s usually watchful eye. And the failure to uncover the vast Madoff “Ponzi scheme” fraud, involving $60 billion worth of investors’ assets, gave the Commission’s critics the opportunity they sought to deprive it of the resources necessary to do its job. Chairmen Arthur Levitt and William Donaldson both served surely, wisely, and with distinction at the SEC’s helm during their terms in office (1993–2000 and 2001–2005, respectively), but the records of their successors were mixed at best.


pages: 354 words: 110,570

Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World by Tom Wright, Bradley Hope

"World Economic Forum" Davos, Asian financial crisis, Bear Stearns, Bernie Madoff, Boeing 747, collapse of Lehman Brothers, colonial rule, corporate social responsibility, Credit Default Swap, Donald Trump, failed state, family office, financial engineering, forensic accounting, Frank Gehry, Global Witness, high net worth, junk bonds, low interest rates, Michael Milken, middle-income trap, Nick Leeson, offshore financial centre, Oscar Wyatt, Ponzi scheme, Right to Buy, risk tolerance, Savings and loan crisis, Snapchat, South China Sea, sovereign wealth fund, Virgin Galactic

But in the fall of 2009, armed with almost endless amounts of money, Low embarked on a period of incessant partying—and networking. Even after the payments to Obaid and others, hundreds of millions of dollars were just sitting in the Good Star account he controlled in Switzerland, for Low to deploy in any way he saw fit. There were no shareholders, no co-investors. His wasn’t a Ponzi scheme like Bernie Madoff’s, which used new money to pay “profits” to earlier investors. Madoff’s fraud led to losses of at least $18 billion, but his take was a fraction of that, as the “profits” were shared among other investors. By the time the scheme imploded in late 2008, Madoff had amassed a paper fortune of $800 million, but most of this was the value of his market-making business; the amount he personally stole was a fraction of the amount lost.

Critics pointed out that Wall Street saw these fines as a cost of doing business that did little to alter behavior. Now, the Justice Department was trying to determine whether Goldman had reason to believe the money it raised for 1MDB was being misused, which could lead to a steep penalty under the Bank Secrecy Act, perhaps in the quantum of the $2 billion that J.P. Morgan paid for failing to stop Madoff’s Ponzi scheme. The Federal Reserve, the Securities and Exchange Commission, and New York State’s Department of Financial Services also were examining some of the bank’s actions. Few observers of the scandal were holding their breath. In America in the twenty-first century, Wall Street bankers typically did not end up in prison.


pages: 398 words: 105,917

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism by Richard Brooks

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, asset-backed security, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, blockchain, BRICs, British Empire, business process, Charles Babbage, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Strachan, Deng Xiaoping, Donald Trump, double entry bookkeeping, Double Irish / Dutch Sandwich, energy security, Etonian, eurozone crisis, financial deregulation, financial engineering, Ford Model T, forensic accounting, Frederick Winslow Taylor, G4S, Glass-Steagall Act, high-speed rail, information security, intangible asset, Internet of things, James Watt: steam engine, Jeremy Corbyn, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, light touch regulation, Long Term Capital Management, low cost airline, new economy, Northern Rock, offshore financial centre, oil shale / tar sands, On the Economy of Machinery and Manufactures, Ponzi scheme, post-oil, principal–agent problem, profit motive, race to the bottom, railway mania, regulatory arbitrage, risk/return, Ronald Reagan, Savings and loan crisis, savings glut, scientific management, short selling, Silicon Valley, South Sea Bubble, statistical model, supply-chain management, The Chicago School, too big to fail, transaction costs, transfer pricing, Upton Sinclair, WikiLeaks

Instead, the firm swallowed spurious assurances about money being held in unaudited offshore funds and a non-existent sale of software to a Jersey affiliate. One smaller firm of accountants had turned down the job because it was refused access to the offshore funds, but Touche was not to let such quibbles keep it from the big payday. It approved the numbers and the takeover went ahead. Then the truth emerged. Barlow Clowes was a Ponzi scheme that had been channelling investors’ money into outlandish investments, not the safe government bonds it had claimed. When it imploded in 1988, around 18,000 investors lost their money. Seven years later, a disciplinary panel found that the ‘professional efficiency, conduct and competence’ of the Touche partner whose work had been relied on by the buying company’s shareholders ‘fell below the standards that should be displayed by, and may properly be expected of, a chartered accountant’.

., 48, 60, 63, 64, 79, 82, 233, 235 Peat, Michael, 68 Peat, William Barclay, ix, 48, 49, 68, 233, 277 Penn Central Transport Company, 64, 79 pension funds, 67 Pepsi, 166 Pergamon, 66 Perrin, Edouard, 168, 169, 171–2, 173, 174, 175 Persson, Mats, 208 Perugia University, 32 Pessoa, Fernando, 1 Peston, Robert, 197 Peterborough hospital, Cambridgeshire, 191 Petits secrets des grandes enterprises, Les, 169 Petrofac, 218 Pfizer, 163 Piot, Wim, 173, 181, 182 Pisa, Italy, 21 place value’ system, 21 political donations, 98 Ponzi schemes, 89 ‘pooling-of-interest’ accounting, 61–2, 63, 67, 96 post-balance sheet events, 72 Powell, Ian, 128, 201–2 Poynter, Kieran, 148, 150 premiums, 45 Presbyterianism, 42 Price, Samuel Lowell, 49 Price Waterhouse & Co., 49, 53–6, 57, 65, 67, 72, 73, 78–9, 82 and conflicts of interest, 73, 277 consultancy, 78–9, 81, 82 Coopers & Lybrand, merger with (1998), 49, 95 in Germany, 233 and Great Crash (1929), 57 in India, 233 international co-ordinating company, 234 and limited liability partnerships, 94 Palo Alto technology centre, 82 and private finance initiative (PFI), 185 in Russia, 236 and tax avoidance, 164 and tax code (1954), 153–4 and United States Steel, 55, 62, 233 PricewaterhouseCoopers (PwC), 2, 5, 6, 49, 95, 97 and American International Group, 134–5, 144, 145, 148 and Bank of Tokyo-Mitsubishi, 230–31 and Barclays, 6 Booz & Co. acquisition (2013), 263–4 and Brexit, 203 and British Home Stores (BHS), 260 Building Public Trust Awards, 256 ‘Building Relationships, Creating Value’, 12 and Cattles plc., 142 cyber-security, 272–3 establishment of (1998), 49, 95 and Financial Crisis Inquiry Commission, 145 and Financial Reporting Council, 142, 144, 209, 210 global operations, 235–6 and Goldman Sachs, 134–5, 148 and Google, 271 and GPT, 217, 218 and Heineken, 246 and Hong Kong protests (2014), 251–2 in India, 242 integrated reporting, 18 and Kanebo, 240 and Labour Party, 201 and National Health Service (NHS), 192, 194, 200 and Northern Rock, 126, 127–9, 142–3, 148 and Olympic Games (2012), 196 presentation (2017), 16 and private finance initiative (PFI), 187, 188–91, 196, 249 profits, 5 revolving door, 207, 208 and RSM Tenon, 210, 261 in Russia, 236–8 and Saudi British Joint Business Council, 218 and securitization, 121, 122, 129 and tax avoidance, 157, 165–79, 180, 182, 237, 246, 267–71, 278 thought leadership, 12 total tax contribution survey, 179 and Tyco, 109 in Ukraine, 238 and Vodafone, 165–6 Prince of Wales’s charity, 181 principal/agent problem, 13 Prior, Nick, 190 Privatbank, 238 Private Eye, 169, 180, 215, 255 private finance initiative (PFI), 185–91, 196, 203, 249 Privy Council, 94 Privy Purse, 68 production-line system, 71 productivity growth, 262–3 professional scepticism, 112, 130, 214, 224 professional services, 11, 72, 150, 183, 204–5, 251, 275, 279 Professional Standards Group, 105–7 Project Braveheart, 106 Project Nahanni, 102 Protestant work ethic, 3 Protestantism, 3, 42, 43 Prudential, 157 Public Accounts Committee, 281 Public Company Accounting Oversight Board (PCAOB), 144–5, 242–3, 253, 261, 274 Puerto Rico, 163 Putin, Vladimir, 17, 237 Qatar, 228 Quakers, 42, 49 Railway Regulation Act (1844), 45 railways United Kingdom, 44–7, 49, 115 United States, 51, 52, 53, 70, 73 Rake, Michael, 144, 149, 150, 162, 181, 257 Raptors, 105 Rayonier, 59 Reagan, Ronald, 80, 84, 154, 184 Reckoning, The (Soll), 27 Redpath, Leopold, 46 regulation, UK, 13, 127, 209–10, 213–14, 259 and Brexit, 273 deregulation (1980s), 95 and financial crisis (2007–8), 127–8, 137–45 Financial Conduct Authority, 140, 149, 281 Financial Reporting Council, 138, 142, 144, 149, 182, 209–10, 213–14, 259, 261 Financial Services Authority, 127, 128, 137, 138, 140 ‘light touch’, 114, 131, 209–10 Railway Regulation Act (1844), 45 self-regulation, 88, 90 regulation, US, 91, 260 Bush administration (2001–2009), 114, 145, 253 Celler–Kefauver Act (1950), 59, 61 competition on price, 79–80 deregulation (1980s), 84–5, 95, 112 derivatives, 122 and Enron, 99 and Lincoln Savings and Loan, 85–7 mark to market, 99 numbers-game era (1990s), 110 Public Company Accounting and Oversight Board, 242–3, 253, 260 Roosevelt, Theodore administration (1901–9), 56–7 Sarbanes–Oxley Act (2002), 114, 122 self-regulation, 61 Trump administration (2017–), 273, 274 and Westec collapse (1966), 63 see also Securities and Exchange Commission Renaissance, 3, 16, 22, 24–37 Renjen, Punit, 275 ‘Repo 105’ technique, 131–3, 149 revolving door, 206–8, 272 Ripley, William Zebina, 57 Robson, Steve, 144, 207 Rockefeller, John Davison, 53, 71 Rolex, 15, 215 Rolls-Royce, 213 Roman numerals, 22 Rome, ancient, 24 Rome, Italy, 25, 27 Roosevelt, Franklin, 58 Roosevelt, Theodore, 56 de Roover, Raymond, 27 Rowland, Roland ‘Tiny’, 66 Royal African Company, 37 Royal Ahold, 238–9 Royal Bank of Scotland, 47, 90, 136–40, 142, 157, 241, 259 Royal London Hospital, 190 RSM Tenon, 210, 261 Russian Federation, 17, 236–8 Ryan, Tim, 134, 148 Saltwater Slavery (Smallwood), 37 Samek, Steve, 103 SANGCOM, 214–19 Sansepolcro, 32 Sarbanes, Paul, 114, 122 Sarbanes–Oxley Act (2002), 114, 122 Sassetti, Francesco, 16, 29, 30, 31, 41 Satyam, 242 Saudi Arabia, 212–19, 221 Saudi British Joint Business Council, 218 Saunders, Stuart, 64 Save South Africa, 250 savings-and-loan mutuals, 84–7, 91, 99 Sberbank, 237 Scarlett, John, 207, 272 Schlich, William, 149 Schumpeter, Joseph, 3 scientific management, 71, 76 Scotland, ix, 42, 47–9, 70, 224 Scuola di Rialto, Venice, 32 Second World War (1939–45), 59, 60, 77, 234 Secret Intelligence Service, 207, 272 Securities Act (1933), 58 Securities and Exchange Commission (SEC), 281 and consulting, 80, 104 and Enron, 99, 104, 108 and Hollinger, 154 Levitt’s ‘Numbers Game’ speech (1998), 96, 98, 104 and Lincoln Savings and Loan, 85, 86 and Penn Central Transport Company, 64 and ‘pooling-of-interest’ accounting, 61, 62 and Public Company Accounting Oversight Board (PCAOB), 144 PwC India fined (2011), 242 and Xerox, 109–10 securitization, 101–2, 116, 119–23, 125, 129–31, 133–40, 148, 265 Seidler, Lee, 68–9, 79 self-regulation, 6, 61, 88 Serious Fraud Office, 213, 216, 217, 218, 219 Sexton, Richard, 129, 268, 278 shadow banking system, 115 Shanghai, China, 17 Shaxson, Nicholas, 247 Sheraton, 59 Sherlock, Neil, 208 short selling, 112, 115, 116 Siemens, 240 Sikka, Prem, 94 Silicon Valley, California, 82 Simec International Ltd, 214, 215 Sinaloa Cartel, 229 Sinclair, Upton, 14 Singapore, 163 Sino-Forest, 244 Skilling, Jeff, 99–100, 101, 105, 108 Skinner, Paul, 208 Slater, James, 65 slave trade, 4, 37 Smallwood, Stephanie, 37 Smallwood, Trevor, 158 Smartest Guys in the Room, The (McLean and Elkind), 101 Smith, Adam, 13 Smith, Jacqui, 207 Snell, Charles, 40 Social Justice Commission, 184 Soll, Jacob, 27 Sombart, Werner, 3–4, 22 SOS (Short Option Strategy), 159, 162 South Africa, 213, 223–4, 249–50 South Sea Company, 39–41, 42, 44 Soviet Union (1922–91), 236 Spacek, Leonard, 62, 77–8 Spain, 36, 39, 241 special investment vehicles, 115 Spinwatch, 201 Sproul, David, 256, 258 St Bartholomew’s Hospital, London, 190 St Louis, Missouri, 56 Standard & Poor’s, 149 Standard Chartered Bank, 230, 231 Starbucks, 178 steam engine, 43 Stein, Jeffrey, 161 Stephenson, George, 44 Stevens, Mark, 82–3 Stevenson, James, 1st Baron Stevenson, 141 Stiglitz, Joseph, 114 stock market, 68, 69, 92, 96 ‘Go-Go’ years (1960s), 62, 65 and Great Crash (1929), 57, 58 and J.


pages: 362 words: 108,359

The Accidental Investment Banker: Inside the Decade That Transformed Wall Street by Jonathan A. Knee

AOL-Time Warner, barriers to entry, Bear Stearns, book value, Boycotts of Israel, business logic, call centre, cognitive dissonance, commoditize, corporate governance, Corrections Corporation of America, deal flow, discounted cash flows, fear of failure, fixed income, Glass-Steagall Act, greed is good, if you build it, they will come, iterative process, junk bonds, low interest rates, market bubble, market clearing, Mary Meeker, Menlo Park, Michael Milken, new economy, Ponzi scheme, pre–internet, proprietary trading, risk/return, Ronald Reagan, shareholder value, Silicon Valley, SoftBank, technology bubble, young professional, éminence grise

The reason why bankers were so generous with each other on revenue credit is that it cost them nothing (it didn’t diminish their own contribution) and provided some significant upside: the thankful banker who had got unearned secondary credit on your deal could be trusted to do the same for you on his. So revenue sheets, which should be the core management tool in any professional services organization, are reduced to a huge ponzi scheme that need to be subjected to intense metaphysical deconstruction at year end. But without a genuine culture of teamwork at Morgan, as a practical matter it was a necessary ponzi scheme to get bankers to cooperate with each other. The actual evaluation process itself was also subject to extensive jockeying by the participants. In theory, reviews were divorced from consideration of the revenue sheets and related only to the feedback obtained.


pages: 375 words: 105,067

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry by Helaine Olen

Alan Greenspan, American ideology, asset allocation, Bear Stearns, behavioural economics, Bernie Madoff, buy and hold, Cass Sunstein, Credit Default Swap, David Brooks, delayed gratification, diversification, diversified portfolio, Donald Trump, Elliott wave, en.wikipedia.org, estate planning, financial engineering, financial innovation, Flash crash, game design, greed is good, high net worth, impulse control, income inequality, index fund, John Bogle, Kevin Roose, London Whale, longitudinal study, low interest rates, Mark Zuckerberg, Mary Meeker, money market fund, mortgage debt, multilevel marketing, oil shock, payday loans, pension reform, Ponzi scheme, post-work, prosperity theology / prosperity gospel / gospel of success, quantitative easing, Ralph Nader, RAND corporation, random walk, Richard Thaler, Ronald Reagan, Saturday Night Live, Stanford marshmallow experiment, stocks for the long run, The 4% rule, too big to fail, transaction costs, Unsafe at Any Speed, upwardly mobile, Vanguard fund, wage slave, women in the workforce, working poor, éminence grise

As our collective finances got tighter over the first decade of the millennium, Orman’s New Age–oriented financial advice became increasingly hectoring. She yelled at people who got themselves into too much debt, whether it happened via a bout of unemployment or by taking on too much in college loans. She blamed the victims of Bernie Madoff for the fact that they had invested their funds in what turned out to be a Ponzi scheme by telling them, “You walked right into that financial concentration camp.” She lectured people on her popular “Can I Afford It?” and “1 on One” segments on her CNBC show, weighing in on people’s desires to do such things as purchase a Porsche (denied) or even the desire to have a second child (also denied).

The link between food and money is one made constantly by financial therapists and coaches, more than a few of whom, I discovered as I interviewed them, were also specialists in eating disorders. The idea is so pervasive, so commonly accepted that Geneen Roth, a star on the therapeutic circuit for such books Women, Food, and God, was able to spin her issues with money into, yes, yet another book after discovering she was a victim of Bernard Madoff’s Ponzi scheme. In Lost and Found: Unexpected Revelations about Food and Money, Roth posited that she had a binge-purge relationship with her funds, spending wildly, and then engaging in budgetary self-deprivation to compensate. Lora Sasiela, the therapist whose work led Melissa Cassera to realize she viewed money as a criminally insane penguin, concurs with the food-money analogy.


pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

Alan Greenspan, American ideology, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Bonfire of the Vanities, bonus culture, book value, break the buck, business cycle, business logic, buy and hold, capital controls, Carmen Reinhart, central bank independence, Charles Lindbergh, collapse of Lehman Brothers, collateralized debt obligation, commoditize, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency risk, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Glass-Steagall Act, Gordon Gekko, greed is good, Greenspan put, Home mortgage interest deduction, Hyman Minsky, income per capita, information asymmetry, interest rate derivative, interest rate swap, junk bonds, Kenneth Rogoff, laissez-faire capitalism, late fees, light touch regulation, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, Martin Wolf, Michael Milken, money market fund, moral hazard, mortgage tax deduction, Myron Scholes, Paul Samuelson, Ponzi scheme, price stability, profit maximization, proprietary trading, race to the bottom, regulatory arbitrage, rent-seeking, Robert Bork, Robert Shiller, Ronald Reagan, Saturday Night Live, Satyajit Das, Savings and loan crisis, sovereign wealth fund, Tax Reform Act of 1986, The Myth of the Rational Market, too big to fail, transaction costs, Tyler Cowen, value at risk, yield curve

In the wake of the collapse of Bear Stearns, the SEC inspector general found that the agency not only took no meaningful action under the Consolidated Supervised Entity program, but also did a poor job implementing its Broker-Dealer Risk Assessment program (created in 1992 in response to the failure of Drexel Burnham Lambert). Under that program, the SEC received quarterly and annual reports from 146 broker-dealers—but generally only reviewed six of them.95 Most famously, the SEC managed to overlook Bernie Madoff’s $65 billion Ponzi scheme, despite tips and investigations going back to 1992.96 This failure to regulate the securities markets effectively was a consequence of the deregulatory ideology introduced by Ronald Reagan as well as the political influence of Wall Street. James Coffman, a former assistant director of the SEC’s enforcement division, wrote, Elected deregulators appointed their own kind to head regulatory agencies and they, in turn, removed career regulators from management positions and replaced them with appointees who had worked in or represented the regulated industries.

Securities and Exchange Commission Office of Inspector General, SEC’s Oversight of Bear Stearns and Related Entities: Broker-Dealer Risk Assessment Program, September 25, 2008, available at http://www.sec-oig.gov/Reports/AuditsInspections/2008/446-b.pdf. 96. U.S. Securities and Exchange Commission, Office of Investigations, Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme—Public Version, August 31, 2009, available at http://graphics8.nytimes.com/packages/pdf/business/20090904secmadoff .pdf. The total amount missing from client accounts was approximately $65 billion, including fake investment returns; the actual amount invested by and not returned to clients was closer to $20 billion. 97.


pages: 387 words: 110,820

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

accelerated depreciation, Alan Greenspan, barriers to entry, behavioural economics, Berlin Wall, big-box store, bread and circuses, business cycle, cognitive dissonance, computer age, cotton gin, creative destruction, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, Lewis Mumford, loss aversion, market design, means of production, mental accounting, Monkeys Reject Unequal Pay, Pearl River Delta, planned obsolescence, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, Salesforce, scientific management, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, Triangle Shirtwaist Factory, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management, zero-sum game

Are these venerable institutions so different from Home Shopping Network, Filene’s Basement, and eBay? In a word, yes. The ancient marketplace was built on a balance of power between buyer and seller that is all but gone today. A cascade of corporate scandals and screwups from Enron to Halliburton to Citibank to Michael Madoff ’s audacious Ponzi scheme has shaken whatever faith we once held in corporate responsibility, and this mistrust has dripped down to the retail level. Even on the sacred rocks in Sedona, it seems, we get taken for a ride. Martin Neil Baily, senior fellow at the Brookings Institute, said that the suspicion that we are being charged more than we should be is entirely rational.

Shore and Prevor kept their operation afloat by locating stores in struggling malls and charging them an up-front fee for the favor of attracting foot traffic. Since these mall fees were essential to its survival, the company was required to expand continuously. In a sense, the company relied for its existence on a fully legal variation of a Ponzi scheme. Business plans like this are not built on a foundation of frugality. They are built on a platform of cognitive dissonance. Three months after boasting of their great success to the New York Times, Steve and Barry filed for bankruptcy. THRIFT MAY BE a bedrock American virtue, but it is no more branded into our DNA than it is branded into the DNA of any other culture.


pages: 407 words: 104,622

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, Andrew Wiles, automated trading system, backtesting, Bayesian statistics, Bear Stearns, beat the dealer, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, blockchain, book value, Brownian motion, butter production in bangladesh, buy and hold, buy low sell high, Cambridge Analytica, Carl Icahn, Claude Shannon: information theory, computer age, computerized trading, Credit Default Swap, Daniel Kahneman / Amos Tversky, data science, diversified portfolio, Donald Trump, Edward Thorp, Elon Musk, Emanuel Derman, endowment effect, financial engineering, Flash crash, George Gilder, Gordon Gekko, illegal immigration, index card, index fund, Isaac Newton, Jim Simons, John Meriwether, John Nash: game theory, John von Neumann, junk bonds, Loma Prieta earthquake, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, Mark Zuckerberg, Michael Milken, Monty Hall problem, More Guns, Less Crime, Myron Scholes, Naomi Klein, natural language processing, Neil Armstrong, obamacare, off-the-grid, p-value, pattern recognition, Peter Thiel, Ponzi scheme, prediction markets, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, Robert Mercer, Ronald Reagan, self-driving car, Sharpe ratio, Silicon Valley, sovereign wealth fund, speech recognition, statistical arbitrage, statistical model, Steve Bannon, Steve Jobs, stochastic process, the scientific method, Thomas Bayes, transaction costs, Turing machine, Two Sigma

“Look at what Madoff is doing,” Simons told Patterson. The criticism grated on Patterson, who gave Simons a tart retort: “Maybe you should hire Bernie.” (A few years later, Simons would become suspicious of Madoff’s extraordinary results and pull money he had invested in Madoff’s fund. In 2008, Madoff would acknowledge running history’s largest Ponzi scheme.) Nervous about the slipping returns, Simons proposed a new idea. Each year, tens of thousands of peer-reviewed research papers are published in disciplines including economics, finance, and psychology. Many delve into the inner workings of financial markets and demonstrate methods of scoring outsize returns, yet are left in history’s dustpan.

* The 5 percent management fee had been determined in 1988, when Straus told Simons he needed about $800,000 to run the firm’s computer system and pay for other operational costs—a figure that amounted to 5 percent of the $16 million managed at the time. The fee seemed about right to Simons, who kept it as the firm grew. * Patterson had more reason for paranoia than even he realized; around the same time, another investor from Long Island, Bernard Madoff, was crafting history’s largest Ponzi scheme. * It wasn’t that the company had a problem hiring women. Like other trading firms, Renaissance didn’t receive many resumes from female scientists or mathematicians. It’s also the case that Simons and others didn’t go out of their way to recruit women or minorities. * When asked to comment, Bannon said there are “errors of fact” in this description of events surrounding the election and his interactions with the Mercers, though he wouldn’t specify the inaccuracies.


pages: 297 words: 108,353

Boom and Bust: A Global History of Financial Bubbles by William Quinn, John D. Turner

accounting loophole / creative accounting, Alan Greenspan, algorithmic trading, AOL-Time Warner, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Big bang: deregulation of the City of London, bitcoin, blockchain, book value, Bretton Woods, business cycle, buy and hold, capital controls, Celtic Tiger, collapse of Lehman Brothers, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, debt deflation, deglobalization, Deng Xiaoping, different worldview, discounted cash flows, Donald Trump, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, fake news, financial deregulation, financial intermediation, Flash crash, Francis Fukuyama: the end of history, George Akerlof, government statistician, Greenspan put, high-speed rail, information asymmetry, initial coin offering, intangible asset, Irish property bubble, Isaac Newton, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, junk bonds, land bank, light touch regulation, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Network effects, new economy, Northern Rock, oil shock, Ponzi scheme, quantitative easing, quantitative trading / quantitative finance, railway mania, Right to Buy, Robert Shiller, Shenzhen special economic zone , short selling, short squeeze, Silicon Valley, smart contracts, South Sea Bubble, special economic zone, subprime mortgage crisis, technology bubble, the built environment, total factor productivity, transaction costs, tulip mania, urban planning

For example, in September 1889 the Victoria Freehold Bank changed its name to the British Bank of Australia.44 Scottish newspapers teemed with advertisements from these companies, offering unusually high interest on deposits.45 But these deposits were being used merely to pay off other maturing debts.46 This ultimately turned these land-boom companies into Ponzi schemes. Several companies, such as those associated with Sir Matthew Davies, the speaker of the Victorian Parliament, engaged in creative accounting practices, paid dividends out of capital or borrowed funds, and used company funds to keep their share price from falling.47 Of course, these zombie banks could only survive for so long.

Notably, the special bankruptcy commissions established in the wake 92 THE AUSTRALIAN LAND BOOM of the crash let many prominent land boomers evade repaying their debts. The influence of the land boomers on politicians and the political machinery is perhaps best exemplified by Sir Matthew Davies, the former speaker of the Victorian Parliament, whose network of companies degenerated into Ponzi schemes. All four of the main companies within his ‘Davies group’ were chaired by senior politicians. It collapsed in 1892, precipitating Davies’ own bankruptcy and that of his companies, after which several unsuccessful attempts were made to prosecute him for conspiracy to defraud by issuing false balance sheets.


pages: 382 words: 105,166

The Reckoning: Financial Accountability and the Rise and Fall of Nations by Jacob Soll

accounting loophole / creative accounting, bank run, Bear Stearns, Bonfire of the Vanities, British Empire, collapse of Lehman Brothers, computer age, corporate governance, creative destruction, Credit Default Swap, delayed gratification, demand response, discounted cash flows, double entry bookkeeping, financial independence, Frederick Winslow Taylor, Glass-Steagall Act, God and Mammon, High speed trading, Honoré de Balzac, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, new economy, New Urbanism, Nick Leeson, Plato's cave, Ponzi scheme, Ralph Waldo Emerson, scientific management, Scientific racism, South Sea Bubble, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

In exchange for a trading monopoly, the government had found a way to service its debt using private investors. It was a miracle of modern finance.13 But there was a catch. When anticipated income failed to materialize in early 1720, the company relied on false profit statements to lead a speculative boom. In what now amounted to an early form of a Ponzi scheme, the company issued more stock to pay its dividends, which, by April, inflated stock prices to £360 per share from the original price of £128. By June 1720, the price had risen to £1,000 per share. Many subscribers paid for shares by borrowing at around 5 percent. As confidence in the South Sea Company wavered in August, creditors raised interest rates or suspended loans, thus starving the credit which fed the company.

., 173, 175, 192 Morris, Robert, 158–162 Mortgage securities bundles (CDOs), 202–203, 206 Mowbray, John, 123 National Congress of Accountants (Italy), 172 Nationally Recognized Statistical Ratings Organizations (NRSROs), 198 Nations, accounting and, xi–xiv, 206 Natural History (Pliny), 4 Necessary Discourse, The (pamphlet), 81–82 Necker, Jacques, 129, 135, 136–146, 232–233n22 influence of, 147, 154, 159–160 Nederlands Institut van Accountants, 172 Neo-Platonism, 38–39, 56–57 Nero (emperor), 6 Netherlands, 59, 65, 66, 70–86, 72 Neudörfer, Johann, 75 New Instruction and Proof of the Praiseworthy Arts of Account Books (Ympyn de Christoffels), 74 New Netherlands, 149 New York Stock Exchange, 192, 198, 201, 202, 206 Newton, Isaac, 101, 108 Nicholson, John, 164 Nixon, Richard, 196, 198 Norman Conquest of England, 7 North, Roger, 118 Obama, Barack, x–xi Oikonomia concept (Aristotle), 4 Oldenbarnevelt, Johan van, 76–77, 79, 81 On the Family (Alberti), 50 Operating ratio, 170 Oration on the Dignity of Man (Pico della Mirandola), 40 Origin of the Species, The (Darwin), 183 Ovando, Juan de, 63–66 Pacioli, Luca, 48–55, 64, 67, 69, 70, 74 Padilla y Meneses, Antonio de, 65 Paine, Thomas, 160 Panofsky, Erwin, 58 Papacy, banking and, 16–17, 33 Pâris brothers, 133–134 Pâris Le Montagne, Claude, 134 Particelli family, 89 Passavanti, Fra Jacopo, 21 Pathway to Knowledge, The (Pietersz), 75 Patronage, 38–39, 41, 49, 115 Peat Marwick Mitchell, 194, 196 Pecora, Ferdinand, 192 Penance, 22, 25–26 Pendleton, Edmund, 156 Penn Central, 196 Pennsylvania Railroad, 170 Pepys, Samuel, 102 Pericles, 113 Peruvian silver, 59 Philip II (king), 61–69, 71–72 Philip III (king), 68 Philip IV (king), 68 Philippics (Cicero), 5 Physiocrats, 134–135 Pico della Mirandola, Giovanni, 39–40, 57 Pietersz, Claes, 74–75 Pitt, Harvey, 239n28 Pitt, William, 127–128 Plato, 31–32, 38–39, 50 Pletho, Georgius Gemistus, 39 Pliny the Elder, 4 Political accountability. See Accountability, financial and political Political stability cultures of accountability and, xvi–xvii Medici family and, 41 threat to English, 107, 111–112 Poliziano, Angelo, 40, 43 Polybius, 4 Pontifex Maximus (pope), 10 Ponzi schemes, 107–112 Population statistics, 182 Portable accounts, 97–98 Portinari, Tommaso, 36, 37–38, 44–45 Post office management, 152–153 Praepostinius of Cremona, 26 Pragmatic Sanction, 61 Prato Museum, 17 Price, Richard, 127 Price, Samuel Lowell, 173 Price Waterhouse & Company, 173, 189, 194, 196 PricewaterhouseCoopers, x, 173, 202 Priestley, Joseph, 128–129, 131 Probability, 83, 126, 182 Profit and loss Christianity and, 20–28 Datini and, 15–22, 25, 26, 27 Dissenters’s view of, 121–122 double-entry accounting and, xiv–xv, 9, 11–12 expected vs. real, 84 railroads and, 169–170 scientific management and, 186–187 Spragues’ equation (A=L+P) and, 174–175 Protestant Ethic and the Spirit of Capitalism (Weber), 151 Protestantism, British Enlightenment, 119–122 Provost, Jan, 208 Prynne, William, 101 Public Company Accounting Oversight Board (U.S.), 202 Puritans, 119–120, 148, 149 Queensware, 122, 124–125 Quesnay, François, 135 Quilter, William, 173 Rabelais, 57 Racism, scientific, 183–184 Railroad Reports (Moody), 174 Railroads, 168–177 Ralph, James, 151 Rathenau, Walter, 187 Ratings agencies, 198, 206 Reading Railroad, 170 Religion, accounting and, 22 Renaissance, 30–32, 35 Report Relative to a Provision for the Support of Public Credit (Hamilton), 163 Republican political theory, 84–85 Republics, Italian, xii–xiii, 9–14 Datini in, 15–22 Pacioli’s Summa and, 52–54 Res gestae divi Augusti (Augustus), 1–2 Revolutionary War Expense Account 1775–1783 (Washington), 157 Richardson, Samuel, 115 Rinuccini, Alamanno, 42 Ripley, William Z., 191 Robber barons, 170 Robespierre, 144 Robinson Crusoe (Defoe), 121 Rockefeller, John D., 175 Roman numerals, 9 Roman Republic and Roman Empire, 1–2, 4–6 Roosevelt, Franklin D., 192 Rose, George, 128 Rossi, Roberto de, 32 Royal African Company, 155 Royal Swedish Railroad Company, 171 Ryder, Joseph, 121 Sadleir, John and James, 171, 180 Saint-Simon, Duke de, 99 Salutati, Coluccio, 31 Sarbanes-Oxley Act of 2002 (U.S.), 202 Sassetti, Francesco, 42–46 Sassetti Chapel, 43–44 Say, Jean-Baptiste, 208 Schumpeter, Joseph, xv Scientific management, 186–187 Secret Committee (England), 112 Securities Act of 1933 (U.S.), 193 Securities and Exchange Commission (SEC) 2008 financial crisis and, x, xi, 203 accounting scandals and, 197 formation of, 192–193 Serjeant, Thomas, 150 Sevigné, Marie de Rabutin-Chantal, marquise de, 92 Shamela (Fielding), 115 Shortly After the Marriage, or The Tête à Tête (art) (Hogarth), 114 Single-entry accounting, xiv in the ancient world, 2, 4 in the Middle Ages, 8 in northern Italian city republics, 10 Sinking funds American War of Independence and, 127–128 Walpole and, 106, 108, 111, 113–114 Slavery, 155–156 Smith, Adam, 42, 46, 73, 92, 113, 130 Snell, Charles, 111, 118 South Sea Company, 106–112 Spanish Empire, 59–69, 70–72 Speer, Albert, 187 Speiß, Walter, 187 Sprague, Charles E., 174 Sprezzatura, 56 St.


pages: 344 words: 104,522

Woke, Inc: Inside Corporate America's Social Justice Scam by Vivek Ramaswamy

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2021 United States Capitol attack, activist fund / activist shareholder / activist investor, affirmative action, Airbnb, Amazon Web Services, An Inconvenient Truth, anti-bias training, Bernie Sanders, Big Tech, BIPOC, Black Lives Matter, carbon footprint, clean tech, cloud computing, contact tracing, coronavirus, corporate governance, corporate social responsibility, COVID-19, critical race theory, crony capitalism, cryptocurrency, defund the police, deplatforming, desegregation, disinformation, don't be evil, Donald Trump, en.wikipedia.org, Eugene Fama: efficient market hypothesis, fudge factor, full employment, George Floyd, glass ceiling, global pandemic, green new deal, hiring and firing, Hyperloop, impact investing, independent contractor, index fund, Jeff Bezos, lockdown, Marc Benioff, Mark Zuckerberg, microaggression, military-industrial complex, Network effects, Parler "social media", plant based meat, Ponzi scheme, profit maximization, random walk, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robinhood: mobile stock trading app, Ronald Reagan, Salesforce, self-driving car, shareholder value, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, single source of truth, Snapchat, social distancing, Social Responsibility of Business Is to Increase Its Profits, source of truth, sovereign wealth fund, Susan Wojcicki, the scientific method, Tim Cook: Apple, too big to fail, trade route, transcontinental railway, traveling salesman, trickle-down economics, Vanguard fund, Virgin Galactic, WeWork, zero-sum game

It’s reminiscent of the amount of money that piled into home loans as a result of mandates in the years leading up to the 2008 financial crisis. Good fundraising strategies don’t always make for good investment strategies. Asset prices may rise in the short run because there are more dollars chasing them due to the expectation they’ll keep rising. But that’s the logic of a Ponzi scheme. It’s what Burton Malkiel refers to as the “greater fool theory” in his book A Random Walk Down Wall Street. It’s a self-fulfilling prophecy: as long as there’s another buyer, the gravy train keeps running, yet it only lasts for so long. Who wins this game? Just like in 2008, the answer is large financial institutions.

Footnote i As a side note, the Southern Poverty Law Center is an entirely separate racket in its own right—a convenient front for the woke corporations that fund it—today a nonprofit whose endowment exceeds $200 million and whose expenditures on fundraising dwarf those of normal nonprofits. A nonprofit that spends a ton of money on fundraising is the charitable world’s equivalent of a Ponzi scheme—an ideological one run by woke capitalists in the name of social justice. See Ben Schreckinger, “Has a Civil Rights Stalwart Lost Its Way?,” Politico, July/August 2017, www.politico.com/magazine/story/2017/06/28/morris-dees-splc-trump-southern-poverty-law-center-215312. CHAPTER 10 Wokeness Is Like a Religion I READ MY FAVORITE STORY about Christ during my junior year at St.


pages: 399 words: 107,932

Don't Call It a Cult: The Shocking Story of Keith Raniere and the Women of NXIVM by Sarah Berman

Albert Einstein, COVID-19, dark matter, Donald Trump, East Village, Jeffrey Epstein, Keith Raniere, lockdown, Milgram experiment, off-the-grid, offshore financial centre, Ponzi scheme, systems thinking, TED Talk, white picket fence, work culture

To prove any kind of racketeering, there needs to be an “enterprise” of multiple people. Over a period of up to ten years, each member has to have agreed to commit at least two crimes in service of a common goal. Law books call this “a pattern of racketeering.” The goal itself doesn’t have to be criminal, as many gangs and Ponzi schemes have purely money-making ends. Raniere’s goal, according to prosecutors, was allegedly to enrich and promote himself, which facilitated his access to women. Raniere was accused of eleven racketeering acts, among them identity theft, altering court records, forced labor, sex trafficking, extortion, sexual exploitation of a child, and possession of child pornography.

Amway changed the game by waging an expensive, politically connected legal battle against the FTC in 1975 and winning the right to continue its chain distribution sales under the banner of “multi-level marketing.” The company argued it had instituted rules that distinguished its dealings from that of a fraudulent Ponzi scheme. The so-called Amway rules became an industry-led response that covered the most obviously exploitative elements of a pyramid: don’t charge a huge upfront fee; don’t require people to endlessly stock up; have some fine print somewhere that allows people to return product, even if restrictions apply.


pages: 338 words: 104,684

The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy by Stephanie Kelton

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Alan Greenspan, American Society of Civil Engineers: Report Card, Apollo 11, Asian financial crisis, bank run, Bernie Madoff, Bernie Sanders, blockchain, bond market vigilante , book value, Bretton Woods, business cycle, capital controls, carbon tax, central bank independence, collective bargaining, COVID-19, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, decarbonisation, deindustrialization, discrete time, Donald Trump, eurozone crisis, fiat currency, floating exchange rates, Food sovereignty, full employment, gentrification, Gini coefficient, global reserve currency, global supply chain, green new deal, high-speed rail, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, Jeff Bezos, liquidity trap, low interest rates, Mahatma Gandhi, manufacturing employment, market bubble, Mason jar, Modern Monetary Theory, mortgage debt, Naomi Klein, National Debt Clock, new economy, New Urbanism, Nixon shock, Nixon triggered the end of the Bretton Woods system, obamacare, open economy, Paul Samuelson, Phillips curve, Ponzi scheme, Post-Keynesian economics, price anchoring, price stability, pushing on a string, quantitative easing, race to the bottom, reserve currency, Richard Florida, Ronald Reagan, San Francisco homelessness, shareholder value, Silicon Valley, Tax Reform Act of 1986, trade liberalization, urban planning, working-age population, Works Progress Administration, yield curve, zero-sum game

That thinking was rooted in the idea that Uncle Sam only has a limited amount of dollars to work with and that locking some of them in a trust fund would somehow make it easier for the government to afford to pay benefits in the future. Gore’s lockbox metaphor backfired politically. George W. Bush mocked the use of the phrase, telling voters that Social Security’s trust funds were nothing more than a “cabinet full of IOUs.” A Ponzi scheme, really. As president, Bush outlined a proposal to begin privatizing Social Security. Fortunately, he was not successful.20 Gore’s heart was in the right place, but imagine how much better it would have been if he had simply said, “Social Security is safe. No major changes are necessary. The federal government can keep every promise it has made because it can never run out of money.”

Treasury Securities and How They Work” (webpage), investorguide.com, www.investorguide.com/article/11679/4-types-of-u-s-treasury-securities-and-how-they-work-igu/. 13. Laurence Kotlikoff, a firebrand economist who commonly refers to the national debt as a form of “fiscal child abuse,” has characterized the US government’s fiscal imbalances as a Ponzi scheme. I could not disagree more strongly with his views. See Joseph Lawler, “Economist Laurence Kotlikoff: U.S. $222 Trillion in Debt,” RealClear Policy, November 20, 2012, www.realclearpolicy.com/blog/2012/12/01/economist_laurence_kotlikoff_us_222_trillion_in_debt_363.html. 14. Patrick Allen, “No Chance of Default, US Can Print Money: Greenspan,” CNBC, August 7, 2011, updated August 9, 2011, www.cnbc.com/id/44051683. 15.


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Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

The mechanisms that culminated in the crisis were built upon foundations of the entrepreneurial self, from exhortations to surrender to the risk of thrill-ride mortgages, capitulation to the financialization of everyday life, participation in virtual selves wending their way through the “weightless economy” on the Internet, day trading like the big boys, getting your information from Facebook and Fox and talk radio, to the indulgences of entertainment theology as Ponzi scheme, and recruitment into astroturfed politics to assist you in expressing your smoldering yet underappreciated individuality. Everyone strove to assume a persona that someone else would be willing to invest in, all in the name of personal improvement. Found yourself in trouble? You could always sell a kidney or enroll in a drug trial . . .

Not only was the movement largely professionally astroturfed by a few large shadow private organizations, such as Americans for Prosperity, American Majority, the Tea Party Express, and FreedomWorks, but it derived much of its energy on the ground through open encouragement of small-bore entrepreneurs to make money in whatever ways they might imagine off the cascading sequence of rallies, bus tours, self-publication of pamphlets, conferences, disruption of town meetings, and other public gatherings.10 In a sort of chain-letter Ponzi scheme, or better yet, an Amway franchise, the disgruntled were first financed and regimented through large quasi-corporations, made to feel empowered by encouragement to do the same on a smaller scale with their own venture-capital start-ups, then themselves motivated to recruit others to join the movement.11 For instance, 41 percent of the booths at the Tea Party convention in Phoenix in February 2011 were manned by for-profit groups; an additional 35 percent were large business interests such as Philip Morris and Exxon Mobil.

See Neoliberal Thought Collective (NTC) Nugent, Ted NYU (New York University) O Obama, Barack Occam’s Razor Occupiers Occupy Handbook Occupy London Occupy Movement Occupy Wall Street (OWS) Odyssey (Homer) Old Thinking Oldham, Taki, Turf Wars Open questions Open Society The Open Society and Its Enemies (Popper) Oracle at Delphi Ordoliberalism Oreskes, Naomi Original Sin O’Rourke, Kevin Orszag, Peter Orwell, George Osborne, George Outsourced Self (Hochschild) OWS (Occupy Wall Street) P Page, Scott Palin, Sarah Pareto, Vilfredo Patterson, Scott, Dark Pools Paul, Ron Paulson, Hank Payday loans Payne, Christopher PBS Peck, Jamie Pecora, Ferdinand Perry, Rick Pesaran, Hashem Pew Economic Policy Group Financial Reform Project Philip Morris Phillips Curve Philosopher’s Stone Pimco Pinochet, Augusto Pinto, Edward Pissarides, Christopher Pity the Billionaire (Frank) Plant, Raymond Plato Plehwe, Dieter Ponzi scheme Poon, Martha Popper, Karl Portes, Richard Posner, Richard Power Auctions Predator Nation (Ferguson) Prediction as red herring Prescott, Edward C. Presidential Economic Recovery Advisory Board Princes of Theory Princeton University Private debt Privatized revolt Proctor, Robert Prophet of the Reformation Protestant Reformation Proteus, Odyssey Provigil Prozac Profits, corporate Public choice theory Purity of Populist Expression Pynchon, Thomas, Gravity’s Rainbow Q Quah, Danny Quarterly Journal of Economics Queen of England Quiggin, John Crooked Timber on economic crisis Williamson on Zombie Economics R Radin, Margaret Rajan, Raghuram Rajnarathan, Raj Rand, Ayn on Hayek Rapture Rationality repudiation Reads, Leonard Reagan, Ronald Reagan–Thatcher era Reckless Endangerment (Morgenson and Rosner) Regulation as panacea Reinhardt, Uwe Reinhart, Carmen Relm Foundation Republican Party, Restructuring of universities Reuters Revealed (Journal) Scripture Revere, Paul “Ricardian Equivalence,” Righteous Sound Thinking Risk Risk, Uncertainty and Profit (Knight) Ritalin Ritholtz, Barry Road to Serfdom (Hayek) Robbins, Lionel Robin, Corey Robinson, Joan Rogoff, Kenneth Rogoff Reinhart neoliberal line Romer, Christina Romer, Paul Romney, Mitt Roosevelt Institute Röpke, Wilhelm Rosner, Josh Rosston, Gregory Rothbard, Murray Roubini, Nouriel Royal Bank of Scotland Rubin, Robert Ruccio, David Rudd, Kevin Rüstow, Alexander Ryan, Paul S Sachs, Jeffrey Sadism Salmon, Felix Samuelson, Paul Sanders, Bernie Santa Clara University Santa Fe Institute Santelli, Rick Sargasso Sea of Ambiguity Sargent, Thomas Sassen, Saskia Savior of the American Economy Schapiro, Mary Schmitt, Carl Schneider, Louis School of Reformed Orthodoxy Schwartz, Anna J., The Monetary History of the United States Schweizerisches Institut für Auslandforschung (Swiss Institute of International Studies) Science ScienceMart Scott, Hal Scott, John MacCallum SEC (Securities and Exchange Commission) Second Life “The Seekers,” Selfhood, neoliberal Seltzer, Nicolas Sen, Amartya Senate Banking Committee Shales, Amy Shapiro, Harold Sharfstein, David Shattered Shaw, D.


pages: 613 words: 181,605

Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to Its Knees by Patrick Dillon, Carl M. Cannon

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", accounting loophole / creative accounting, affirmative action, Alan Greenspan, AOL-Time Warner, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, buy and hold, Carl Icahn, collective bargaining, Columbine, company town, computer age, corporate governance, corporate raider, desegregation, energy security, estate planning, Exxon Valdez, fear of failure, fixed income, Gordon Gekko, greed is good, illegal immigration, index fund, John Markoff, junk bonds, mandatory minimum, margin call, Maui Hawaii, McDonald's hot coffee lawsuit, Michael Milken, money market fund, new economy, oil shale / tar sands, Ponzi scheme, power law, Ralph Nader, rolodex, Ronald Reagan, Sand Hill Road, Savings and loan crisis, Silicon Valley, Silicon Valley startup, Steve Jobs, the High Line, the market place, white picket fence, Works Progress Administration, zero-sum game

The Methodist hierarchy bailed the homes out at first, but as the losses mounted, Pacific Homes’ officials resorted to acquiring more buildings and attracting new residents with “life-care contracts,” even as they spent the money paid up front by new retirees to keep the existing retirement facilities afloat. However well intentioned the Methodist elders had been originally, they eventually found themselves running an elaborate Ponzi scheme. The legal case began in 1977, when a Pacific Homes retiree named Frank Barr placed a call to a San Diego law firm, Wied & Granby, to which he had been referred by his estate planning attorney. Barr told the Wied & Granby attorneys his story: months after he had paid more than $300,000 for a “life-care contract,” Pacific Homes officials had announced that all residents would have to pay several hundred dollars more each month to keep the place afloat.

Isaacs replied that he’d seen the draft and, in his opinion, the whole investigation had reached a critical point of whether to keep investigating, discontinue, or push forward and out into the open. Did he have an opinion? McGahan was anxious to know. Yes, Isaacs told his younger colleague, previewing what he would recommend to Cardona. “Let’s indict.” * Among the many victims of Bernie Madoff’s Ponzi scheme was Mel Weiss. Although the amount of his loss was not disclosed publicly, Bill Lerach estimated it to be between $20 million and $30 million. * “I know what I don’t know,” Ebbers would later testify at his own trial. “I don’t know technology and engineering. I don’t know accounting.” The charges against him hinged on the last of those three claims, and the jurors and a federal judge chose not to believe him.

That agency had clearly lost its oomph. In the sixty years after the Boston office of the SEC had been the impetus in expanding the commission’s reach under the 1933–34 securities acts, that same regional office professed not to see anything wrong with Bernard Madoff’s transparent, multibillion-dollar Ponzi scheme—even after it was brought to their attention by a Boston-based trader named Harry Markopolos. As Madoff appeared to be heading to prison, FBI officials told Congress that despite a huge redeployment of its agents to financial fraud, it would never have the resourses to police the financial markets on the threat of criminal prosecution alone.


pages: 124 words: 39,011

Beyond Outrage: Expanded Edition: What Has Gone Wrong With Our Economy and Our Democracy, and How to Fix It by Robert B. Reich

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Alan Greenspan, banking crisis, benefit corporation, business cycle, carried interest, collateralized debt obligation, collective bargaining, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, electricity market, Ford Model T, full employment, Glass-Steagall Act, Home mortgage interest deduction, job automation, low interest rates, Mahatma Gandhi, minimum wage unemployment, money market fund, Nelson Mandela, new economy, Occupy movement, offshore financial centre, plutocrats, Ponzi scheme, race to the bottom, Ronald Reagan, Savings and loan crisis, single-payer health, special drawing rights, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, women in the workforce, working poor, zero-sum game

They and any others who would lose medical coverage if the new law were repealed will get emergency care when they’re in dire straits in any event—hospitals won’t refuse them—but we all end up paying indirectly. Regressives pretend they’re about opportunity. But in reality, as I’ve said before, they’re promoting social Darwinism. 8. Social Security is a Ponzi scheme. Don’t believe it. In a former life I was a trustee of the Social Security trust fund, and I know how the Social Security actuaries make their projections. Social Security is solvent for the next twenty-five years, until 2037. It could be solvent for the next century if we raised the ceiling on income subject to the Social Security payroll tax.


pages: 147 words: 39,910

The Great Mental Models: General Thinking Concepts by Shane Parrish

Albert Einstein, anti-fragile, Atul Gawande, Barry Marshall: ulcers, bitcoin, Black Swan, colonial rule, correlation coefficient, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, delayed gratification, feminist movement, Garrett Hardin, if you see hoof prints, think horses—not zebras, index fund, Isaac Newton, Jane Jacobs, John Bogle, Linda problem, mandelbrot fractal, Pepsi Challenge, Philippa Foot, Pierre-Simon Laplace, Ponzi scheme, Richard Feynman, statistical model, stem cell, The Death and Life of Great American Cities, the map is not the territory, the scientific method, Thomas Bayes, Torches of Freedom, Tragedy of the Commons, trolley problem

Remarkably, no one wearing a mask was attacked by a tiger for the next three years; anyone killed by tigers during that time had either refused to wear the mask, or had taken it off while working. — Sidebar: Occam’s Razor in the Medical Field A few caveats One important counter to Occam’s Razor is the difficult truth that some things are simply not that simple. The regular recurrence of fraudulent human organizations like pyramid schemes and Ponzi schemes is not a miracle, but neither is it obvious. No simple explanation suffices, exactly. They are a result of a complex set of behaviors, some happening almost by accident or luck, and some carefully designed with the intent to deceive. It isn’t a bit easy to spot the development of a fraud. If it was, they’d be stamped out early.


pages: 457 words: 112,439

Zero History by William Gibson

augmented reality, business intelligence, dark matter, edge city, hive mind, invisible hand, messenger bag, new economy, pattern recognition, Pepto Bismol, placebo effect, Ponzi scheme, RFID, too big to fail

“Sometimes,” Hollis said, “I think something about Bigend condenses things, pulls them together …” “Reg,” said Heidi, drawing the dart’s black tip perilously close to her eye, “just says Bigend’s a producer. The Hollywood kind, not the music kind. A giant version of what fuckstick said he’d like to be, but without the hassle of having to make movies.” She lowered the second dart, looked seriously at Hollis. “Maybe that was what he was thinking of with the Ponzi scheme, huh?” “You had no idea he was doing that?” “I don’t think he did either, most of the time. He was good at delegation. Delegated that to some module of himself he didn’t have to hear from too often. Reg says he embodied the decade that way.” “Have you seen Reg yet?” “We had lunch when you were in Paris.”

He knew that there were private parks here. “What’s this hotel called?” he asked. “Cabinet,” said Hollis. “Let’s go.” 47. IN THE CUISINART ATRIUM Heidi, for some reason, knew a great deal about custom vehicular armor. Perhaps it was a Beverly Hills thing, Hollis thought, as Aldous wound them deeper into the City, or a Ponzi scheme thing, or both. Heidi and Aldous, with whom Hollis could see Heidi was flirting, though still at a level of solid deniability, were deep in a discussion of whether or not Bigend had been wise to insist on power windows for the front set of doors, which had meant forgoing a bulletproof documentation slot on the driver’s side, through which papers might be presented without opening either the door or the window.


pages: 386 words: 116,233

The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime by Mj Demarco

8-hour work day, Albert Einstein, AltaVista, back-to-the-land, Bernie Madoff, bounce rate, business logic, business process, butterfly effect, buy and hold, cloud computing, commoditize, dark matter, delayed gratification, demand response, do what you love, Donald Trump, drop ship, fear of failure, financial engineering, financial independence, fixed income, housing crisis, Jeff Bezos, job-hopping, Lao Tzu, Larry Ellison, low interest rates, Mark Zuckerberg, multilevel marketing, passive income, passive investing, payday loans, planned obsolescence, Ponzi scheme, price anchoring, Ronald Reagan, subscription business, upwardly mobile, wealth creators, white picket fence, World Values Survey, zero day

She asked questions and didn't like the answers. Something didn't “feel” right. Logic tickled her inner brain. Ultimately, she passed on the investment and it remained outside her world. Years later “The Fund” made headline news. An investment company had bilked millions of dollars from investors. The investment company was exposed to be a Ponzi scheme, and several swindled investors committed suicide, including the perpetrator. This investment company was none other than that great investment mother declined years earlier-“The Fund.” The Law of Victims The Law of Victims says you can't be a victim if you don't relinquish power to someone capable of making you a victim.

Verify First, Trust Later Former president Ronald Reagan once said, “Trust, but verify.” When I hired the liar, I trusted but didn't verify. It took several robberies, video cameras, and public record searches to uncover the truth. I verified too late and it cost me. The most egregious cases of trust are our financial system. Bernard Madoff perpetrated the largest Ponzi scheme ever, and billions of dollars were lost. How does one man siphon billions from millions? Unverified trust. Thousands trusted Madoff and thousands failed to verify. Those who did verify didn't invest and some even blew the whistle. We are a trusting people and we want to believe the best. We want to believe in fairy tales and happily ever after.


pages: 422 words: 113,830

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips

"World Economic Forum" Davos, Alan Greenspan, algorithmic trading, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, business cycle, buy and hold, collateralized debt obligation, computer age, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency peg, diversification, Doha Development Round, energy security, financial deregulation, financial engineering, financial innovation, fixed income, Francis Fukuyama: the end of history, George Gilder, Glass-Steagall Act, housing crisis, Hyman Minsky, imperial preference, income inequality, index arbitrage, index fund, interest rate derivative, interest rate swap, Joseph Schumpeter, junk bonds, Kenneth Rogoff, large denomination, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, Menlo Park, Michael Milken, military-industrial complex, Minsky moment, mobile money, money market fund, Monroe Doctrine, moral hazard, mortgage debt, Myron Scholes, new economy, oil shale / tar sands, oil shock, old-boy network, peak oil, plutocrats, Ponzi scheme, profit maximization, prosperity theology / prosperity gospel / gospel of success, Renaissance Technologies, reserve currency, risk tolerance, risk/return, Robert Shiller, Ronald Reagan, Satyajit Das, Savings and loan crisis, shareholder value, short selling, sovereign wealth fund, stock buybacks, subprime mortgage crisis, The Chicago School, Thomas Malthus, too big to fail, trade route

The new treasury secretary, as president of the New York Federal Reserve Bank, had been part of the troika running the rescue programs. The incoming Roosevelt administration of 1933 had no similar link. Gallup’s November poll had found 60 percent of those sampled calling it critical or very important for Obama to impose stricter regulation on financial institutions. Then December’s revelation of the $50 billion Ponzi scheme run by financier Bernard Madoff further soured the public. In December’s CNN/opinion research poll, 74 percent of those sampled said they believed Madoff’s behavior was common among financial advisers and institutions, and 59 percent said that government regulated the stock market and financial institutions too loosely, up from 50 percent in September.

My task here is somewhat narrower: to set out several securities-market-related dimensions unique to the last three decades, clearly the deepest of the three transformations. The financial sector cut its teeth in the Gilded Age, in the years of J. P. Morgan and the initial emergence of the great corporations and trusts. In the Roaring Twenties came the first broad American stock mania, replete with Ponzi schemes and bucket shops. But amid the blood, sweat, and jeers of the Depression, tickertape ballyhoo collapsed into caution. Contemporary finance was able to seize and hold the nation’s reins, in part by selling markets as a participatory experience and democratic empowerment only when the 1980s and 1990s brought support from pension funds, Internet trading, and 401(k)s.


pages: 342 words: 114,118

After the Fall: Being American in the World We've Made by Ben Rhodes

Affordable Care Act / Obamacare, Alan Greenspan, Asian financial crisis, Berlin Wall, Bernie Sanders, Big Tech, British Empire, centre right, COVID-19, Deng Xiaoping, disinformation, Dissolution of the Soviet Union, Donald Trump, drone strike, Edward Snowden, fake news, Fall of the Berlin Wall, gentrification, geopolitical risk, George Floyd, Glass-Steagall Act, global pandemic, global supply chain, Great Leap Forward, illegal immigration, independent contractor, invisible hand, late capitalism, lockdown, Mark Zuckerberg, Mikhail Gorbachev, Nelson Mandela, new economy, obamacare, open economy, Ponzi scheme, profit motive, QAnon, quantitative easing, Ralph Waldo Emerson, Ronald Reagan, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social distancing, South China Sea, the long tail, too big to fail, trade route, Washington Consensus, young professional, zero-sum game

The worry, Adam said, is that Russia is exporting these methodologies, causing them to mushroom across the United States and around the world—the counterrevolution gone viral. Still, Russia itself was not likely to be the beneficiary, for the same reasons that Navalny had seized upon—the corruption that is only about the perpetuation of wealth and power for a particular group of people in a particular time. “Putin runs the government like a Ponzi scheme. And eventually, Ponzi schemes implode.” The more ominous danger, Adam said, came from China. “Putin’s Russia is the threat of a wounded animal. China is the threat of a growing, strengthening, burgeoning power.” It was a power that had the capacity to do more than tear things down—the stopgap nationalism of a Putin or Orban.


pages: 1,845 words: 567,850

J.K. Lasser's Your Income Tax 2014 by J. K. Lasser

accelerated depreciation, Affordable Care Act / Obamacare, airline deregulation, asset allocation, book value, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, independent contractor, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, obamacare, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond

- - - - - - - - - - IRS Alert Expanded Eligibility For IRS’ Ponzi Scheme Loss Safe Harbor In Revenue Procedure 2011-58, the IRS expanded eligibility for its optional safe harbor for Ponzi scheme losses, allowing it to be used by victimized investors when the lead figure in the scam dies before the authorities can charge him or her with criminal theft. - - - - - - - - - - Deduction allowed to victims of Ponzi schemes and similar fraudulent schemes The IRS allows investors who fall victim to fraudulent investment arrangements, including Ponzi schemes, to claim a theft loss deduction under special rules (Revenue Ruling 2009-9).

However, if the lead figure died before being charged with criminal theft and a civil complaint under (3) above was filed, the discovery year is the year of the lead figure’s death where that is later than the year that the civil complaint was filed (Revenue Procedure 2011-58). - - - - - - - - - - Filing Instruction Claiming Ponzi Scheme Loss on Form 4684 The IRS has added a new Section C to Form 4684 for claiming a Ponzi scheme loss under the optional safe harbor method - - - - - - - - - - Fraudulent sales offers Worthless stock purchases made on the representation of false and fraudulent sales offers are deductible as theft losses in the year there is no reasonable prospect of recovery.

See also Simplified employee pension (SEP) plans Pensions disability nontaxable self-employed income and Percentage depletion Per diem travel allowance Performing artists Periodic interest Periodic payments, retirement plan Permanent life insurance Permanently and totally disabled person Permits, departure (sailing) Personal creative works, donating Personal exemptions citizen and resident tests for dependents and joint returns by dependents number of phaseout of qualifying children qualifying relatives and Social Security numbers of dependents spouse Personal injury settlements Personal interest Personal property Personal rollovers (retirement plan) Personal service corporations Personal tax credits adoption credit child tax credit dependent care credit earned income credit first-time homebuyer credit for fuel cell and plug-in electric vehicles health coverage credit mortgage interest credit overview residential energy credits saver’s credit Personal use with business use capital losses on assets with losses on vehicles with Personal-use days Personal-use property and imputed interest rule with business use losses on rental of with business use Personal-use tests Phaseout Range for Deduction Limit on 2013 Returns Phaseout rules. See Deduction phaseout rules Phaseout threshold Physical presence test Pilots Placed in service (term) Pledge rule Plug-in electric vehicles “Points” Ponzi schemes Portability election (estate tax) Portfolio income Postmarks, for returns Pre-1936 buildings Pre-1974 participation in retirement plans Premature distributions Prepaid expenses Prepaid interest Primary purpose determination, educational program Principal residence Principal residence exclusion Principal residence indebtedness Principals (school) Prior law deferral rules Prior law rollover rules Private activity bonds Private letter ruling Private non-operating foundations Private schools Prizes, as income Probate estate Production activities Production costs Products, discounts on Product testing Professional gamblers Professionals, deductions for Professional sports players Profit presumption Profits.


pages: 410 words: 119,823

Radical Technologies: The Design of Everyday Life by Adam Greenfield

3D printing, Airbnb, algorithmic bias, algorithmic management, AlphaGo, augmented reality, autonomous vehicles, bank run, barriers to entry, basic income, bitcoin, Black Lives Matter, blockchain, Boston Dynamics, business intelligence, business process, Californian Ideology, call centre, cellular automata, centralized clearinghouse, centre right, Chuck Templeton: OpenTable:, circular economy, cloud computing, Cody Wilson, collective bargaining, combinatorial explosion, Computer Numeric Control, computer vision, Conway's Game of Life, CRISPR, cryptocurrency, David Graeber, deep learning, DeepMind, dematerialisation, digital map, disruptive innovation, distributed ledger, driverless car, drone strike, Elon Musk, Ethereum, ethereum blockchain, facts on the ground, fiat currency, fulfillment center, gentrification, global supply chain, global village, Goodhart's law, Google Glasses, Herman Kahn, Ian Bogost, IBM and the Holocaust, industrial robot, informal economy, information retrieval, Internet of things, Jacob Silverman, James Watt: steam engine, Jane Jacobs, Jeff Bezos, Jeff Hawkins, job automation, jobs below the API, John Conway, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Perry Barlow, John von Neumann, joint-stock company, Kevin Kelly, Kickstarter, Kiva Systems, late capitalism, Leo Hollis, license plate recognition, lifelogging, M-Pesa, Mark Zuckerberg, means of production, megacity, megastructure, minimum viable product, money: store of value / unit of account / medium of exchange, natural language processing, Network effects, New Urbanism, Nick Bostrom, Occupy movement, Oculus Rift, off-the-grid, PalmPilot, Pareto efficiency, pattern recognition, Pearl River Delta, performance metric, Peter Eisenman, Peter Thiel, planetary scale, Ponzi scheme, post scarcity, post-work, printed gun, proprietary trading, RAND corporation, recommendation engine, RFID, rolodex, Rutger Bregman, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, sharing economy, Shenzhen special economic zone , Sidewalk Labs, Silicon Valley, smart cities, smart contracts, social intelligence, sorting algorithm, special economic zone, speech recognition, stakhanovite, statistical model, stem cell, technoutopianism, Tesla Model S, the built environment, The Death and Life of Great American Cities, The Future of Employment, Tony Fadell, transaction costs, Uber for X, undersea cable, universal basic income, urban planning, urban sprawl, vertical integration, Vitalik Buterin, warehouse robotics, When a measure becomes a target, Whole Earth Review, WikiLeaks, women in the workforce

Nor is “We actually don’t know who started it” an explanation likely to satisfy a magistrate interested in assuring an organization’s regulatory compliance. This is one of the reasons why skepticism about The DAO has run deep from the very beginning. Within days of its launch, the venture was criticized for the dubious quality of its initial investments, mocked for its naivete, pilloried as a Ponzi scheme, and characterized as “the first scam where the participants scam themselves.”31 After just a month up and running, a group of the experts most familiar with its codebase (including one of its own Curators, Ethereum researcher Vlad Zamfir) had developed reservations so pronounced that they called for a moratorium on submitting funding proposals to The DAO.32 But it was already too late for precautionary action.

We might even join Bitcoin core developer Mike Hearn in dreaming a transhuman future in which sovereign autonomous vehicles own themselves, lease themselves to users, and transact with a marketized grid for the power they need.37 It’s not unreasonable to be intrigued by these possibilities, whatever your own politics. But if the collapse of The DAO holds any lesson for us, it’s that any envelope of potentials in which these things are possible must also necessarily contain monsters. If Ethereum’s vision proves out in any way, we need to prepare for densely layered Ponzi schemes whose true beneficiaries are ultimately obscured by cryptographic means, for vampiric rent-extraction syndicates and fully autonomous nonhuman grifters. We may well wonder, when beset with these horrors, why anyone ever believed this was a future worth investing in and bringing to fruition. And for those of us who are motivated by commitment to a specifically participatory politics of the commons, it’s not at all clear that any blockchain-based infrastructure can support the kind of flexible assemblies we imagine.


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alan Greenspan, Alvin Roth, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, benefit corporation, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, democratizing finance, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial engineering, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, Great Leap Forward, Ida Tarbell, income inequality, information asymmetry, invisible hand, John Bogle, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, social contagion, Steven Pinker, tail risk, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

The regulators quickly go after small-time crooks, Markopolos argued, but when it comes to large companies, they are “captive to the companies they are supposed to regulate.” Markopolos uncovered substantial evidence that the massive hedge fund run by the respected Wall Street gure Bernard Madoff was nothing more than a Ponzi scheme, a fraudulent investment scheme built on a plan for social contagion of enthusiasm among investors. The fund was eventually exposed in 2008. But Markopolos had complained about Mado ’s scheme to the SEC as early as 2000. In 2005, three years before the ultimate collapse of the scheme, Markopolos presented a twenty-one-page document to SEC New York Branch Chief Meaghan Cheung and explained his ndings.

Steel production was to be carried out in backyard furnaces that would be considered laughable by knowledgeable steel industry analysts, but those who understood that had no in uence in China at the time. Of course there was no way to short the Great Leap Forward. As a result of this bubble, agricultural labor and resources were rapidly diverted to industry. The result was massive famine, with tens of millions of deaths.3 The Great Leap Forward also has aspects of a Ponzi scheme. There are reports that Mao Zedong, on visiting a modern steel plant in Manchuria in 1959, became doubtful that the backyard furnaces were a good idea. According to his personal physician and later biographer Li Zhisui, “he gave no order to halt the backyard steel furnaces. The horrible waste of manpower and materials, the useless output from the homemade furnaces, was not his main concern.


pages: 424 words: 119,679

It's Better Than It Looks: Reasons for Optimism in an Age of Fear by Gregg Easterbrook

affirmative action, Affordable Care Act / Obamacare, air freight, Alan Greenspan, Apollo 11, autonomous vehicles, basic income, Bernie Madoff, Bernie Sanders, Black Lives Matter, Boeing 747, Branko Milanovic, Brexit referendum, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, clean tech, clean water, coronavirus, Crossrail, David Brooks, David Ricardo: comparative advantage, deindustrialization, Dissolution of the Soviet Union, Donald Trump, driverless car, Elon Musk, Exxon Valdez, factory automation, failed state, fake news, full employment, Gini coefficient, Google Earth, Home mortgage interest deduction, hydraulic fracturing, Hyperloop, illegal immigration, impulse control, income inequality, independent contractor, Indoor air pollution, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, labor-force participation, liberal capitalism, longitudinal study, Lyft, mandatory minimum, manufacturing employment, Mikhail Gorbachev, minimum wage unemployment, Modern Monetary Theory, obamacare, oil shale / tar sands, Paul Samuelson, peak oil, plant based meat, plutocrats, Ponzi scheme, post scarcity, purchasing power parity, quantitative easing, reserve currency, rising living standards, Robert Gordon, Ronald Reagan, self-driving car, short selling, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, Steve Wozniak, Steven Pinker, supervolcano, The Chicago School, The Rise and Fall of American Growth, the scientific method, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transaction costs, Tyler Cowen, uber lyft, universal basic income, War on Poverty, Washington Consensus, We are all Keynesians now, WikiLeaks, working poor, Works Progress Administration

Projecting unrealistic returns at unspecified future dates allows governors and mayors to pretend to be fiscally responsible and allows state and local pension fund managers to award themselves generous bonuses, while distributing current revenues as if they were investment yields—exactly the manner in which Ponzi schemes function. Connecticut, Illinois, New Jersey, and many California cities are among places with runaway unfunded liabilities to retirees: unfunded pension liabilities in Illinois equate to $22,500 per resident, and the state is not saving for ever-rising numbers of retirees. Dallas has unfunded pension liabilities equivalent to four years of the city’s budget. Teachers’ pension plans—which in many states justify big bonuses to fund officers by claiming excellent fiduciary performance—owe at least $500 billion they have not saved and in many states employ a Ponzi-scheme structure.


pages: 510 words: 120,048

Who Owns the Future? by Jaron Lanier

3D printing, 4chan, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, augmented reality, automated trading system, barriers to entry, bitcoin, Black Monday: stock market crash in 1987, book scanning, book value, Burning Man, call centre, carbon credits, carbon footprint, cloud computing, commoditize, company town, computer age, Computer Lib, crowdsourcing, data science, David Brooks, David Graeber, delayed gratification, digital capitalism, digital Maoism, digital rights, Douglas Engelbart, en.wikipedia.org, Everything should be made as simple as possible, facts on the ground, Filter Bubble, financial deregulation, Fractional reserve banking, Francis Fukuyama: the end of history, Garrett Hardin, George Akerlof, global supply chain, global village, Haight Ashbury, hive mind, if you build it, they will come, income inequality, informal economy, information asymmetry, invisible hand, Ivan Sutherland, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Kevin Kelly, Khan Academy, Kickstarter, Kodak vs Instagram, life extension, Long Term Capital Management, machine translation, Marc Andreessen, Mark Zuckerberg, meta-analysis, Metcalfe’s law, moral hazard, mutually assured destruction, Neal Stephenson, Network effects, new economy, Norbert Wiener, obamacare, off-the-grid, packet switching, Panopticon Jeremy Bentham, Peter Thiel, place-making, plutocrats, Ponzi scheme, post-oil, pre–internet, Project Xanadu, race to the bottom, Ray Kurzweil, rent-seeking, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, smart meter, stem cell, Steve Jobs, Steve Wozniak, Stewart Brand, synthetic biology, tech billionaire, technological determinism, Ted Nelson, The Market for Lemons, Thomas Malthus, too big to fail, Tragedy of the Commons, trickle-down economics, Turing test, Vannevar Bush, WikiLeaks, zero-sum game

Despite my favorable regard for organized labor, for the purposes of this book I have to focus somewhat on certain failings. The problems of interest to me are not really with the labor movement, but with the nature of levees. What might be called “upper-class levees,” like exclusive investment funds, have been known to blur into Ponzi schemes or other criminal enterprises, and the same pattern exists for levees at all levels. Levees are more human than algorithmic, and that is not an entirely good thing. Whether for the rich or the middle class, levees are inevitably a little conspiratorial, and conspiracy naturally attracts corruption.

., 75, 91, 266–67 New York Times, 109 Nobel Prize, 40, 118, 143n nodes, network, 156, 227, 230, 241–43, 350 “no free lunch” principle, 55–56, 59–60 nondeterministic music, 23n nonlinear solutions, 149–50 nonprofit share sites, 59n, 94–95 nostalgia, 129–32 NRO, 199–200 nuclear power, 133 nuclear weapons, 127, 296 nursing, 97–100, 123, 296n nursing homes, 97–100, 269 Obama, Barack, 79, 100 “Obamacare,” 100n obsolescence, 89, 95 oil resources, 43, 133 online stores, 171 Ono, Yoko, 212 ontologies, 124n, 196 open-source applications, 206, 207, 272, 310–11 optical illusions, 121 optimism, 32–35, 45, 130, 138–40, 218, 230n, 295 optimization, 144–47, 148, 153, 154–55, 167, 202, 203 Oracle, 265 Orbitz, 63, 64, 65 organ donors, 190, 191 ouroboros, 154 outcomes, economic, 40–41, 144–45 outsourcing, 177–78, 185 Owens, Buck, 256 packet switching, 228–29 Palmer, Amanda, 186–87 Pandora, 192 panopticons, 308 papacy, 190 paper money, 34n parallel computers, 147–48, 149, 151 paranoia, 309 Parrish, Maxfield, 214 particle interactions, 196 party machines, 202 Pascal, Blaise, 132, 139 Pascal’s Wager, 139 passwords, 307, 309 “past-oriented money,” 29–31, 35, 284–85 patterns, information, 178, 183, 184, 188–89 Paul, Ron, 33n Pauli exclusion principle, 181, 202 PayPal, 60, 93, 326 peasants, 565 pensions, 95, 99 Perestroika (Kushner), 165 “perfect investments,” 59–67, 77–78 performances, musical, 47–48, 51, 186–87, 253 perpetual motion, 55 Persian Gulf, 86 personal computers (PCs), 158, 182n, 214, 223, 229 personal information systems, 110, 312–16, 317 Pfizer, 265 pharmaceuticals industry, 66–67, 100–106, 123, 136, 203 philanthropy, 117 photography, 53, 89n, 92, 94, 309–11, 318, 319, 321 photo-sharing services, 53 physical trades, 292 physicians, 66–67 physics, 88, 153n, 167n Picasso, Pablo, 108 Pinterest, 180–81, 183 Pirate Party, 49, 199, 206, 226, 253, 284, 318 placebos, 112 placement fees, 184 player pianos, 160–61 plutocracy, 48, 291–94, 355 police, 246, 310, 311, 319–21, 335 politics, 13–18, 21, 22–25, 47–48, 85, 122, 124–26, 128, 134–37, 149–51, 155, 167, 199–234, 295–96, 342 see also conservatism; liberalism; libertarianism Ponzi schemes, 48 Popper, Karl, 189n popular culture, 111–12, 130, 137–38, 139, 159 “populating the stack,” 273 population, 17, 34n, 86, 97–100, 123, 125, 132, 133, 269, 296n, 325–26, 346 poverty, 37–38, 42, 44, 53–54, 93–94, 137, 148, 167, 190, 194, 253, 256, 263, 290, 291–92 power, personal, 13–15, 53, 60, 62–63, 86, 114, 116, 120, 122, 158, 166, 172–73, 175, 190, 199, 204, 207, 208, 278–79, 290, 291, 302–3, 308–9, 314, 319, 326, 344, 360 Presley, Elvis, 211 Priceline, 65 pricing strategies, 1–2, 43, 60–66, 72–74, 145, 147–48, 158, 169–74, 226, 261, 272–75, 289, 317–24, 331, 337–38 printers, 90, 99, 154, 162, 212, 269, 310–11, 316, 331, 347, 348, 349 privacy, 1–2, 11, 13–15, 25, 50–51, 64, 99, 108–9, 114–15, 120–21, 152, 177n, 199–200, 201, 204, 206–7, 234–35, 246, 272, 291, 305, 309–13, 314, 315–16, 317, 319–24 privacy rights, 13–15, 25, 204, 305, 312–13, 314, 315–16, 321–22 product design and development, 85–89, 117–20, 128, 136–37, 145, 154, 236 productivity, 7, 56–57, 134–35 profit margins, 59n, 71–72, 76–78, 94–95, 116, 177n, 178, 179, 207, 258, 274–75, 321–22 progress, 9–18, 20, 21, 37, 43, 48, 57, 88, 98, 123, 124–40, 130–37, 256–57, 267, 325–31, 341–42 promotions, 62 property values, 52 proprietary hardware, 172 provenance, 245–46, 247, 338 pseudo-asceticism, 211–12 public libraries, 293 public roads, 79–80 publishers, 62n, 92, 182, 277–78, 281, 347, 352–60 punishing vs. rewarding network effects, 169–74, 182, 183 quants, 75–76 quantum field theory, 167n, 195 QuNeo, 117, 118, 119 Rabois, Keith, 185 “race to the bottom,” 178 radiant risk, 61–63, 118–19, 120, 156, 183–84 Ragnarok, 30 railroads, 43, 172 Rand, Ayn, 167, 204 randomness, 143 rationality, 144 Reagan, Ronald, 149 real estate, 33, 46, 49–52, 61, 78, 95–96, 99, 193, 224, 227, 239, 245, 255, 274n, 289n, 296, 298, 300, 301 reality, 55–56, 59–60, 124n, 127–28, 154–56, 161, 165–68, 194–95, 203–4, 216–17, 295–303, 364–65 see also Virtual Reality (VR) reason, 195–96 recessions, economic, 31, 54, 60, 76–77, 79, 151–52, 167, 204, 311, 336–37 record labels, 347 recycling, 88, 89 Reddit, 118n, 186, 254 reductionism, 184 regulation, economic, 37–38, 44, 45–46, 49–50, 54, 56, 69–70, 77–78, 266n, 274, 299–300, 311, 321–22, 350–51 relativity theory, 167n religion, 124–25, 126, 131, 139, 190, 193–95, 211–17, 293, 300n, 326 remote computers, 11–12 rents, 144 Republican Party, 79, 202 research and development, 40–45, 85–89, 117–20, 128, 136–37, 145, 154, 215, 229–30, 236 retail sector, 69, 70–74, 95–96, 169–74, 272, 349–51, 355–56 retirement, 49, 150 revenue growth plans, 173n revenues, 149, 149, 150, 151, 173n, 225, 234–35, 242, 347–48 reversible computers, 143n revolutions, 199, 291, 331 rhythm, 159–62 Rich Dad, Poor Dad (Kiyosaki), 46 risk, 54, 55, 57, 59–63, 71–72, 85, 117, 118–19, 120, 156, 170–71, 179, 183–84, 188, 242, 277–81, 284, 337, 350 externalization of, 59n, 117, 277–81 risk aversion, 188 risk pools, 277–81, 284 risk radiation, 61–63, 118–19, 120, 156, 183–84 robo call centers, 177n robotic cars, 90–92 robotics, robots, 11, 12, 17, 23, 42, 55, 85–86, 90–92, 97–100, 111, 129, 135–36, 155, 157, 162, 260, 261, 269, 296n, 342, 359–60 Roman Empire, 24–25 root nodes, 241 Rousseau, Jean-Jacques, 129 Rousseau humor, 126, 129, 130–31 routers, 171–72 royalties, 47, 240, 254, 263–64, 323, 338 Rubin, Edgar, 121 rupture, 66–67 salaries, 10, 46–47, 50–54, 152, 178, 270–71, 287–88, 291–94, 338–39, 365 sampling, 71–72, 191, 221, 224–26, 259 San Francisco, University of, 190 satellites, 110 savings, 49, 72–74 scalable solutions, 47 scams, 119–21, 186, 275n, 287–88, 299–300 scanned books, 192, 193 SceneTap, 108n Schmidt, Eric, 305n, 352 Schwartz, Peter, 214 science fiction, 18, 126–27, 136, 137–38, 139, 193, 230n, 309, 356n search engines, 51, 60, 70, 81, 120, 191, 267, 289, 293 Second Life, 270, 343 Secret, The (Byrne), 216 securitization, 76–78, 99, 289n security, 14–15, 175, 239–40, 305–8, 345 self-actualization, 211–17 self-driving vehicles, 90–92, 98, 311, 343, 367 servants, 22 servers, 12n, 15, 31, 53–57, 71–72, 95–96, 143–44, 171, 180, 183, 206, 245, 358 see also Siren Servers “Sexy Sadie,” 213 Shakur, Tupac, 329 Shelley, Mary, 327 Short History of Progress, A (Wright), 132 “shrinking markets,” 66–67 shuttles, 22, 23n, 24 signal-processing algorithms, 76–78, 148 silicon chips, 10, 86–87 Silicon Valley, 12, 13, 14, 21, 34n, 56, 59, 60, 66–67, 70, 71, 75–76, 80, 93, 96–97, 100, 102, 108n, 125n, 132, 136, 154, 157, 162, 170, 179–89, 192, 193, 200, 207, 210, 211–18, 228, 230, 233, 258, 275n, 294, 299–300, 325–31, 345, 349, 352, 354–58 singularity, 22–25, 125, 215, 217, 327–28, 366, 367 Singularity University, 193, 325, 327–28 Sirenic Age, 66n, 354 Siren Servers, 53–57, 59, 61–64, 65, 66n, 69–78, 82, 91–99, 114–19, 143–48, 154–56, 166–89, 191, 200, 201, 203, 210n, 216, 235, 246–50, 258, 259, 269, 271, 272, 280, 285, 289, 293–94, 298, 301, 302–3, 307–10, 314–23, 326, 336–51, 354, 365, 366 Siri, 95 skilled labor, 99–100 Skout, 280n Skype, 95, 129 slavery, 22, 23, 33n Sleeper, 130 small businesses, 173 smartphones, 34n, 39, 162, 172, 192, 269n, 273 Smith, Adam, 121, 126 Smolin, Lee, 148n social contract, 20, 49, 247, 284, 288, 335, 336 social engineering, 112–13, 190–91 socialism, 14, 128, 254, 257, 341n social mobility, 66, 97, 292–94 social networks, 18, 51, 56, 60, 70, 81, 89, 107–9, 113, 114, 129, 167–68, 172–73, 179, 180, 190, 199, 200–201, 202, 204, 227, 241, 242–43, 259, 267, 269n, 274–75, 280n, 286, 307–8, 317, 336, 337, 343, 349, 358, 365–66 see also Facebook social safety nets, 10, 44, 54, 202, 251, 293 Social Security, 251, 345 software, 7, 9, 11, 14, 17, 68, 86, 99, 100–101, 128, 129, 147, 154, 155, 165, 172–73, 177–78, 182, 192, 234, 236, 241–42, 258, 262, 273–74, 283, 331, 347, 357 software-mediated technology, 7, 11, 14, 86, 100–101, 165, 234, 236, 258, 347 South Korea, 133 Soviet Union, 70 “space elevator pitch,” 233, 342, 361 space travel, 233, 266 Spain, 159–60 spam, 178, 275n spending levels, 287–88 spirituality, 126, 211–17, 325–31, 364 spreadsheet programs, 230 “spy data tax,” 234–35 Square, 185 Stalin, Joseph, 125n Stanford Research Institute (SRI), 215 Stanford University, 60, 75, 90, 95, 97, 101, 102, 103, 162, 325 Starr, Ringo, 256 Star Trek, 138, 139, 230n startup companies, 39, 60, 69, 93–94, 108n, 124n, 136, 179–89, 265, 274n, 279–80, 309–10, 326, 341, 343–45, 348, 352, 355 starvation, 123 Star Wars, 137 star (winner-take-all) system, 38–43, 50, 54–55, 204, 243, 256–57, 263, 329–30 statistics, 11, 20, 71–72, 75–78, 90–91, 93, 110n, 114–15, 186, 192 “stickiness,” 170, 171 stimulus, economic, 151–52 stoplights, 90 Strangelove humor, 127 student debt, 92, 95 “Study 27,” 160 “Study 36,” 160 Sumer, 29 supergoop, 85–89 supernatural phenomena, 55, 124–25, 127, 132, 192, 194–95, 300 supply chain, 70–72, 174, 187 Supreme Court, U.S., 104–5 surgery, 11–13, 17, 18, 98, 157–58, 363 surveillance, 1–2, 11, 14, 50–51, 64, 71–72, 99, 108–9, 114–15, 120–21, 152, 177n, 199–200, 201, 206–7, 234–35, 246, 272, 291, 305, 309–11, 315, 316, 317, 319–24 Surviving Progress, 132 sustainable economies, 235–37, 285–87 Sutherland, Ivan, 221 swarms, 99, 109 synthesizers, 160 synthetic biology, 162 tablets, 85, 86, 87, 88, 113, 162, 229 Tahrir Square, 95 Tamagotchis, 98 target ads, 170 taxation, 44, 45, 49, 52, 60, 74–75, 77, 82, 149, 149, 150, 151, 202, 210, 234–35, 263, 273, 289–90 taxis, 44, 91–92, 239, 240, 266–67, 269, 273, 311 Teamsters, 91 TechCrunch, 189 tech fixes, 295–96 technical schools, 96–97 technologists (“techies”), 9–10, 15–16, 45, 47–48, 66–67, 88, 122, 124, 131–32, 134, 139–40, 157–62, 165–66, 178, 193–94, 295–98, 307, 309, 325–31, 341, 342, 356n technology: author’s experience in, 47–48, 62n, 69–72, 93–94, 114, 130, 131–32, 153, 158–62, 178, 206–7, 228, 265, 266–67, 309–10, 325, 328, 343, 352–53, 362n, 364, 365n, 366 bio-, 11–13, 17, 18, 109–10, 162, 330–31 chaos and, 165–66, 273n, 331 collusion in, 65–66, 72, 169–74, 255, 350–51 complexity of, 53–54 costs of, 8, 18, 72–74, 87n, 136–37, 170–71, 176–77, 184–85 creepiness of, 305–24 cultural impact of, 8–9, 21, 23–25, 53, 130, 135–40 development and emergence of, 7–18, 21, 53–54, 60–61, 66–67, 85–86, 87, 97–98, 129–38, 157–58, 182, 188–90, 193–96, 217 digital, 2–3, 7–8, 15–16, 18, 31, 40, 43, 50–51, 132, 208 economic impact of, 1–3, 15–18, 29–30, 37, 40, 53–54, 60–66, 71–74, 79–110, 124, 134–37, 161, 162, 169–77, 181–82, 183, 184–85, 218, 254, 277–78, 298, 335–39, 341–51, 357–58 educational, 92–97 efficiency of, 90, 118, 191 employment in, 56–57, 60, 71–74, 79, 123, 135, 178 engineering for, 113–14, 123–24, 192, 194, 217, 218, 326 essential vs. worthless, 11–12 failure of, 188–89 fear of (technophobia), 129–32, 134–38 freedom as issue in, 32–33, 90–92, 277–78, 336 government influence in, 158, 199, 205–6, 234–35, 240, 246, 248–51, 307, 317, 341, 345–46, 350–51 human agency and, 8–21, 50–52, 85, 88, 91, 124–40, 144, 165–66, 175–78, 191–92, 193, 217, 253–64, 274–75, 283–85, 305–6, 328, 341–51, 358–60, 361, 362, 365–67 ideas for, 123, 124, 158, 188–89, 225, 245–46, 286–87, 299, 358–60 industrial, 49, 83, 85–89, 123, 132, 154, 343 information, 7, 32–35, 49, 66n, 71–72, 109, 110, 116, 120, 125n, 126, 135, 136, 254, 312–16, 317 investment in, 66, 181, 183, 184, 218, 277–78, 298, 348 limitations of, 157–62, 196, 222 monopolies for, 60, 65–66, 169–74, 181–82, 187–88, 190, 202, 326, 350 morality and, 50–51, 72, 73–74, 188, 194–95, 262, 335–36 motivation and, 7–18, 85–86, 97–98, 216 nano-, 11, 12, 17, 162 new vs. old, 20–21 obsolescence of, 89, 97 political impact of, 13–18, 22–25, 85, 122, 124–26, 128, 134–37, 199–234, 295–96, 342 progress in, 9–18, 20, 21, 37, 43, 48, 57, 88, 98, 123, 124–40, 130–37, 256–57, 267, 325–31, 341–42 resources for, 55–56, 157–58 rupture as concept in, 66–67 scams in, 119–21, 186, 275n, 287–88, 299–300 singularity of, 22–25, 125, 215, 217, 327–28, 366, 367 social impact of, 9–21, 124–40, 167n, 187, 280–81, 310–11 software-mediated, 7, 11, 14, 86, 100–101, 165, 234, 236, 258, 347 startup companies in, 39, 60, 69, 93–94, 108n, 124n, 136, 179–89, 265, 274n, 279–80, 309–10, 326, 341, 343–45, 348, 352, 355 utopian, 13–18, 21, 31, 37–38, 45–46, 96, 128, 130, 167, 205, 207, 265, 267, 270, 283, 290, 291, 308–9, 316 see also specific technologies technophobia, 129–32, 134–38 television, 86, 185–86, 191, 216, 267 temperature, 56, 145 Ten Commandments, 300n Terminator, The, 137 terrorism, 133, 200 Tesla, Nikola, 327 Texas, 203 text, 162, 352–60 textile industry, 22, 23n, 24, 135 theocracy, 194–95 Theocracy humor, 124–25 thermodynamics, 88, 143n Thiel, Peter, 60, 93, 326 thought experiments, 55, 139 thought schemas, 13 3D printers, 7, 85–89, 90, 99, 154, 162, 212, 269, 310–11, 316, 331, 347, 348, 349 Thrun, Sebastian, 94 Tibet, 214 Time Machine, The (Wells), 127, 137, 261, 331 topology, network, 241–43, 246 touchscreens, 86 tourism, 79 Toyota Prius, 302 tracking services, 109, 120–21, 122 trade, 29 traffic, 90–92, 314 “tragedy of the commons,” 66n Transformers, 98 translation services, 19–20, 182, 191, 195, 261, 262, 284, 338 transparency, 63–66, 74–78, 118, 176, 190–91, 205–6, 278, 291, 306–9, 316, 336 transportation, 79–80, 87, 90–92, 123, 258 travel agents, 64 Travelocity, 65 travel sites, 63, 64, 65, 181, 279–80 tree-shaped networks, 241–42, 243, 246 tribal dramas, 126 trickle-down effect, 148–49, 204 triumphalism, 128, 157–62 tropes (humors), 124–40, 157, 170, 230 trust, 32–34, 35, 42, 51–52 Turing, Alan, 127–28, 134 Turing’s humor, 127–28, 191–94 Turing Test, 330 Twitter, 128, 173n, 180, 182, 188, 199, 200n, 201, 204, 245, 258, 259, 349, 365n 2001: A Space Odyssey, 137 two-way links, 1–2, 227, 245, 289 underemployment, 257–58 unemployment, 7–8, 22, 79, 85–106, 117, 151–52, 234, 257–58, 321–22, 331, 343 “unintentional manipulation,” 144 United States, 25, 45, 54, 79–80, 86, 138, 199–204 universities, 92–97 upper class, 45, 48 used car market, 118–19 user interface, 362–63, 364 utopianism, 13–18, 21, 30, 31, 37–38, 45–46, 96, 128, 130, 167, 205, 207, 265, 267, 270, 283, 290, 291, 308–9, 316 value, economic, 21, 33–35, 52, 61, 64–67, 73n, 108, 283–90, 299–300, 321–22, 364 value, information, 1–3, 15–16, 20, 210, 235–43, 257–58, 259, 261–63, 271–75, 321–24, 358–60 Values, Attitudes, and Lifestyles (VALS), 215 variables, 149–50 vendors, 71–74 venture capital, 66, 181, 218, 277–78, 298, 348 videos, 60, 100, 162, 185–86, 204, 223, 225, 226, 239, 240, 242, 245, 277, 287, 329, 335–36, 349, 354, 356 Vietnam War, 353n vinyl records, 89 viral videos, 185–86 Virtual Reality (VR), 12, 47–48, 127, 129, 132, 158, 162, 214, 283–85, 312–13, 314, 315, 325, 343, 356, 362n viruses, 132–33 visibility, 184, 185–86, 234, 355 visual cognition, 111–12 VitaBop, 100–106, 284n vitamins, 100–106 Voice, The, 185–86 “voodoo economics,” 149 voting, 122, 202–4, 249 Wachowski, Lana, 165 Wall Street, 49, 70, 76–77, 181, 184, 234, 317, 331, 350 Wal-Mart, 69, 70–74, 89, 174, 187, 201 Warhol, Andy, 108 War of the Worlds, The (Wells), 137 water supplies, 17, 18 Watts, Alan, 211–12 Wave, 189 wealth: aggregate or concentration of, 9, 42–43, 53, 60, 61, 74–75, 96, 97, 108, 115, 148, 157–58, 166, 175, 201, 202, 208, 234, 278–79, 298, 305, 335, 355, 360 creation of, 32, 33–34, 46–47, 50–51, 57, 62–63, 79, 92, 96, 120, 148–49, 210, 241–43, 270–75, 291–94, 338–39, 349 inequalities and redistribution of, 20, 37–45, 65–66, 92, 97, 144, 254, 256–57, 274–75, 286–87, 290–94, 298, 299–300 see also income levels weather forecasting, 110, 120, 150 weaving, 22, 23n, 24 webcams, 99, 245 websites, 80, 170, 200, 201, 343 Wells, H.


pages: 516 words: 116,875

Greater: Britain After the Storm by Penny Mordaunt, Chris Lewis

"World Economic Forum" Davos, 2021 United States Capitol attack, 3D printing, accelerated depreciation, Ada Lovelace, Airbnb, banking crisis, battle of ideas, behavioural economics, Bernie Madoff, bitcoin, Black Lives Matter, blockchain, Bob Geldof, Boeing 747, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, carbon footprint, Charles Babbage, collective bargaining, Corn Laws, corporate social responsibility, COVID-19, credit crunch, crowdsourcing, data is not the new oil, data is the new oil, David Attenborough, death from overwork, Deng Xiaoping, Diane Coyle, Donald Trump, Downton Abbey, driverless car, Elon Musk, en.wikipedia.org, experimental economics, failed state, fake news, Firefox, fixed income, full employment, gender pay gap, global pandemic, global supply chain, green new deal, happiness index / gross national happiness, high-speed rail, impact investing, Jeremy Corbyn, Khartoum Gordon, lateral thinking, Live Aid, lockdown, loss aversion, low skilled workers, microaggression, mittelstand, moral hazard, Neil Kinnock, Nelson Mandela, Ocado, off-the-grid, offshore financial centre, Panamax, Ponzi scheme, post-truth, quantitative easing, remote working, road to serfdom, Salesforce, Sheryl Sandberg, Skype, smart cities, social distancing, South China Sea, sovereign wealth fund, Steve Jobs, Steven Pinker, surveillance capitalism, transaction costs, transcontinental railway

THE PROBLEM WITH LEADERSHIP Since the turn of the century,2 we’ve learned that our leaders illegally avoided taxes,3 rigged interest rates,4 evaded taxes,5 laundered drug money,6 presided over an offshore banking system bigger than anyone thought possible,7 forced good companies into closure8 and destroyed pension funds as they themselves grew wealthier.9 Collectively, they oversaw an unprecedented destruction of wealth and the collapse of the financial system.10 They watched as life savings placed into investment funds set up by leaders of previously unimpeachable integrity turned out to be Ponzi schemes.11 They sold off reserves of gold to compensate for these exercises in corporate greed, while never once convicting any banker.12 Our spiritual leaders covered up sex abuse in the Church.13 Our charity leaders sexually abused the vulnerable.14 Our child welfare leaders have permitted child abuse.15 More CEOs are now being forced out of office for ethical lapse than for any other reason.16 Leaders of the automotive industry17 lied about emissions,18 were imprisoned, fled the country while out on bail and remain fugitives.19 The leaders of our water utilities polluted rivers then tried to cover it up.20 Global entertainment leaders have faced multiple allegations of sexual harassment and abuse.21 Britain’s leading broadcaster falsely accused political figures of being child abusers,22 while allowing actual abusers to commit crimes on their premises.23 Meanwhile, sporting leaders have been caught cheating and doping.24 Human rights lawyers have been struck off for misconduct and dishonesty.25 In the US, many of the former president’s political advisors have been jailed26 and he has been subject to impeachment proceedings twice.

sh=556f93d970d6 8 https://www.theguardian.com/business/2016/nov/08/rbs-facing-400m-bill-to-compensate-small-business-customers 9 https://www.ft.com/content/87f72e9e-bafb-11e7-9bfb-4a9c83ffa852 10 https://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008 11 http://www.businessinsider.com/how-bernie-madoffs-ponzi-scheme-worked-2014-7 12 https://www.forbes.com/sites/greatspeculations/2019/05/03/20-years-since-the-uks-massive-gold-sales-heres-the-big-lesson-for-gold-investors/#51fb3a932ac6 13 https://www.cnn.com/2017/06/29/world/timeline-catholic-church-sexual-abuse-scandals/index.html 14 http://www.bbc.co.uk/news/uk-43121833 15 http://www.bbc.com/news/education-11621391 16 https://www.pwc.com/ee/et/publications/pub/sb87_17208_Are_CEOs_Less_Ethical_Than_in_the_Past.pdf 17 https://www.bbc.co.uk/news/business-34324772 18 https://www.theguardian.com/environment/2015/oct/09/mercedes-honda-mazda-mitsubishi-diesel-emissions-row 19 https://edition.cnn.com/2019/12/30/business/carlos-ghosn-lebanon/index.html 20 https://www.bbc.co.uk/news/business-48755329 21 http://www.bbc.co.uk/news/entertainment-arts-41594672 22 https://www.theguardian.com/media/greenslade/2014/feb/19/newsnight-lord-mcalpine 23 https://www.telegraph.co.uk/news/uknews/crime/jimmy-savile/12172773/Jimmy-Savile-sex-abuse-report-to-be-published-live.html 24 http://www.bbc.co.uk/sport/athletics/43301116 25 https://www.theguardian.com/law/2017/feb/02/iraq-human-rights-lawyer-phil-shiner-disqualified-for-professional-misconduct 26 https://www.theguardian.com/us-news/2018/aug/22/how-many-of-trumps-close-advisers-have-been-convicted-and-who-are-they 27 https://www.icij.org/investigations/panama-papers/ 28 https://www.bostonglobe.com/ideas/2018/01/20/trillions-dollars-have-sloshed-into-offshore-tax-havens-here-how-get-back/2wQAzH5DGRw0mFH0YPqKZJ/story.html 29 https://www.visualcapitalist.com/80-trillion-world-economy-one-chart/ 30 https://uk.reuters.com/article/us-davos-meeting-eu-tax/tax-avoidance-evasion-costs-eu-170-billion-euros-a-year-says-poland-idUKKBN1ZL1H4 31 https://www.theguardian.com/commentisfree/2018/nov/29/im-credited-with-having-coined-the-acronym-terf-heres-how-it-happened 32 https://stonewallhousing.org/wp-content/uploads/2018/09/FindingSafeSpaces_StonewallHousing_LaptopVersion.pdf 33 https://www.telegraph.co.uk/news/2016/11/10/white-working-class-boys-perform-worst-at-gcses-research-shows/ 34 https://www.visualcapitalist.com/the-decline-of-upward-mobility-in-one-chart/ 35 https://www.theguardian.com/society/2020/jan/21/social-mobility-decline-britain-official-survey-finds 36 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/622214/Time_for_Change_report_-_An_assessement_of_government_policies_on_social_mobility_1997-2017.pdf 37 https://www.thetimes.co.uk/article/johnson-says-half-of-mps-should-be-women-vdgnw2gpx 38 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/622214/Time_for_Change_report_-_An_assessement_of_government_policies_on_social_mobility_1997-2017.pdf 39 https://www.gov.uk/government/publications/social-mobility-in-great-britain-state-of-the-nation-2018-to-2019 40 https://www.oecd.org/social/broken-elevator-how-to-promote-social-mobility-9789264301085-en.htm 41 https://www.bbc.com/news/world-africa-36132151 42 https://www.bbc.com/news/uk-politics-53246899 43 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/413347/Music_in_schools_wider_still__and_wider.pdf 44 https://www.statista.com/statistics/685208/number-of-female-ceo-positions-in-ftse-companies-uk/ 45 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/814080/GEO_GEEE_Strategy_Gender_Equality_Monitor_tagged.pdf 46 https://www.telegraph.co.uk/women/work/just-who-are-the-7-women-bosses-of-the-ftse-100/ 47 https://www.bloomberg.com/gei/ 48 https://www.wsj.com/articles/blackrock-companies-should-have-at-least-two-female-directors-1517598407 49 https://www.bloomberg.com/news/articles/2018-02-02/blackrock-asks-companies-to-explain-dearth-of-women-on-boards 50 https://hbr.org/2016/02/study-firms-with-more-women-in-the-c-suite-are-more-profitable 51 https://fortune.com/2015/06/29/black-women-entrepreneurs/ 52 https://www.nawbo.org/resources/women-business-owner-statistics 53 https://www.nawbo.org/resources/women-business-owner-statistics 54 https://www.womensbusinesscouncil.co.uk/wp-content/uploads/2017/02/DfE-WBC-Two-years-on-report_update_AW_CC.pdf 55 https://www.intheblack.com/articles/2016/08/01/challenging-the-myth-that-self-confidence-equals-success 56 https://hbr.org/2014/07/the-dangers-of-confidence 57 https://researchbriefings.files.parliament.uk/documents/SN05878/SN05878.pdf 58 https://www.telegraph.co.uk/culture/charles-dickens/9048771/Gradgrind-My-favourite-Charles-Dickens-character.html 59 https://www.independent.co.uk/news/education/education-news/sir-anthony-seldon-historian-says-test-obsession-wrecks-education-a6779891.html 60 https://www.youtube.com/watch?


pages: 442 words: 135,006

ZeroZeroZero by Roberto Saviano

Berlin Wall, Bernie Madoff, call centre, credit crunch, double entry bookkeeping, Fall of the Berlin Wall, illegal immigration, Julian Assange, Kinder Surprise, London Interbank Offered Rate, Mikhail Gorbachev, new economy, open borders, planetary scale, Ponzi scheme, Ronald Reagan, Skype, Steve Jobs, uranium enrichment, WikiLeaks

In 1995 Ivan’kov has an extortion on his hands, or rather “a debt collection” of $3.5 million. Aleksandr Volkov and Vladimir Vološin, two Russian businessmen with mysterious pasts working on Wall Street, founded Summit International, an investment company in New York in which the Chara Bank of Moscow invested, $3.5 million. But Volkov and Vološin’s company is nothing but a gigantic Ponzi scheme: The two of them promise creditors, for the most part Russian immigrants, a 120 percent annual interest rate. But in truth they don’t invest anything, spending the money instead on women, travel, and gambling. When the president of Chara Bank asks them to return the money they had “invested,” the two managers refuse.

., 38–39 Oficina de Envigado (Office of Envigado), 161–62, 165 Olive Tree Party, 170 omertà code, 340 Onorata Società (Honored Society), 170, 171, 175, 176, 187, 195 Onwumere, Peter Christopher, 323 Operación Leyenda (Operation Legend), 31–33 Operation Crimine-Infinito, 168, 193 Operation Dark Waters, 306 Operation Decollo (Take-Off), 178–81, 189, 192–94, 196, 197, 198, 199, 200 Operation Decollo bis, 192 Operation Decollo Money, 192–93, 198 Operation Decollo ter, 192, 197, 199 Operation Dinero, 222–26 Operation Magna Charta, 298 Operation Meta, 330 Operation Millennium, 158 Operation Overloading, 202 Operation Reckoning, 185–86, 191 Operation Sword, 277–78 Operazione Solare, 185–86, 191 opium, 16–21, 25, 28, 31, 34, 38–40, 62, 282–83 Opnor (ship), 321 Orange Revolution, 285 Orechovskaja group, 263 Oseguera Ramos, Nemesio (El Mencho), 67 Oslo Accords, 154–55 Osorio Chong, Miguel Ángel, 54, 70 Ospedaletto, Italy, 302 Overdose (sailboat), 300 Paderno Dugnano, Italy, 168, 193 Padua, Italy, 329 Palace of the Thousand and One Nights, 45 Palermo, Caterina, 220 Palermo, Giuseppe, 235 Palermo maxi-trial, 169 Palestine, 143 Palo Borracho, 329 Palo della Banda dell’Ortica, 212 Palombini Bar, 225 Panama, 150, 231, 319 Pannunzi, Alessandro, 218, 229, 230, 238 Pannunzi, Roberto (Bebè), 211, 213–22, 226, 227–36, 238–40, 305 Pannunzi, Simona, 218 Papp, Katalin, 269 Paraguay, 334 Paramaribo, Suriname, 335 paranoia, 36, 123, 374 Paris, France, 119, 314 Paris, Natalia, 133–36, 137, 140, 143–49, 151, 157–60 Parma, Italy, 238 Parrita (paramilitary), 138–39 Partido Revolucionario Institucional (PRI) (Institutional Revolutionary Party), 100 Paso Fino horses, 223 Pastrana, Andrés, 154–57, 158 PATRIOT Act (2001), 242, 254 Patrullas de Autodefensa Civil, 84 Pay de Limón (sniffer dog), 345 Pearl cocaine, 117–18 Pelle, Antonio (‘Ntoni Gambazza) , 202 Peña Nieto, Enrique, 54, 68, 70 Peru, 232 phencyclidine, 113 Picasso, Pablo, 223 Pictet Cie, 255–57 piedra muñeca marble, 177, 180 Ping ideogram, 304 Pinochet, Augusto, 350 Piraeus, Greece, 233 Piromalli, Francesco and Giuseppe (Roly-poly brothers), 230–31 Piromalli family, 172, 305 Pistoleros, 360 Pistone, Joe, 80 Pizza Connection, 255 Pizzata, Bruno, 202–3, 205 Plan Colombia, 155–57 plastic surgery, 45–46 plata o plomo (money or lead), 127, 130 Platì, Italy, 193, 194, 215, 216, 217, 218, 229, 230 Pocho (sniffer dog), 343–44 Poh Lin (ship), 332 Policía Federal Ministerial (PFM), Mexican, 101 Polsi, San Luca, Italy, 168, 186–87, 194 Ponte San Pietro, Italy, 237 Ponzi schemes, 273–74 Poptún training camp, 86–87 Porky’s strip club, 279–80 Portugal, 297, 317–25, 333 Posada, Rosa María, 154 Posadas Ocampo, Juan Jesús, 40–41 potassium carbonate, 75 Poveda, Christian, 348–56 Prague, 275–76, 277 Presidential Security Service, Russian, 269 Prestieri, Maurizio, 226–27 Progreso, Mexico, 98, 329 Project Coronado, 64–65 prostitution, 94, 135, 269–70 Puente Grande prison, 41 Puma, Commander (AFI commander), 101 Pupone (Big Baby) (real estate agent), 202 Putin, Vladimir, 285–86 racehorses, 223, 252–53 Ragal (sniffer dog), 345 Rambo (paramilitary), 188 Ramírez Treviño, Mario Armando (El Pelón; X20), 61 Ramiro (drug dealer), 184, 190 Reagan, Ronald, 29 Red Ribbon Week, 33–34 Resortito (clown), 95–96 Reta, Rosalío, 96–97 Revelation, Book of, 375 Rex (mule dog), 346 Reyes, Fernando, 47 Reynosa, Mexico, 60, 101 RHM Trust Bank, 222–23 Riina, Salvatore (Totò), 259 Rijeka, Croatia, 180 Rimini, Italy, 251 Rodríguez Orejuela brothers, 129, 142 Roizis, Griša (the Cannibal), 279–81 Romanò, Attilio, 339 Romano, Lino, 339, 340 Rome, 202, 215, 225, 227, 230, 232, 239–40, 300, 331 Romero Vázquez, Jesús Antonio, 100 Rosarno, Italy, 193, 202–3, 298 RosUkrEnergo, 285–87 Rotterdam, 291, 308, 332 Royal Air Maroc, 323–24 Royal Bank of Scotland, 249–50, 252 Rubens, Peter Paul, 223 Ruello, Nello, 204 Russia: arms trafficking in, 272, 273, 282, 283 arrests and imprisonment in, 260, 263, 275–76, 284–85 banking in, 270–71, 274 cocaine trafficking in, 279–82, 283, 287 drug addiction in, 282–83 economy of, 265–67, 270–71, 285–87 gas exports of, 285–87 mafia of, 251–52, 258–87, 289, 294 money laundering in, 251, 260, 268–69, 273, 276–78, 281, 283–84 prisons of, 260, 262, 265 prostitution in, 269–70 protection rackets in, 263–66 violence in, 263–68, 273, 285 see also Soviet Union sailing vessels, 296–300 St.


pages: 484 words: 136,735

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky

"World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, classic study, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, eat what you kill, Edward Glaeser, electricity market, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, foreign exchange controls, full employment, geopolitical risk, George Akerlof, global rebalancing, Goodhart's law, Great Leap Forward, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, long and variable lags, Long Term Capital Management, low interest rates, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, military-industrial complex, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, Paul Volcker talking about ATMs, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, systems thinking, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game

But if governments and central banks use the economic tools at their disposal—and if political and business leaders seize the opportunities presented by the emergence of a new capitalist system—the optimism expressed by Summers could prove to be justified. If the next decade does indeed prove more prosperous than the last one, the world will conclude that the market-oriented reforms of the Thatcher-Reagan era were not just a cynical deception, that financial capitalism was not just a Ponzi scheme, that the wealth created in the precrisis decades was not just a figment of collective madness, that the demolition of communism, the technological revolution, the rise of Asia, and the abolition of the gold standard were not just daydreams but earth-shattering historical events. These are essentially the arguments of this book.

This interpretation of the crisis implies that economic liberalization and globalization should be preserved as far as possible and used as the foundation for a new adaptive, mixed-economy version of the capitalist system, which should prove even more productive and successful. The second plausible response to the crisis was to argue that Thatcher-Reagan capitalism had been a fraud and a failure. The economic growth supposedly unleashed by the reforms of the 1980s was just an illusion, conjured up by a gigantic Madoff-style Ponzi scheme. After all the speculative bubbles and phony financial froth were blown away, the true wealth created from the 1980s onward turned out to be much smaller than the wealth created in the era of government-led, strictly regulated, high-tax capitalism from 1945 until the 1970s. On this reading of history, even the apparent resolution of class conflicts that was arguably the greatest achievement of the 1980s was a mirage.


Evil Genes: Why Rome Fell, Hitler Rose, Enron Failed, and My Sister Stole My Mother's Boyfriend by Barbara Oakley Phd

agricultural Revolution, Alfred Russel Wallace, Barry Marshall: ulcers, cognitive dissonance, conceptual framework, corporate governance, dark triade / dark tetrad, Deng Xiaoping, disinformation, double helix, Great Leap Forward, Gregor Mendel, impulse control, Mahatma Gandhi, meta-analysis, Milgram experiment, mirror neurons, Mustafa Suleyman, Norbert Wiener, phenotype, Ponzi scheme, prisoner's dilemma, Richard Feynman, rolodex, Ronald Reagan, seminal paper, Silicon Valley, Stanford prison experiment, Steven Pinker, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, twin studies, union organizing, Y2K

(After Enron's demise, Skilling would become more obviously delusional, suffering a nervous breakdown on the streets of New York City, “running up to people in bars and on the street, pulling open their clothes, and claiming that they were undercover FBI agents.”)46 Overseeing Skilling and Fastow was glad-handing chairman Ken Lay, a man so dysfunctionally clueless that whatever the evidence presented to the contrary, he believed the entire issue was simply a PR problem that could be solved with a press release.47 Those who looked the seemingly gullible, self-serving Lay in the eye and told egregious lies were forgiven—their “minor” sins excused. In short then, encouragement from Enron's semi-delusional Machiavellian top fostered development of a dim-witted Ponzi scheme. This was coupled with hiring, retention, and reward practices that selected for the unethical or their willing codependents, Intimidation of those who might have spoken up ensured that dissent was kept to a minimum. All this was bolstered by an oblivious chairman who refused to take firm action no matter what was brought to his attention.

Rather than being diagnosed “in normal times,” it appears that most people who interact with the successfully sinister, even trained psychologists and psychiatrists, have no idea with whom they're dealing—not unless these analysts are given twenty-twenty hindsight clues such as a dead body or unexplained missing millions from a company's accounts. A charming, highly successful lawyer, for example, who beats and abuses his wife and children can almost literally get away with murder without being caught.17 A major company like Enron can run a flagrant Ponzi scheme where dozens of insiders are in a position to know something seriously strange is going on—and still no one says a word publicly.18 Pedophile priests in the Catholic Church can be responsible for the rape of tens of thousands of children, and the church hierarchy not only manages to keep the offenses hidden but knowingly moves the priests to new parishes, where fresh prey await.19 Key members of the United Nations can literally be in “Complicity with Evil,” as described in Adam LeBor's meticulously researched book of that name, in the commission of genocide after genocide.


pages: 460 words: 131,579

Masters of Management: How the Business Gurus and Their Ideas Have Changed the World—for Better and for Worse by Adrian Wooldridge

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, affirmative action, Alan Greenspan, barriers to entry, behavioural economics, Black Swan, blood diamond, borderless world, business climate, business cycle, business intelligence, business process, carbon footprint, Cass Sunstein, Clayton Christensen, clean tech, cloud computing, collaborative consumption, collapse of Lehman Brothers, collateralized debt obligation, commoditize, company town, corporate governance, corporate social responsibility, creative destruction, credit crunch, crowdsourcing, David Brooks, David Ricardo: comparative advantage, disintermediation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Edward Glaeser, Exxon Valdez, financial deregulation, Ford Model T, Frederick Winslow Taylor, future of work, George Gilder, global supply chain, Golden arches theory, hobby farmer, industrial cluster, intangible asset, It's morning again in America, job satisfaction, job-hopping, joint-stock company, Joseph Schumpeter, junk bonds, Just-in-time delivery, Kickstarter, knowledge economy, knowledge worker, lake wobegon effect, Long Term Capital Management, low skilled workers, Mark Zuckerberg, McMansion, means of production, Menlo Park, meritocracy, Michael Milken, military-industrial complex, mobile money, Naomi Klein, Netflix Prize, Network effects, new economy, Nick Leeson, Norman Macrae, open immigration, patent troll, Ponzi scheme, popular capitalism, post-industrial society, profit motive, purchasing power parity, radical decentralization, Ralph Nader, recommendation engine, Richard Florida, Richard Thaler, risk tolerance, Ronald Reagan, science of happiness, scientific management, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Levy, supply-chain management, tacit knowledge, technoutopianism, the long tail, The Soul of a New Machine, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Hsieh, too big to fail, vertical integration, wealth creators, women in the workforce, young professional, Zipcar

Companies are finding that the shift from formal to informal management structures is rife with risks. The Baring family lost its bank because the management over-empowered one individual, Nick Leeson. Enron’s embrace of the post-Sloanist mantras of delayering and empowerment allowed it to cover up a financial Ponzi scheme. In theory, all these external sources of control are supposed to be replaced by “trust” and “self-discipline.” But the power of trust and self-discipline is constantly being undermined by all the other things modern management is up to. The system that has replaced Sloanism is fraught with contradictions.

., 310 Pauling, Linus, 240, 243, 249 Payre, Denis, 176 Peacock, Thomas Love, 376 PepsiCo, 52–53, 215, 275 Perkins Coie, 352 Perspectives, 255 Peters, Tom, xv, 4, 10, 54, 58, 65, 72, 77, 95–110, 150, 257, 315, 317–318, 319, 347, 395, 410 biography of, 97–98 Pew Global Attitudes Survey, 270 Pfeffer, Jeffrey, 13–14, 400–402 Philip Morris, 41 Phonehouse, 195 Piketty, Thomas, 382 Pilot, Sachin, 53 PingCo, 185 Pink, Daniel, 342–343 Pirating, 205 Pixar, 238, 248 Polanyi, Karl, 81 Polaroid, 172 Politics, globalization and, 277–281 Polman, Paul, 294 Ponoko, 148 Ponzi scheme, 165 PopTech, 236 Porras, Jerry, 112, 262 Porter, Michael, xv, 53, 88, 253, 256, 278, 308, 316, 317, 410, 414 Potocnik, Janez, 176 Potter, Dennis, 314 Powell, Colin, 321 Power, Samantha, 331 Power: Why Some People Have It—And Others Don’t (Pfeffer), 402 Prabhu, Jaideep, 67 The Practice of Adaptive Leadership (Heifetz), 307 The Practice of Management (Drucker), 69 Prahalad, C.


pages: 455 words: 138,716

The Divide: American Injustice in the Age of the Wealth Gap by Matt Taibbi

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Alan Greenspan, banking crisis, Bear Stearns, Bernie Madoff, book value, butterfly effect, buy and hold, collapse of Lehman Brothers, collateralized debt obligation, company town, Corrections Corporation of America, Credit Default Swap, credit default swaps / collateralized debt obligations, Edward Snowden, ending welfare as we know it, fake it until you make it, fixed income, forensic accounting, Glass-Steagall Act, Gordon Gekko, greed is good, illegal immigration, information retrieval, London Interbank Offered Rate, London Whale, Michael Milken, naked short selling, off-the-grid, offshore financial centre, Ponzi scheme, profit motive, regulatory arbitrage, Savings and loan crisis, short selling, social contagion, telemarketer, too big to fail, two and twenty, War on Poverty

In early 2010 the DOJ decided to end the investigation of AIG Financial Products chief Joe Cassano, the patient zero of the financial crisis, whose half-trillion-dollar portfolio of unsecured credit default swaps imploded in 2008, forcing the government to bail out AIG and sending the world economy into a tailspin. Cases involving Ponzi scheme artists Bernie Madoff and Allen Stanford were restricted to a few defendants apiece, while banks and other institutions that aided their frauds got off clean. It would be years before the Obama administration would begin again to look at the role played in the Madoff scandal by JPMorgan Chase, Madoff’s banker.

The situation was tenable so long as housing prices kept rising and these teeming new populations of home borrowers could keep their heads above water, selling or refinancing their way out of trouble if need be. But the instant the arrow began tilting downward, this rapidly expanding death-balloon of phony real estate value inevitably had to—and did—explode. In other words, it was a Ponzi scheme, no different than the Bernie Madoff caper, only executed on an exponentially huger scale. The scheme depended upon the ability of a nexus of large financial companies to factory-produce and sell these magic home loans fast enough, and in big enough numbers, to continually keep more money coming in than going out.


pages: 349 words: 134,041

Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives by Satyajit Das

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, Asian financial crisis, asset-backed security, Bear Stearns, beat the dealer, Black Swan, Black-Scholes formula, Bretton Woods, BRICs, Brownian motion, business logic, business process, buy and hold, buy low sell high, call centre, capital asset pricing model, collateralized debt obligation, commoditize, complexity theory, computerized trading, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, currency peg, currency risk, disinformation, disintermediation, diversification, diversified portfolio, Edward Thorp, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, financial engineering, financial innovation, fixed income, Glass-Steagall Act, Haight Ashbury, high net worth, implied volatility, index arbitrage, index card, index fund, interest rate derivative, interest rate swap, Isaac Newton, job satisfaction, John Bogle, John Meriwether, junk bonds, locking in a profit, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Marshall McLuhan, mass affluent, mega-rich, merger arbitrage, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mutually assured destruction, Myron Scholes, new economy, New Journalism, Nick Leeson, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, Parkinson's law, placebo effect, Ponzi scheme, proprietary trading, purchasing power parity, quantitative trading / quantitative finance, random walk, regulatory arbitrage, Right to Buy, risk free rate, risk-adjusted returns, risk/return, Salesforce, Satyajit Das, shareholder value, short selling, short squeeze, South Sea Bubble, statistical model, technology bubble, the medium is the message, the new new thing, time value of money, too big to fail, transaction costs, value at risk, Vanguard fund, volatility smile, yield curve, Yogi Berra, zero-coupon bond

Trend chasers, ‘mo’ (momentum) buyers, kept buying because they kept making money; nobody could explain the overvaluation; the doomsayer’s position became untenable and, puzzled by the duration of overvaluation, even intelligent and honest analysts eventually succumbed, evolving complex theories of why it was different this time. The overvaluation was sustainable after all. Theories of the ‘new economy’ and the good returns allowed suspension of reality for a little longer but eventually, the Ponzi scheme collapsed.3 Every rising market is driven by a new paradigm, every crash is the same as the last crash. In 2001, the Internet bubble burst. The NASDAQ index fell 80%. Eliot Spitzer and the SEC (Securities and Exchange Commission) belatedly took up the issue of the analysts and some were banned from the securities industry.

(10–16 July 2003) BRW. 3 Remarks at the Futures Industry Association, Boca Raton, Florida (19 March 1999). Chapter 2 Beautiful lies – the ‘sell’ side 1 Quoted in Frank Partnoy (2004) Infectious Greed; Owl Books, New York, p. 55. 2 Sun Tzu (translated by Thomas Cleary) (1988) The Art of War; Shambala, Boston & London. 3 Ponzi schemes are a type of illegal pyramid scheme. They are named after Charles Ponzi, who duped thousands of New England residents into investing in a speculative scheme in the 1920s. The basic scheme offers high returns to investors and relies on using money from new investors to pay off earlier investors, until the whole thing collapses. 4 Quoted in Frank Partnoy (2004) Infectious Greed; Owl Books, New York, p. 83. 5 Morgan Stanley’s settlement is described in ‘Frustration’ (17 July 2004) The Economist, pp. 68–9. 6 Michael Lewis ‘How the Eggheads Cracked’ (24 January 1999) New York Times Magazine, pp. 24–42.


pages: 311 words: 130,761

Framing Class: Media Representations of Wealth and Poverty in America by Diana Elizabeth Kendall

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", AOL-Time Warner, Bernie Madoff, blue-collar work, Bonfire of the Vanities, call centre, content marketing, Cornelius Vanderbilt, David Brooks, declining real wages, Donald Trump, employer provided health coverage, ending welfare as we know it, fixed income, framing effect, gentrification, Georg Cantor, Gordon Gekko, greed is good, haute couture, housing crisis, illegal immigration, income inequality, junk bonds, Michael Milken, mortgage tax deduction, new economy, payday loans, Ponzi scheme, Ray Oldenburg, Richard Florida, Ronald Reagan, San Francisco homelessness, Saturday Night Live, systems thinking, telemarketer, The Great Good Place, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, trickle-down economics, union organizing, upwardly mobile, urban planning, vertical integration, work culture , working poor

Farkas pocketed at least $20 million from the fraud, which he used to finance a private jet and a lavish lifestyle that included five homes and a collection of vintage cars, prosecutors said.”4 Similarly, media sources have described R. Allen Stanford, a Texas financier who defrauded investors in a massive $8 billion Ponzi scheme, as a “billionaire inmate” with a net worth of $2.2 billion who possesses $100 million in private jets, a yacht he paid $100,000 a week to rent, and a fully stocked, professional kitchen in his company’s Houston headquarters.5 Media descriptions of upper-class crime and the excessive patterns of consumption that typically accompany it may influence ordinary people’s perceptions of how the rich live and the gratification they receive from acquiring more and more luxury possessions such as private jets, yachts, and mansions.

Subsequent investigation reveals that the victim “was trapped inside the car’s windshield after the accident and that the driver—a high profile publicist—left the man dying in her garage” before disposing of the body.71 “Darwinian” uses what Law & Order refers to as a “rippedfrom-the-headlines” plot that combines two real criminal cases, one in which a woman (of more modest means than in the TV show) left a man to die on her windshield after hitting him with her car and a second involving a wellknown society publicist convicted on a felony charge of leaving the scene of an accident after she backed her Mercedes SUV into a group of people going to a night club. This episode is characteristic of the bad-apple messages that Law & Order and other crime dramas send to viewers.72 When Bernard (“Bernie”) Madoff was accused of perpetrating a $65 billion fraud in a Ponzi scheme, set up through Bernard L. Madoff Investment Securities, that cost many investors their life savings, a Law & Order episode combined elements of his crimes with the murder of a television reporter: While investigating the murder of television reporter Dawn Prescott, detectives Lupo and Bernard discover that she was involved in a love triangle involving 9781442202238.print.indb 75 2/10/11 10:46 AM 76 Chapter 3 another reporter at the station.


pages: 598 words: 140,612

Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier by Edward L. Glaeser

affirmative action, Andrei Shleifer, Berlin Wall, Boeing 747, British Empire, Broken windows theory, carbon footprint, carbon tax, Celebration, Florida, classic study, clean water, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, declining real wages, desegregation, different worldview, diversified portfolio, Edward Glaeser, Elisha Otis, endowment effect, European colonialism, Fairchild Semiconductor, financial innovation, Ford Model T, Frank Gehry, global village, Guggenheim Bilbao, haute cuisine, high-speed rail, Home mortgage interest deduction, James Watt: steam engine, Jane Jacobs, job-hopping, John Snow's cholera map, junk bonds, Lewis Mumford, machine readable, Mahatma Gandhi, McMansion, megacity, megaproject, Michael Milken, mortgage debt, mortgage tax deduction, New Urbanism, place-making, Ponzi scheme, Potemkin village, Ralph Waldo Emerson, rent control, RFID, Richard Florida, Rosa Parks, school vouchers, Seaside, Florida, Silicon Valley, Skype, smart cities, Steven Pinker, streetcar suburb, strikebreaker, Thales and the olive presses, the built environment, The Death and Life of Great American Cities, the new new thing, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, upwardly mobile, urban planning, urban renewal, urban sprawl, vertical integration, William Shockley: the traitorous eight, Works Progress Administration, young professional

New England’s climate is very similar to that of old England, so Boston couldn’t send much overseas that the English couldn’t get more cheaply closer to home. Yet Bostonians wanted to buy European manufactured goods, like guns and Bibles. In its early years, Boston operated as a sort of colonial-era Ponzi scheme: the first wave of immigrants sold basic survival items, like food and clothing, to the next wave of immigrants, who, like John Harvard himself, came over with money. The problem with Ponzi schemes is that they require eternal exponential growth, and Boston’s growth stalled when the English Civil War established a Protestant commonwealth in the old country. Boston’s citizenry then tried a lot of different moneymaking experiments, like ironworks and printing presses, but its first reinvention owes more to luck than skill.


pages: 517 words: 139,477

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies by Jeremy Siegel

Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, break the buck, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, carried interest, central bank independence, cognitive dissonance, compound rate of return, computer age, computerized trading, corporate governance, correlation coefficient, Credit Default Swap, currency risk, Daniel Kahneman / Amos Tversky, Deng Xiaoping, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Financial Instability Hypothesis, fixed income, Flash crash, forward guidance, fundamental attribution error, Glass-Steagall Act, housing crisis, Hyman Minsky, implied volatility, income inequality, index arbitrage, index fund, indoor plumbing, inflation targeting, invention of the printing press, Isaac Newton, it's over 9,000, John Bogle, joint-stock company, London Interbank Offered Rate, Long Term Capital Management, loss aversion, machine readable, market bubble, mental accounting, Minsky moment, Money creation, money market fund, mortgage debt, Myron Scholes, new economy, Northern Rock, oil shock, passive investing, Paul Samuelson, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price stability, proprietary trading, purchasing power parity, quantitative easing, random walk, Richard Thaler, risk free rate, risk tolerance, risk/return, Robert Gordon, Robert Shiller, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, stocks for the long run, survivorship bias, technology bubble, The Great Moderation, the payments system, The Wisdom of Crowds, transaction costs, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uptick rule, Vanguard fund

Hyman Minsky, an economics professor from Washington University in St. Louis, formulated the “financial instability hypothesis,”6 in which he believed long periods of economic stability and rising asset prices drew in not only speculators and “momentum” investors but also swindlers who engage in Ponzi schemes that trap ordinary investors who wish to ride the market’s upward breaks. Minsky’s theories never gained much currency with mainstream economists because he did not formulate them in a rigorous form. But Minsky had a strong impact on many, including the late Charles Kindleberger, an economics professor at MIT whose five editions of Manias, Panics, and Crashes: A History of Financial Crises have drawn a large following.

See Price/earnings (P/E) ratios Paper money standard, 80–81, 100, 210 Passive investing, 367–368, 376 Paulson, Treasury Secretary Henry, 34–35, 54–55, 246 Payout ratios, 147–149 PayPal, 69 Payroll surveys, 261–262 PCE (Personal consumption expenditure) deflator, 266 Pearl Harbor, 253 Per share earnings/dividends, 145, 155 “Permanently high plateau,” 9–10 Personal consumption expenditure (PCE) deflator, 266 Pessimism, 57–58, 62 Petrochina, 205 Petty, Damon, 181 Pfizer, 153 Philadelphia Fed Manufacturing Report, 264 Phillip Morris, 126–129, 205 PIMCO, 16, 69 Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment , 17 Plossser, Charles, 36 PMI (purchasing managers index), 263–264 Ponzi schemes, 24 Portfolios insuring, 293–296 monitoring, 350–352 rebalancing, 370 returns of, 352–354 Positive correlations, 100 Positive futures contracts, 277 Post-1945 conflicts, 253–255 Postcrash views, 11–12 Postdevaluation monetary policy, 215–216 Postgold monetary policy, 216–217 Pound.


pages: 573 words: 142,376

Whole Earth: The Many Lives of Stewart Brand by John Markoff

A Pattern Language, air freight, Anthropocene, Apple II, back-to-the-land, Benoit Mandelbrot, Bernie Madoff, Beryl Markham, Big Tech, Bill Atkinson, Biosphere 2, Brewster Kahle, Buckminster Fuller, Burning Man, butterfly effect, Claude Shannon: information theory, cloud computing, complexity theory, computer age, Computer Lib, computer vision, Danny Hillis, decarbonisation, demographic transition, disinformation, Douglas Engelbart, Douglas Engelbart, Dynabook, El Camino Real, Electric Kool-Aid Acid Test, en.wikipedia.org, experimental subject, feminist movement, Fillmore Auditorium, San Francisco, Filter Bubble, game design, gentrification, global village, Golden Gate Park, Hacker Conference 1984, Hacker Ethic, Haight Ashbury, Herman Kahn, housing crisis, Howard Rheingold, HyperCard, intentional community, Internet Archive, Internet of things, Jane Jacobs, Jaron Lanier, Jeff Bezos, John Gilmore, John Markoff, John Perry Barlow, Kevin Kelly, Kickstarter, knowledge worker, Lao Tzu, Lewis Mumford, Loma Prieta earthquake, Marshall McLuhan, megacity, Menlo Park, Michael Shellenberger, microdosing, Mitch Kapor, Morris worm, Mother of all demos, move fast and break things, New Urbanism, Norbert Wiener, Norman Mailer, North Sea oil, off grid, off-the-grid, paypal mafia, Peter Calthorpe, Ponzi scheme, profit motive, public intellectual, Ralph Nader, RAND corporation, Ray Kurzweil, Richard Stallman, Sand Hill Road, self-driving car, shareholder value, Silicon Valley, South of Market, San Francisco, speech recognition, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, systems thinking, technoutopianism, Ted Nelson, Ted Nordhaus, TED Talk, The Death and Life of Great American Cities, The Hackers Conference, Thorstein Veblen, traveling salesman, Turing test, upwardly mobile, Vernor Vinge, We are as Gods, Whole Earth Catalog, Whole Earth Review, young professional

Those dreams would end abruptly. Through Paul Hawken, they had been introduced to Reed Slatkin, the initial investor in and cofounder of EarthLink, a high-flying internet service provider. Slatkin was a former Scientology minister who between 1986 and 2001 bilked roughly eight hundred investors in a Ponzi scheme that was outdone only by Bernie Madoff. Brand and Phelan had the misfortune of being among the very last people to invest with Slatkin. Late in 2000, he had dinner with the couple on the deck of the Mirene, appearing to carefully weigh whether to let them in on his remarkable portfolio. It was not something he would usually do, he told them.

., 272, 291, 306–7, 319 People’s Computer Company, 148–49, 158 Peradam conference, 185–87 Perry, David, 101–2 personal computers, 147, 168–69, 211–13 advent of, 185 Albrecht and, 149 early models of, 250–51 Fred Moore and, 196–97 hackers and, see hackers, hacker culture hobbyists and, 148–49, 252 Quarterly features on, 230 SB’s early use of term, 212 transformative impact of, 239, 241, 252, 259, 280 see also cyberspace peyote, SB’s experiences with, 100–101, 109, 112, 119 Phase Raga (Brand), 136 Phelan, Kathleen, 353 Phelan, Patty, 262, 268, 281, 290, 313, 317, 324, 332, 333, 338, 353, 360, 361 background of, 235–36 Baker scandal and, 247–48 Direct Medical Knowledge founded by, 326, 342 DNA Direct founded by, 343 Equestrian Catalog business of, 291, 312 failed pregnancy of, 312 health problems of, 238, 311 in London with SB, 286 at Long Now Foundation, 342–43 marriage of SB and, 246–47, 312 at Planetree, 245–46 Ponzi scheme losses of, 334 Quarterly’s hiring of, 236 SB dated by, 237–38 with SB in Kenya trip, 271–76 Phillips, Michael, 128, 149, 203, 250 Phillips Exeter Academy: Mike Brand at, 14–15, 17 SB at, 15–18, 20–21, 23 photography: of SB’s Indian reservation visits, 86–87, 95, 96, 97–98, 118 SB’s interest in, 68, 90, 93, 199 photojournalism, Brand’s pursuit of career in, 3, 15–16, 44, 53, 55, 57, 63–64, 70, 75, 83, 85–87 Pinchot, Gifford, 340 planetary consciousness, 6, 362 Planetree, 245–46, 326 Point Foundation, 203, 210, 216, 233, 249, 250, 271, 276, 289, 292, 333–34, 343 Pomo Indians, 101 Pontin, Jason, 341 Pool, Ithiel de Sola, 279 Pope, Carl, 340 Population Bomb, The (Ehrlich), 45, 177, 187, 206, 341 Pork Chop Hill (film), 39 Portola Institute, 146, 147, 150–51, 155, 158, 161–62, 170, 196, 273 pragmatism, of SB, 4, 77, 340–41 Price, Richard, 71, 84 Prime Computer, 259 print media, computers’ transformation of, 239, 241 privacy, SB’s warning on cyberspace threat to, 315 Project Jonah, 206 Project One, 197–98 psychedelics, 28, 194, 241 SB and, 101, 104, 162–63, 177–78 see also LSD; peyote Pyramid Lake, 108 Q Question 7 (film), 62 R Ram Dass (Richard Alpert), 72, 79, 89, 103, 107, 139, 160, 216 Ramparts, 158, 202 Rancho Diablo, 164, 188, 189 Rand, Ayn, 31, 132 Randall, Doug, 339 RAND Corporation, 273 Random House, 193, 200, 201, 213 Rathbun, Emilia, 40 Rathbun, Harry, 40–41 Rawn, William, 305 Ray, Janet and William, 304 Raymond, Ann, 170 Raymond, Dick, 85–86, 113, 146, 147, 151, 158, 160, 163, 164, 170, 188 and creation of Whole Earth Catalog, 155, 157 education fair project of, 150, 151, 152 Point Foundation and, 202–3 SB’s friendship with, 23–25, 83, 149, 150, 152 see also Portola Institute Realist, 136, 162, 234 Reality Club, 294–95 Rear Window (film), 15 Reddy, Raj, 268 Red Scare, 17 Reed College, 355 Reiss, Spencer, 340 Remy, Danica, 287–88 Renault, Mary, 52 renewable energy, 167, 223, 297, 346, 349–50, 351, 356 Resource One, 197 Revive & Restore, 360 Rexroth, Kenneth, 66, 70 Rheingold, Howard, 265, 310, 311 Rhode Island School of Design, 217 Richards, M.


pages: 166 words: 49,639

Start It Up: Why Running Your Own Business Is Easier Than You Think by Luke Johnson

Albert Einstein, barriers to entry, Bear Stearns, Bernie Madoff, business cycle, collapse of Lehman Brothers, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, creative destruction, credit crunch, false flag, financial engineering, Ford Model T, Grace Hopper, happiness index / gross national happiness, high net worth, James Dyson, Jarndyce and Jarndyce, Jarndyce and Jarndyce, Kickstarter, mass immigration, mittelstand, Network effects, North Sea oil, Northern Rock, patent troll, plutocrats, Ponzi scheme, profit motive, Ralph Waldo Emerson, Silicon Valley, software patent, stealth mode startup, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, traveling salesman, tulip mania, Vilfredo Pareto, wealth creators

Only risk-positive entrepreneurs have the guts to risk making fresh investments in this environment, a time when investment is exactly what society needs to pick itself up again. Watch out for an epidemic of petty fraud The economist J. K. Galbraith asserted that fraud rose in a bull market and shrank in a slump. As he put it, the ‘bezzle’ rises in a boom because of lax controls, and fades in a bust. Colossal frauds like Bernard Madoff’s Ponzi scheme suggests Galbraith may be right about large-scale embezzlement, but my experience is the opposite when it comes to petty larceny. One of our restaurant companies suffered a disturbing rise in insurance claims. It wasn’t down to carelessness. Several claims related to apparent falls by suppliers’ workers.


pages: 200 words: 47,378

The Internet of Money by Andreas M. Antonopoulos

AltaVista, altcoin, bitcoin, blockchain, clean water, cognitive dissonance, cryptocurrency, disruptive innovation, Dogecoin, Ethereum, ethereum blockchain, financial exclusion, global reserve currency, information security, litecoin, London Interbank Offered Rate, Marc Andreessen, Oculus Rift, packet switching, peer-to-peer lending, Ponzi scheme, QR code, ransomware, reserve currency, Satoshi Nakamoto, self-driving car, skeuomorphism, Skype, smart contracts, the medium is the message, trade route, Tragedy of the Commons, underbanked, WikiLeaks, zero-sum game

Bitcoin is none of those things. Bitcoin is simply a technology. As a technology, often the first use it finds is in the hands of criminals. The first cars were used as getaway vehicles. The first telephones were used to plot conspiracy. The first telegrams were used to run long-distance mail-fraud schemes and Ponzi schemes. The first forms of electricity were used to run medical hoaxes and scam people. These things always happen with a new technology, and they happen with bitcoin, too. "Bitcoin is simply a technology. As a technology, often the first use it finds is in the hands of criminals. The first cars were used as getaway vehicles… Criminals use the most cutting-edge technology because they operate in an environment with very high profit margins and very high risk."


pages: 165 words: 48,594

Democracy at Work: A Cure for Capitalism by Richard D. Wolff

asset-backed security, Bear Stearns, Bernie Madoff, business cycle, collective bargaining, Credit Default Swap, declining real wages, feminist movement, financial intermediation, Glass-Steagall Act, green new deal, Howard Zinn, income inequality, John Maynard Keynes: technological unemployment, laissez-faire capitalism, means of production, military-industrial complex, moral hazard, mortgage debt, Occupy movement, Ponzi scheme, profit maximization, quantitative easing, race to the bottom, Ronald Reagan, too big to fail, trickle-down economics, wage slave, women in the workforce, Works Progress Administration

For centuries, in every capitalist country, individual economic actors have been charged, convicted, and imprisoned for violating some law, and businesses have been shut down or sanctioned for similar reasons. But the individuals and businesses that follow sooner or later replicate their behavior. For example, from long before Charles Dickens’s 1857 novel Little Dorrit all the way up through the stunning multibillion-dollar scam of Bernard Madoff, Ponzi schemes have recurred across capitalism’s history. Capitalism produced these schemes, which only grew larger as the system expanded. The slave and feudal systems that preceded capitalism fostered forms of crime rooted in their mixes of economic risks and rewards. But those systems never displayed the recurring boom-and-bust cycles common to all forms of capitalism.


pages: 162 words: 50,108

The Little Book of Hedge Funds by Anthony Scaramucci

Alan Greenspan, Andrei Shleifer, asset allocation, Bear Stearns, Bernie Madoff, business process, carried interest, corporate raider, Credit Default Swap, diversification, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, financial engineering, fixed income, follow your passion, global macro, Gordon Gekko, high net worth, index fund, it's over 9,000, John Bogle, John Meriwether, Long Term Capital Management, mail merge, managed futures, margin call, mass immigration, merger arbitrage, Michael Milken, money market fund, Myron Scholes, NetJets, Ponzi scheme, profit motive, proprietary trading, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk-adjusted returns, risk/return, Ronald Reagan, Saturday Night Live, Sharpe ratio, short selling, short squeeze, Silicon Valley, tail risk, Thales and the olive presses, Thales of Miletus, the new new thing, too big to fail, transaction costs, two and twenty, uptick rule, Vanguard fund, Y2K, Yogi Berra, zero-sum game

And yet, he was never able to offer any transparency as to his investment process, philosophy, or allocation. Interesting. Fund of fund managers (some of them at least) took the easy way out and allocated aggressively to Madoff. And so, several funds of hedge funds—Fairfield Greenwich and Tremont Partners, to name two—took the easy way out and allocated aggressively to Mr. Madoff and his fraudulent Ponzi scheme. That is disgraceful! What happened to all of the research and risk management and due diligence? Any cursory review of Madoff would have caused a shunning of Madoff, as if he were a leper in a nudist colony! After all, he was self–taught and had an unknown accountant who worked out of a storefront across the Tappan Zee Bridge.


pages: 209 words: 53,236

The Scandal of Money by George Gilder

Affordable Care Act / Obamacare, Alan Greenspan, bank run, behavioural economics, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, Claude Shannon: information theory, Clayton Christensen, cloud computing, corporate governance, cryptocurrency, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, decentralized internet, Deng Xiaoping, disintermediation, Donald Trump, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, glass ceiling, guns versus butter model, Home mortgage interest deduction, impact investing, index fund, indoor plumbing, industrial robot, inflation targeting, informal economy, Innovator's Dilemma, Internet of things, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jeff Bezos, John Bogle, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, Law of Accelerating Returns, low interest rates, Marc Andreessen, Mark Spitznagel, Mark Zuckerberg, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Nixon triggered the end of the Bretton Woods system, obamacare, OSI model, Paul Samuelson, Peter Thiel, Ponzi scheme, price stability, Productivity paradox, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, reality distortion field, reserve currency, road to serfdom, Robert Gordon, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, secular stagnation, seigniorage, Silicon Valley, Skinner box, smart grid, Solyndra, South China Sea, special drawing rights, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, time value of money, too big to fail, transaction costs, trickle-down economics, Turing machine, winner-take-all economy, yield curve, zero-sum game

The incentives of the free-zone strategy, by contrast, were just the opposite. Everyone outside the zone wanted to get in. The pressure was on to expand the zones. Jiang also put key military bases in the free zones, thus enlisting sectors of the Chinese People’s Liberation Army in the economic liberation movement. Hardly a Ponzi scheme, this strategy was perhaps the single most successful freedom movement in world history. Yet Jiang Zemin, its leading protagonist along with Deng, was a complex man, presenting his own Rorschach test to historians. Known as an authoritarian, he assumed the presidency after the Tiananmen Square protests and initiated the crackdown on the Falun Gong.


pages: 177 words: 54,421

Ego Is the Enemy by Ryan Holiday

activist fund / activist shareholder / activist investor, Airbnb, Ben Horowitz, Berlin Wall, Bernie Madoff, Burning Man, delayed gratification, Google Glasses, growth hacking, Jeff Bezos, Joan Didion, Lao Tzu, Paul Graham, Ponzi scheme, Ralph Waldo Emerson, Richard Feynman, side project, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, Streisand effect, sunk-cost fallacy, TED Talk, Upton Sinclair

He left office a maligned and controversial figure after two exhausting terms, almost surprised by how poorly it had gone. After the presidency, Grant invested almost every penny he had to create a financial brokerage house with a controversial investor named Ferdinand Ward. Ward, a Bernie Madoff of his day, turned it into a Ponzi scheme, and publicly bankrupted Grant. As Sherman wrote with sympathy and understanding of his friend, Grant had “aimed to rival the millionaires, who would have given their all to have won any of his battles.” Grant had accomplished so much, but to him, it wasn’t enough. He couldn’t decide what was important—what actually mattered—to him.


pages: 182 words: 55,234

Rendezvous With Oblivion: Reports From a Sinking Society by Thomas Frank

Affordable Care Act / Obamacare, Alan Greenspan, behavioural economics, Bernie Sanders, big-box store, business climate, business cycle, call centre, crowdsourcing, David Brooks, deindustrialization, deskilling, Donald Trump, edge city, fake news, Frank Gehry, high net worth, income inequality, Jane Jacobs, Jeff Bezos, McMansion, military-industrial complex, new economy, New Urbanism, obamacare, offshore financial centre, plutocrats, Ponzi scheme, profit maximization, prosperity theology / prosperity gospel / gospel of success, Ralph Nader, Richard Florida, Ronald Reagan, Silicon Valley, single-payer health, Steve Bannon, The Death and Life of Great American Cities, too big to fail, urban planning, Washington Consensus, Works Progress Administration

Make college excellent and affordable, so that graduates aren’t forced by the weight of student debt to seek corporate employment in the big cities. Resist the urgings of foundation dignitaries and focus instead on the far less beguiling reverie of durable, productive enterprise. For any of this to happen, though, the vibrancy Ponzi scheme first has to bottom out; the creative class must face its final Götterdämmerung. So hop to it, Akron: convert your very last rubber factory to an artist’s loft, bring on the indie-rock festivals, and borrow millions in order to get a sweeping new titanium city hall designed by Rem Koolhaas. Go vibrant—and go for broke


pages: 169 words: 55,866

Generation X: Tales for an Accelerated Culture by Douglas Coupland

gravity well, McJob, oil shock, place-making, Ponzi scheme

There's a satellite time lag between replies, maybe one-tenth of a second long, that makes you think there's something suspect malfunctioning in your brain—information and secrets being withheld from you. As for how Elvissa makes her living, none of us are quite sure, and none of us are sure we want to even know. She is living proof of Claire's theory that anyone who lives in a resort town under the age of thirty is on the make. I think her work may have to do with pyramid or Ponzi schemes, but then it may be somehow sexual: I once saw her in a Princess Stephanie one-piece swimsuit ("please, my maillot") chatting amiably with a mafioso type while counting a wad of bills at the poolside of the Ritz Carlton, high in the graham cracker—colored hills above Rancho Mirage. Afterward she denied she was there.


The New Class War: Saving Democracy From the Metropolitan Elite by Michael Lind

"World Economic Forum" Davos, affirmative action, anti-communist, basic income, Bernie Sanders, Boris Johnson, Bretton Woods, Brexit referendum, business cycle, Cambridge Analytica, capital controls, Cass Sunstein, central bank independence, centre right, collective bargaining, commoditize, corporate governance, cotton gin, crony capitalism, deindustrialization, disinformation, Doha Development Round, Donald Trump, Edward Snowden, export processing zone, fake news, future of work, gentrification, global supply chain, guest worker program, Haight Ashbury, illegal immigration, immigration reform, independent contractor, invisible hand, Jeremy Corbyn, knowledge economy, Les Trente Glorieuses, liberal world order, low skilled workers, low-wage service sector, manufacturing employment, Mark Zuckerberg, mass immigration, means of production, Michael Milken, moral panic, Nate Silver, new economy, offshore financial centre, oil shock, open borders, plutocrats, Ponzi scheme, purchasing power parity, Ralph Nader, regulatory arbitrage, rent-seeking, Richard Florida, Ronald Reagan, scientific management, Silicon Valley, SoftBank, The Wealth of Nations by Adam Smith, Thorstein Veblen, Timothy McVeigh, trade liberalization, union organizing, universal basic income, upwardly mobile, WikiLeaks, Wolfgang Streeck, working poor

In 2000, the UN Population Division calculated that in order to maintain the worker-to-retiree ratio in the US, the US would have to increase legal immigration from roughly 1 million a year to 12 million a year, adding more than half a billion additional net immigrants to the US population by 2050.28 Using more recent data, the Center for Immigration Studies has estimated that maintaining the US worker-to-retiree ratio would require increasing immigration fivefold, more than doubling the US population between now and 2060, to 706 million.29 Even worse, in order to maintain a fixed dependency ratio of workers to an ever-growing number of retirees, the US would need to import ever-growing numbers of immigrants until the unsustainable demographic Ponzi scheme collapsed when the rest of the world was depopulated. Those who claim that mass immigration is needed to maintain dependency ratios in Western nations exaggerate the change in those ratios caused by population aging. Under a scenario in which US immigration was slashed by two-thirds to stabilize the population, in 2060 there would be 2.2 workers per retiree, compared to 2.5 workers in an alternate scenario in which the US adds 46 million net immigrants by 2060.30 This is hardly a crisis.


pages: 523 words: 159,884

The Great Railroad Revolution by Christian Wolmar

"Hurricane Katrina" Superdome, 1919 Motor Transport Corps convoy, accounting loophole / creative accounting, banking crisis, Bay Area Rapid Transit, big-box store, California high-speed rail, Charles Lindbergh, collective bargaining, company town, Cornelius Vanderbilt, cross-subsidies, Ford Model T, high-speed rail, intermodal, James Watt: steam engine, junk bonds, Kickstarter, Ponzi scheme, quantitative easing, railway mania, Ralph Waldo Emerson, refrigerator car, Silicon Valley, streetcar suburb, strikebreaker, Suez canal 1869, too big to fail, trade route, transcontinental railway, traveling salesman, union organizing, urban sprawl, vertical integration

The Southern Pacific, whose terminus was in Los Angeles, then a modest Mexican-style town, ran along the border with Mexico through New Mexico and Texas and eventually to New Orleans, the mouth of the Mississippi. It was the brainchild of the Big Four of the Central Pacific, who were reliant on expanding their rail network in order to allow them to pay off the debts incurred in building the original transcontinental. To them, railroad construction was like a giant Ponzi scheme:17 they had to keep building in order to disguise the fact that their company was in financial trouble— although, personally, they had all enriched themselves. The Southern Pacific was not a single line but rather a collection of existing railroads that the Big Four had built or purchased in California, and in 1907 it joined with the Atchison, Topeka & Santa Fe Railway to form the Northwestern Pacific.

Holbrook, The Story of American Railroads (Bonanza Books, 1947), 213. 15. In railroad terms, a washout denotes the erosion of the track bed by flowing water, as a result of heavy rain or flooding. 16. William D. Middleton, George M. Smerk, and Roberta L. Diehl, eds., Encyclopedia of North American Railroads (Indiana University Press, 2007), 729. 17. A Ponzi scheme pays returns out of sums invested by other investors and therefore makes no genuine profit. It is named after Charles Ponzi, one of the first perpetrators of this type of fraud. 18. John F. Stover, American Railroads (University of Chicago Press, 1961), 76. 19. Ibid., 78. 20. The Great Northern’s premier passenger service was named Great Northern in Hill’s honor, a name that today’s Chicago–Seattle Amtrak retains. 21.


pages: 559 words: 155,372

Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley by Antonio Garcia Martinez

Airbnb, airport security, always be closing, Amazon Web Services, Big Tech, Burning Man, business logic, Celtic Tiger, centralized clearinghouse, cognitive dissonance, collective bargaining, content marketing, corporate governance, Credit Default Swap, crowdsourcing, data science, deal flow, death of newspapers, disruptive innovation, Dr. Strangelove, drone strike, drop ship, El Camino Real, Elon Musk, Emanuel Derman, Fairchild Semiconductor, fake it until you make it, financial engineering, financial independence, Gary Kildall, global supply chain, Goldman Sachs: Vampire Squid, Hacker News, hive mind, How many piano tuners are there in Chicago?, income inequality, industrial research laboratory, information asymmetry, information security, interest rate swap, intermodal, Jeff Bezos, Kickstarter, Malcom McLean invented shipping containers, Marc Andreessen, Mark Zuckerberg, Maui Hawaii, means of production, Menlo Park, messenger bag, minimum viable product, MITM: man-in-the-middle, move fast and break things, Neal Stephenson, Network effects, orbital mechanics / astrodynamics, Paul Graham, performance metric, Peter Thiel, Ponzi scheme, pre–internet, public intellectual, Ralph Waldo Emerson, random walk, Reminiscences of a Stock Operator, Ruby on Rails, Salesforce, Sam Altman, Sand Hill Road, Scientific racism, second-price auction, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, Social Justice Warrior, social web, Socratic dialogue, source of truth, Steve Jobs, tech worker, telemarketer, the long tail, undersea cable, urban renewal, Y Combinator, zero-sum game, éminence grise

Somerset, 200 Mayer, Marissa, 78 Mayfield Capital, 154, 156, 159, 162–63 McAfee, 382 McCorvie, Ryan, 16–17 McDonald’s, 82, 450 McEachen, Matthew (“MRM”), 41, 46, 62–63 call to, 123 CEO position, 249 chaos monkey suggestion, 103 codebase and, 66, 73, 184, 234 coding, 146 comrade-in-arms, 91 as daredevil, 136–37 deal details and, 251–52 earnestness, 68 Facebook and, 223, 225 family, 135, 205 getting to know, 88 irritation, 102–3 lost with, 109 paying off mortgage, 494 as resourceful savior, 100–101 as steadfast, 67 McGarraugh, Charlie, 14–15 McLean, Malcom, 447 media publishers, 387 MediaMath, 390 Menlo Park, 84 bedroom community, 338 conferences, 119 headquarters, 469 moving to, 337 schools, 306 meritocracy, 74 Merkle, 384 mesothelioma, 81 Miami drug trade, 304 Michelangelo, 334 Microsoft Adchemy and, 153–54, 161–62 Atlas, 383, 453–55 calendar, 340 dogfooding, 43 monopolist, 286 program managers, 272 middle managers, 359 Miller, Arthur, 104 Miller, Frank, 434 Milton, John, 475 minimum viable product (MVP), 434 miracles, 51 misleading, offensive, or sexually inappropriate (MOSI), 310 Mixpanel, 62 mobile commerce, 484–89 mobile data, 382, 477, 484, 486 Mobile Marketing Association (MMA), 448 monetary value, 317–19 monetization bet, 4 data-per-pixel, 274 digital, 184 Facebook, 5, 209, 275, 278, 298, 318, 425, 444 folly, 361–72 Google, 186 growth, 141 influences, 9 savvy, 486–89 tug-of-war, 379 Twitter, 190 zero-sum game, 319 money fuck-you money, 102, 415–16 investors, 74 outside, 155 pre-money valuation, 212 seed, 96 of VCs, 174 Moore’s law, 25 MoPub, 476–77, 479–81 morality, 226, 256, 284 Morgenstern, Jared, 218 Morishige, Sara, 183 Morris, Robert Tappan, 60–61 Mortal Kombat 3, 178 Moscone, George, 181 Moskovitz, Dustin, 284 Motwani, Rajeev, 138 Museum of Natural History, 366 My Life as a Quant (Derman), 16 MySpace, 283–84 N00b, 269 Nanigans, 480–81 Narasin, Ben, 128–31, 143–44 NASDAQ, 405, 410 National Socialism, 356 native ad formats, 448–49 Neko, 482 Netflix, 83, 103, 328 Netscape Navigator, 286 Neustar, 384, 386 New Rich, 357 New York Times, 448, 486 New Zealand, 318 News Feed addictive, 482 ads, 482–84, 488, 492 click-through rates, 487 content, 309 creation, 2 distribution, 364 as magic real estate, 362 spamming users, 372 versions, 444 newspaper advertising, 36–37 Nielsen, 385 1984 (Orwell), 433 noncash valuation, 212 no-shop contract, 201 Nukala, Murthy crossing paths, 167–68 ego, 42–43 greed, 44 hazing by, 71 immigrant worker, 72 lecture from, 65–66 manipulative rage, 136 pep rally, 36 saying good-bye to, 73 self-preservation and, 162–63 tantrums, 45 as tyrant, 158 vindictiveness, 134 wooing by, 154 Obama, Barack, 299–300 obscenity, 268 OkCupid, 54 Olivan, Javier, 410 Omnicom, 437, 443 on-boarding, 260–67, 271 one shot, one kill motto, 298 one-on-one, 434, 457, 469 online dating, 54–55 Opel, John, 148 Open Graph, 280, 364 optimization, 276, 302 Oracle investors, 111 job at, 193 logo, 124 product shindigs, 181 recruiting, 70 Orkut, 379 Orrick, Herrington & Sutcliffe, 193, 203, 253 Orwell, George, 433 outside money, 155 Ovid, 316 Oxford English Dictionary, 80 Page, Larry, 112, 428, 431 Pahl, Sebastien, 119 Palantir, 272 Palihapitiya, Chamath, 265–66 Palo Alto bosom of, 116 climate, 123 downtown, 333, 338 East, 404 hub, 109 old, 112, 158 posh, 84 shuttles, 289, 339 Stanford grads, 63 Pamplona running of bulls, 106–7 Pan-Arabism, 356 Pansari, Ambar, 210 Paper, 283 Parse, 155 Patel, Satya, 249–50 Patton, 369 Payne, Jim, 476 PayPal, 78, 124 personal wealth, 415 personally identifiable information (PII), 395 photo sharing, 286, 490–91, 493 photo-comparison software, 310 Pickens, Slim, 102 Piepgrass, Brian, 374 pings, 188, 327, 422 PMMess, 347–51, 407, 409 poker playing, 396–97 polyandry, 483 Polybius, 172, 316, 336 Pong, 150 Ponzi scheme, 16 pornography, 167, 262, 268, 312, 314, 315 post-valuation, 212 pregnancy, 58–59 pre-money valuation, 212 La Presse, 37 privacy Facebook and, 316–29 Irish Data Privacy Audit, 278, 320–23 PRIZM Segments, 385 product development, 47, 94, 191, 220, 334, 370, 389 product managers (PMs) as Afghan warlords, 273 earning money, 302 everyday work, 294 Facebook, 4, 6–7, 10, 91, 97, 202, 210, 271–79 Google, 192 habitat, 341 high-value, 246 ideal, 219 information and, 295 internal and external forces and, 316–17 last on buck-passing chain, 327 managing, 276 stupidity, 313 tech companies, 272 tiebreaker role, 292 product marketing manager (PMM), 277, 366 product navigators, 272 production, 94 product-market fit, 175 programmatic media-buying technology, 38 Project Chorizo, 296 pseudorandomness, 75 publishers, 37, 39 Putnam, Chris, 284 Qualcomm, 70 quants, 16–18, 24, 29, 141, 207 Quick and Dirty Operating System (QDOS), 149 Rabkin, Mark, 3, 312, 389, 398, 435 Rajaram, Gokul, 8, 10 accepting offer from, 248 banter with, 472–73 as boss, 3 bribery, 471 FBX and, 435 go big or go home ethos, 300 in great debate, 459 influence, 202 insubordination toward, 465 interview with, 221–22 leadership, 309 loss of trust, 468 lot with, 373 management of, 434 middle manager, 463–64 one-on-one and, 469 as product leader, 276–77 riding by, 346 stripping of duties, 452 word of, 252 Ralston, Geoff, 93 Rapportive, 96–97, 106 real-time bidding (RTB), 40–41 real-time data synchronization, 38 Red Rock Coffee, 84 RedLaser, 51 Reesman, Ben, 308, 389, 399–400, 475, 477 relativity, 25 replicating portfolio, 247–48 retargeting, 9, 381, 395, 438, 461 return of advertising spend (ROAS), 81 revenue dashboards, 274–75, 295–96 Right Media, 37–38 The Road Warrior, 134 Roetter, Alex, 185, 190, 493–94 romantic liaisons, 55–56 Romper Stomper, 202 Rosenblum, Rich, 21–22 Rosenn, Itamar, 368 Rosenthal, Brian, 389, 390 Ross, Blake, 444 Rossetti, Dante Gabriel, 303 rounds, 156 routing system, 324 Rubinstein, Dan, 312–13 Ruby on Rails, 155 Russia, 375–76 Sacca, Chris, 128, 141, 143 acquisition advice, 187–88, 212–13, 245–47 on deals, 205–7 ignoring inquiries, 201 pseudoangel, 113, 117–19 wisdom, 202 Safari, 484 safe sex, 58 safeguarding role, 315 sailboat living, 307, 332, 337–38 salaries, 358 San Francisco Museum of Modern Art (SFMOMA), 181 Sandberg, Sheryl, 2, 10 data joining and, 465 gatekeeper, 4–5 intimates, 3–4 leadership, 410 managerial prowess, 311–13 meetings, 371, 382, 459 PowerPoint and, 7 recommendations to, 462 schmoozing, 367 wiles of, 408 Sarna, Chander, 67–68, 71, 72 sausage grinder, 296 scale, 300 Scalps@Facebook, 314 scavenging foray, 116 schadenfreude, 16–17 Schopenhauer, Arthur, 282 Schrage, Elliot, 3–4, 410 Schreier, Bryan, 123–25 Schrock, Nick, 400 Schroepfer, Mike, 2 Schultz, Alex, 374 scientific racism, 122 Scoble, Robert, 100 Scott, George C., 24, 369 security, 314–15 seed money, 96 Sequoia, 122–25, 130, 159 severance package, 470–71 severity-level-one bug (SEV1), 323 sexual molestation, 17 Shaffer, Justin, 219–21, 444 Shakespeare, William, 120, 427, 456 Shapiro, Scott, 378, 459 Shelly, Percy Bysshe, 337 Shockley, William, 122 shuttles, 289, 339 Siegelman, Russell, 146, 201, 213, 397 angel investor, 110–13 commitment, 141–43 negotiations, 116–17 Silicon Valley.

They absolutely litter Wall Street now, and some areas of finance, like the hyperfast world of high-frequency trading, couldn’t exist without them. The most authentic view of their world was penned by a founder of the Goldman Strategies team, Emanuel Derman, in his classic My Life as a Quant. † For fans of schadenfreude, life is a never-ending feast. When the Madoff scandal, the largest Ponzi scheme in American history, erupted in late 2008, it would turn out that the Elie Wiesel Foundation for Humanity had invested all of its assets with Madoff. Elie’s son, Elisha, my boss, was the foundation’s treasurer. This reminds me of the joke about mixed emotions being the sight of your mother-in-law driving over a cliff in your new Porsche.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

"World Economic Forum" Davos, 23andMe, Abraham Maslow, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, Cornelius Vanderbilt, cotton gin, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Easter island, Edward Glaeser, Edward Jenner, electricity market, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, flying shuttle, Flynn Effect, food miles, Ford Model T, Garrett Hardin, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Herbert Marcuse, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jevons paradox, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Large Hadron Collider, Mark Zuckerberg, Medieval Warm Period, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, ocean acidification, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Ponzi scheme, precautionary principle, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Robert Solow, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, the long tail, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, world market for maybe five computers, Y2K, Yogi Berra, zero-sum game

It was roughly what John Law did in Paris with the Mississippi Company in 1719, what John Blunt did in London with the South Sea company in 1720, what Charles Ponzi did in Boston in 1920 with reply coupons for postage stamps, what Ken Lay did with Enron’s stock in 2001. Is it possible that not just the recent credit boom, but the entire postwar rise in living standards was a Ponzi scheme, made possible by the gradual expansion of credit? That we have in effect grown rich by borrowing the means from our children and that a day of reckoning is now at hand? It is certainly true that your mortgage is borrowed (via a saver somewhere else, perhaps in China) from your future self, who will pay it off.

Kung people 44, 135, 136–7 Kuznets curve 106 Kwakiutl people 92 Lagos 322 Lagrange Point 346 lakes, acidification of 305–6 Lamalera people 87 Lancashire 214, 217, 232, 263 Landes, David 223, 406 Lang, Tim 392 language: and exchange 58; genes for 55; Indo-European 129; and isolationism 73; Neanderthals 4, 55; numbers of languages 73; as unique human development 4 Laos 209 lapis lazuli 162, 164 Lascaux caves, France 6 lasers 272 Lassa fever 307 Laurion, Attica 171 Law, John 29, 259 Lawson, Nigel, Baron 331 Lay, Ken 29, 385 Layard, Richard 25 lead 167, 174, 177, 213 Leadbetter, Charles 290 Leahy, Michael 92 leather 70, 122, 167, 176 Lebanon 167 LeBlanc, Steven 137 LEDs (light-emitting diodes) 21–2 lentils 129 Leonardo da Vinci 196, 251 Levy, Stephen 355 Liang Ying (farm worker) 220 liberalism 108, 109–110, 290 Liberia 14, 316 libertarianism 106 Libya 171 lice 68 lichen 75 life expectancy: in Africa 14, 316, 422; in Britain 13, 15, 284; improvements in 12, 14, 15, 17–18, 205, 284, 287, 298, 316; in United States 298; world averages 47 Life (magazine) 304 light, artificial 13, 16, 17, 20–22, 37, 233, 234, 240, 245, 272, 368 light-emitting diodes (LEDs) 21–2 Limits to Growth (report) 303–4, 420 Lindsey, Brink 102, 109 linen 216, 218 lions 43, 87 literacy 106, 201, 290, 353, 396 Liverpool 62, 283 local sourcing (of goods) 35, 41–2, 149, 392; see also food miles Locke, John 96 Lodygin, Alexander 272 Lombardy 178, 196 Lomborg, Björn 280 London 12, 116, 186, 199, 218, 222, 282; as financial centre 259 longitude, measurement of 261 Longshan culture 397 Los Angeles 17, 142 Lothal, Indus valley 162, 164 Louis XI, King of France 184 Louis XIV, King of France 36, 37, 38, 184, 259 Lowell, Francis Cabot 263 Lübeck 180 Lucca 178, 179 Lunar Society 256 Luther, Martin 102 Luxembourg 331 Lyon 184 Macao 183 MacArthur, General Douglas 141 Macaulay, Thomas Babington, 1st Baron 11, 285–7, 359 McCloskey, Deirdre 109, 366–7 Mace, Ruth 73 McEwan, Ian 47 Machiguenga people 87 MacKay, David 342 McKendrick, Neil 224 McKibben, Bill 293 Macmillan, Harold, 1st Earl of Stockton 16 McNamara, Robert 203 mad-cow disease (vCJD) 280, 308 Madagascar 70, 299 Maddison, Angus 180 Maddox, John 207 Madoff, Bernard 28–9 Maghribis 178, 180 magnesium 213 maize 126, 146–7, 153, 155, 156, 163; for biofuel 240, 241 malaria 135, 157, 275, 299, 310, 318, 319, 331, 336, 353, 428, 429 Malawi 40–41, 132, 316, 318 Malawi, Lake 54 Malay Peninsula 66 Malaysia 35, 89, 242, 332 Mali 316, 326 Malinowski, Bronislaw 134 malnutrition 154, 156, 337 Maltese Falcon, The (film) 86 Malthus, Robert 139, 140, 146, 191, 249, 303 Malthusianism 141, 193, 196, 200, 202, 401 mammoths 68, 69, 71, 73, 302 Manchester 214, 218, 283 Mandell, Lewis 254 manganese 150, 213 mangoes 156, 327, 392 Manhattan 83 manure 147, 150, 198, 200, 282 Mao Zedong 16, 187, 262, 296, 311 Marchetti, Cesare 345–6 Marcuse, Herbert 291 Marie-Antoinette, Queen of France 199 markets (in capital and assets) 9, 258–60 markets (in goods and services): and collective betterment 9–10, 36–9, 103–110, 115–16, 281; disdain for 102–3, 104, 291–2, 358; etiquette and ritual of 133–4; and generosity 86–7; global interdependence 42–3; market failure 182, 250; ‘perfect markets’ 249–50; and population control 210–211; and preindustrial economies 133–4; and trust 98–100, 103; and virtue 100–104, 105; see also bartering; exchange; trade Marne, River 234 Martu aborigines 62 Marx, Karl 102, 104, 107–8, 291, 406 Marxism 101, 217–18, 319, 356 Maskelyne, Nevil 221 Maudslay, Henry 221 Mauritius 187, 316 Mauryan empire 172–3, 201, 357 Maxwell, James Clerk 412 measles 14, 135, 310 meat eating 51, 60, 62, 68–9, 126, 147, 156, 241, 376 Mecca 177 Mediterranean Sea: prehistoric settlements 56, 68–9, 159; trade 89, 164, 167–8, 169, 171, 176, 178 meerkats 87 Mehrgarh, Baluchistan 162 Mehta, Suketa 189 Meissen 185 memes 5 Menes, Pharaoh of Egypt 161 mercury 183, 213, 237 Mersey, River 62 Merzbach valley, Germany 138 Mesopotamia 38, 115, 158–61, 163, 177, 193, 251, 357; see also Assyrian empire; Iraq metal prices, reductions in 213 Metaxas, Ioannis 186 methane 140, 329, 345 Mexico: agriculture 14, 123, 126, 142, 387; emigration to United States 117; hurricanes 335; life expectancy 15; nature conservation 324; swine flu 309 Mexico City 190 Meyer, Warren 281 Mezherich, Ukraine 71 mice 55, 125 Michelangelo 115 Microsoft (corporation) 24, 260, 268, 273 migrations: early human 66–70, 82; rural to urban 158, 188–9, 210, 219–20, 226–7, 231, 406; see also emigration Milan 178, 184 Miletus 170–71 milk 22, 55, 97, 135 Mill, John Stuart 34, 103–4, 108, 249, 274, 276, 279 Millennium Development goals 316 Miller, Geoffrey 44, 274 millet 126 Mills, Mark 244 Ming empire 117, 181–4, 260, 311 Minoan civilisation 166 Mississippi Company 29 Mittal, Lakshmi 268 mobile phones 37, 252, 257, 261, 265, 267, 297, 326–7 Mohamed (prophet) 176 Mohawk Indians 138–9 Mohenjo-Daro, Indus valley 161–2 Mojave Desert 69 Mokyr, Joel 197, 252, 257, 411, 412 monarchies 118, 162, 172, 222 monasteries 176, 194, 215, 252 Monbiot, George 291, 311, 426 money: development of 71, 132, 392; ‘trust inscribed’ 85 Mongolia 230 Mongols 161, 181, 182 monkeys 3, 57, 59, 88; capuchins 96–7, 375 monopolies 107, 111, 166, 172, 182 monsoon 174 Montesquieu, Charles, Baron de 103 moon landing 268–9, 275 Moore, Gordon 221, 405 Moore, Michael 291 Morgan, J.P. 100 Mormonism 205 Morocco 53, 209 Morse, Samuel 272 mortgages 25, 29, 30, 323; sub-prime 296 Moses 138 mosquito nets 318 ‘most favoured nation’ principle 186 Moyo, Dambisa 318 Mozambique 132, 316 Mozart, Wolfgang Amadeus 267 Mugabe, Robert 262 Mumbai 189, 190 murder 14, 20, 85, 88, 106, 118, 201 Murrays’ Mills, Manchester 214 music 70, 115, 266–7, 326 Myceneans 166 Nairobi 322 Namibia 209, 324 Napoleon I 184 NASA 269 Nashville 326 Nassarius shells 53, 56, 65 National Food Service 268 National Health Service 111, 261 nationalisation (of industry) 166, 182 nationalism 357 native Americans 62, 92–3, 138–9 Natufians 125 natural selection 5–6, 27, 49–50, 350 nature conservation 324, 339; see also wilderness land, expansion of Neanderthals 3, 4, 53, 55, 64, 65, 68, 71, 79, 373, 378 Nebuchadnezzar 169 needles 43, 70 Nehru, Jawaharlal 187 Nelson, Richard 5 Nepal 15, 209 Netscape (corporation) 259 New Deal 109 New Guinea: agriculture 123, 126, 387; languages 73; malaria 336; prehistoric 66, 123, 126; tribes 87, 92, 138 New York 12, 16, 83, 169, 190 New York Times 23, 295, 305 New Zealand 17, 35, 42, 70 Newcomen, Thomas 244, 256 newspapers 270, 295; licensing copyrights 267 Newsweek (magazine) 329 Newton, Sir Isaac 116, 256 nickel 34, 213 Niger 208–9, 210, 324 Nigeria 15, 31, 99, 117, 210, 236, 316 Nike (corporation) 115, 188 Nile, River 161, 164, 167, 171 nitrogen fertlisers 140, 146, 147, 149–50, 155, 305 nitrous oxide 155 Nobel Peace Prize 143, 280 ‘noble savage’ 43–4, 135–8 Norberg, Johann 187 Nordau, Max 288 Nordhaus, William 331 Norte Chico civilisation 162–3 North, Douglass 324, 397 North Carolina 219–20 North Korea 15, 116–17, 187, 333 North Sea 180, 185 North Sentinel islanders 67 Northern Rock (bank) 9 Northumberland 407 Norton, Seth 211 Norway 97–8, 332, 344 Norwich 225 nostalgia 12–13, 44, 135, 189, 284–5, 292 Novgorod 180 Noyce, Robert 221, 405 nuclear accidents 283, 293–4, 308, 345, 421 nuclear power 37, 236, 238, 239, 245, 246, 343, 344, 345 nuclear war, threat of 280, 290, 299–300, 333 Obama, Barack 203 obesity 8, 156, 296, 337 obsidian 53, 92, 127 occupational safety 106–7 ocean acidification 280, 340–41 ochre 52, 53, 54, 92 octopi 3 Oersted, Hans Christian 272 Oetzi (mummified ‘iceman’) 122–3, 132–3, 137 Ofek, Haim 131 Ohalo II (archaeological site) 124 oil: and ‘curse of resources’ 31, 320; drilling and refining 242, 343; and generation of electricity 239; manufacture of plastics and synthetics 237, 240; pollution 293–4, 385; prices 23, 238; supplies 149, 237–8, 280, 281, 282, 296, 302–3 old age, quality of life in 18 olive oil 167, 169, 171 Olson, Ken 282 Omidyar, Pierre 99 onchoceriasis 310 open-source software 99, 272–3, 356 Orang Asli people 66 orang-utans 60, 239, 339 organic farming 147, 149–52, 393 Orinoco tar shales, Venezuela 238 Orma people 87 ornament, personal 43, 52, 53, 54, 70, 71, 73 O’Rourke, P.J. 157 Orwell, George 253, 290, 354 Ostia 174 otters 297, 299 Otto I, Holy Roman emperor 178 Ottoman empire 161 Oued Djebanna, Algeria 53 oxen 130, 136, 195, 197, 214–15 oxytocin (hormone) 94–5, 97–8 ozone layer 280, 296 Paarlberg, Robert 154 Pacific islanders 134 Pacific Ocean 184 Paddock, William and Paul 301 Padgett, John 103 Page, Larry 114 Pagel, Mark 73 Pakistan 142–3, 204, 300 palm oil 57–8, 239, 240, 242, 339 Pan Am (airline) 24 paper 282, 304 Papin, Denis 256 papyrus 171, 175 Paraguay 61 Pareto, Vilfredo 249 Paris 215, 358; electric lighting 233; restaurants 264 parrots 3 Parsons, Sir Charles 234 Parthian empire 161 Pasadena 17 Pataliputra 173 patents 223, 263, 264–6, 269, 271, 413–14 patriarchy 136 Paul, St 102 PayPal (e-commerce business) 262 peacocks 174 peanuts 126 peat 215–16 Peel, Sir Robert 185 Pemberton, John 263 pencils 38 penicillin 258 Pennington, Hugh 308 pensions 29, 40, 106 Periplus of the Erythrean Sea, The 174 Persia 89, 161, 171, 177 Persian Gulf 66, 164, 340, 429 Peru 97–8, 126, 162–3, 320, 387; silver 31, 132, 183–4 pessimism: and belief in turning points in history 287–9, 301, 311; natural pessimism of human nature 294–5; in nineteenth century 283–8; in twentieth century 281, 282, 288–91, 292–4, 296–308, 328–9; in twenty-first century 8–9, 17, 28, 281–2, 291–2, 308–311, 314–15; ubiquity of 280–85, 291–2, 294–7, 341, 352 pesticides 151–2, 154, 155, 336; DDT 297–8, 299; natural 298–9 Peto, Richard 298 Petty, Sir William 185, 199, 254, 256 pharmaceutical industry 260, 266 philanthropy 92, 105, 106, 295, 318–19, 356 Philip II, King of Spain 30–31 Philip II of Macedon 171 Philippines 61–2, 89, 234 Philistines 166, 170, 396 Phillips, Adam 103, 292 Phoenicians 166–70, 177 photography 114, 283, 386 physiocrats 42 pi, calculation of 173 pig farming 135, 145, 148, 197 Pinnacle Point, South Africa 52, 83 Pisa 115, 178 plagues 135, 176, 195–6, 197; forecasts of 280, 284, 307–310; see also Black Death plastics 237, 240, 270 Plate, River 186 platinum 213 Plato 292 Plautus 44 ploughing 129–30, 136, 145, 150, 195, 197, 198, 215 pneumonia 13, 353 Polanyi, Karl 164–5 polar bears 338–9 polio 261, 275, 310 political fragmentation 170–73, 180–81, 184, 185 pollution: effects on wildlife 17, 297, 299, 339; and industrialisation 218; pessimism about 293–4, 304–6; reduction in 17, 106, 148, 279, 293–4, 297, 299 polygamy 136 Pomeranz, Kenneth 201–2 Ponzi, Charles 29 Ponzi schemes 28–9 population control policies 202–4, 210–211 population growth: and food supply 139, 141, 143–4, 146–7, 192, 206, 208–9; global population totals 3, 12, 14, 191, 206, 332; and industrialisation 201–2; and innovation 252; pessimism about 190, 193, 202–3, 281, 290, 293, 300–302, 314; population explosions 8, 139, 141, 202, 206, 281; and specialisation 192–3, 351; see also birth rates; demographic transition; infant mortality; life expectancy porcelain 181, 183, 184–5, 225, 251 Porritt, Jonathan 314 Portugal 75, 183, 184, 317, 331 Post-it notes 261 Postrel, Virginia 290–91 potatoes 199 Potrykus, Ingo 154 pottery 77, 158, 159, 163, 168, 177, 225, 251 Pound, Ezra 289 poverty: and charitable giving 106; current levels 12, 15, 16–17, 41, 316, 353–4; and industrialisation 217–20; pessimism about 280, 290, 314–15; reduction in 12, 15, 16–17, 290; and self-sufficiency 42, 132, 200, 202, 226–7; solutions to 8, 187–8, 316–17, 322, 326–8, 353–4 Prebisch, Raul 187 preservatives (in food) 145 Presley, Elvis 110 Priestley, Joseph 256 printing: on paper 181, 251, 252, 253, 272; on textiles 225, 232 prisoner’s dilemma game 96 property rights 130, 223, 226, 320, 321, 323–5 protectionism 186–7, 226 Ptolemy III 171 Pusu-Ken (Assyrian merchant) 165–6 putting out system 226, 227, 230 pygmy people 54, 67 Pythagoras 171 Quarterly Review 284 quasars 275 Quesnay, François 42 racial segregation 108 racism 104, 415 radioactivity 293–4, 345 radios 264–5, 271 railways 252; and agriculture 139, 140–41; opposition to 283–4; speed of 283, 286; travel costs 23 rainforests 144, 149, 150, 240, 243, 250–51, 338 Rajan, Raghuram 317 Rajasthan 162, 164 Ramsay, Gordon 392 rape seed 240 Ratnagar, Shereen 162 ravens 69 Rawls, John 96 Read, Leonard 38 recession, economic 10, 28, 113, 311 reciprocity 57–9, 87, 95, 133 Red Sea 66, 82, 127, 170, 174, 177 Rees, Martin 294 Reformation 253 refrigeration 139 regress, technological 78–84, 125, 181–2, 197–200, 351, 380 Reiter, Paul 336, 428 religion 4, 104, 106, 170, 357, 358, 396; and population control 205, 207–8, 211; see also Buddhism; Christianity; Islam Rembrandt 116 Renaissance 196 research and development budgets, corporate 260, 262, 269 Research in Motion (company) 265 respiratory disease 18, 307, 310 restaurants 17, 37, 61, 254, 264 Rhine, River 265–6 rhinoceroses 2, 43, 51, 68, 73 Rhodes, Cecil 322 Ricardo, David 75, 169, 187, 193, 196, 249, 274 rice 32, 126, 143, 146–7, 153, 154, 156, 198 Rifkin, Jeremy 306 Riis, Jacob 16 Rio de Janeiro, UN conference (1992) 290 risk aversion 294–5 Rivers, W.H.R. 81 Rivoli, Pietra 220, 228 ‘robber-barons’ 23–4, 100, 265–6 Rockefeller, John D. 23, 281 Rocky Mountains 238 Rogers, Alex 340 Roman empire 161, 166, 172, 173–5, 184, 214, 215, 259–60, 357 Rome 158, 175 Romer, Paul 269, 276–7, 328, 354 Roosevelt, Franklin D. 109 Roosevelt, Theodore 288 Rosling, Hans 368 Rothschild, Nathan 89 Rousseau, Jean-Jacques 43, 96, 104, 137 Royal Institution 221 rubber 220 rule of law 116–18, 325 Rumford, Benjamin Thompson, Count 221 rural to urban migration 158, 188–9, 210, 219–20, 226–7, 231, 406 Ruskin, John 104 Russia, post-Soviet 14; oil and gas production 31, 37; population decline 205 Russia, prehistoric 71, 73 Russia, Tsarist 216, 229, 324 Rwanda 14, 316 rye 124, 125, 199, 224, 286 Sachs, Jeffrey 208 Saddam Hussein 161 Sahel region 123, 334 Sahlins, Marshall 133, 135 Sahul (landmass) 66, 67 Salisbury, Wiltshire 194 Salk, Jonas 38, 261 salmon 297 Salmon, Cecil 142 saltpetre 140 Sanger, Frederick 412 Sanskrit 129 São Paulo 190, 315 Sargon of Akkad 164 SARS virus 307, 310 satellites 252, 253 satnav (satellite navigation systems) 268 Saudi Arabia 238 Saunders, Peter 102 Schumpeter, Joseph 113–14, 227, 260, 276, 302 science, and innovation 255–8, 412 Scientific American 280 Scotland 103, 199–200, 227, 263, 315 scrub jays 87 scurvy 14, 258 sea level, changes in 128, 314, 333–4 Seabright, Paul 93, 138 seals (for denoting property) 130 search engines 245, 256, 267 Second World War 289 segregation, racial 108 Seine, River 215 self-sufficiency 8, 33–5, 39, 82, 90, 133, 192, 193, 351; and poverty 41–2, 132, 200, 202, 226–7 selfishness 86, 87, 93–4, 96, 102, 103, 104, 106, 292 Sematech (non-profit consortium) 267–8 Sentinelese people 67 serendipity 257, 346 serfs 181–2, 222 serotonin 156, 294 sexism 104, 136 sexual division of labour 61–5, 136, 376 sexual reproduction 2, 6, 7, 45, 56, 271; of ideas 6–7, 270–72 Sforza, house of 184 Shady, Ruth 162 Shakespeare, William 2; The Merchant of Venice 101, 102 Shang dynasty 166 Shapiro, Carl 265 sheep 97, 176, 194, 197 Shell (corporation) 111 shellfish 52, 53, 62, 64, 79, 92, 93, 127, 163, 167 Shennan, Stephen 83, 133 Shermer, Michael 101, 106, 118 ship-building 185, 229; see also boat-building shipping, container 113, 253, 386 Shirky, Clay 356 Shiva, Vandana 156 Siberia 145 Sicily 171, 173, 178 Sidon 167, 170 Siemens, William 234 Sierra Leone 14, 316 Silesia 222 silicon chips 245, 263, 267–8 Silicon Valley 221–2, 224, 257, 258, 259, 268 silk 37, 46, 172, 175, 178, 179, 184, 187, 225 Silk Road 182 silver 31, 132, 164, 165, 167, 168, 169, 171, 177, 183–4, 213 Silver, Lee 122–3 Simon, Julian 83, 280, 303 Singapore 31, 160, 187 Skhul, Israel 53 slash-and-burn farming 87, 130 slave trade 167, 170, 177, 229, 319, 380; abolition 214, 221 slavery 34, 214–15, 216, 407; ancient Greece 171; hunter-gatherer societies 45, 92; Mesopotamia 160; Roman empire 174, 176, 214; United States 216, 228–9, 415; see also anti-slavery sleeping sickness 310, 319 Slovakia 136 smallpox 13, 14, 135, 310; vaccine 221 smelting 131–2, 160, 230 smiling 2, 94 Smith, Adam 8, 80, 96, 101, 104, 199, 249, 272, 350; Das Adam Smith Problem 93–4; Theory of Moral Sentiments 93; The Wealth of Nations vii, 37–8, 39, 56, 57, 93, 123, 236, 283 Smith, Vernon 9, 90, 192 smoke, indoor 13, 338, 342, 353, 429 smoking 297, 298 Smoot-Hawley Tariff Act 186 soap 176, 215 social networking websites 262, 268, 356 socialism 106, 115, 357, 406 software, computer 99, 257, 272–3, 304, 356 solar energy 216, 243, 244 solar power 234–5, 238, 239, 245–6, 343, 344–5, 408 solar wind 346 solid-state electronics 257 Solomon, Robert 94 Solow, Robert 276 Somalia 14, 316, 337, 353 songbirds 55 Sony (corporation) 261 sorghum 126, 156 South Africa: agriculture 154; economy 316, 322; life expectancy 316; pre-historic 52, 53, 54, 83 South Korea 15, 31, 116–17, 187, 212, 322 South Sea Company 29 Southey, Robert 284–5 Soviet Union 16, 107, 109, 289, 299, 318, 324 soybeans 147, 148, 155, 156, 242 space travel 268–9, 275, 282 Spain: agriculture 129; climate 334; Franco regime 186, 289; Peruvian silver 30–31, 183–4; tariffs 222 spears 6, 43, 48, 50, 52, 70, 80, 81, 91 specialisation: by sex 61–5, 136, 376; and division of labour 7, 33, 38, 46, 61–5, 175; and exchange 7, 10, 33, 35, 37–8, 46, 56, 58, 75, 90, 132–3, 350–52, 355, 358–9; and innovation 56, 71–2, 73–4, 76–7, 119, 251; and population growth 192–3, 351; and rule of law 116, 117–18 speech 2, 55; see also language Spencer, Herbert 108 Spengler, Oswald 289 sperm counts 280, 293, 329 spice trade 167, 175, 176, 177, 179, 185 Spinoza, Baruch de 116 Sputnik 282 squashes (vegetables) 126, 163 Sri Lanka 35, 38, 66, 205, 208, 299 Stalin, Joseph 16, 262 stamp seals 130 Stangler, Dane 294 steam engines 126, 214, 221, 228, 231–2, 244, 256, 258, 270, 271, 413–14 steamships 139, 253, 283 Stein, Gil 159 Stein, Herb 281 stem-cell research 358 Stephenson, George 256, 412 Steptoe, Patrick 306 sterilisation, coerced 203–4 Stern (magazine) 304 Stern, Nicholas, Baron 330–31, 332, 425 Stiner, Mary 64, 69 storms 314, 333, 335 Strabo 174 string 70 strokes (cerebral accidents) 18 Strong, Maurice 311 Subramanian, Arvind 317 subsidies: farming 188, 328; renewable energy supplies 344 subsistence farming 87, 138, 175–6, 189, 192, 199–200 substantivism 164–5 suburbia 108, 110, 190 Sudan 316 suffrage, universal 107 sugar 179, 202, 215 sugar beet 243 sugar cane 240, 241, 242 Sun Microsystems (corporation) 259 Sunda (landmass) 66 sunflowers 126 Sungir, Russia 71, 73 superconductivity, high-temperature 257 Superior, Lake 131 supermarkets 36, 112, 148, 268, 292, 297 surfboards 273 Sussex 285 Swan, Sir Joseph 234, 272 Swaziland 14 Sweden 17, 184, 229, 305, 340, 344 Swift, Jonathan 121, 240 Switzerland 264 swords, Japanese 198–9 Sybaris 170–71 symbiosis 75, 351 synergy 6, 101 Syria 124, 130, 164, 174 Szilard, Leo 412 Tahiti 169 Taiwan 31, 187, 219, 322 Talheim, Germany 138 Tanzania 316, 325, 327–8; Hadza people 61, 63, 87 Tapscott, Don 262 Tarde, Gabriel 5 tariffs 185–7, 188, 222–3 taro (vegetable plant) 126 Tartessians 169 Tasman, Abel 80 Tasmania 78–81, 83–4 Tattersall, Ian 73 Taverne, Dick, Baron 103 taxation: carbon taxes 346; and charitable giving 319; and consumption 27; and declining birth rates 211; early development of 160; and housing 25; and innovation 255; and intergenerational transfer 30; Mauryan empire 172; Roman empire 184; United States 25 Taylor, Barbara 103 tea 181, 182, 183, 202, 327, 392 telegraph 252–3, 257, 272, 412 telephones 252, 261; charges 22–3, 253; mobile 37, 252, 257, 261, 265, 267, 297, 326–7 television 38, 234, 252, 268 Telford, Thomas 221 Tennessee Valley Authority 326 termites 75–6 terrorism 8, 28, 296, 358 Tesco (retail corporation) 112 Tesla, Nikola 234 text messaging 292, 356 Thailand 320, 322 Thales of Miletus 171 Thames, River 17 thermodynamics 3, 244, 256 Thiel, Peter 262 Thiele, Bob 349 Thoreau, Henry David 33, 190 3M (corporation) 261, 263 threshing 124, 125, 130, 153, 198; machines 139, 283 thumbs, opposable 4, 51–2 Thwaites, Thomas 34–5 Tiberius, Roman emperor 174, 259 tidal and wave power 246, 343, 344 Tierra del Fuego 45, 62, 81–2, 91–2, 137 tigers 146, 240 timber 167, 216, 229; trade 158, 159, 180, 202 time saving 7, 22–4, 34–5, 123 Timurid empire 161 tin 132, 165, 167, 168, 213, 223, 303 ‘tipping points’ 287–9, 290, 291, 293, 301–2, 311, 329 Tiwi people 81 Tokyo 190, 198 Tol, Richard 331 Tooby, John 57 tool making: early Homo sapiens 53, 70, 71; machine tools 211, 221; Mesopotamian 159, 160; Neanderthals 55, 71, 378; Palaeolithic hominids 2, 4, 7, 48–51; technological regress 80 Torres Strait islanders 63–4, 81 tortoises 64, 68, 69, 376 totalitarianism 104, 109, 181–2, 290 toucans 146 Toulouse 222 Townes, Charles 272 ‘toy trade’ 223 Toynbee, Arnold 102–3 tractors 140, 153, 242 trade: and agriculture 123, 126, 127–33, 159, 163–4; early human development of 70–75, 89–93, 133–4, 159–60, 165; female-centred 88–9; and industrialisation 224–6; and innovation 168, 171; and property rights 324–5; and trust 98–100, 103; and urbanisation 158–61, 163–4, 167; see also bartering; exchange; markets trade unions and guilds 113, 115, 223, 226 trademarks 264 traffic congestion 296 tragedy of the commons 203, 324 Trajan, Roman Emperor 161 transistors 271 transport costs 22, 23, 24, 37, 229, 230, 253, 297, 408 transport speeds 22, 252, 253, 270, 283–4, 286, 287, 296 trebuchets 275 Tressell, Robert 288 Trevithick, Richard 221, 256 Trippe, Juan 24 Trobriand islands 58 trust: between strangers 88–9, 93, 94–8, 104; and trade 98–100, 103, 104; within families 87–8, 89, 91 Tswana people 321, 322 tungsten 213 Turchin, Peter 182 Turkey 69, 130, 137 Turnbull, William (farm worker) 219 Turner, Adair, Baron 411 turning points in history, belief in 287–9, 290, 291, 293, 301–2, 311, 329 Tuscany 178 Tyneside 231 typhoid 14, 157, 310 typhus 14, 299, 310 Tyre 167, 168–9, 170, 328 Ubaid period 158–9, 160 Uganda 154, 187, 316 Ukraine 71, 129 Ulrich, Bernd 304 Ultimatum Game 86–7 unemployment 8, 28, 114, 186, 289, 296 United Nations (UN) 15, 40, 205, 206, 290, 402, 429 United States: affluence 12, 16–17, 113, 117; agriculture 139, 140–41, 142, 219–20; biofuel production 240, 241, 242; birth rates 211, 212; civil rights movement 108, 109; copyright and patent systems 265, 266; credit crunch (2008) 9, 28–9; energy use 239, 245; GDP, per capita 23, 31; Great Depression (1930s) 31, 109, 192; happiness 26–7; immigration 108, 199–200, 202, 259; income equality 18–19; industrialisation 219; life expectancy 298; New Deal 109; oil supplies 237–8; pollution levels 17, 279, 304–5; poverty 16–17, 315, 326; productivity 112–13, 117; property rights 323; rural to urban migration 219; slavery 216, 228–9, 415; tax system 25, 111, 241; trade 186, 201, 228 Upper Palaeolithic Revolution 73, 83, 235 urbanisation: and development of agriculture 128, 158–9, 163–4; global urban population totals 158, 189, 190; and population growth 209–210; and trade 158–61, 163–4, 167, 189–90; see also rural to urban migration Uruguay 186 Uruk, Mesopotamia 159–61, 216 vaccines 17, 287, 310; polio 261, 275; smallpox 221 Vandals 175 Vanderbilt, Cornelius 17, 23, 24 vCJD (mad-cow disease) 280, 308 Veblen, Thorstein 102 Veenhoven, Ruut 28 vegetarianism 83, 126, 147, 376 Venezuela 31, 61, 238 Venice 115, 178–9 venture capitalists 223, 258, 259 Veron, Charlie 339–40 Victoria, Lake 250 Victoria, Queen 322 Vienna exhibition (1873) 233–4 Vietnam 15, 183, 188 Vikings 176 violence: decline in 14, 106, 201; homicide 14, 20, 85, 88, 106, 118, 201; in pre-industrial societies 44–5, 136, 137–9; random 104 Visby, Gotland 180 vitamin A 353 vitamin C 258 vitamin D 129 Vivaldi, Antonio 115 Vladimir, Russia 71 Vogel, Orville 142 Vogelherd, Germany 70 voles 97 Voltaire 96, 103, 104, 256 Wagner, Charles 288 Wal-Mart (retail corporation) 21, 112–14, 263 Wales 132 Wall Street (film) 101 Walton, Sam 112–13, 263 Wambugu, Florence 154 war: in Africa 316; in hunter-gatherer societies 44–5; threat of nuclear war 280, 290, 299–300; twentieth-century world wars 289, 309; unilateral declarations of 104 water: contaminated 338, 353, 429; pricing of 148; supplies 147, 280, 281, 324, 334–5; see also droughts; irrigation water snakes 17 watermills 176, 194, 198, 215, 216–17, 234 Watson, Thomas 282 Watt, James 221, 244, 256, 271, 411, 413–14 wave and tidal power 246, 343, 344 weather forecasting 3, 4, 335 weather-related death rates 335–6 Wedgwood, Josiah 105, 114, 225, 256 Wedgwood, Sarah 105 weed control 145, 152 Weiss, George David 349 Weitzman, Martin 332–3 Welch, Jack 261 welfare benefits 16, 106 Wellington, Arthur Wellesley, 1st Duke of 89 Wells, H.G. 65, 313, 352, 354 West Germany 289–90 West Indies 202, 216, 310 Western Union (company) 261 Westinghouse, George 234 whales 6, 281, 302 whaling 87, 185, 281 wheat 42, 71, 124, 125, 129, 139, 140, 146–7, 149, 153, 156, 158, 161, 167, 300–301; new varieties 141–3 Wheeler, Sir Mortimer 162 wheels, invention of 176, 274 Whitehead, Alfred North 255 Wikipedia (online encyclopedia) 99, 115, 273, 356 Wilberforce, William 105, 214 Wilder, Thornton 359 wilderness land, expansion of 144, 147, 148, 239, 337–8, 347, 359 wildlife conservation 324, 329 William III, King 223 Williams, Anthony 262 Williams, Joseph 254 Williams, Rowan, Archbishop of Canterbury 102 Wilson, Bart 90, 324 Wilson, E.O. 243, 293 Wiltshire 194 wind power 239, 246, 343–4, 346, 408 wolves 87, 137 women’s liberation 108–9 wool 37, 149, 158, 167, 178, 179, 194, 224 working conditions, improvements in 106–7, 114, 115, 188, 219–20, 227, 285 World Bank 117, 203, 317 World Health Organisation 336–7, 421 World Wide Web 273, 356 World3 (computer model) 302–3 Wrangham, Richard 59, 60 Wright brothers 261, 264 Wright, Robert 101, 175 Wrigley, Tony 231 Y2K computer bug 280, 290, 341 Yahgan Indians 62 Yahoo (corporation) 268 Yangtze river 181, 199, 230 Yeats, W.B. 289 yellow fever 310 Yellow river 161, 167 Yemen 207, 209 Yir Yoront aborigines 90–91 Yong-Le, Chinese emperor 183, 184, 185 Yorkshire 285 Young, Allyn 276 young people, pessimism about 292 Young, Thomas 221 Younger Dryas (climatic period) 125 Yucatan 335 Zak, Paul 94–5, 97 Zambia 28, 154, 316, 317, 318, 331 zero, invention of 173, 251 zero-sum thinking 101 Zimbabwe 14, 28, 117, 302, 316 zinc 213, 303 Zuckerberg, Mark 262 Acknowledgements It is one of the central arguments of this book that the special feature of human intelligence is that it is collective, not individual – thanks to the invention of exchange and specialisation.


pages: 532 words: 141,574

Bleeding Edge: A Novel by Thomas Pynchon

addicted to oil, AltaVista, anti-communist, Anton Chekhov, Bernie Madoff, big-box store, Burning Man, carried interest, deal flow, Donald Trump, double entry bookkeeping, East Village, eternal september, false flag, fixed-gear, gentrification, Hacker Ethic, index card, invisible hand, jitney, Larry Ellison, late capitalism, margin call, messenger bag, Network effects, Ponzi scheme, prediction markets, pre–internet, QWERTY keyboard, RAND corporation, rent control, rolodex, Ronald Reagan, Sand Hill Road, Silicon Valley, telemarketer, Y2K

But sometimes distinctions between hustling and being hustled broke down. It didn’t escape Maxine’s notice that, given stock valuations on some start-ups of interest chiefly to the insane, there might not much difference. How is a business plan that depends on faith in “network effects” kicking in someday different from the celestial pastry exercise known as a Ponzi scheme? Venture capitalists feared industrywide for their rapacity were observed to surface from pitch sessions with open wallets and leaking eyeballs, having been subjected to nerd-produced videos with subliminal messages and sound tracks featuring oldie mixes that pushed more buttons than a speed freak with a Nintendo 64.

“Nice average return, so what’s the problem?” “Not average. Same every month.” “Uh-oh.” She flips pages, has a look at the graph. “What the fuck. It’s a perfect straight line, slanting up forever?” “Seem a little abnormal to you?” “In this economy? Look at this—even last year, when the tech market went belly-up? No, it’s got to be a Ponzi scheme, and from the scale of these investments he could be front-running also. You have any money with him?” “Friends of mine. They’ve become concerned.” “And . . . these are grown-up persons who can deal with unwelcome news?” “In their special way. But they warmly appreciate wise advice.” “Well, that’s me, and my advice today is proceed quickly, unemotionally if possible, to the nearest exit strategy.


pages: 164 words: 57,068

The Second Curve: Thoughts on Reinventing Society by Charles Handy

"Friedman doctrine" OR "shareholder theory", Abraham Maslow, Airbnb, Alan Greenspan, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, disruptive innovation, Edward Snowden, falling living standards, future of work, G4S, greed is good, independent contractor, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, plutocrats, Ponzi scheme, Robert Solow, Ronald Coase, shareholder value, sharing economy, Skype, Social Responsibility of Business Is to Increase Its Profits, Stanford marshmallow experiment, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel

The equation begins to falter if the numbers change and if people live longer. In years gone by there were six people in work for every one retired, and those often died in their seventies. What happens when there are only two workers for every pensioner and those pensioners live until they are nearly 90, as will be the case in Europe by 2050? When Ponzi schemes become unbalanced it is bad news for all involved. Already the income collected from National Insurance contributions in Britain is £10 billion less than the outgoings. It would be more honest and straightforward if the pretence of National Insurance were dropped and everything incorporated in general taxation.


pages: 189 words: 57,632

Content: Selected Essays on Technology, Creativity, Copyright, and the Future of the Future by Cory Doctorow

AltaVista, AOL-Time Warner, book scanning, Brewster Kahle, Burning Man, cognitive load, drop ship, en.wikipedia.org, general purpose technology, informal economy, information retrieval, Internet Archive, invention of movable type, Jeff Bezos, John Gilmore, John Perry Barlow, Law of Accelerating Returns, machine readable, Metcalfe's law, mirror neurons, Mitch Kapor, moral panic, mutually assured destruction, Neal Stephenson, new economy, optical character recognition, PalmPilot, patent troll, pattern recognition, peer-to-peer, Ponzi scheme, post scarcity, QWERTY keyboard, Ray Kurzweil, RFID, Sand Hill Road, Skype, slashdot, Snow Crash, social software, speech recognition, Steve Jobs, the long tail, Thomas Bayes, Turing test, Vernor Vinge, Wayback Machine

In 2004, a player in the MMO EVE Online declared that the game's creators had stacked the deck against him, called EVE, "a poorly designed game which rewards the greedy and violent, and punishes the hardworking and honest." He was upset over a change in the game dynamics which made it easier to play a pirate and harder to play a merchant. The player, "Dentara Rask," wrote those words in the preamble to a tell-all memoir detailing an elaborate Ponzi scheme that he and an accomplice had perpetrated in EVE. The two of them had bilked EVE's merchants out of a substantial fraction of the game's total GDP and then resigned their accounts. The objective was to punish the game's owners for their gameplay decisions by crashing the game's economy. In both of these instances, players — residents of virtual worlds — resolved their conflicts with game management through customer activism.


pages: 244 words: 58,247

The Gone Fishin' Portfolio: Get Wise, Get Wealthy...and Get on With Your Life by Alexander Green

Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, backtesting, behavioural economics, borderless world, buy and hold, buy low sell high, cognitive dissonance, diversification, diversified portfolio, Elliott wave, endowment effect, Everybody Ought to Be Rich, financial independence, fixed income, framing effect, hedonic treadmill, high net worth, hindsight bias, impulse control, index fund, interest rate swap, Johann Wolfgang von Goethe, John Bogle, junk bonds, Long Term Capital Management, means of production, mental accounting, Michael Milken, money market fund, Paul Samuelson, Ponzi scheme, risk tolerance, risk-adjusted returns, short selling, statistical model, stocks for the long run, sunk-cost fallacy, transaction costs, Vanguard fund, yield curve

In 30 years, there will be twice as many Americans eligible for Social Security as there are today. Meanwhile, the number of workers per beneficiary has dropped from 5.1 in 1960, to 3.3 in 2007, to a projected 2.1 in 2032. Forget about this so-called trust fund. Current payroll taxes are being used to pay out current benefits, making Social Security look increasingly like a Ponzi scheme. Early investors get paid by new ones. Latecomers get left holding the bag. I’m not an alarmist, but facts are facts. There are not going to be enough workers to maintain the current level of benefits indefinitely. The federal government’s own Web site says, “The current Social Security system is unsustainable in the long run.”


pages: 218 words: 62,889

Sabotage: The Financial System's Nasty Business by Anastasia Nesvetailova, Ronen Palan

Alan Greenspan, algorithmic trading, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Bernie Sanders, big-box store, bitcoin, Black-Scholes formula, blockchain, Blythe Masters, bonus culture, Bretton Woods, business process, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, critique of consumerism, cryptocurrency, currency risk, democratizing finance, digital capitalism, distributed ledger, diversification, Double Irish / Dutch Sandwich, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, gig economy, Glass-Steagall Act, global macro, Gordon Gekko, high net worth, Hyman Minsky, independent contractor, information asymmetry, initial coin offering, interest rate derivative, interest rate swap, Joseph Schumpeter, junk bonds, Kenneth Arrow, litecoin, London Interbank Offered Rate, London Whale, Long Term Capital Management, margin call, market fundamentalism, Michael Milken, mortgage debt, new economy, Northern Rock, offshore financial centre, Paul Samuelson, peer-to-peer lending, plutocrats, Ponzi scheme, Post-Keynesian economics, price mechanism, regulatory arbitrage, rent-seeking, reserve currency, Ross Ulbricht, shareholder value, short selling, smart contracts, sovereign wealth fund, Thorstein Veblen, too big to fail

‘Problems’, in turn, range from investors being unable to withdraw money, a police investigation into a platform, or owners vanishing into thin air. These and other cases of fraud across China’s shadow banking industry have prompted a broader crackdown on debt and financial risk by the authorities, partly driven by the desire to avoid expensive bailouts, as a number of China’s wealth management firms, many of which are Ponzi schemes, fold.14 BLOCKCHAIN If peer-to-peer is engulfed in scandals, what about blockchain and its most famous cyber offspring, bitcoin? Cryptocurrencies like bitcoin show the truism of Hyman Minsky’s theory. Minsky, one of the greatest financial economists of the twentieth century, once said: ‘Anybody can create money, the problem is to get it accepted.’


pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

1919 Motor Transport Corps convoy, agricultural Revolution, Alan Greenspan, An Inconvenient Truth, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bear Stearns, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, Charles Lindbergh, classic study, collateralized debt obligation, collective bargaining, Columbian Exchange, commoditize, Cornelius Vanderbilt, corporate governance, cotton gin, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, fixed income, Ford Model T, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, General Magic , Glass-Steagall Act, Gordon Gekko, Great Leap Forward, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, Ida Tarbell, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, John Bogle, joint-stock company, Joseph Schumpeter, junk bonds, knowledge economy, land bank, land reform, Livingstone, I presume, Long Term Capital Management, low interest rates, Mahatma Gandhi, Martin Wolf, military-industrial complex, moral hazard, Nixon triggered the end of the Bretton Woods system, PalmPilot, Parag Khanna, pneumatic tube, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, scientific management, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, Suez canal 1869, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transcontinental railway, two and twenty, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, vertical integration, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

The separation of shareholders from managers, celebrated in the lore about corporations, sometimes invited irresponsibility, if not outright corruption. High-flying corporate heads could fiddle with the books, contract with their own firms, or pay dividends out of capital instead of earnings. Worse they could sell new shares of stock to pay dividends, amounting to Ponzi schemes.44 Still, corporations became popular among American and British entrepreneurs. General incorporation laws in the nineteenth century made it easier and cheaper to turn private companies into public incorporated entities than it had been. This was particularly the case in the United States, where the states chartered thousands of limited liability companies.

Only India, saved by its conservative banking traditions, escaped relatively unscathed. The unexpected fragility of these securities—an oxymoronic term—that American banks were pushing worldwide left leaders of many emerging economies angry at the perpetrators of the debacle. Globalization got another notch in its belt with the first worldwide Ponzi scheme, one that came a cropper at the end of 2008. Named after Charles Ponzi, the notorious swindler of the Roaring Twenties, such flimflams rely on enticing ever more people to invest in order to pay off those who have already bought into the fake firm. Buoyed by strong earnings, the shareholders then become informal salesmen of their remunerative investment.


pages: 526 words: 160,601

A Generation of Sociopaths: How the Baby Boomers Betrayed America by Bruce Cannon Gibney

1960s counterculture, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, American Society of Civil Engineers: Report Card, Bear Stearns, Bernie Madoff, Bernie Sanders, Black Lives Matter, bond market vigilante , book value, Boston Dynamics, Bretton Woods, business cycle, buy and hold, carbon footprint, carbon tax, Charles Lindbergh, classic study, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate personhood, Corrections Corporation of America, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, dark matter, DeepMind, Deng Xiaoping, Donald Trump, Downton Abbey, Edward Snowden, Elon Musk, ending welfare as we know it, equal pay for equal work, failed state, financial deregulation, financial engineering, Francis Fukuyama: the end of history, future of work, gender pay gap, gig economy, Glass-Steagall Act, Haight Ashbury, Higgs boson, high-speed rail, Home mortgage interest deduction, Hyperloop, illegal immigration, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, junk bonds, Kitchen Debate, labor-force participation, Long Term Capital Management, low interest rates, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, medical bankruptcy, Menlo Park, Michael Milken, military-industrial complex, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Armstrong, neoliberal agenda, Network effects, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, operation paperclip, plutocrats, Ponzi scheme, price stability, prosperity theology / prosperity gospel / gospel of success, quantitative easing, Ralph Waldo Emerson, RAND corporation, rent control, ride hailing / ride sharing, risk tolerance, Robert Shiller, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, school choice, secular stagnation, self-driving car, shareholder value, short selling, side project, Silicon Valley, smart grid, Snapchat, source of truth, stem cell, Steve Jobs, Stewart Brand, stock buybacks, survivorship bias, TaskRabbit, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, War on Poverty, warehouse robotics, We are all Keynesians now, white picket fence, Whole Earth Catalog, women in the workforce, Y2K, Yom Kippur War, zero-sum game

In the more than eighteen months between April 2007, when the SEC relaxed capital requirements and authorized banks to model their own risks, and the late summer of 2008, when the wheels came off, the special office assigned to monitor the results of deregulation completed zero investigations (it also had no director).23 Even though it is clear that neither government nor firms had adequate insight into systemic risk, the trend has been to less transparency and understanding. The accounting profession’s craven accommodations did not make it any easier to understand what was going on. Sometimes the auditors simply committed fraud, as happened when Bernie Madoff’s accountants helped his Ponzi scheme. More usually, it took the form of industry opinions that allowed substantial and unwise discretion on the part of financial officers. Older and more conservative standards, like holding assets at book value, gave way to mark-to-market and mark-to-model accounting. The former allowed firms to price their assets at prevailing market prices (fair enough) and received strong support from financial firms when the market was performing well.

Unfortunately, because most pension plans have not collected adequate contributions from older beneficiaries, they depend on an increasing flow of new workers into the system and very high rates of return on invested assets, assumptions that have been problematic for years. If pensions are not exactly a Ponzi scheme, neither are they well managed. Private pensions are badly underfunded—in 2012, there was a $355 billion shortfall for just the companies in the S&P 500.11 Public pensions cover vastly more workers and have correspondingly bigger problems. The most optimistic estimates come, not surprisingly, from the association of public pension administrators, who even at the acme of self-service admit about $1 trillion in shortfalls; the most pessimistic academic estimates pegged underfunding at $1–3.74 trillion, with $2.66 trillion as a probable estimate, and that number will likely grow.12 As it turns out, the academics were the Cassandras of retirement: In fall 2016, it was revealed that California’s public pensions maintained two sets of books, one with the official, high-return figures and a second with grimmer calculations based on the same sorts of assumptions underlying the academic analyses.13 As pensions fail, the oldest will almost certainly be paid first, leaving little or nothing left over for younger beneficiaries.


pages: 575 words: 171,599

The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund by Anita Raghavan

"World Economic Forum" Davos, airport security, Asian financial crisis, asset allocation, Bear Stearns, Bernie Madoff, Boeing 747, British Empire, business intelligence, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, delayed gratification, estate planning, Etonian, glass ceiling, high net worth, junk bonds, kremlinology, Larry Ellison, locking in a profit, Long Term Capital Management, Marc Andreessen, mass immigration, McMansion, medical residency, Menlo Park, new economy, old-boy network, Ponzi scheme, risk tolerance, rolodex, Ronald Reagan, short selling, Silicon Valley, sovereign wealth fund, stem cell, technology bubble, too big to fail

In 2006, when Christopher Cox, a California congressman, led the SEC, enforcement lawyers often got pushback when they sought formal powers to probe. Cox believed that financial players like investment banks and hedge funds could be trusted to regulate themselves. During his time, the agency missed some stunningly huge fraudsters, such as Bernie Madoff, who ran a Ponzi scheme for nearly two decades. It also overlooked troubling practices such as collateralized debt obligations that led to the financial system’s near meltdown in 2008. For a month, the SEC’s exam staff camped in Sedna’s offices. They turned up instant messages and emails that seemed to point to something suspicious.

If a case is brought too early, prosecutors run the risk that they could miss chasing leads that would allow them to bring a far bigger action or uncover separate but related illegal activity. At the same time, when an investigation drags on for years, evidence grows stale and memories fade. The financial meltdown in September 2008 and the shocking revelations two months later that respected securities industry executive Bernard Madoff was running a Ponzi scheme that went undetected for decades shone a harsh spotlight on the SEC. Then presidential candidate John McCain, reflecting the mood of the time, called for the firing of SEC chairman Christopher Cox. Morale at the agency plummeted. One former SEC lawyer was asked at his mother’s birthday party, “How does it make you feel that your agency is absolutely incompetent?”


J.K. Lasser's Your Income Tax 2016: For Preparing Your 2015 Tax Return by J. K. Lasser Institute

accelerated depreciation, Affordable Care Act / Obamacare, airline deregulation, asset allocation, book value, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, independent contractor, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, transaction costs, urban renewal, zero-coupon bond

The Tax Court took the same approach in holding that a taxpayer who bought stock on the open market could not support a theft loss under California law because there was no “privity” relationship between the taxpayer and the corporate officers accused of wrongdoing, and so it could not be shown that there was intent to obtain the taxpayer’s property. Deduction allowed to victims of Ponzi schemes and similar fraudulent schemes. The IRS allows investors who fall victim to fraudulent investment arrangements, including Ponzi schemes, to claim a theft loss deduction under special rules (Revenue Ruling 2009-9). A theft loss is deductible for the year the loss is discovered. The loss is considered a “theft,” not a capital loss, as it is the result of a criminal fraudulent scheme intended to deprive investors of the funds they invested.

The court held that the loss occurred in the later year. In another case, hurricane damage did not become apparent for two years. The Tax Court allowed the deduction in the later year. A deduction is generally not allowed for drought damage after the year in which the drought occurs (18.1). Note that under special rules for Ponzi-scheme-related losses, the IRS does allow the deduction to be claimed in the “discovery” year (18.9). If your loss is in a federal disaster area. If your property is damaged in an area eligible for federal disaster assistance, you have a choice of years for which the loss may be claimed (18.3). If reimbursements exceed your adjusted basis for the property.

There is no theft in this situation because there is no direct connection between the corporate wrongdoers and the investors, and the officers and directors lacked a specific criminal intent to take the shareholders’ funds. The IRS contrasts such open market transactions with Ponzi-type fraudulent schemes, in which it holds there is a criminal intent to target the investors, and thus a theft loss is allowed for such Ponzi-scheme losses; see below. Caution Stock Devaluation Due to Corporate Misconduct The IRS has warned shareholders who suffer a loss in the value of their stock due to the fraud, misappropriation, or other misconduct of corporate officers or directors that their loss is not a deductible theft loss.


pages: 214 words: 71,585

Selfish, Shallow, and Self-Absorbed: Sixteen Writers on the Decision Not to Have Kids by Meghan Daum

delayed gratification, demographic transition, Donald Trump, financial independence, happiness index / gross national happiness, index card, Joan Didion, Mason jar, Multics, peak oil, Ponzi scheme, risk tolerance, Skype, women in the workforce

As much as women talk the talk about maternal instinct, fewer than ever are walking the walk: the fastest-growing segments of the female population now have either zero children or one child by age forty. According to demographers, the consequences down the road will be seismic: an aging citizenry unable to sustain itself economically (Social Security is already basically a national Ponzi scheme, some are calculating). Though no one exactly says it, women are voting with their ovaries, and the reason is simple. There are too few social supports, especially given the fact that the majority of women are no longer just mothers now, they’re mother-workers. Yet virtually no social policy accounts for this.


pages: 221 words: 68,880

Bikenomics: How Bicycling Can Save the Economy (Bicycle) by Elly Blue

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, active transport: walking or cycling, American Society of Civil Engineers: Report Card, autism spectrum disorder, big-box store, bike sharing, Boris Johnson, business cycle, car-free, congestion pricing, Donald Shoup, food desert, hydraulic fracturing, if you build it, they will come, Induced demand, job automation, Loma Prieta earthquake, medical residency, oil shale / tar sands, parking minimums, peak oil, Ponzi scheme, power law, ride hailing / ride sharing, science of happiness, the built environment, Tragedy of the Commons, urban renewal, women in the workforce, working poor, young professional

Eventually the road needs to be expanded; the initial debt has not been fully paid off, so a new, larger loan is taken out to fund the new project and pay off the old one. The money is borrowed against the promise of further development to bring in new tax revenue. And so it continues. Charles Marohn, an engineer and planner from rural Minnesota and author of the blog Strong Towns, writes compellingly that this is “like a classic Ponzi scheme, with ever-increasing rates of growth necessary to sustain long-term liabilities.” Marohn makes a compelling case. “In sixty years of building endlessly outward,” he writes, “we have reaped significant short term financial gains. But the cost is long-term financial obligations of a much greater magnitude.


pages: 222 words: 50,318

The Option of Urbanism: Investing in a New American Dream by Christopher B. Leinberger

addicted to oil, American Society of Civil Engineers: Report Card, asset allocation, big-box store, centre right, commoditize, credit crunch, David Brooks, desegregation, Donald Shoup, Donald Trump, drive until you qualify, edge city, Ford Model T, full employment, General Motors Futurama, gentrification, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, knowledge economy, Lewis Mumford, McMansion, mortgage tax deduction, new economy, New Urbanism, peak oil, Ponzi scheme, postindustrial economy, RAND corporation, Report Card for America’s Infrastructure, reserve currency, Richard Florida, Savings and loan crisis, Seaside, Florida, the built environment, transit-oriented development, urban planning, urban renewal, urban sprawl, value engineering, walkable city, white flight

Many real estate developers purchased S&Ls in the 1980s and then turned around and made loans to their own projects, having the S&L take on massive risk, which was government-insured. In addition, many S&L owners continually refi nanced loans at ever higher appraised valuations, justifying larger and larger loans. This was a Ponzi scheme with federal loan insurance NOTES | 183 6. 7. 8. 9. 10. 11. 12. 13. backing it up, leading to inevitable bankruptcy, the government holding the bag. Only a few S&L owners, most infamously Charles Keating, went to jail. Japan had a comparable financial sector crisis at about the same time; banks had made a huge number of loans to real estate projects that then went sour.


pages: 224 words: 64,156

You Are Not a Gadget by Jaron Lanier

1960s counterculture, Abraham Maslow, accounting loophole / creative accounting, additive manufacturing, Albert Einstein, Bear Stearns, call centre, cloud computing, commoditize, crowdsourcing, death of newspapers, different worldview, digital Maoism, Douglas Hofstadter, Extropian, follow your passion, General Magic , hive mind, Internet Archive, Jaron Lanier, jimmy wales, John Conway, John Perry Barlow, John von Neumann, Kevin Kelly, Long Term Capital Management, Neal Stephenson, Network effects, new economy, packet switching, PageRank, pattern recognition, Ponzi scheme, Project Xanadu, Ray Kurzweil, Richard Stallman, Savings and loan crisis, Silicon Valley, Silicon Valley startup, slashdot, social graph, stem cell, Steve Jobs, Stewart Brand, Stuart Kauffman, synthetic biology, technological determinism, Ted Nelson, telemarketer, telepresence, the long tail, The Wisdom of Crowds, trickle-down economics, Turing test, Vernor Vinge, Whole Earth Catalog

For instance, if a regulator became curious about whether a particular derivative should be understood as a form of insurance—which should only be allowed if the insurer has adequate reserves—it would be easy to make the necessary analysis. (This function would have prevented much of the current mess.) It should also be possible to detect the potential emergence of Ponzi schemes and the like within complex networks of transactions that might otherwise fool even those who designed them. Visualizations or other nonstandard presentations of transactions that would help legislators and other nonspecialists understand new ideas in transactions might be developed. A tool to help consumers cope with the monetary world might well come from an enlightened NGO or a university.


pages: 218 words: 68,648

Confessions of a Crypto Millionaire: My Unlikely Escape From Corporate America by Dan Conway

Affordable Care Act / Obamacare, Airbnb, bank run, basic income, Bear Stearns, Big Tech, bitcoin, blockchain, buy and hold, cloud computing, cognitive dissonance, corporate governance, crowdsourcing, cryptocurrency, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, fault tolerance, financial independence, gig economy, Gordon Gekko, Haight Ashbury, high net worth, holacracy, imposter syndrome, independent contractor, initial coin offering, job satisfaction, litecoin, Marc Andreessen, Mitch Kapor, obamacare, offshore financial centre, Ponzi scheme, prediction markets, rent control, reserve currency, Ronald Coase, Satoshi Nakamoto, Silicon Valley, Silicon Valley billionaire, smart contracts, Steve Jobs, supercomputer in your pocket, tech billionaire, tech bro, Tragedy of the Commons, Turing complete, Uber for X, universal basic income, upwardly mobile, Vitalik Buterin

Still others were potentially credible but would require immense, groundbreaking software engineering and blockchain development before coming to fruition. Alleged scammer LandCoin sent a note with grammatical errors and addressed it to another firm—a cut-and-paste job gone wrong in their frantic effort to blast out the details of their token sale. Bitconnect is the notorious alleged Ponzi scheme which became a cautionary crypto meme and is the subject of an FBI investigation. They asked if we’d like to advertise on their website. LevelNet eventually shut itself down after regulators in Vermont took action against them for allegedly making unrealistic claims to investors. Arthereium was planning an ICO for art collectors.


J.K. Lasser's Your Income Tax 2022: For Preparing Your 2021 Tax Return by J. K. Lasser Institute

accelerated depreciation, Affordable Care Act / Obamacare, airline deregulation, anti-communist, asset allocation, bike sharing, bitcoin, business cycle, call centre, carried interest, collective bargaining, coronavirus, COVID-19, cryptocurrency, distributed generation, distributed ledger, diversification, employer provided health coverage, estate planning, Home mortgage interest deduction, independent contractor, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, ride hailing / ride sharing, Right to Buy, sharing economy, TaskRabbit, Tax Reform Act of 1986, transaction costs, zero-coupon bond

The IRS contrasts such open market transactions with Ponzi-type fraudulent schemes, in which it holds there is a criminal intent to target the investors, and thus a theft loss is allowed for such Ponzi-scheme losses; see below. Deduction allowed to victims of Ponzi schemes and similar fraudulent schemes. The IRS allows investors who fall victim to fraudulent investment arrangements, including Ponzi schemes, to claim a theft loss deduction under special rules (Revenue Ruling 2009-9). A theft loss is deductible for the year the loss is discovered. The loss is considered a “theft,” not a capital loss, as it is the result of a criminal fraudulent scheme intended to deprive investors of the funds they invested.

If in the year the loss is discovered the investor has a reasonable prospect of reimbursement, the deductible amount is reduced by the expected reimbursement. holding that a taxpayer who bought stock on the open market could not support a theft loss under California law because there was no “privity” relationship between the taxpayer and the corporate officers accused of wrongdoing, and so it could not be shown that there was intent to obtain the taxpayer’s property. Recognizing that it could be difficult to determine when and how much to deduct as a Ponzi-scheme loss, the IRS provides certain taxpayers with an optional safe harbor method, discussed below, for computing and reporting the theft loss (Revenue Procedure 2009-20). If you are eligible for and choose to use the IRS safe harbor, first complete Section C of Form 4684, and then enter the deductible amount from Section C on Section B.

Allen, 16 TC 163 (1951) John L. Seymour, 14 TC 1111 (1950) Edna M. Oatis, 6 TCM 569 (1947) Corporate misconduct doesn't support theft loss deduction Notice 2004-27, 2004-16 IRB 782 *Ronald C. Singerman, TC Summary Opinion 2005-4 Theft losses allowed to victims of Madoff and other Ponzi schemes Rev. Proc. 2011-58, 2011-50 IRB 849 (expanded eligibility for safe harbor) Rev. Rul. 2009-9, 2009-14 IRB 735 Rev. Rul. 2009-20, 2009-14 IRB 749 (optional safe harbor) Chief Counsel Memorandum 2015-11018 (year of discovery for claiming deduction) Estate gets theft loss deduction for LLC account invested with Madoff Est. of Heller, 147 TC No. 11 (2016) No theft loss for poor investment decision Oscar C.


pages: 624 words: 180,416

For the Win by Cory Doctorow

anti-globalists, barriers to entry, book value, Burning Man, company town, creative destruction, double helix, Internet Archive, inventory management, lateral thinking, loose coupling, Maui Hawaii, microcredit, New Journalism, off-the-grid, planned obsolescence, Ponzi scheme, post-materialism, printed gun, random walk, reality distortion field, RFID, San Francisco homelessness, Silicon Valley, skunkworks, slashdot, speech recognition, stem cell, Steve Jobs, Steve Wozniak, supply-chain management, technoutopianism, time dilation, union organizing, wage slave, work culture

While Gibbons regaled the impressionable post-adolescents with tales of his derring-do, he avidly noted their strategic suggestions for solving his legal, paramilitary, and technical problems. One suggestion that drew Gibbons’s attention and admiration was to approach venture capitalists and beg them for the capital to sue Disney and then use the settlements from the suits to pay back the VCs. This mind-croggling Ponzi scheme is the closest thing to a business model we’ve yet heard of from the chip-addled techno-hippies of the New Work and its post-boom incarnation. One can only imagine how our Ms Church will cover this in her fan-blog: breathless admiration for Mr Gibbons’s cunning in soliciting yet more “way out of the box” thinking from the Junior Guevaras of the Great Midwest, no doubt.

One can only imagine when the other, financial shoe will drop. For wherever Church goes, money isn’t far behind: surely there’s a financial aspect to this business with the ride. UPDATE: Indeed there is: further anonymous tipsterism reveals that papers have been filed to create a “co-operative” structured like a classic Ponzi scheme, in which franchise operators of the ride are expected to pay membership dues further up the ladder. All the romance of Church’s accounts will certainly find a fresh batch of suckers—if there’s one thing we know about Suzanne Church, it’s that she knows how to separate a mark from his money. Lester ran the ride basically on his own that week, missing his workshop and his tinkering, thinking of Suzanne, wishing that Perry was back already.


pages: 272 words: 19,172

Hedge Fund Market Wizards by Jack D. Schwager

asset-backed security, backtesting, banking crisis, barriers to entry, Bear Stearns, beat the dealer, Bernie Madoff, Black-Scholes formula, book value, British Empire, business cycle, buy and hold, buy the rumour, sell the news, Claude Shannon: information theory, clean tech, cloud computing, collateralized debt obligation, commodity trading advisor, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, diversification, diversified portfolio, do what you love, Edward Thorp, family office, financial independence, fixed income, Flash crash, global macro, hindsight bias, implied volatility, index fund, intangible asset, James Dyson, Jones Act, legacy carrier, Long Term Capital Management, managed futures, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, merger arbitrage, Michael Milken, money market fund, oil shock, pattern recognition, pets.com, Ponzi scheme, private sector deleveraging, proprietary trading, quantitative easing, quantitative trading / quantitative finance, Reminiscences of a Stock Operator, Right to Buy, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Rubik’s Cube, Savings and loan crisis, Sharpe ratio, short selling, statistical arbitrage, Steve Jobs, systematic trading, technology bubble, transaction costs, value at risk, yield curve

Does there have to be an identifiable reason for every trade? Not necessarily. For example, before the 1998 financial crisis began, I didn’t even know who LTCM was. Long Term Capital Management (LTCM) was the most famous hedge fund failure in history. (Madoff may have been even more prominent, but his operation was a Ponzi scheme rather than a hedge fund. Madoff simply made up performance results and never did any trading.) In its first four years of operation, LTCM generated steady profits, quadrupling the starting net asset value. Then in a five-month period (May to September 1998), it all unraveled, with the net asset value of the fund plunging a staggering 92 percent.

I took 10 of these trades to a high-placed brokerage friend and asked him if he could find out who the counterparties were on those trades. He checked and found out that Madoff’s organization didn’t appear as counterparty on any of the trades. I told my institutional client, “He is printing fake trades. He is making it all up. What you should do is get out as soon as you can and as quietly as you can. This is a huge Ponzi scheme that will get bigger and bigger, and one day it is going to self-destruct.” Did they get out? They did. Did you take it any further? I thought of trying to expose it, but I had already had a belly full of government with Giuliani and Princeton Newport Partners. I also had previously found some small frauds and was told by a lawyer friend of mine who spent eight years working for the SEC that it would be a waste of time reporting it.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

"World Economic Forum" Davos, Air France Flight 447, Alan Greenspan, Andrei Shleifer, anti-fragile, banking crisis, Benoit Mandelbrot, Berlin Wall, biodiversity loss, Black Swan, business cycle, caloric restriction, caloric restriction, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, fail fast, financial engineering, financial independence, Flash crash, flying shuttle, Gary Taubes, George Santayana, Gini coefficient, Helicobacter pylori, Henri Poincaré, Higgs boson, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, Jim Simons, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, language acquisition, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, Mark Spitznagel, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, Post-Keynesian economics, power law, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, Rupert Read, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, synthetic biology, tacit knowledge, tail risk, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

In spite of its denial of antifragility, the Enlightenment and the political systems that emerged from it freed us (somewhat) from the domination of society, the tribe, and the family that had prevailed throughout history. The unit in traditional cultures is the collective; and it could be perceived to be harmed by the behavior of an individual—the honor of the family is sullied when, say, a daughter becomes pregnant, or a member of the family engages in large-scale financial swindles and Ponzi schemes, or, worst, may even teach a college course in the charlatanic subject of financial economics. And these mores persist. Even as recently as the late nineteenth century or early twentieth, it was common in, say, rural France for someone to spend all his savings to erase the debts of a remote cousin (a practice called passer l’éponge, literally, to use a sponge to erase the liability from the chalkboard), and to do so in order to preserve the dignity and good name of the extended family.

Likewise, government deficits are particularly concave to changes in economic conditions. Every additional deviation in, say, the unemployment rate—particularly when the government has debt—makes deficits incrementally worse. And financial leverage for a company has the same effect: you need to borrow more and more to get the same effect. Just as in a Ponzi scheme. The same with operational leverage on the part of a fragile company. Should sales increase 10 percent, then profits would increase less than they would decrease should sales drop 10 percent. That was in a way the technique I used intuitively to declare that the Highly Respected Firm Fannie Mae was on its way to the cemetery—and it was easy to produce a rule of thumb out of it.


Big Data and the Welfare State: How the Information Revolution Threatens Social Solidarity by Torben Iversen, Philipp Rehm

23andMe, Affordable Care Act / Obamacare, algorithmic bias, barriers to entry, Big Tech, business cycle, centre right, collective bargaining, COVID-19, crony capitalism, data science, DeepMind, deindustrialization, full employment, George Akerlof, income inequality, information asymmetry, invisible hand, knowledge economy, land reform, lockdown, loss aversion, low interest rates, low skilled workers, microbiome, moral hazard, mortgage debt, Network effects, new economy, obamacare, personalized medicine, Ponzi scheme, price discrimination, principal–agent problem, profit maximization, Robert Gordon, speech recognition, subprime mortgage crisis, tail risk, The Market for Lemons, The Rise and Fall of American Growth, union organizing, vertical integration, working-age population

Nevertheless, it was hard to avoid adverse selection in the case of sickness pay, and the time-inconsistency problem was never far behind because older workers were more likely to fall sick or have accidents. Unlike the case of burial insurance, rising life expectancy made the adverse selection problem worse (Beito 1990, 725), and the implied direct transfer between younger and older generations was severe enough that it has been likened to a Ponzi scheme (Kaufman 2002, 47). Indeed, much effort went into recruiting younger members to pay for older insiders, which was not easy. That said, the logic is no different than a public PAYG scheme, which would ordinarily be welfare enhancing. The problem was that MASs, unlike strong political parties coupled with the coercive powers of the state, could not credibly commit to future generations.

., 53 illness, 8, 13–14, 20, 25, 48, 62–63, 75, 96, 108, 110, 171, 173, 185–186, 188 immigrants, 46, 167 individual retirement accounts (IRAs), 47, 64, 193 industrialization, 17, 96n25; deindustrialization and, 12, 30, 179, 188– 189; health insurance and, 195; historical perspective on, 44, 49, 51, 56; knowledge economy and, 192; middle class and, 6, 15, 51, 53–54; mutual aid societies (MASs) and, 44, 190; uncertainty and, 189; urbanization and, 189 inequality: credit markets and, 106–115, 118–131, 138, 140, 144, 196–198; democracy and, 12, 70, 188; future issues and, 201; Hartz IV reforms and, 14; historical perspective on, 59–61, 64–65; increased, 2, 7, 14, 16, 19, 33, 59, 61, 64– 65, 70–71, 100, 106, 108–113, 118, 128, 223 130, 138, 140, 188–189, 197–198, 201; information and, 2, 5, 7, 12, 14; labor markets and, 198; mortgages and, 119– 131; private markets and, 70–71, 82, 92, 100; reduction of, 92, 112, 118, 138, 188–189, 198; regulation and, 119–131; risk and, 2, 7, 12, 14, 19, 33, 59–61, 65, 82, 92, 100, 108, 111–114, 130, 138, 144, 188–189, 196–198, 201; segmentation and, 59, 61, 188–189, 196; taxes and, 19, 60, 100, 188–189; theoretical model and, 16, 19, 33 information: actuarial science and, 49 (see also actuarial science); asymmetric, 2–4, 8, 15, 20–27, 38, 39, 55, 56, 63, 74, 82n17, 160, 190, 199, 202; Big Data, 5, 13, 22, 63, 108, 119, 138, 191; credible, 28, 38, 39; credit markets and, 64–65, 112–113; Department of Motor Vehicles and, 75; diagnostics and, 10, 27, 49, 62, 81–88, 94, 100, 193; division of insurance pools and, 5–10; electronic health records (EHRs) and, 76–79; funded systems and, 18; health insurance and, 4–8, 11, 13, 60–64, 192–196; high, 8, 10, 25–27, 38, 56–58, 64, 82n17, 200; human genome, 62, 81, 83; incomplete, 2, 12, 18, 29, 55, 66; inequality and, 2, 5, 7, 12, 14, 119–131; laboratories and, 81, 83, 87; labor markets and, 160–165; life insurance and, 4–7, 10, 13, 72–73, 82– 88, 101–103, 104, 193–193; loans and, 112–113, 118–119; low, 8, 10, 14, 18, 25–26, 28, 38, 39, 56, 57, 67, 199; market failure and, 6, 9, 19–30, 190; market feasibility and, 16–19, 30–37, 46, 58, 160, 199; Medical Information Bureau (MIB) and, 72n4, 75, 78–79; Moore’s Law and, 61–62, 83n18; mortgages and, 119–131; mutual aid societies (MASs) and, 6, 8, 10–13, 199; ownership of, 202; pensions and, 64–65; preferences and, 18–19, 35–37; prescription databases and, 75, 77; privacy and, 10, 26–29, 40–42, 63, 78, 94, 202; regulation and, 2, 14, 18, 38, 63– 65, 70, 73, 81, 87–89, 93–94, 100, 110, 117–131, 140, 199, 202; revolution in, 2, 4, 13, 35, 39, 55, 58–73, 82, 88, 94, 100, 108, 188, 201; risk and, 1–15, 18–30, 35– 37, 160–165; segmentation and, 2, 5–6, https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press 224 Index 8, 11–14, 16, 18, 58–59, 66–67, 70, 89, 94, 159, 162, 165, 177, 180, 188–189, 192, 196; social insurance and, 2–13, 189–190, 193, 198; social solidarity and, 53–60; symmetric, 20, 25–29, 39, 55, 82n17; trackers and, 3–4, 29, 79–80, 191; uncertainty and, 16 (see also uncertainty); underwriting and, 74–75; unemployment insurance and, 65–67, 183; welfare and, 2–14 information and communication technology (ICT), 4, 8, 119, 131, 189 integration, 2, 5 interest rates: changing, 17; credit markets and, 105, 108, 111–132, 138–144, 152, 156; Denmark and, 198; equalization of, 65; FICO scores and, 121–130; Gini coefficient and, 121–127, 129, 138; mortgages, 14, 65, 116–124, 128, 138– 140, 197; segmentation and, 52, 58, 70 International Monetary Fund (IMF), 106, 107 Ireland, 90, 102, 107, 147 ISCO, 174 Italy, 90, 102, 107, 147, 203 Japan, 58, 66, 90, 91, 102, 107 Jawbone, 79 Job Pact, 182 John Hancock Life Insurance, 4, 29, 77–78, 80 Kaiser Family Foundation Poll, 99 Keen, Michael, 19 Korpi, Walter, 53, 193 laboratories, 81, 83, 87 labor markets: actuarial approach and, 160, 163n2, 177, 179, 184; collective bargaining and, 64, 159, 193; democracy and, 163, 183; disability and, 34, 38, 44, 63, 75, 139, 197; education and, 159, 161–162, 165, 167, 174, 179, 183–184, 198; elderly and, 159, 171, 173, 185– 186; empirical applications and, 198– 199; employment protection, 159, 162, 180; fragmentation and, 50n2; Germany and, 165–172, 173, 185–186, 198; Ghent system and, 177, 179–180, 182, 184, 198; health insurance and, 159; inequality and, 198; information and, 160–165; Law on Employment Protection, 180; market failure and, 184; partisanship and, 177, 183; poor people and, 160, 176; preferences and, 14, 66, 160, 163, 165– 177; public system and, 165, 177, 182– 183; redistribution and, 172, 174–176, 183, 186–187; reform and, 165, 177– 182, 198; regression analysis and, 166, 172, 173, 185–186; regulation and, 159; segmentation and, 14, 50, 67, 159, 162, 165, 177, 180, 182, 188, 192, 198; social insurance and, 159–160, 163, 177; subsidies and, 182, 185; Swedish unemployment insurance and, 177–183; taxes and, 159, 177, 180, 181; uncertainty and, 160, 163n2; unemployment protection, 46, 159, 164, 197n3; unions and, 159, 161, 164, 174, 177–184, 200; United States and, 66; voters and, 163–164, 184; wage protection, 159 Latin America, 66 Law on Employment Protection, 180 layoffs, 110 legal issues: clerical marriage, 44; discrimination, 116; intergenerational contracts and, 31; social media, 81; symmetric information and, 26 Lexis Nexis Risk Classifier, 76 life expectancy: adverse selection and, 45; historical perspective on, 45, 48–51; increased data on, 10, 45; predicting, 18, 193; premiums and, 17; private markets and, 72, 83–87; risk and, 34 life insurance: artificial intelligence (AI) and, 81–82; commercialization of, 45–50, 54– 55, 67; credit reports and, 76; Department of Motor Vehicles and, 75; diagnostics and, 10, 27, 49, 62, 81, 83– 88, 94, 100, 193; division of insurance pools and, 5, 7; electronic health records (EHRs) and, 76–79; empirical applications and, 193–196; funded plans and, 7, 16–18, 33, 45, 48, 53, 58, 96, 193–195; guaranty associations and, 33; historical perspective on, 44–49, 55, 58, 63; information and, 4–7, 10, 13, 72–73, 82–88, 101–103, 104, 193–193; laboratories and, 81, 83, 87; Lexis Nexis Risk Classifier and, 76; market penetration of, 82–88, 101–103, 104; https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press Index Medical Information Bureau (MIB) and, 72n4, 75, 78–79; micro-targeted products and, 73; permanent, 72; prescription databases and, 75, 77; private markets and, 70–94, 100–102, 103–104; purpose of, 71–72; theoretical model and, 16–17, 29, 33–38; trackers and, 76, 79–81, 100; underwriting and, 71, 73–82, 87–88, 100–101 liquidity, 109 loans: access to, 65, 105–106, 110; bank, 65, 105, 116, 131–132, 202; credit markets and, 118–119; default and, 108 (see also default); discretionary income and, 100, 105, 108–115, 118, 138, 140, 142, 196; FICO scores and, 121–130, 149, 151–158; flat-rate benefits and, 37, 114–115, 132, 144–146; Gini coefficient and, 121–127, 129, 138; Hartz reform and, 65, 132; inequality and, 119–131; information and, 112–113, 118–119; interest rates and, 110 (see also interest rates); liquidity and, 109; model for, 110– 117, 141–144; mortgages, 110 (see also mortgages); private markets and, 83; regulation and, 115–131; risk and, 65, 100, 105, 108–109, 111–117, 130, 132, 138, 141–142, 196, 202; Single Family Loan-Level Dataset and, 121; welfare and, 110–111, 113–115, 131–138 loan-to-value ratio, 124, 131, 156 Loewenstein, Lara, 120–121, 131 low information, 8, 10, 14, 18, 25–26, 28, 38, 39, 56, 57, 67, 199 lump sum payments, 33, 35–36, 114 McFadden pseudo R-squared measure, 166–172, 173, 185–186 Maclaurin, Colin, 45 market failure: asymmetric information and, 22–25; classic framework for, 19– 30; democracy and, 19–30; historical perspective on, 53, 57, 67; information and, 6, 9, 190; labor markets and, 184; mutual aid societies (MASs) and, 6, 67; private markets and, 94; redistribution and, 6, 12, 67, 191, 200; symmetric information and, 25–29; theoretical model and, 12, 15, 18–20, 29 market feasibility, 160, 199; historical perspective on, 46, 58; information and, 225 16–18, 30–35; preferences and, 18–19, 35–37; time inconsistency and, 16–18, 30–35 market-mediated funded systems, 201 Medicaid, 8, 10, 60, 68, 96–99, 193 Medical Information Bureau (MIB), 72n4, 75, 78–79 Medical Literature Analysis and Retrieval System Online, 84 Medical Subject Headings (MeSH), 84 Medicare, 2, 7, 9, 17, 59–60, 96–99, 193 Meltzer-Richard model, 114 Microsoft, 5, 62, 81 micro-tracking, 3 middle class: credit markets and, 106; education and, 199; industry and, 6, 15, 51, 53–54; mortgages and, 65, 106; preferences of, 59, 196, 200; private markets and, 69, 71, 92, 97, 200; theoretical model and, 5; universal public system and, 30; voters, 32, 51, 61, 193; welfare and, 6, 8, 13, 15, 54, 68–69, 193– 195, 199 Misfit, 79 MLC On Track, 80 mobility, 49, 66, 68, 189, 191–192, 200 Moore’s Law, 61–62, 83n18 moral hazard, 10, 45, 48, 184, 198 mortality: artificial intelligence (AI) and, 81–82; Lexis Nexis Risk Classifier and, 76; life expectancy and, 10, 17, 34, 45, 48–51, 72, 83–87, 193; private markets and, 72, 75–76, 79, 81, 84, 86, 101–102 mortgages: credit markets and, 106, 109– 140, 146, 147; FICO scores and, 121– 130, 149, 151–158; Gini coefficient and, 121–127, 129, 138; Home Mortgage Disclosure Act (HMDA) and, 120n10; inequality and, 119–131; information and, 119–131; interest rates and, 14, 65, 116–124, 128, 138–140, 197; middle class and, 65, 106; private markets and, 198; redlining and, 11, 116, 202; regulation and, 14, 65, 109, 115, 117– 131, 138, 140, 197; risk and, 14, 65, 109, 115–117, 120, 128, 132, 134–138, 197, 202; Single Family Loan-Level Dataset and, 121; underwriting, 120, 207–208 Motor Vehicle Reports, 75 MRI scans, 1, 27, 83 Murray, Charles, 51–52 https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press 226 Index mutual aid societies (MASs): asymmetric information and, 23, 25, 199; burial insurance, 47–48; commercialization of, 45–50, 54–55, 67; democracy and, 16; destitution and, 45, 67; double bind of, 48, 50, 54, 67, 190; dues to, 46; education and, 192; elderly and, 44, 47–49, 55; Equitable Life Assurance Society, 49; failure of, 12; heyday of, 51; historical perspective on, 10–11, 13, 44–57, 65, 67, 192; immigrants and, 46; increase of, 44; industrialization and, 44; information and, 6, 8, 10–13, 199; limitations of, 6; market failure and, 6, 67; New England Mutual Life Insurance Company, 49; New York Life Insurance Company, 49; as partial solution, 190; protections by, 44; role of, 11; Scottish Presbyterian Widows Fund, 44–46, 49, 83, 193; sickness pay and, 44, 48; solidarity and, 46, 53–58; taxes and, 47; theoretical model and, 15–16, 23, 25, 32; timeinconsistency and, 6–7, 16, 32, 45, 47– 48, 54, 56, 199; transfers and, 6, 48, 57– 58; unions and, 192; United States and, 44, 46, 49, 55; welfare and, 6, 8, 10, 12– 13, 15–16, 25, 48, 51–52, 54, 56; widespread use of, 44 National Human Genome Research Institute, 62 National Laboratory of Medicine, 84 Netherlands, 90, 91, 102, 107, 147 New England Mutual Life Insurance Company, 49 New York Life Insurance Company, 49 New York State Department of Financial Services, 80–81 New Zealand, 90, 102, 107 Norway, 90, 92, 102, 107, 147 Obama, Barack, 76, 81, 90 occupational unemployment rates (OURs), 174n0 OECD Health Statistics, 89, 101 opting out: adverse selection and, 30, 54, 199; Akerlof and, 24; Bismarckian system and, 53; cost of, 19, 29; deterrents against, 9; private markets and, 25; privileged, 15; public system and, 8–9, 15, 19, 24–25, 30, 37, 54, 57, 59, 64, 71, 89n23, 94–96; segmentation and, 8; selfinsurance and, 11–12, 20–22, 50n2, 51, 57, 60, 67, 73, 93, 190; theoretical model and, 15, 19, 24–25, 29–30, 37, 41 Oscar Health Insurance, 80 Palme, Joakim, 53, 193 Park, Sunggeun (Ethan), 99 participation, 9, 67, 95, 102, 184 partisanship: adverse selection and, 37; coercion and, 6; Comparative Political Data Set and, 102; credit markets and, 118; historical perspective on, 59; labor markets and, 177, 183; preferences and, 12, 19, 59, 200; private markets and, 71, 92, 94, 97, 101–102, 103–104, 195; regulation and, 37–38; theoretical model and, 37–38; welfare and, 12 pay-as-you-go (PAYG) systems: credible government commitment to, 7; historical perspective on, 46–48, 53–58, 64, 67; market-mediated funded systems and, 201; private markets and, 96; redistribution and, 16, 18, 32, 53, 64, 67; subsidies and, 18, 67; time-inconsistency and, 16, 31–35, 47, 56, 96, 191, 193; transfers and, 16, 47, 55, 191; voters and, 193; welfare and, 16, 18, 33, 48, 53, 193; younger generation and, 16, 18, 31, 33, 47–48, 56, 64, 67, 96, 193 pay-how-you-drive (PHYD), 3 pensions: credit-based insurance and, 64– 65; credit markets and, 64–65, 114, 131n14, 135n20, 141; funded systems and, 7, 17, 33, 53, 55, 58, 64, 193, 201; historical perspective on, 51, 53–60, 64– 65; information and, 64–65; marketmediated funded systems and, 201; PAYG and, 31 (see also pay-as-you-go (PAYG) systems); private markets and, 18, 36, 70, 82; taxes and, 19, 31 “piggy bank”, 12, 24 Placebo outcomes, 126–127, 148, 156–157 “Politics of Medicaid, The: Most Americans Are Connected to the Program, Support Its Expansion, and Do Not View It as Stigmatizing” (Grogan and Park), 99 Ponzi schemes, 48 poor people: attitudinal gap and, 176; becoming, 7; cost of insurance and, 30; credit markets and, 115, 133–140, 196; https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press Index labor markets and, 160, 176; Medicaid and, 8, 10, 60, 68, 96–99, 193; Medicare and, 2, 7, 9, 17, 59–60, 96–99, 193; private markets and, 96, 98, 100; support of by rich people, 4; transfers and, 7–8, 55, 115, 200; welfare and, 68 (see also welfare) Portugal, 90, 102, 147 Potential Years of Life Lost (PYLL), 86–87, 101–102, 104 poverty: credit markets and, 115; destitution, 45, 67; elderly and, 46–47; fear of, 7–8; historical perspective on, 46– 47, 55, 67–68; insurance against, 7–9, 193; private markets and, 71, 96, 99; transfers and, 13 Precision Medicine Initiative, 81 preferences: bifurcation of, 30, 163; constrained, 9, 59, 199; divergence in, 192; first-best, 9, 95; formation of, 35– 37; increased information and, 18–19, 35–37; labor markets and, 14, 66, 160, 163, 165–177; market feasibility and, 18– 19, 35–37; mass, 18; middle class, 59, 196, 200; partisan, 12, 19, 59, 200; polarization of, 2, 9, 12, 14, 16, 20, 37, 39, 66–67, 163, 169, 172, 176, 184; policy, 11–12, 14, 19, 26, 37, 67, 172, 184; political, 160, 163–177, 184, 186; private markets and, 95, 96n24, 99; public spending and, 18, 37, 59, 95, 192; redistribution, 12, 16, 18, 21n4, 35, 172, 174, 200, 203; risk and, 2, 12, 14, 16, 18, 21, 26, 30, 35, 37, 39, 57, 59, 66–67, 160, 163–176, 184, 192, 199–200, 203; shaping, 19, 59, 66, 160, 200; uncertainty and, 16, 26, 66, 199; welfare and, 2, 9, 12, 18, 21, 30, 37, 39, 68, 203 prescription databases, 75, 77 Preston, Ian, 93 price discrimination, 38 price nondiscrimination, 39 privacy, 10, 26–29, 40–42, 63, 78, 94, 202 private markets: actuarial approach and, 72, 81, 83, 89, 99–100; adverse selection and, 72, 82n17, 83, 88; Big Data and, 13, 63, 191; democracy and, 13, 70, 73, 89, 100; education and, 84, 92–95, 96n24; elderly and, 18, 96–97; Germany and, 80, 89n23, 90, 91, 96n25, 102; health insurance and, 70–102, 104, 201; homeownership and, 227 93; inequality and, 70–71, 82, 92, 100; life expectancy and, 72, 83–87; life insurance and, 70–94, 100–102, 103– 104; market failure and, 94; middle class and, 69, 71, 92, 97, 200; mortality and, 72, 75–76, 79, 81, 84, 86, 101–102; mortgages and, 198; opting out and, 25; partisanship and, 71, 92, 94, 97, 101– 102, 103–104, 195; pay-as-you-go (PAYG) systems and, 96; pensions and, 18, 36, 70, 82; poor people and, 96, 98, 100; poverty and, 71, 96, 99; preferences and, 95, 96n24, 99; public system and, 71, 82, 91–97, 100; reform and, 89–92; regression analysis and, 83; regulation and, 19, 37–38, 70, 73, 80–81, 87–94, 97, 100, 102; risk and, 70–100; segmentation and, 2, 5, 8, 11, 13–14, 18, 40, 53, 58–59, 63, 67, 70, 89, 94, 165, 180, 196; social insurance and, 70, 96; subsidies and, 94; taxes and, 89, 92, 100; time-inconsistency and, 71, 89, 96–99; top-up plans and, 9, 89, 179–182, 195; transfers and, 80n15, 81, 96; uncertainty and, 101; unemployment and, 4; United States and, 8, 18, 44, 51, 70, 74, 77–84, 89n23, 90, 91–99, 102–103, 195; voters and, 101; wealth and, 70, 97, 100; welfare and, 19, 37–38, 70; younger generation and, 84–86, 92, 96–97, 101 professional associations, 49, 66, 159, 161, 164, 179 Profeta, Paola, 53 Prudential, 80 Prussia, 44 Przeworski, Adam, 19 public spending, 29n13, 37, 68, 139, 145, 192, 199 public system: historical perspective on, 54, 57, 59, 63–64; information and, 8–9; labor markets and, 165, 177, 182–183; left’s support for, 19, 37–38; opting out and, 8–9, 15, 19, 24–25, 30, 37, 54, 57, 59, 64, 71, 89n23, 94–96; private markets and, 71, 82, 91–97, 100; taxes and, 9, 15, 19, 25, 31, 37, 39, 54, 60, 195, 200; theoretical model and, 15–20, 24– 25, 28–30, 35, 37–40; top-up plans and, 9, 36, 89, 179–182, 195; uncertainty and, 8, 15–16, 30, 61, 67 Putnam, Robert, 203 https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press 228 Index Qualcomm, 80 Rawls, John, 8, 15n1, 54, 67 recessions, 46, 189 reciprocity, 46, 203 Recovery Act, 76 redistribution: credit markets and, 109, 115, 124, 128, 144; division of insurance pools and, 5; historical perspective on, 46, 53, 58, 60, 64, 67; intergenerational, 32, 67; labor markets and, 172, 174–176, 183, 186–187; literature on, 21n4, 189; lumpsum benefits and, 36; market failure and, 6, 12, 67, 191, 200; pay-as-you-go (PAYG) systems, 16, 18, 32, 53, 64, 67; preferences and, 12, 16, 18, 21n4, 35, 172, 174, 200, 203; risk, 5, 17, 30, 38, 53, 58, 60, 172, 174–176, 183, 186–187, 197, 200; time-inconsistency and, 30; transfers and, 16, 30, 64, 109, 144, 188– 189, 200; welfare and, 6, 12, 16, 18, 21, 36, 38, 53, 56, 58, 68, 115, 188, 191, 197, 203; younger generation and, 16, 30, 64 redlining, 11, 116, 202 reform, 201; credit markets and, 116–117, 120, 131–137, 140; Hartz IV, 14, 65, 131–137, 140, 198; historical perspective on, 65, 67; labor markets and, 165, 177– 182, 198; private markets and, 89–92; regulation and, 14, 18, 65, 89, 117; Scottish Reformation, 44; unemployment, 14, 29, 65, 67, 131–137, 165, 177–182, 198; voters and, 18, 29 regression analysis: credit markets and, 125–126, 127, 130, 146, 147–158; discontinuity results and, 148; labor markets and, 166, 172, 173, 185–186; private markets and, 83 regulation: adverse selection and, 37–38; constraints from, 2, 63, 68, 94, 111; credit markets and, 14, 109–111, 115–131, 138, 140; historical perspective on, 50, 60–65, 68; inequality and, 119–131; of information, 2, 14, 18, 38, 63–65, 70, 73, 81, 87–89, 93–94, 100, 110, 117– 131, 140, 199, 202; labor markets and, 159; loans and, 115–131; mortgage markets and, 14, 65, 109, 115, 117–131, 138, 140, 197; partisanship and, 37–38; private markets and, 19, 37–38, 70, 73, 80–81, 87–94, 97, 100, 102; redistribution and, 172, 174–176, 183, 186–187; reform and, 14, 18, 65, 89, 117; risk and, 2, 14, 18–19, 33, 42, 50, 60–61, 64–65, 70, 73, 81, 89, 94, 109, 115–120, 130–131, 138, 140, 159, 195, 197, 199, 202; role of, 37–38, 115–118; segmentation and, 2, 6, 11–14, 16, 18, 40, 50, 52–53, 58–67, 70, 89, 94, 159, 162, 165, 177, 180, 188–189, 192–193, 196, 198; tax, 19, 50, 63, 115, 195, 199; trackers and, 80–81; welfare and, 37–38 Reinfeldt, Fredrick, 92, 177 Republican Party, 94 retirement: adverse selection and, 45; Employee Retirement Income Security Act and, 50n2, 60–61; funded systems and, 16, 33, 45, 64, 96; individual retirement accounts (IRAs), 47, 64, 193; pensions and, 64–65 (see also pensions); Social Security, 47, 67 rich people: attitudinal gap and, 176; credit markets and, 133–137, 140, 196; democracy and, 2, 73, 183; education and, 9, 40, 60, 92, 95; health and, 2, 4, 8– 9, 58, 60, 91, 95, 193; self-insurance and, 11–12, 20–22, 50n2, 51, 57, 60, 67, 73, 93, 190; selfinsuring by, 12, 22; support of poor by, 4 risk: adverse selection and, 1–2, 4, 6, 13, 30, 34, 45–46, 49–50, 54, 65, 67, 72, 82, 112, 199, 202; Akerlof model and, 6, 12, 19, 23–25, 27, 29, 190, 196; argument synopsis on, 189–192; average, 16, 22– 23, 24n7, 25n8, 28, 38, 54–55, 57, 59, 163n2; aversion to, 20, 22n6, 29n14, 36– 37, 41–42, 54, 56; credit markets and, 105, 108–120, 128–146; default, 144–146 (see also default); discretionary income and, 100, 105, 108–115, 138, 196; distribution of, 5, 16–17, 29–30, 38, 53–60, 108, 112, 128n13, 132, 140, 183, 189, 191, 197–200; education and, 7, 11, 17, 33, 40, 60, 66, 69, 84, 93, 115, 138, 141, 159, 161–162, 165, 174, 179, 183– 184, 192, 197n3, 198; flat-rate benefits and, 144–146; historical perspective on, 44–69; inequality and, 2, 7, 12, 14, 19, 33, 59–61, 65, 82, 92, 100, 108, 111–114, https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press Index 130, 138, 144, 188–189, 196–198, 201; information and, 1–15, 18–30, 35– 37, 160–165; labor markets and, 159– 185; Lexis Nexis Risk Classifier and, 76; life expectancy and, 34; loans and, 65, 105, 108–109, 111–112, 115–117, 130, 132, 141–142, 202; market failure and, 184 (see also market failure); medical data and, 75; moral hazard and, 10, 45, 48, 184, 198; mortgages and, 14, 65, 109, 115–117, 120, 128, 132, 134–138, 197, 202; pooling of, 1–16, 19, 22–29, 38–42, 50–51, 54–55, 58–68, 72, 128, 159–160, 171, 177, 179–180, 184–185, 188, 191, 200–203; preferences and, 2, 12, 14, 16, 18, 21, 26, 30, 35, 37, 39, 57, 59, 66–67, 160, 163–176, 184, 192, 199–200, 203; private markets and, 70–100; redistribution and, 5, 17, 30, 38, 53, 58, 60, 197, 200; regulation and, 2, 14, 18–19, 33, 42, 50, 60–61, 64–65, 70, 73, 81, 89, 94, 109, 115–120, 130–131, 138, 140, 159, 195, 197, 199, 202; segmentation and, 189; subsidies and, 1, 4, 11, 17–18, 23, 25, 28, 30, 54, 61, 67, 109, 116, 118, 185, 192, 197, 199; theoretical model and, 15–43; timeinconsistency and, 7, 30–35, 45, 47, 54, 56, 89, 96, 191, 199; traditional classification of, 3; uncertainty and, 8, 13, 16, 26, 30, 36, 56, 61, 66–67, 160, 163, 191, 196, 199; unemployment and, 5, 8– 14, 18, 20, 26, 29, 35, 44, 46, 51, 60, 65– 67, 108–109, 131–132, 136–138, 159– 166, 169, 171–174, 177–180, 183–184, 188, 191–192, 197–198; voters and, 18, 25, 29, 61, 64, 163, 184, 188–191, 197n3, 199; welfare and, 2, 6–30, 33, 36– 39, 48, 51–58, 68–69, 105, 108–109, 115, 138, 140, 188, 191, 193, 197, 201, 203 Rogers, Will, 108 Rothschild, Michael, 19, 25, 41 Rothstein, Bo, 52 Rueda, David, 162 Sample Survey of Income and Expenditure (EVS), 134–135, 137 SAP government, 182–183 savings: credit markets and, 114, 116–117, 133, 157; health savings plans and, 7, 17, 229 33, 96; private markets and, 96–97; wealth and, 1, 7–8, 17, 20–21, 29, 33–34, 36, 46–47, 51, 66, 96–97, 114, 116–117, 133, 136, 141, 160, 180, 190, 193 savings and loans (S&Ls), 116–117 Scottish Mutual, 55 Scottish Presbyterian Widows Fund, 44–46, 49, 83, 193 Scottish Reformation, 44 segmentation: choice and, 8; concept of, 6; credit markets and, 40, 159, 192; health insurance and, 70; historical perspective on, 50, 52–53, 58–59, 61, 63, 66–67; inequality and, 59, 61, 188–189, 196; information and, 2, 5–8, 11–18, 58–59, 66–67, 70, 89, 94, 159, 162, 165, 177, 180, 188–189, 192, 196; information levels and, 2, 5; integration and, 2, 5; interest rates and, 52, 58, 70; labor markets and, 14, 50, 67, 159, 162, 165, 177, 180, 182, 188, 192, 198; opting out and, 8; private markets and, 2, 5, 8, 11, 13–14, 18, 40, 53, 58–59, 63, 67, 70, 89, 94, 165, 180, 196; regulation and, 2, 70, 89, 94; risk and, 2, 6, 11, 13–14, 16, 18, 40, 50, 52–53, 58–59, 61, 63, 66–67, 70, 89, 94, 159, 162, 165, 177, 180, 188– 189, 192–193, 196, 198; state programs and, 11, 18, 50, 52–53, 159, 188; theoretical model and, 16, 18, 40; unemployment insurance and, 177–183; welfare and, 8, 18, 52–53, 188 self-insurance, 11–12, 20–22, 50n2, 51, 57, 60, 67, 73, 93, 190 self-interest, 19, 29, 52, 191 Shapley decomposition, 169, 170, 170 sickness pay, 44, 48 Single Family Loan Level Dataset, 121 social capital, 51–52, 203 social insurance: future politics of, 199–201; historical perspective on, 44, 51–52, 54, 56–60, 65, 67; information and, 2–13, 189–190, 193, 198; labor markets and, 159–160, 163, 177; private markets and, 70, 96; theoretical model and, 15, 19, 21n4, 30, 35, 37, 39 social media, 80–81 social networks, 11–12, 14, 18, 25, 66–67, 164, 183–184, 196 Social Security, 47, 67 https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press 230 Index solidarity: COVID-19 pandemic and, 61; cross-class, 8, 14, 18, 203; emergence of, 53–58; fragmentation of, 58–67; information revolution and, 58–67, 71, 201; mutual aid societies (MASs) and, 46, 53–58; reciprocity and, 203; uncertainty and, 66, 160, 196; unemployment insurance and, 183, 192; welfare and, 8, 18, 40n21, 201, 203 Spain, 90, 102, 147 Stiglitz, Joseph, 19, 25 Stolle, Dietlind, 52 Study Watch, 62 subsidies: credit markets and, 109, 116, 118, 131n14, 138, 139, 144; historical perspective on, 54, 61, 67; homeownership, 131, 138–139, 197; labor markets and, 182, 185; pay-as-yougo (PAYG) systems and, 18, 67; private markets and, 94, 192; risk and, 1, 4, 11, 17–18, 23, 25, 28, 30, 54, 61, 67, 109, 116, 118, 185, 192, 197, 199; tax, 4, 37, 54, 199 supplementary health insurance, 88–94 Swaan, Abram de, 50–51 Sweden, 11, 38, 66, 90, 102; “Alliance for Sweden” campaign, 184; Bildt and, 11, 177; credit markets and, 107, 147; Democrats, 182–183; Ghent system and, 177, 179–180, 182, 184, 198; Job Pact and, 182; Law on Employment Protection and, 180; Left Party, 182; politics of private markets and, 180; Reinfeldt and, 92, 177; SAP government and, 182–183; unemployment insurance funds (UIFs) and, 180–184; unions and, 182 Swedish Confederation of Professional Associations (SACO), 179–180, 182 Swedish Confederation of Professional Employees (TCO), 180, 182 symmetric information, 20, 25–29, 39, 55, 82n17 taxes: coercive, 12; credit markets and, 114– 115, 139, 144; credits, 9, 195, 199; deductions, 50, 92, 115, 199; flat-rate, 37, 114–115, 132, 144–146; historical perspective on, 47, 50, 54–56, 60, 63, 66; inequality and, 19, 60, 100, 188–189; labor markets and, 159, 177, 180, 181; mutual aid societies (MASs) and, 47; paying for social protection by, 4, 8, 15, 19, 25, 31, 198–200; pensions and, 19, 31; power to, 54, 191; preference formation and, 35–37; price nondiscrimination and, 39; private markets and, 89, 92, 100; public system and, 9, 15, 19, 25, 31, 37, 39, 54, 60, 195, 200; regulation and, 19, 50, 63, 115, 195, 199; subsidies and, 4, 37, 54, 199; transfers and, 8, 114–115, 144, 188–191, 200; voters and, 25, 31, 188–191 time-inconsistency: adverse selection and, 30, 34; asymmetric information and, 56, 190, 199; elderly and, 7, 16–18, 30–35, 47, 56, 89, 96, 193; historical perspective on, 45, 47–48, 54, 56; intergenerational bargains and, 47, 191, 193; market feasibility and, 16–18, 30–35; mutual aid societies (MASs) and, 6–7, 16, 45, 47–48, 54, 56, 199; overlapping generations models and, 32; pay-as-you-go (PAYG) systems and, 16, 31–35, 47, 56, 96, 191, 193; persistence of, 7; private markets and, 71, 89, 96–99; redistribution and, 30; risk and, 7, 30–35, 45, 47, 54, 56, 89, 96, 191, 199; theoretical model and, 30– 35; voters and, 32, 191, 193, 199; younger generation and, 6–7, 16–18, 30–35, 47–48, 56, 96, 190, 194 top-up plans, 9, 36, 89, 179–182, 195 trackers, 3–4, 29, 76, 79–81, 100, 191 transfers: credit markets and, 109, 114–115, 144; democracy and, 16, 30, 67, 190; funded systems and, 7, 16, 47, 64, 96; intergenerational, 6–7, 13, 55, 56, 190; mutual aid societies (MASs), 6, 48, 57– 58; pay-as-you-go (PAYG) systems, 16, 47, 55, 191; poor people and, 7–8, 55, 115, 200; poverty and, 13; private markets and, 80n15, 81, 96; redistribution and, 16, 30, 64, 109, 144, 188–189, 200; taxes and, 8, 114–115, 144, 188–191, 200; theoretical model and, 16, 20, 30, 47–48, 55, 56–57, 64–65, 67; younger generation and, 6–7, 13, 16, 30, 47–48, 56, 67, 96, 190 uncertainty: democracy and, 8; incomplete information and, 8, 66–67; industrialization and, 189; labor markets and, 160, 163n2; preferences and, 16, 26, https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press Index 66, 199; private markets and, 101; public system and, 8, 15–16, 30, 61, 67; risk and, 8, 13, 16, 26, 30, 36, 56, 61, 66–67, 160, 163, 191, 196, 199; solidarity and, 66, 160, 196; voters and, 31, 61, 101, 163, 199; welfare and, 8, 13, 36, 56, 189, 191 underwriting: actuarial science and, 49; artificial intelligence (AI) and, 81–82; COVID-19 pandemic and, 74, 77; current practices of, 73–76; Department of Motor Vehicles and, 75; diagnostics and, 10, 27, 49, 62, 81, 83–88, 94, 100, 193; digitalization and, 76–79; electronic health records (EHRs) and, 76–79; health insurance and, 17, 92– 94, 100; innovations in, 76–82; laboratories and, 81, 83, 87; Lexis Nexis Risk Classifier and, 76; life insurance and, 71, 73–82, 87–88, 100–101; Medical Information Bureau (MIB) and, 72n4, 75, 78–79; mortgages, 120–121, 207–208; prescription databases and, 75, 77; trackers and, 3–4, 29, 76, 79–81, 100, 191; unemployment insurance funds (UIFs) and, 180 unemployment: benefits during, 14, 65, 109, 131–133, 136n24, 137–138, 169–172, 173, 182–184, 185, 198, 200; credit markets and, 108–109, 131–138; disability and, 44, 139, 197; education and, 11, 60, 66, 159, 161–162, 165, 174, 179, 183–184, 192, 197n3, 198; Germany and, 14, 65, 165, 168–173, 185–186, 198; high levels of, 180, 182, 184; historical perspective on, 44, 46, 51, 55, 60, 65–67; homeownership and, 134– 137; information and, 8–14; insurance for, 4, 11, 14, 34, 35, 46, 55, 65–67, 159– 160, 163, 165, 177–184, 192, 198; lost income and, 109, 188; occupational unemployment rates (OURs), 174n0; private markets and, 4; reform and, 14, 29, 65, 67, 131–137, 165, 177–182, 198; risk and, 5, 8–11, 13–14, 18, 20, 26, 29, 35, 44, 46, 51, 60, 65–67, 108–109, 131– 132, 136–138, 159–166, 169, 171–174, 177–180, 183–184, 188, 191–192, 197– 198; theoretical model and, 16, 18, 20, 25, 26n10, 29–30, 35; United States and, 198 231 unemployment insurance funds (UIFs), 11, 14, 66, 177–184, 192, 198–199 unemployment protection, 46, 159, 164, 197n3 unions: fall of, 12, 188; historical perspective on, 58, 66; Job Pact and, 182; labor markets and, 159, 161, 164, 174, 177–184, 200; rise of, 12; Sweden and, 182; unemployment insurance funds (UIFs) and, 11, 14, 66, 177–184, 192, 198–199 UnitedHealth, 80 United Kingdom, 80, 90, 93, 147 United States: 401(k) plans, 33, 64; Bush and, 17; Clinton and, 116; credit markets and, 106–107, 109, 117, 121, 124, 131, 139–140; employer-based coverage, 58; Fair Housing Act and, 12; Fannie Mae, 65, 109, 116–117, 121; financial crisis of, 14; fraternal societies and, 47, 52; Freddie Mac, 65, 109, 116–117, 119–130, 140n25, 197; Great Depression, 30, 46, 117, 189; guaranty associations and, 33; healthcare costs in, 29n13, 62; health savings accounts (HSAs), 17, 195; individual retirement accounts (IRAs), 193; information revolution and, 58–60; labor markets and, 66; Medicaid, 8, 10, 60, 68, 96–99, 133; Medicare, 2, 7, 9, 17, 59–60, 96–99, 193; mutual aid societies (MASs) and, 44, 46, 49, 55; Obama and, 76, 81, 90; private markets and, 8, 18, 44, 51, 70, 74, 77–84, 89n23, 90, 91–99, 102–103, 195; Republican Party and, 94; self-insurance and, 11; Social Security, 47, 67; as stingy welfare state, 197; unemployment and, 198 universal public system, 18, 30, 91 University of Edinburgh, 45 urbanization, 6, 30, 51, 189 US Genetic Information Nondiscrimination Act (GINA), 38, 63, 93, 94 Verily Life Sciences, 62, 81 Vitality Health, 79–80 voluntary private health insurance (VPHI), 63, 89–93 voters: Comparative Study of Electoral Systems (CSES), 176; labor markets and, 163–164, 184; median, 25, 32, 64; https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press 232 Index middle-class, 1; pay-as-you-go (PAYG) systems and, 193; private markets and, 101; reform and, 18, 29; risk and, 18, 25, 29, 61, 64, 163, 184, 188–191, 197n3, 199; self-interested, 29; taxes and, 25, 31, 188–191; time inconsistency and, 32, 191, 193, 199; uncertainty and, 31, 61, 101, 163, 199 wage protection, 159 Wallace, Robert, 45 wealth: credit markets and, 108, 110, 111n2, 133, 140; discretionary income and, 100, 105, 108–115, 118, 138, 140, 142, 196; historical perspective on, 56; mobility and, 49, 66, 68, 189, 191–192, 200; private markets and, 70, 97, 100; public system and, 15; savings and, 1, 7–8, 17, 20–21, 29, 33–36, 46–47, 51, 66, 96– 97, 114–117, 133, 136, 141, 160, 180, 190, 193; self-insurance and, 11–12, 20–22, 50n2, 51, 57, 60, 67, 73, 93, 190, 192 Webster, Alexander, 45 welfare: Bismarckian, 52–53, 58, 67, 191, 199–201; credit markets and, 105, 108– 115, 131–138, 140; democracy and, 8; destitution and, 45, 67; discretionary income and, 110–111; elderly and, 4, 7–8, 13–14, 18, 33, 53–54, 58, 105, 188, 193, 199; Golden Age of, 54; historical perspective on, 44–58, 68–69; homeownership and, 131–138; information and, 2–14; loans and, 110–111, 113–115, 131–138; middle class and, 6, 8, 13, 15, 54, 68–69, 193– 195, 199; mutual aid societies (MASs) and, 6, 8, 10, 12–13, 15–16, 25, 48, 51– 52, 54, 56; partisanship and, 12; pay-asyou-go (PAYG) systems and, 16, 18, 33, 48, 53, 193; preferences and, 2, 9, 12, 18, 21, 30, 37, 39, 68, 203; private markets and, 19, 37–38, 70; public system and, 19; redistribution and, 6, 12, 16, 18, 21, 36, 38, 53, 56, 58, 68, 115, 188, 191, 197, 203; regulation and, 37–38; risk and, 2, 6–30, 33, 36–39, 48, 51–58, 68–69, 105, 108–109, 115, 138, 140, 188, 191, 193, 197, 201, 203; role of, 188; segmentation and, 8, 18, 52–53, 188; solidarity and, 8, 18, 40n21, 201, 203; theoretical model and, 15–25, 30–33, 36–40; uncertainty and, 8, 13, 36, 56, 189, 191 Westcott, Edward Noyes, 108 Wiedemann, Andreas, 109 Wienk, Ron, 116n7 Willen, Paul, 120–121 World Health Organization (WHO), 86, 93 World War II era, 4, 30, 36, 51, 189 younger generation: deductibles and, 17; health and, 4, 6–7, 13, 17–18, 30–31, 48, 56, 67, 86, 92, 96, 101, 193–195; health savings plans and, 7, 17, 33, 96; market feasibility and, 16–18, 30–35; pay-asyou-go (PAYG) systems and, 16, 18, 31, 33, 47–48, 56, 64, 67, 96, 193; private markets and, 84–86, 92, 96–97, 101; redistribution and, 16, 30, 64; support of elderly by, 4; time-inconsistency and, 6–7, 16–18, 30–35, 47–48, 56, 96, 190, 193; transfers and, 6–7, 13, 16, 30, 47–48, 56, 67, 96, 190 https://doi.org/10.1017/9781009151405.009 Published online by Cambridge University Press CAMBRIDGE STUDIES IN COMPARATIVE POLITICS Other Books in the Series (continued from page ii) Laia Balcells, Rivalry and Revenge: The Politics of Violence during Civil War Lisa Baldez, Why Women Protest?


pages: 1,164 words: 309,327

Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris

active measures, Andrei Shleifer, AOL-Time Warner, asset allocation, automated trading system, barriers to entry, Bernie Madoff, Bob Litterman, book value, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, equity risk premium, fault tolerance, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, information security, interest rate swap, invention of the telegraph, job automation, junk bonds, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, National best bid and offer, Nick Leeson, open economy, passive investing, pattern recognition, payment for order flow, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, proprietary trading, race to the bottom, random walk, Reminiscences of a Stock Operator, rent-seeking, risk free rate, risk tolerance, risk-adjusted returns, search costs, selection bias, shareholder value, short selling, short squeeze, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, vertical integration, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game

These schemes are called pyramid schemes because they are built upon an ever-enlarging base of investors. The investors at the top profit from the “support” provided by the investors at the base. They are similar to chain letters. Pyramid schemes are extreme examples of “robbing Peter to pay Paul.” Pyramid schemes are also known as Ponzi schemes after Charles K. Ponzi, who ran an extremely large pyramid scheme in 1920. Until pyramid schemes collapse, the returns that they generate are remarkably good. If you analyze these returns to determine whether a manager is skilled or just lucky, you will conclude that the manager is skilled. The only way to protect against losing to a pyramid scheme is to determine whether the manager’s accounting systems accurately report investment assets, account liabilities, investment income, and capital gains distributions.

The properties of the tests described there were derived by assuming that analysts would use the tests under ideal circumstances. In practice, statistical performance evaluations rarely are applied under ideal circumstances. Consequently, the tests are still less useful than they seem. * * * ▶ Ponzi’s Ponzi Scheme Charles K. Ponzi established the Securities Exchange Company in December 1919 in Boston. His company purportedly traded postal reply coupons. Postal reply coupons are coupons redeemable for postage. People who wanted to enclose return postage used them when corresponding with people in other countries.

.), 228 Philadelphia Stock Exchange, 589 physically convened markets, 90 physically settled contracts, 41 pinging the market, 92 Pink Sheets, 107, 108 pits. See trading pits players, 32–34, 145 Plexus Group, 424, 437 Plug Power, 374 POETS (Pacific Options Exchange Trading System), 27 poker, 268, 291 Poland, 50 political risks, 413 pollution, 213 pollution credits, 39 Pons, Stanley, 566 Ponzi schemes, 471 portfolio insurance, 253, 328, 560–61, 563 portfolio managers. See investment advisers; managers portfolio performance, 443, 451 portfolio trading market, 490 POSIT (POrtfolio System for International Trading), 17, 19, 49, 132–34, 136, 325, 531 position limits, 572 position traders, 279 positive economic analyses, 203, 204 positive externalities, 7, 206 postal reply coupons, 470 posts.


pages: 2,045 words: 566,714

J.K. Lasser's Your Income Tax by J K Lasser Institute

accelerated depreciation, Affordable Care Act / Obamacare, airline deregulation, asset allocation, book value, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, independent contractor, intangible asset, medical malpractice, medical residency, money market fund, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond

Deduction allowed to victims of Ponzi schemes and similar fraudulent schemes. The IRS allows investors who fall victim to fraudulent investment arrangements, including Ponzi schemes, to claim a theft loss deduction under special rules (Revenue Ruling 2009-9). The loss is deductible as a theft loss of income-producing property (so the loss is figured in Section B of Form 4684 and the floors for personal-use property in 18.12 do not apply) on your tax return for the year the loss was discovered. - - - - - - - - - - Law Alert IRS Expands Eligibility For Ponzi Scheme Loss Safe Harbor In Revenue Procedure 2011-58, the IRS expanded eligibility for its optional safe harbor for Ponzi scheme losses, allowing it to be used by victimized investors when the lead figure in the scam dies before the authorities can charge him or her with criminal theft

- - - - - - - - - - Law Alert IRS Expands Eligibility For Ponzi Scheme Loss Safe Harbor In Revenue Procedure 2011-58, the IRS expanded eligibility for its optional safe harbor for Ponzi scheme losses, allowing it to be used by victimized investors when the lead figure in the scam dies before the authorities can charge him or her with criminal theft. - - - - - - - - - - The IRS also provides an optional safe harbor method for computing and reporting the theft loss (Revenue Procedure 2009-20). The safe harbor allows eligible investors to deduct either 75% or 95% of their “qualified investment”, less any actual or projected recovery from insurance, loss-protection arrangement or the SIPC (Securities Investor Protection Corporation).

table of MACRS depreciation rates when not allowed Modified adjusted gross income (MAGI) American Opportunity Credit education tax credits eligibility for deductible higher education expenses IRA deductions and Medicare Part B premium based on phaseout, child tax credit phaseout, limits to Roth IRA phaseout, rental real estate loss allowance student loan interest deduction Moller decision Money-market account, deducting fees for check writing Money orders of $10,000 or less, reporting to IRS Mormon missionaries, parents’ support payments of children serving as Mortgage(s) discounted mortgage repayment fees not deductible foreclosure on, other than purchase money graduated payment home mortgage loans increase on loan limit for buying new home, possible insurance premium deductions loan modification “workout” and repayment conveyance payment rules refinanced loans repossession after buyer’s default on repossession on restriction to student loan interest deduction restructuring debt transferring mortgaged realty wraparound Mortgage credit certificates, interest on Mortgaged property, sale of, calculating selling price Mortgage interest on adjustable rate allocating expenses to rental days AMT and deductions for expenses home acquisition loans Mortgage subsidy bonds Motor vehicle registration fees Moving expenses 39-week employee test deductibility rules deducting from gross income distance test job, move due to new location mileage test for military personnel nondeductible expenses not subject to 2% AGI floor overseas reimbursements for tax form to file Multiple homes, avoiding tax on sale of principal residence Multiple support agreements community property rules and medical expense deductions and Multi-unit residence, reporting rents from Municipal bond funds Musical composition expenses paid or incurred, amortizing Mutual funds basis methods, comparison of basis of shares capital gain distributions from capital or ordinary gains and loss from sale of distributions, reporting distributions, types of expenses foreign tax credit or deduction gain or loss, figuring gift, shares received as holding period of identifying shares when selling load charges redemptions and exchanges of fund shares reinvestment plans reporting distributions tax credits from tax-exempt securities timing investment in “M” visa N NAICS (North American Industry Classification System Nanny tax, employment taxes National Guard members National Health Services Corps Scholarship Program National Health Services Loan Repayment Program National Housing Act National Oceanic and Atmosphere Administration Nephews and nieces, relationship test for claiming an exemption Net disaster loss, additional standard deductions for Net investment income Net operating loss (NOL) alternative minimum tax and carryback of losses carry forward of losses far-related expenses figuring for refund of prior taxes key to reporting income and loss passive activity limitation and reporting New business courses, not deductible expenses, looking for a New hire retention credit Night school Nominee distributions of dividends joint accounts original issue discount (OID) reporting Nonaccountable plans, reimbursements under Nonaccrual experience method (NAE) for deferring service income Noncash contributions to charity Nongift term loans Nonpassive income and losses rules Nonperiodic distributions Nonprofit organizations that qualify for deductible donations Non-publicly offered mutual funds Nonqualified deferred compensation plans Nonqualified plan distributions, key to Form W-2 Nonqualified stock options Nonrecourse debt Nonrecourse financing Nonresident aliens alimony to dual status earned income credit and income, taxation and individual taxpayer I.D. number for proof of eligibility as employee Social Security benefits received by spouse exemption for filing jointly with head of household status of Nonresidential real property allocating expenses to business use MACRS real estate depreciation table pre-1936 buildings Nonstatutory stock option exercised North American Industry Classification System (NAICS) Northern Mariana Islands, earnings in Notes, employer’s, as payment NUA (net unrealized appreciation) Nurse courses taken by services, as deductible medical expense travel costs incurred by, nondeductible expense Nursery school, dependent care credit and Nursing homes O Obesity, weight-loss program for Oil and gas depletion deduction intangible drilling costs interests, reporting royalty income passive activity loss restrictions, exempt from percentage depletion deduction wells, working interests in One-bite rule One-person 401(k) plan Options Oral sales-repurchase agreement, wash sale rule Ordinary dividends Ordinary income assignment of future lottery payments and conversion transactions Ordinary loss Organizations in the 50% limit category nondeductible contributions to nonprofit organizations that qualify for deductible donations qualifying for deductible charitable donations Original issue discount (OID) discount on bonds interest income nongovernmental obligations and REMICS reporting on return sale or retirement of bonds with stripped bonds or coupons tax-exempt bonds and obligations Orphan drug credit Out-the-money call option Overnight-sleep test Overseas employment, as tax-saving opportunity Overtime, meal costs during Ownership and use tests of residence, meeting P Parents, AMT rules for personal exemptions Parking, employer-provided Parsonage allowances Partner / Partnership 78-week test for 401(k) plan treatment abandoning a partnership interest debts disallowing exclusion of value of meals and lodging distributions of property to a partner dividends from domestic production activities deduction exchanges of partnership interests final return of decedent first-year expensing depreciation deduction fiscal year restrictions form of doing business gain or loss from disposition of interest interests, disposition of involuntary conversions, electing to defer tax on gain in limited net operating loss organizational costs passive activity rules profit and loss, reporting profits from foreign earned income property of, holding period for providing property that is not engaged to rentals rental real estate held by at risk rules sale of partnership interests Schedule K-1, IRS matching program for special allocations disproportionate to capital contributions straddles, tax rules for unified tax audits of wages for the W-2 limit Part-time employees, not covered by employer Keogh Plan Part-year employees, avoiding overwithholding Passive activity alternative minimum tax and equity-financed lending activity incidental rental of property by development activity income or loss, alternative minimum tax and installment sale of interest insubstantial depreciable basis, rental of property with interest and investment interest interest expenses attributable to loss disallowance rule losses, debts cancelled in bankruptcy loss restrictions loss rules at-risk rules, effect of rental activities material participation net operating losses and partnership rules personal service and closely held corporations portfolio income and recharacterization rental activities subject to rules rental loss allowance of up to $25,000 sales of property and suspended losses allowed on disposition of interest suspended tax credits tax credits of to unrelated party, loss on sale of interest in working oil and gas interest Patents amortizing depreciation of costs over life of donating to charity Peace Corps volunteers, subsistence allowances for Pell grants Penalty(-ies) early distribution, reporting failure to file FBAR for income from foreign accounts failure to report tips foreign financial accounts, non-reporting of IRAs (individual retirement accounts) for excess contributions garnished withdrawing medical-related exceptions premature fund withdrawals, forfeiture of interest on premature withdrawals from deferred annuities retirement plan distributions before age 59½ when retirement benefits must begin Roth IRAs, early withdrawals within five years of conversion or rollover Section 409A rules SIMPLE IRAs strike pay withholdings that do not cover estimated tax Pension age for required minimum distributions distributions to employees repayment, deducting taxable Pension Benefit Guaranty Corporation (PBGC) Percentage depletion Percentage method of accounting Per diem payments by qualified long-term-care policy Per diem travel allowance under accountable plans Performing artists deductions from gross income material participation tests for Permanent physical injuries, tax-free payments for Persecution, restitution payments because of Personal exemptions not subject to phaseout for 2012 subject to AMT Personal injury caused by negligence, as nondeductible loss deducting legal fees for recovered taxable damages settlements or awards, medical expense deductions and Personal property loss of, as nondeductible loss real rental and sales of tangible, donating Personal residence buying, as tax-saving idea incapacitated homeowner rental of sale of transfer taxes Personal rollover Personal service activity, material participation tests for Personal service corporation Personal use and rental days, counting and rental of residential unit Phaseout of child tax credit key credit and deduction amounts limits to Roth IRA of part of overall itemized deductions of rental real estate loss allowance Photographers, production costs of Physicians assignment of fees by courses taken by malpractice insurance Pledging installment obligation as security Plug-in conversion credit Points on home mortgage loans principal residence refinancing, points paid on seller-paid Political campaign/action committees, nondeductible contributions to Politician, job expenses Ponzi schemes Portability, of estate tax exemption Portfolio income Postponing itemized expenses Preferred stock dividends on stripped Premature distributions of retirement plans Premature fund withdrawals, forfeiture of interest on Premiums of medical care policies, deductibility of Prepaid interest on loan used for investment or business purposes Prepaying or postponing itemized expenses Prepayment penalty, mortgage Prescription drugs, deductibility of Price adjustments on property bought on credit Primary business purpose, proving Principal place of business test Principal residence avoiding tax on sale of damaged, insurance proceeds from debt income, cancellation of determination of repossession and resale of sale of, reduced maximum exclusion selling your home at a loss used for business purposes Private activity bonds, alternative minimum tax and Private foundations for tax-free educational grants to employees’ children Probate estate Product Classes “like” class Production, domestic, activities Product testing, as working condition fringe benefit Professional association dues, as fringe benefit Professionals deductions for healthcare Professional services, deductible and nondeductible Profit motive, lacking, rentals Profit-sharing plan active participation in employer plan disability payments from Keogh plan Promissory notes Property appreciated, gifts of basis of buyer’s personal-use capital or ordinary gains and loss from sale of casualty loss deduction damage, caused by negligence, as nondeductible loss deducting expenses incurred in managing depreciation deductions for dividends paid in exchanging without tax foreclosure free use of improvements to installment sale of interest intangible, licensing of MACRS of multiple, exchanges of passive activity rules price adjustments on reporting sales and exchanges of sale of rollover of proceeds from of vulnerable property under a hazard mitigation program self-rental selling home at a loss stolen, recovered tax, deducting two-year resale rule for unadjusted basis of Property donations art objects fair market value of figuring value interests in real estate mortgaged property through trusts Property losses, floors for personal-use Property sales capital gains and losses, figuring installment sales profit or loss, figuring tax pattern of worthless securities Property transfer to former spouse, as alimony between spouses and ex-spouses tax-free exchange, when MACRS is not allowed Provisional income Psychiatrist, courses taken by Public Health Service Act, health professionals, debt forgiven or repaid Publicly offered mutual funds Publicly traded partnerships (PTPs) Public safety employees separated from service, as exception to early distribution penalty Puerto Rico earnings in travel in Punitive damages Puts Q Qualified charitable organization Qualified conservation contributions Qualified corporate dividends, taxation of Qualified covered call option, straddle losses and Qualified dividends Qualified Dividends and Capital Gain Tax Worksheet Qualified domestic relations order (QDRO) distributions of retirement benefits under rollover of distribution received under divorce or support proceeding transfer to IRA Qualified Exchange Accommodation Arrangements (QEAAs) for Reverse Exchanges Qualified joint and survivor annuity (QJSA) Qualified plans payments post-death distribution rules restriction to student loan interest deduction SIMPLE IRA employer contributions tax-free rollovers from Qualified Pre-retirement Survivor Annuity (QPSA) Qualified principal residence indebtedness, exclusion for Qualified production activities income (QPAI) Qualified reservist Qualified retirement plans company, tax-favored retirement plan employer-provided retirement advice Section 409A, exclusion from Qualified terminable interest property (QTIP) Qualified Tuition Program (QTP) (Section 529 Plans) education tax credits, effect on student loan interest deduction Qualifying children as dependent for dependent care credit as personal exemptions Qualifying domestic trust (QDOT) Qualifying relatives as dependent for dependent care credit as exemptions Qualifying widow(er) AMT exemptions claiming dependents determining excess adjusted gross income filing as Form W-4 head of household status phaseout of child tax credit spouse’s death in 2011 or 2010, or before 2010 standard deduction for dependents standard deduction for figuring recoveries of itemized deductions standard deduction if 65 or older or blind “Quid-pro-quo” test “Q” visa R Rabbi, housing allowance for Rabbi trusts Racehorses, MACRS recovery period for Raffle tickets Railroad retirement benefits subject to tax withholding Railroad travel as business trip deduction Ransom, kidnapping Ratable accrual method Real estate ACRS rates for allowance for tax credits appreciated, charitable contribution of business real estate debts capital gains (or losses) certified historic structure debts deducting accountant’s fee for arranging purchase of deducting taxes depreciation of, placed in service after 1980 and before 1987 foreclosure Gulf Opportunity Zone, special tax credits for investments in leasehold improvements low-income housing MACRS for property placed in service after 1986 pre-1936 buildings rehabilitation of rental activities repossession after buyer’s default on mortgage restructuring mortgage debt at risk, financing for sale of, timing of seller’s back taxes, buyer cannot deduct selling rented residence subdivided land sales tax credits taxes, allocating to rental days taxes, deducting tax-free exchanges of foreign real estate tax reporting for year-end sales of transferring mortgaged realty unrecaptured Section 1250 gain on Real estate investment trust (REIT) dividends paid by investing in property sales, tax pattern of undistributed capital gains from Real estate mortgage investment company (REMIC) Real estate professional Real estate taxes allocating, when you sell or buy realty co-tenant’s deduction for deducting foreign standard deductions, additional tax form to file who may deduct Real property real property year rental and personal property rental residential rental property taxes, who may deduct timing sales of Rebates of insurance agent’s commission Recapture deductions subject to of depreciation on real estate of education tax credit of expensing deduction of losses where at risk is less than zero of mortgage subsidy of rehabilitated real estate rules of alimony of tuition and fees deduction Receipts, as record of expense Recharacterization of passive income as nonpassive reconverting to Roth IRA between traditional IRA and Roth IRA Recognized gain or loss Record-keeping administrative activity in home office business trip deductions charitable contributions convention business travel deductible losses home records inadequate, excuses for loss carryovers mutual fund redeemed shares Section 1244 stock travel and entertainment Recovered deductions and tax credits Recovery property Red Cross personnel Redemptions, interest on bonds and Refinanced mortgage loans interest on points paid on Reforestation amortization Refund of taxes paid or withheld credited to state estimated tax decedent’s state and local taxes deducted in prior year Rehabilitation property credit for pre-1936 buildings or certified historic structures Reimbursement(s) of club dues of employee expenses, restrictive test exception from employer of medical expenses Reimbursement plans for travel and entertainment expenses accountable plans accounting requirements automobile mileage allowances as de minimis fringe benefit nonaccountable plans per diem travel allowance under accountable plans Reinvestment in company stock mutual funds Related parties acquisitions from, disqualification of first-year expensing deduction disallowed loss on sales to exchanges between sale of remainder interest to straddle positions Relationship tests for claiming as exemption Relatives business expense owed to relative buying replacement from dependent, head of household status dependent care credit and payments to installment sales to qualifying relatives as dependent for dependent care credit as exemptions renting residence to tax-free exchanges between Religious beliefs against applying for and using Social Security numbers Relocation due to disaster loss Remarriage effect on pre-1985 agreement for alimony exemption for spouse and Remote camp in foreign country, lodging in Rental days allocating expenses of a residence to counting personal use days and Rental income advance rentals as of aged parent, deduction for allocation of expenses of residence to rental days audits of taxpayers with rental real estate losses deductions from depreciation of expenses in a foreign country improvements by tenants not considered insurance proceeds as lacking profit motive landlord’s unit, treated as losses married couple filing jointly, reporting from multi-unit residences nondeductible as property tax passive activity restrictions on personal use and redeemable ground rents repairs and improvements, distinctions between reporting security deposits not considered self-employment income and support test for dependents and temporary, IRS may challenge losses claimed before sale tenants’ payment of Rental property checklist of deductions improvements, records for MACRS real estate depreciation MACRS recovery period for passive activity rules profit-making purposes residence converted to, loss on self-employment income and trips to investigate prospective use of personal residence as Rental real estate loss allowance Reorganizations exchanging market discount bonds in interest on bonds and Repair costs for casualty losses deducting on Schedule C as evidence of loss of value to home measure of loss Repayment of wages received in prior year Replacement property to fully deter tax on giving IRS notice of replacement identifying time period for buying types or qualifying Repossessed home figuring gain or loss of personal property sold on installment of property Reputation, professional, damages for injury to Required Minimum Distributions (RMDs) Requisitioned property, as involuntary conversion qualifying for tax deferral Research assistants, tuition reductions for Research credit Research expenses Reservists qualified reservist distribution repayment of IRA tax information for Residence capital or ordinary gains and loss from sale of as collateral, for interest deduction deducting casualty loss disaster losses, insurance proceeds for domicile vs.


pages: 238 words: 73,121

Does Capitalism Have a Future? by Immanuel Wallerstein, Randall Collins, Michael Mann, Georgi Derluguian, Craig Calhoun, Stephen Hoye, Audible Studios

affirmative action, blood diamond, Bretton Woods, BRICs, British Empire, business cycle, butterfly effect, company town, creative destruction, deindustrialization, demographic transition, Deng Xiaoping, discovery of the americas, distributed generation, Dr. Strangelove, eurozone crisis, fiat currency, financial engineering, full employment, gentrification, Gini coefficient, global village, hydraulic fracturing, income inequality, Isaac Newton, job automation, joint-stock company, Joseph Schumpeter, junk bonds, land tenure, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, loose coupling, low skilled workers, market bubble, market fundamentalism, mass immigration, means of production, mega-rich, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, offshore financial centre, oil shale / tar sands, Ponzi scheme, postindustrial economy, reserve currency, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, Suez crisis 1956, too big to fail, transaction costs, vertical integration, Washington Consensus, WikiLeaks

This lends plausibility to the idea that everyone can become a finance capitalist, playing the great game of financial markets. And indeed popular participation in financial markets has grown a good deal during the late 20th century and the early 21st, through employee pension funds, millions of small stock market investors, and speculating through mortgaged home ownership in the Ponzi scheme of the inflationary housing market. How far can this go? Can it save capitalism? It would surely be a rocky road, given the inherent volatility of financial markets, their tendency to booms and busts. This has been a long-term historical pattern, ever since the Dutch tulip investment mania in 1637 and the South Sea bubble in 1720.


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Apollo 11, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, Bear Stearns, behavioural economics, bitcoin, blockchain, book value, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, cognitive load, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, data science, Didi Chuxing, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, Higgs boson, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, Large Hadron Collider, lone genius, low cost airline, low interest rates, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, radical decentralization, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, scientific management, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, subprime mortgage crisis, Suez canal 1869, tacit knowledge, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, vertical integration, William Langewiesche, Y Combinator

Smith, “Hidden Debt: From Enron’s Commodity Prepays to Lehman’s Repo 105s,” Financial Analysts Journal 67, no. 5 [September/October 2011], https://www.cfainstitute.org/learning/products/publications/faj/Pages/faj.v67.n5.2.aspx), and electronics giant Toshiba, which in 2015 was caught posting profits early and pushing back the posting of losses in a salesperson’s version of a Ponzi scheme (see Sean Farrell, “Toshiba Boss Quits over £780 Million Accounting Scandal,” Guardian, July 21, 2015, https://www.theguardian.com/world/2015/jul/21/toshiba-boss-quits-hisao-tanaka-accounting-scandal). collection of minute details about every task: Robert Kanigel, The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency (New York: Little Brown, 1997).


pages: 265 words: 74,941

The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work by Richard Florida

"World Economic Forum" Davos, Alan Greenspan, banking crisis, big-box store, bike sharing, blue-collar work, business cycle, car-free, carbon footprint, collapse of Lehman Brothers, company town, congestion charging, congestion pricing, creative destruction, deskilling, edge city, Edward Glaeser, falling living standards, financial engineering, financial innovation, Ford paid five dollars a day, high net worth, high-speed rail, Home mortgage interest deduction, housing crisis, if you build it, they will come, income inequality, indoor plumbing, interchangeable parts, invention of the telephone, Jane Jacobs, Joseph Schumpeter, knowledge economy, Lewis Mumford, low skilled workers, manufacturing employment, McMansion, megaproject, Menlo Park, Nate Silver, New Economic Geography, new economy, New Urbanism, oil shock, Own Your Own Home, pattern recognition, peak oil, Ponzi scheme, post-industrial society, postindustrial economy, reserve currency, Richard Florida, Robert Shiller, scientific management, secular stagnation, Silicon Valley, Silicon Valley startup, social intelligence, sovereign wealth fund, starchitect, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, total factor productivity, urban decay, urban planning, urban renewal, white flight, young professional, Zipcar

Yet the boom neither followed nor resulted in the development of sustainable, scalable, highly productive industries or services. It was fueled and funded by housing, and housing was its primary product. In this debt-intoxicated, crazy real estate bubble era, whole cities and metro regions became giant Ponzi schemes. Phoenix, for instance, grew from 983,000 people in 1990 to more than 1.5 million in 2007. One of its suburbs, Mesa, exploded out of nowhere to more than half a million residents, filling with more people than Pittsburgh, Cleveland, or Miami. As housing starts and housing prices rose, so did tax revenues, and the fattened public coffers allowed for a major capital spending boom throughout the Greater Phoenix area.


pages: 252 words: 72,473

Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy by Cathy O'Neil

Affordable Care Act / Obamacare, Alan Greenspan, algorithmic bias, Bernie Madoff, big data - Walmart - Pop Tarts, call centre, Cambridge Analytica, carried interest, cloud computing, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, data science, disinformation, electronic logging device, Emanuel Derman, financial engineering, Financial Modelers Manifesto, Glass-Steagall Act, housing crisis, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, Ida Tarbell, illegal immigration, Internet of things, late fees, low interest rates, machine readable, mass incarceration, medical bankruptcy, Moneyball by Michael Lewis explains big data, new economy, obamacare, Occupy movement, offshore financial centre, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price discrimination, quantitative hedge fund, Ralph Nader, RAND corporation, real-name policy, recommendation engine, Rubik’s Cube, Salesforce, Sharpe ratio, statistical model, tech worker, Tim Cook: Apple, too big to fail, Unsafe at Any Speed, Upton Sinclair, Watson beat the top human players on Jeopardy!, working poor

The small and underfunded teams who handle that work, from the FBI to investigators at the Securities and Exchange Commission, have learned through the decades that bankers are virtually invulnerable. They spend heavily on our politicians, which always helps, and are also viewed as crucial to our economy. That protects them. If their banks go south, our economy could go with them. (The poor have no such argument.) So except for a couple of criminal outliers, such as Ponzi-scheme master Bernard Madoff, financiers don’t get arrested. As a group, they made it through the 2008 market crash practically unscathed. What could ever burn them now? My point is that police make choices about where they direct their attention. Today they focus almost exclusively on the poor. That’s their heritage, and their mission, as they understand it.


pages: 282 words: 26,931

The Five-Year Party: How Colleges Have Given Up on Educating Your Child and What You Can Do About It by Craig Brandon

Bernie Madoff, call centre, corporate raider, Donald Trump, en.wikipedia.org, Gordon Gekko, helicopter parent, impulse control, new economy, Ponzi scheme, Ralph Nader

The regional accreditation organizations that are supposed to evaluate the quality of education at our colleges and universities seem to have been soundly sleeping as the colleges dumbed down their programs, inflated grades, and turned themselves into entertainment centers. They are like Securities and Exchange Commission watchdogs, fiddling with forms while corporate raiders fleeced millions of Americans and Bernie Madoff set up his Ponzi schemes. There are six regional accreditation groups in the United States, but they all work pretty much the same way. Colleges apply for membership and then become a part of the organization. The college and individual departments submit regular self-study reports about changes they have made and problems they are experiencing.


pages: 300 words: 78,475

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

Alan Greenspan, American Society of Civil Engineers: Report Card, Apollo 13, Bear Stearns, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, Cornelius Vanderbilt, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, do what you love, extreme commuting, Exxon Valdez, full employment, Glass-Steagall Act, greed is good, Greenspan put, guns versus butter model, high-speed rail, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, low interest rates, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, military-industrial complex, Neil Armstrong, new economy, New Journalism, offshore financial centre, Ponzi scheme, post-work, proprietary trading, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, Savings and loan crisis, single-payer health, smart grid, The Wealth of Nations by Adam Smith, Timothy McVeigh, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

Who could have known? Well, financial fraud investigator Harry Markopolos, for one. Not only did he know, he did everything he could to make sure everybody else knew as well.148 In 1999, after researching Madoff’s methods, Markopolos wrote a letter to the SEC saying, “Madoff Securities is the world’s largest Ponzi Scheme.” He pursued his claims with the feds for the next nine years, with little result. One would think the “Who Could Have Known?” excuse has been exposed as a sham enough times to render it obsolete, but there are always new incentives to not know. In the wake of 9/11, Condoleezza Rice assured us nobody “could have predicted” that someone “would try to use an airplane as a missile.”149 Except, of course, the 1999 government report that said “Suicide bomber(s) belonging to al-Qaeda’s Martyrdom Battalion could crash-land an aircraft packed with high explosives (C-4 and semtex) into the Pentagon, the headquarters of the Central Intelligence Agency (CIA), or the White House.”150 After Katrina, the Bush White House read from the “Who Could Have Known?”


The Handbook of Personal Wealth Management by Reuvid, Jonathan.

asset allocation, banking crisis, BRICs, business cycle, buy and hold, carbon credits, collapse of Lehman Brothers, correlation coefficient, credit crunch, cross-subsidies, currency risk, diversification, diversified portfolio, estate planning, financial deregulation, fixed income, global macro, high net worth, income per capita, index fund, interest rate swap, laissez-faire capitalism, land tenure, low interest rates, managed futures, market bubble, merger arbitrage, negative equity, new economy, Northern Rock, pattern recognition, Ponzi scheme, prediction markets, proprietary trading, Right to Buy, risk tolerance, risk-adjusted returns, risk/return, short selling, side project, sovereign wealth fund, statistical arbitrage, systematic trading, transaction costs, yield curve

High-net-worth individuals (HNWs) and others with significant capital assets, including pension pots, available for investment have had to rethink their investment strategies. Financial institutions and advisers were caught on the hop too and have had to tighten their investment analysis and due diligence routines. Bernard Medoff’s failed Ponzi scheme in New York demonstrated how reputable fund managers, in the UK as well as the United States, could be sucked into a quite simple scam through a lack of rigour in their investment selections. The UK is now engulfed by economic recession. Normally, the banking system remains strong in recessionary times and plays an important part in supporting both business and individuals.


pages: 236 words: 77,735

Rigged Money: Beating Wall Street at Its Own Game by Lee Munson

affirmative action, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, call centre, Credit Default Swap, diversification, diversified portfolio, estate planning, fear index, fiat currency, financial engineering, financial innovation, fixed income, Flash crash, follow your passion, German hyperinflation, Glass-Steagall Act, global macro, High speed trading, housing crisis, index fund, joint-stock company, junk bonds, managed futures, Market Wizards by Jack D. Schwager, Michael Milken, military-industrial complex, money market fund, moral hazard, Myron Scholes, National best bid and offer, off-the-grid, passive investing, Ponzi scheme, power law, price discovery process, proprietary trading, random walk, Reminiscences of a Stock Operator, risk tolerance, risk-adjusted returns, risk/return, Savings and loan crisis, short squeeze, stocks for the long run, stocks for the long term, too big to fail, trade route, Vanguard fund, walking around money

It took me several years to find a decent certified public accounting (CPA) firm to handle my company’s accounting. Why would my industry be any different? How a So-Called Pro Fools Himself There is a natural desire for people to either want a get-rich-quick scheme, or a play-it-safe investment. Usually it is one and the same. I want to make a lot and not lose anything—don’t you? How on earth can Ponzi schemes exist if not for our ability to suspend all reason in the hope of a sure thing? I was invited to be the guest at a small conference for a broker-dealer of which the owner was an old friend. This guy used to be one of my cold callers. He dialed the phone hundreds of times a day hawking stocks. He has done well since those days, but he is polite enough to give me credit for his early education on the mean streets.


pages: 290 words: 72,046

5 Day Weekend: Freedom to Make Your Life and Work Rich With Purpose by Nik Halik, Garrett B. Gunderson

Airbnb, bitcoin, Buckminster Fuller, business process, clean water, collaborative consumption, cryptocurrency, delayed gratification, diversified portfolio, do what you love, drop ship, en.wikipedia.org, estate planning, Ethereum, fear of failure, fiat currency, financial independence, gamification, glass ceiling, Grace Hopper, Home mortgage interest deduction, independent contractor, initial coin offering, Isaac Newton, Kaizen: continuous improvement, litecoin, low interest rates, Lyft, market fundamentalism, microcredit, minimum viable product, mortgage debt, mortgage tax deduction, multilevel marketing, Nelson Mandela, passive income, peer-to-peer, peer-to-peer rental, planned obsolescence, Ponzi scheme, quantitative easing, Ralph Waldo Emerson, ride hailing / ride sharing, selling pickaxes during a gold rush, sharing economy, side project, Skype, solopreneur, subscription business, TaskRabbit, TED Talk, traveling salesman, uber lyft

Most people start out each month with a 0:1 ratio, meaning that they have nothing with which to cover their monthly expenses until they earn money actively from a job. The objective is to get to a 1:1 ratio at the end of the month (enough money coming in to equal their expenses). In some cases, people don’t even reach that ratio and fall back on credit cards to make up the difference. Some even use cash advances on their credit cards as a Ponzi scheme to service the interest payments on other credit cards. Credit cards are now perceived as supplemental income. At a 1:1 ratio, 100 percent of your earning activities are spent trading time for money and servicing lifestyle and liabilities. What you want to develop instead is a Passive Income Ratio (PIR), referring to the amount of passive income generated in relation to your expenses.


pages: 232

Planet of Slums by Mike Davis

barriers to entry, Branko Milanovic, Bretton Woods, British Empire, Brownian motion, centre right, clean water, company town, conceptual framework, crony capitalism, declining real wages, deindustrialization, Deng Xiaoping, disinformation, Dr. Strangelove, edge city, European colonialism, failed state, gentrification, Gini coefficient, Hernando de Soto, housing crisis, illegal immigration, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, jitney, jobless men, Kibera, labor-force participation, land reform, land tenure, Lewis Mumford, liberation theology, low-wage service sector, mandelbrot fractal, market bubble, megacity, microcredit, Nelson Mandela, New Urbanism, Pearl River Delta, Ponzi scheme, RAND corporation, rent control, structural adjustment programs, surplus humans, upwardly mobile, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor

As Devisch explains, "With such a large part of the population of Kinshasa involved in these financial schemes, the effects of the collapse on the economy, and especially the informal sector, were 64 Tshikala Biaya, " SAP: A Catalyst for the Underdevelopment and Privatization of Public Administration in the Democratic Republic of Congo, 1997-2000," DPMN Bulletin 7:3 (December 2000). 65 Devisch, "Frenzy, Violence, and Ethical Renewal in Kinshasa," p. 604. 66 See analyses by World Bank researchers: Carlos Elbirt, "Albania under the Shadow of the Pyramids;" and Utpal Bhattacharya, "On the Possibility of Ponzi Schemes in Transition Economies," in Transition Newsletter (newsletter published by the World Bank Group) (January-February 2000), (www.worldbank.org/transitionnewsletter/janfeb600/pgs24-26.htm). disastrous. The bitter frustration of the people led to an imaginary yet vicious mentality of sorcery."67 The immediate aftermath, amidst continuing inflation, was the great urban jacqwrie of September 1991 when Kinshasa's slum-dwellers — with the Army's connivance — engaged in a massive, festive pillaging of factories, stores, and warehouses.


pages: 244 words: 79,044

Money Mavericks: Confessions of a Hedge Fund Manager by Lars Kroijer

activist fund / activist shareholder / activist investor, Bear Stearns, Bernie Madoff, book value, capital asset pricing model, corporate raider, diversification, diversified portfolio, equity risk premium, family office, fixed income, forensic accounting, Gordon Gekko, hiring and firing, implied volatility, index fund, intangible asset, Jeff Bezos, Just-in-time delivery, Long Term Capital Management, Mary Meeker, merger arbitrage, NetJets, new economy, Ponzi scheme, post-work, proprietary trading, risk free rate, risk-adjusted returns, risk/return, shareholder value, Silicon Valley, six sigma, statistical arbitrage, Vanguard fund, zero-coupon bond

I should tear up my presentation and market myself as someone who knows someone who can generate 16–18 per cent uncorrelated returns, which would be enough to make me an attractive prospect. In fact, you should take $100 and gear it five times and you would be almost guaranteed to double your money every year. Even the Ponzi schemes don’t promise that!’ I assumed we would be thrown out of the office at this point, but Mr Totti was clearly having fun. He was almost relieved that someone had challenged him and we ended up spending two hours in his office discussing how much market correlation there is in many funds even if they go to great lengths to disguise it.


pages: 283 words: 77,272

With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful by Glenn Greenwald

Alan Greenspan, Ayatollah Khomeini, banking crisis, Bear Stearns, Bernie Madoff, Clive Stafford Smith, collateralized debt obligation, Corrections Corporation of America, crack epidemic, Credit Default Swap, credit default swaps / collateralized debt obligations, David Brooks, deskilling, financial deregulation, full employment, high net worth, income inequality, Julian Assange, mandatory minimum, nuremberg principles, Ponzi scheme, Project for a New American Century, rolodex, Ronald Reagan, Seymour Hersh, too big to fail, Washington Consensus, WikiLeaks

In sum, the financial crisis caused by Wall Street was easily one of the most devastating and misery-producing events in American history. To the limited extent its causes have been investigated, it has become increasingly clear that the crisis was the result of plundering, fraud, lawlessness, and criminality on a massive scale. Major sectors of the financial industry turned out to be little more than glorified Ponzi schemes. Credit agencies on which investors relied routinely gave their stamp of approval to debt and loan instruments that were backed by “assets” of little or no value. Wall Street flooded the nation with toxic “derivative products,” which Warren Buffett had denounced back in 2003 as “financial weapons of mass destruction” posing a “mega-catastrophic risk.”


pages: 249 words: 73,731

Car Guys vs. Bean Counters: The Battle for the Soul of American Business by Bob Lutz

An Inconvenient Truth, corporate governance, creative destruction, currency manipulation / currency intervention, flex fuel, Ford Model T, medical malpractice, Ponzi scheme, profit maximization, Ralph Nader, scientific management, shareholder value, Steve Jobs, Toyota Production System, transfer pricing, Unsafe at Any Speed, upwardly mobile, value engineering

Industrial jobs can be created again, and Americans can once again aspire to middle-class jobs through actually making things.We need to remember that economic value is basically created only one of three ways:• Mining the material from the bowels of the earth • Growing food and wood on the surface of the earth • Manufacturing and distributing the products of the first two Everything else is simply trading “value” that has already been created. And issuing mortgages, for high profit, to home “owners” who manifestly don’t qualify for homeownership is about as economically useful as a Ponzi scheme, which, now that I think of it, it resembles. GM will come back. The people, the skills, the desire to succeed are all there. The competitive “killer instinct” is at a higher pitch than at anytime in the last fifty years. The burdens of the past, which so shackled the company, and hangovers from the parties of better days, are gone.


The Fix: How Bankers Lied, Cheated and Colluded to Rig the World's Most Important Number (Bloomberg) by Liam Vaughan, Gavin Finch

Alan Greenspan, asset allocation, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Sanders, Big bang: deregulation of the City of London, buy low sell high, call centre, central bank independence, collapse of Lehman Brothers, corporate governance, credit crunch, Credit Default Swap, eurozone crisis, fear of failure, financial deregulation, financial innovation, fixed income, interest rate derivative, interest rate swap, Kickstarter, light touch regulation, London Interbank Offered Rate, London Whale, low interest rates, mortgage debt, Neil Armstrong, Northern Rock, performance metric, Ponzi scheme, Ronald Reagan, social intelligence, sovereign wealth fund, subprime mortgage crisis, urban sprawl

More than 200 traders and brokers from around the world were caught up in the scam, affecting interest rates in at least half a dozen currencies. By the spring of 2012, Gensler’s patience had run out. The CFTC carries out about 500 investigations a year, mostly into small-scale misdemeanors like registration violations and tin-pot Ponzi schemes. Each time an investigation is wrapped up the agency’s five commissioners sign off before it’s announced to the public. In a heated meeting, Gensler told Meister no further enforcement actions would pass through his office until the Barclays settlement was out. Case files described as hostages were held for weeks in a cardboard container that ominously came to be known as “the Box”.


pages: 206 words: 9,776

Rebel Cities: From the Right to the City to the Urban Revolution by David Harvey

Alan Greenspan, Bretton Woods, business cycle, collateralized debt obligation, commoditize, creative destruction, David Graeber, deindustrialization, financial innovation, Garrett Hardin, gentrification, Guggenheim Bilbao, Hernando de Soto, high-speed rail, housing crisis, illegal immigration, indoor plumbing, invisible hand, Jane Jacobs, late capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, military-industrial complex, moral hazard, mortgage debt, mortgage tax deduction, Murray Bookchin, New Urbanism, Ponzi scheme, precariat, profit maximization, race to the bottom, radical decentralization, Robert Shiller, Savings and loan crisis, special economic zone, the built environment, the High Line, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transcontinental railway, urban planning, We are the 99%, William Langewiesche, Works Progress Administration

The delusion that capital can "valorize itself by way of its own powers" is self-perpetuating and self-fulfilling, at least for a while. As one of M ichael Lewis's perceptive financial analysts who saw the crash coming early on put it in The B ig Short: "Holy shit, this isn't just credit. Th is is a fictitious Ponzi scheme:'28 Th ere is yet another wrinkle to this story. Rising housing prices in the US increased effective demand in th e economy at large. In the year 2003 alone, 1 3 .6 m illion mortgages were issued (as opposed to less than half that ten years before), worth $3 .7 trillion. Of these, $2.8 trillion's worth were for purposes of refinancing (for comparison, the total US GDP at that time was less than $ 1 5 trillion) .


pages: 269 words: 79,285

Silk Road by Eileen Ormsby

4chan, bitcoin, blockchain, Brian Krebs, corporate governance, cryptocurrency, disinformation, drug harm reduction, Edward Snowden, fiat currency, Firefox, incognito mode, Julian Assange, litecoin, Mark Zuckerberg, Network effects, off-the-grid, operational security, peer-to-peer, Ponzi scheme, power law, profit motive, Right to Buy, Ross Ulbricht, Satoshi Nakamoto, stealth mode startup, Ted Nelson, trade route, Turing test, web application, WikiLeaks

– Dread Pirate Roberts forum post ‘Chat’, 20 March 2012 The Growth of a Legend Over the ensuing eighteen months, the identity of the Dread Pirate Roberts became the subject of debate, news articles and the work of internet sleuths. But nobody could link the name of a real person to him. The only names that were raised in speculation of Roberts’ identity at that time were other pseudonyms. One such name was ‘pirateat40’, a Bitcointalk user who ran a suspected Ponzi scheme through the forum during 2011 and 2012. Carrying out a business under the name Bitcoin Savings and Trust (BST), pirateat40 promised returns of 7 per cent per week. As with most sham schemes, BST provided the returns to those who wanted them, and ‘reinvested’ for those who wanted the cumulative interest effect.


pages: 250 words: 75,151

The New Nomads: How the Migration Revolution Is Making the World a Better Place by Felix Marquardt

"World Economic Forum" Davos, agricultural Revolution, Anthropocene, Black Lives Matter, Black Swan, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, carbon footprint, carbon tax, coronavirus, COVID-19, dark matter, digital nomad, Donald Trump, George Floyd, ghettoisation, glass ceiling, green new deal, Greta Thunberg, Intergovernmental Panel on Climate Change (IPCC), Joi Ito, Kickstarter, knowledge economy, labour market flexibility, Les Trente Glorieuses, out of africa, phenotype, place-making, Ponzi scheme, pre–internet, QAnon, Ray Kurzweil, remote working, Richard Feynman, road to serfdom, Silicon Valley, Skype, Snapchat, social distancing, sustainable-tourism, technological solutionism, technoutopianism, Yogi Berra, young professional

But really anything that can be done remotely can be a profession for a digital nomad. Indeed, the range of businesses at the coworking space in central London was as varied as the accents. Some wrote personal travel blogs (in fact a disproportionate number of them did). Travel blogging is the Ponzi scheme of digital nomadism: ‘Pay for my travels by reading/watching me give advice on how you can get paid for your travels.’ Others ran sophisticated business outfits like digital creative and advertising agencies, with remote workers spread across dozens of countries. Some were stopping over on their way to visit family in the Midlands.


pages: 236 words: 73,008

Deadly Quiet City: True Stories From Wuhan by Murong Xuecun

Boris Johnson, citizen journalism, coronavirus, COVID-19, Deng Xiaoping, disinformation, Donald Trump, fake news, global pandemic, lockdown, megacity, Ponzi scheme, QR code, social distancing, TikTok

After the demolition business closed, Li worked for a while installing windows, doors and pipes in new apartments. He was over fifty, the work was hard and the pay was only just enough to cover living expenses. He applied for several credit cards, borrowed against each card in succession and repaid in succession, like a mini Ponzi scheme. He used the money to gamble, hoping to change his fortunes, but his debts just piled up. ‘I was too clever for my own good,’ he sighs ruefully. ‘Credit cards are really bad.’ Around 2016, his boss, a former employee, fired him. Li didn’t hesitate for long; his age and his savings balance didn’t allow hesitation.


pages: 306 words: 82,765

Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb

anti-fragile, availability heuristic, behavioural economics, Benoit Mandelbrot, Bernie Madoff, Black Swan, Brownian motion, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cellular automata, Claude Shannon: information theory, cognitive dissonance, complexity theory, data science, David Graeber, disintermediation, Donald Trump, Edward Thorp, equity premium, fake news, financial independence, information asymmetry, invisible hand, knowledge economy, loss aversion, mandelbrot fractal, Mark Spitznagel, mental accounting, microbiome, mirror neurons, moral hazard, Murray Gell-Mann, offshore financial centre, p-value, Paradox of Choice, Paul Samuelson, Ponzi scheme, power law, precautionary principle, price mechanism, principal–agent problem, public intellectual, Ralph Nader, random walk, rent-seeking, Richard Feynman, Richard Thaler, Ronald Coase, Ronald Reagan, Rory Sutherland, Rupert Read, Silicon Valley, Social Justice Warrior, Steven Pinker, stochastic process, survivorship bias, systematic bias, tail risk, TED Talk, The Nature of the Firm, Tragedy of the Commons, transaction costs, urban planning, Yogi Berra

GOLD AND RICE Now, indeed, we know by instinct that brain surgery is not more “scientific” than aspirin, any more than flying the forty or so miles between JFK and Newark airports represent “efficiency,” although there is more technology involved. But we don’t easily translate this to other domains and remain victims of scientism, which is to science what a Ponzi scheme is to investment, or what advertisement or propaganda are to genuine scientific communication. You magnify the cosmetic attributes. Recall the genetic modifications of Book 3 (and the smear campaign of Chapter 4). Let us consider the story of the genetically modified Golden Rice. There has been a problem of malnutrition and nutrient deficiency in many developing countries, which my collaborators Yaneer Bar-Yam and Joe Norman attribute to a simple and very straightforward transportation issue.


pages: 318 words: 85,824

A Brief History of Neoliberalism by David Harvey

"World Economic Forum" Davos, affirmative action, air traffic controllers' union, Asian financial crisis, Berlin Wall, Bretton Woods, business climate, business cycle, California energy crisis, capital controls, centre right, collective bargaining, creative destruction, crony capitalism, debt deflation, declining real wages, deglobalization, deindustrialization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, financial intermediation, financial repression, full employment, gentrification, George Gilder, Gini coefficient, global reserve currency, Great Leap Forward, illegal immigration, income inequality, informal economy, labour market flexibility, land tenure, late capitalism, Long Term Capital Management, low interest rates, low-wage service sector, manufacturing employment, market fundamentalism, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, military-industrial complex, Mont Pelerin Society, mortgage tax deduction, neoliberal agenda, new economy, Pearl River Delta, phenotype, Ponzi scheme, price mechanism, race to the bottom, rent-seeking, reserve currency, Ronald Reagan, Savings and loan crisis, Silicon Valley, special economic zone, structural adjustment programs, Suez crisis 1956, the built environment, The Chicago School, Tragedy of the Commons, transaction costs, union organizing, urban renewal, urban sprawl, Washington Consensus, We are all Keynesians now, Winter of Discontent

The $40 trillion annual turnover in 2001 compares to the estimated $800 billion that would be required to support international trade and productive investment flows.11 Deregulation allowed the financial system to become one of the main centres of redistributive activity through speculation, predation, fraud, and thievery. Stock promotions, ponzi schemes, structured asset destruction through inflation, asset-stripping through mergers and acquisitions, the promotion of levels of debt incumbency that reduced whole populations, even in the advanced capitalist countries, to debt peonage, to say nothing of corporate fraud, dispossession of assets (the raiding of pension funds and their decimation by stock and corporate collapses) by credit and stock manipulations—all of these became central features of the capitalist financial system.


pages: 261 words: 81,802

The Trouble With Billionaires by Linda McQuaig

"World Economic Forum" Davos, battle of ideas, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, British Empire, Build a better mousetrap, carried interest, Charles Babbage, collateralized debt obligation, computer age, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Douglas Engelbart, Douglas Engelbart, employer provided health coverage, financial deregulation, fixed income, full employment, Gary Kildall, George Akerlof, Gini coefficient, Glass-Steagall Act, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invention of the wheel, invisible hand, Isaac Newton, Jacquard loom, John Bogle, Joseph-Marie Jacquard, laissez-faire capitalism, land tenure, lateral thinking, low interest rates, Mark Zuckerberg, market bubble, Martin Wolf, mega-rich, minimum wage unemployment, Mont Pelerin Society, Naomi Klein, neoliberal agenda, Northern Rock, offshore financial centre, Paul Samuelson, plutocrats, Ponzi scheme, pre–internet, price mechanism, proprietary trading, purchasing power parity, RAND corporation, rent-seeking, rising living standards, road to serfdom, Robert Solow, Ronald Reagan, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, trickle-down economics, Vanguard fund, very high income, wealth creators, women in the workforce

In addition, tax havens help terrorists move untraceable funds around the world; they allow individuals to escape from professional, parental and other legal obligations; they distort world trade and investment flows; and they exacerbate financial crises by making much of the global financial system invisible. Over the past few decades, the use of tax havens has been the common denominator in almost every large money laundering operation, Ponzi scheme, financial crisis, mega commercial fraud, and large accounting and business scandal. And, of course, they facilitate tax evasion by wealthy individuals and multinational corporations. This evasion is particularly catastrophic for poor countries, where corrupt politicians and local ruling elites make off with billions of dollars of desperately needed revenue and assets.


pages: 278 words: 83,468

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries

3D printing, barriers to entry, Benchmark Capital, call centre, Clayton Christensen, clean tech, clean water, cloud computing, commoditize, Computer Numeric Control, continuous integration, corporate governance, disruptive innovation, experimental subject, Ford Model T, Frederick Winslow Taylor, hockey-stick growth, Kanban, Lean Startup, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, minimum viable product, Mitch Kapor, Network effects, payday loans, Peter Thiel, pets.com, Ponzi scheme, pull request, reality distortion field, risk tolerance, scientific management, selection bias, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, social bookmarking, stealth mode startup, Steve Jobs, the scientific method, Toyota Production System, transaction costs

I use the language of economics in referring to value rather than profit, because entrepreneurs include people who start not-for-profit social ventures, those in public sector startups, and internal change agents who do not judge their success by profit alone. Even more confusing, there are many organizations that are wildly profitable in the short term but ultimately value-destroying, such as the organizers of Ponzi schemes, and fraudulent or misguided companies (e.g., Enron and Lehman Brothers). A similar thing is true for growth. As with value, it’s essential that entrepreneurs understand the reasons behind a startup’s growth. There are many value-destroying kinds of growth that should be avoided. An example would be a business that grows through continuous fund-raising from investors and lots of paid advertising but does not develop a value-creating product.


pages: 264 words: 79,589

Kingpin: How One Hacker Took Over the Billion-Dollar Cybercrime Underground by Kevin Poulsen

Apple II, Brian Krebs, Burning Man, corporate governance, dumpster diving, Exxon Valdez, fake news, gentrification, Hacker Ethic, hive mind, index card, Kickstarter, McMansion, Mercator projection, offshore financial centre, packet switching, pirate software, Ponzi scheme, Robert Hanssen: Double agent, Saturday Night Live, Silicon Valley, SQL injection, Steve Jobs, Steve Wozniak, Steven Levy, traffic fines, web application, WikiLeaks, zero day, Zipcar

By December 2005, the company’s internal investigations had identified more than three thousand accounts involved in carding, another three thousand used for buying and selling child porn, and thirteen thousand accounts linked to various investment scams. They were easy enough to spot: the “memo” field in child porn transactions would read, for example, “Lolita”; in Ponzi schemes, “HYIP,” for “high-yield investment program.” Carders included shorthand descriptions of what they were buying: “For 3 IDs”; “for dumps”; “10 classics”; “Fame’s dumps”; “10 M/C”; “one plat and six classics”; “20 vclassics”; “18 ssns”; “10 AZIDs”; “4 v classics”; “four cvv2s”; “for 150 classics.”


pages: 309 words: 84,038

Bike Boom: The Unexpected Resurgence of Cycling by Carlton Reid

1960s counterculture, autonomous vehicles, Beeching cuts, bike sharing, California gold rush, car-free, cognitive dissonance, driverless car, Ford Model T, Haight Ashbury, Jane Jacobs, Kickstarter, military-industrial complex, peak oil, Ponzi scheme, Silicon Valley, Skype, Steve Jobs, Steven Pinker, Stop de Kindermoord, the built environment, The Death and Life of Great American Cities, Traffic in Towns by Colin Buchanan, urban planning, urban renewal, Whole Earth Catalog, Yom Kippur War

Already bicycling is often the best way to get around quickly in city centers. The simplicity of the bicycle chimed with E. F. Schumacher’s 1973 best seller Small Is Beautiful. This was one of the key eco-polemics of the 1970s—it theorized that capitalism was inherently bad for the planet because, like a Ponzi scheme, it can only survive by growing, unsustainably. What was required instead, believed Schumacher, were small-scale “appropriate technologies.” The bicycle, believed the bike activists (“biketivists”), was more of an appropriate technology for city use than the smelly, dangerous, gas-guzzling, space-hungry automobile.


pages: 290 words: 84,375

China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle by Dinny McMahon

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, Andrei Shleifer, Asian financial crisis, bank run, business cycle, California gold rush, capital controls, crony capitalism, dark matter, Deng Xiaoping, Donald Trump, Edward Glaeser, eurozone crisis, financial innovation, fixed income, Gini coefficient, Global Witness, Great Leap Forward, high-speed rail, if you build it, they will come, income inequality, industrial robot, invisible hand, low interest rates, megacity, middle-income trap, military-industrial complex, money market fund, mortgage debt, new economy, peer-to-peer lending, Ponzi scheme, Ronald Reagan, short selling, Silicon Valley, subprime mortgage crisis, too big to fail, trickle-down economics, urban planning, working-age population, zero-sum game

Clearly the complexity of shadow banking has made it difficult for authorities to bring it under control, but complicating matters is that the authorities are also of two minds about reining it in. The conflict was best summed up in 2012 by Xiao Gang, then-chairman of the Bank of China, who, in a column published in the state press, described wealth-management products as being “fundamentally a Ponzi scheme.” Yet a few paragraphs later, he wrote, “Admittedly, shadow banking has its advantages. It helps businesses that need credit but who are unable to access it from traditional bank loans. Meanwhile, shadow banking continues to provide funds that allow certain half-finished projects to remain in construction, which spur the GDP growth rate.”


pages: 304 words: 85,291

Cities: The First 6,000 Years by Monica L. Smith

Anthropocene, bread and circuses, classic study, clean water, diversified portfolio, failed state, financial innovation, gentrification, hiring and firing, invention of writing, Jane Jacobs, New Urbanism, payday loans, place-making, Ponzi scheme, SimCity, South China Sea, telemarketer, the built environment, The Fortune at the Bottom of the Pyramid, the strength of weak ties, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, urban planning, urban renewal, wikimedia commons

Mihaly Csikszentmihalyi’s examination of “flow” as the product of constraints enables us to appreciate the ways in which ancient urban residents benefited from their challenging environments. Connectivity was key to making any individual metropolis successful, enabling each city to be sustainable and environmentally resilient because of its link to other places. The situation at first glance seems like a giant Ponzi scheme, with each new city bringing more into the network than it could draw out. Yet the benefit of an interconnected urban landscape is not merely what one city can deliver to another but the way in which each city engages tightly with its own local environment to draw in food, goods, and people to work in the city’s burgeoning enterprises.


pages: 316 words: 87,486

Listen, Liberal: Or, What Ever Happened to the Party of the People? by Thomas Frank

Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, Amazon Mechanical Turk, American ideology, antiwork, barriers to entry, Berlin Wall, Bernie Sanders, Black Lives Matter, blue-collar work, Burning Man, centre right, circulation of elites, Clayton Christensen, collective bargaining, Credit Default Swap, David Brooks, deindustrialization, disruptive innovation, Donald Trump, driverless car, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, financial engineering, financial innovation, Frank Gehry, fulfillment center, full employment, George Gilder, gig economy, Gini coefficient, Glass-Steagall Act, high-speed rail, income inequality, independent contractor, Jaron Lanier, Jeff Bezos, knowledge economy, knowledge worker, Lean Startup, mandatory minimum, Marc Andreessen, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, microcredit, mobile money, moral panic, mortgage debt, Nelson Mandela, new economy, obamacare, payday loans, Peter Thiel, plutocrats, Ponzi scheme, post-industrial society, postindustrial economy, pre–internet, profit maximization, profit motive, race to the bottom, Republic of Letters, Richard Florida, ride hailing / ride sharing, Ronald Reagan, Savings and loan crisis, sharing economy, Silicon Valley, Steve Jobs, Steven Levy, TaskRabbit, tech worker, TED Talk, Thorstein Veblen, too big to fail, Travis Kalanick, Uber for X, union organizing, urban decay, WeWork, women in the workforce, Works Progress Administration, young professional

He cheers for the bravery of Wal-Mart workers who, it appears, are finally starting to stand up to their bosses. He watches a 2012 Obama-Romney debate and thinks of all the people he knows who would be considered part of Romney’s lazy 47 percent—including his own mother, a factory worker during World War II who was now “draining our country dry through the twin Ponzi schemes of Social Security and Medicare.”16 “To us, it looks as though the city is dissolving,” Dion wrote in late 2015. As the working-class apocalypse takes hold, he invites readers to remember exactly what it was they once liked about their town. “Fall River used to be a good place to be poor,” he concludes.


pages: 301 words: 89,076

The Globotics Upheaval: Globalisation, Robotics and the Future of Work by Richard Baldwin

agricultural Revolution, Airbnb, AlphaGo, AltaVista, Amazon Web Services, Apollo 11, augmented reality, autonomous vehicles, basic income, Big Tech, bread and circuses, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, commoditize, computer vision, Corn Laws, correlation does not imply causation, Credit Default Swap, data science, David Ricardo: comparative advantage, declining real wages, deep learning, DeepMind, deindustrialization, deskilling, Donald Trump, Douglas Hofstadter, Downton Abbey, Elon Musk, Erik Brynjolfsson, facts on the ground, Fairchild Semiconductor, future of journalism, future of work, George Gilder, Google Glasses, Google Hangouts, Hans Moravec, hiring and firing, hype cycle, impulse control, income inequality, industrial robot, intangible asset, Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Kevin Roose, knowledge worker, laissez-faire capitalism, Les Trente Glorieuses, low skilled workers, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, Metcalfe’s law, mirror neurons, new economy, optical character recognition, pattern recognition, Ponzi scheme, post-industrial society, post-work, profit motive, remote working, reshoring, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, robotic process automation, Ronald Reagan, Salesforce, San Francisco homelessness, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, social intelligence, sovereign wealth fund, standardized shipping container, statistical model, Stephen Hawking, Steve Jobs, supply-chain management, systems thinking, TaskRabbit, telepresence, telepresence robot, telerobotics, Thomas Malthus, trade liberalization, universal basic income, warehouse automation

Likewise, chipmakers invest hundreds of millions for years to designing better chips in anticipation of the frothy demand that flows from the breakthrough software and telecommunication services that come online every year. To put it differently, Moore’s law is a self-fulfilling prophecy, or maybe even a Ponzi scheme. For decades, the home of Moore’s law, and the coordinating mechanism for chip makers and users, was the International Technology Roadmap for Semiconductors. The 2015 report, which was the last, predicted Moore’s law would continue apace until at least 2020. No one thinks this will be easy or automatic.


pages: 389 words: 81,596

Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen, Bryce Leung

Affordable Care Act / Obamacare, Airbnb, Apollo 13, asset allocation, barriers to entry, buy low sell high, call centre, car-free, Columbine, cuban missile crisis, Deng Xiaoping, digital nomad, do what you love, Elon Musk, fear of failure, financial independence, fixed income, follow your passion, Great Leap Forward, hedonic treadmill, income inequality, index fund, John Bogle, junk bonds, longitudinal study, low cost airline, Mark Zuckerberg, mortgage debt, Mr. Money Mustache, obamacare, offshore financial centre, passive income, Ponzi scheme, risk tolerance, risk/return, side hustle, Silicon Valley, single-payer health, Snapchat, Steve Jobs, subprime mortgage crisis, supply-chain management, the rule of 72, working poor, Y2K, Zipcar

Yearly savings $126,900 Savings rate 76% Investment gains/losses 0% We’re still staying out of the market and missing out on gains. But luckily our salaries are higher and our spending hasn’t changed. Net worth $507,150 2012 Since work is getting stressful and the housing market in Toronto is looking more like a Ponzi scheme every day, I start to go into hyper tracking mode and break down our costs in even finer detail. This helps me identify and cut all the fat from our budget. This has the effect of pushing our savings rate to 78 percent, the highest it’s ever been. At this point, we discover FIRE (Financial Independence Retire Early) and run the math to find that we are just three to five years from retirement if we invest our savings instead of using it to buy a house.


pages: 304 words: 80,965

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson

activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, buy and hold, Carl Icahn, centralized clearinghouse, clean water, compensation consultant, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, income inequality, index fund, information asymmetry, invisible hand, John Bogle, Kenneth Arrow, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, Paul Volcker talking about ATMs, payment for order flow, performance metric, Ponzi scheme, post-work, principal–agent problem, rent-seeking, Ronald Coase, seminal paper, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks

But the potential for a conflict of interest is obvious. What is not as obvious is that a corporate official may simply not be as vigilant in overseeing the pension plan if he or she is not overseen by the people with a stake in its performance. In one disheartening case, a corporate pension plan included infamous Ponzi scheme mastermind Bernard Madoff’s fraudulent investment program even though the custodian of the plan refused to take custody of Madoff’s “assets.”16 The challenge is to ensure that those with the power to control funds act in the interests of those who are supposed to benefit from them. When those in charge of the plan are not accountable to members, it is difficult to be sure if, when, how frequently, how energetically, and how skillfully this oversight is carried out.


pages: 328 words: 84,682

The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power by Michael A. Cusumano, Annabelle Gawer, David B. Yoffie

activist fund / activist shareholder / activist investor, Airbnb, AltaVista, Amazon Web Services, AOL-Time Warner, asset light, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, business logic, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, collective bargaining, commoditize, CRISPR, crowdsourcing, cryptocurrency, deep learning, Didi Chuxing, distributed ledger, Donald Trump, driverless car, en.wikipedia.org, fake news, Firefox, general purpose technology, gig economy, Google Chrome, GPS: selective availability, Greyball, independent contractor, Internet of things, Jeff Bezos, Jeff Hawkins, John Zimmer (Lyft cofounder), Kevin Roose, Lean Startup, Lyft, machine translation, Mark Zuckerberg, market fundamentalism, Metcalfe’s law, move fast and break things, multi-sided market, Network effects, pattern recognition, platform as a service, Ponzi scheme, recommendation engine, Richard Feynman, ride hailing / ride sharing, Robert Metcalfe, Salesforce, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, SoftBank, software as a service, sovereign wealth fund, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Steven Levy, subscription business, Susan Wojcicki, TaskRabbit, too big to fail, transaction costs, transport as a service, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Vision Fund, web application, zero-sum game

The government started to crack down in 2016–2017, jailing for life the founder of Ezubao, a $9 billion lending platform. In July 2018 alone, China closed down 168 of these dubious lending platforms, according to one industry source.5 In retrospect, most of these platforms were little more than Ponzi schemes, operating under the cover of the “sharing economy.” The discussion of what governments should and should not permit is really about platform regulation. Some platforms have hidden behind their self-definition as “technology companies” to claim that sectoral regulation should not apply to them.


pages: 259 words: 84,261

Scary Smart: The Future of Artificial Intelligence and How You Can Save Our World by Mo Gawdat

3D printing, accounting loophole / creative accounting, AI winter, AlphaGo, anthropic principle, artificial general intelligence, autonomous vehicles, basic income, Big Tech, Black Lives Matter, Black Monday: stock market crash in 1987, butterfly effect, call centre, carbon footprint, cloud computing, computer vision, coronavirus, COVID-19, CRISPR, cryptocurrency, deep learning, deepfake, DeepMind, Demis Hassabis, digital divide, digital map, Donald Trump, Elon Musk, fake news, fulfillment center, game design, George Floyd, global pandemic, Google Glasses, Google X / Alphabet X, Law of Accelerating Returns, lockdown, microplastics / micro fibres, Nick Bostrom, off-the-grid, OpenAI, optical character recognition, out of africa, pattern recognition, Ponzi scheme, Ray Kurzweil, recommendation engine, self-driving car, Silicon Valley, smart contracts, Stanislav Petrov, Stephen Hawking, subprime mortgage crisis, superintelligent machines, TED Talk, TikTok, Turing machine, Turing test, universal basic income, Watson beat the top human players on Jeopardy!, Y2K

Use the links I suggested earlier (#OneBillionHappy or tag my social media accounts: mo_gawdat on Instagram, @mogawdat on LinkedIn, @mgawdat on Twitter or @Mo.Gawdat.Official on Facebook) and I will boost your reach and share your content with my community. One Billion Happy is nothing more than a positive ponzi scheme – one that aims to rob our modern world of its depression – and, more importantly, one that aims to set a mathematical pattern that is impossible for the intelligent machines to miss. One Billion Happy will broadcast to all of humanity and all intelligent beings one undeniable message: Humans want to be happy more than they want anything else, and they want others to be happy too.


pages: 1,199 words: 332,563

Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition by Robert N. Proctor

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", bioinformatics, carbon footprint, clean water, corporate social responsibility, Deng Xiaoping, desegregation, disinformation, Dr. Strangelove, facts on the ground, friendly fire, germ theory of disease, global pandemic, index card, Indoor air pollution, information retrieval, invention of gunpowder, John Snow's cholera map, language of flowers, life extension, New Journalism, optical character recognition, pink-collar, Ponzi scheme, Potemkin village, precautionary principle, publication bias, Ralph Nader, Ronald Reagan, selection bias, speech recognition, stem cell, telemarketer, Thomas Kuhn: the structure of scientific revolutions, Triangle Shirtwaist Factory, Upton Sinclair, vertical integration, Yogi Berra

And once the decision had been made to deny all evidence of harms—in 1953—it was difficult (for legal reasons) to stray very far from this path. Management must have known that the sordid admissions would eventually have to be made, but the hope was that this could be delayed into the indefinite future, into someone else’s watch. It’s as if they were operating a gigantic—and deadly—oncologic Ponzi scheme. So when did the industry realize it was killing people? That turns out to depend on what you mean by “the industry.” Even if we restrict our attention to manufacturers in the United States, it is difficult to establish a uniform time scale for the acceptance or recognition of hazards, since we are talking about large and complex organizations with tens of thousands of employees.

Long, in a 1986 interview asserted that if he ever “saw or thought there were any evidence whatsoever that conclusively proved that, in some way, tobacco was harmful to people, and I believed it in my heart and my soul, then I would get out of the business.” Such were the promises.1 One reason the companies never admitted proof, or even evidence of any gravity, may be that they found themselves too far along in their campaign of denial to backtrack without causing a corporate catastrophe. Like a giant Ponzi scheme, there wasn’t any coherent exit strategy. How did they think it would end? The companies’ own laboratories were confirming cancer hazards—so there was always the danger that this, too, might come to light. And the longer the conspiracy went on, the darker were the prospects for any kind of innocent exit.

See Committee of Counsel polls of knowledge of hazards: doctors not convinced FTC’s summary knowledge vs. awareness most smokers want to quit ranking polls regret studies teenagers have unrealistic expectations unprompted polonium 210 in cigarettes: accumulates in “hot spots” cycles of attention and forgetting falls into ideological gap fears of a Three Mile Marlboro from fallout from superphosphate fertilizers industry research on Martell’s theory methods to eliminate Nystrom rejects trichome washing as having “no commercial advantage” Radford and Hunt discover research suppressed Rodgman on as “sleeping giant” Tso on Winters and Difranza equate to 300 annual chest X-rays polycyclic aromatic hydrocarbons (PAHs) in cigarette smoke: industry labs confirm Liggett hopes palladium will burn up Reynolds scientists barred from publishing on Roffo discovers Teague on Ponzi scheme, tobacco industry duplicity as pornography power walls (of cigarette packs) Premier cigarettes (Reynolds brand) price elasticity Proctor, Christopher (Scientific Director, BAT) product placement (of cigarettes in films): banned by the studios in British films common by the 1980s. See also Sean Connery; Clint Eastwood; Paul Newman; Sylvester Stallone Prohibition: alcohol vs. tobacco Haag opposes Volstead Act prohibitions Project 16 Project 1600 Project BIG BOY Project Censored Project Cosmic Project Moon Project Scum Project Truth Project Virile Female Project XA (Liggett’s palladium cigarette) propaganda and brainwashing propane fuel, used for flue-curing propylene glycol public opinion polls.


pages: 298 words: 95,668

Milton Friedman: A Biography by Lanny Ebenstein

Abraham Wald, affirmative action, Alan Greenspan, banking crisis, Berlin Wall, Bretton Woods, business cycle, classic study, Deng Xiaoping, Fall of the Berlin Wall, fiat currency, floating exchange rates, Francis Fukuyama: the end of history, full employment, Hernando de Soto, hiring and firing, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Arrow, Lao Tzu, liquidity trap, means of production, Modern Monetary Theory, Mont Pelerin Society, Myron Scholes, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, price stability, public intellectual, rent control, road to serfdom, Robert Bork, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thorstein Veblen, zero-sum game

On aging societies, there is no reason why a country that has a lot of old people can’t be prosperous if, during their working lives, individuals provide for their retirement. The only reason there is a crisis about Social Security in the U.S. and pensions in Europe and Japan is that you cannot maintain a “Ponzi” scheme indefinitely. We have collected from today’s young to pay today’s old and counted on tomorrow’s young to keep doing so. That was a fine scheme as long as the number of young people was rising faster than old people. When that ratio comes to an end, such a system also has to end. It all would have been much better if individuals saved for their own old age.


pages: 343 words: 89,057

Artemis by Andy Weir

accounting loophole / creative accounting, Apollo 11, centre right, low earth orbit, Neil Armstrong, orbital mechanics / astrodynamics, pneumatic tube, Ponzi scheme

“When people move to Artemis, they bring their life savings with them. Then they spend it here. As long as our population kept growing that was fine, but now we’ve plateaued.” She angled the gun away from me. She still had a good grip on it, but at least she wouldn’t kill me by mistake if she sneezed. “The whole system has become an unintentional Ponzi scheme. And we’re just cresting the top of the curve now.” For the first time, my attention was torn away from the gun. “Is…are we…is this whole city going bankrupt?” “Yes, if we don’t take action,” she said. “But ZAFO is our savior. The telecom industry will want to upgrade, and ZAFO can only be cheaply made here.


pages: 297 words: 91,141

Market Sense and Nonsense by Jack D. Schwager

3Com Palm IPO, asset allocation, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Brownian motion, buy and hold, collateralized debt obligation, commodity trading advisor, computerized trading, conceptual framework, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, fixed income, global macro, high net worth, implied volatility, index arbitrage, index fund, Jim Simons, junk bonds, London Interbank Offered Rate, Long Term Capital Management, low interest rates, managed futures, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, merger arbitrage, negative equity, pattern recognition, performance metric, pets.com, Ponzi scheme, proprietary trading, quantitative trading / quantitative finance, random walk, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, selection bias, Sharpe ratio, short selling, statistical arbitrage, statistical model, subprime mortgage crisis, survivorship bias, tail risk, transaction costs, two-sided market, value at risk, yield curve

Inherent psychological biases lead investors to make distorted risk assessments and ultimately irrational investment decisions when comparing hedge funds with traditional investments. 1 We use the fund of funds index rather than the composite index of individual funds to represent hedge fund performance because, as will be explained in Chapter 14, hedge fund indexes based on individual funds are significantly biased. 2 Bernie Madoff may have been even more prominent, but his was a Ponzi scheme rather than a hedge fund. Madoff simply made up performance results and never did any trading. Also, Madoff lacked all the normal structural checks of a hedge fund, such as an independent broker and administrator. 3 New York: Random House, 2000. This book was the source for the LTCM discussion in this section. 4 In 2003, President Levy Mwanawasa of Zambia banned the distribution of donated genetically modified food to his starving population.


pages: 329 words: 95,309

Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner

algorithmic trading, AltaVista, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, Bitcoin Ponzi scheme, business cycle, business intelligence, business process, business process outsourcing, buy and hold, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, cross-border payments, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, gamification, Google Glasses, high net worth, informal economy, information security, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, MITM: man-in-the-middle, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, Pingit, platform as a service, Ponzi scheme, prediction markets, pre–internet, QR code, quantitative easing, ransomware, reserve currency, RFID, Salesforce, Satoshi Nakamoto, Silicon Valley, smart cities, social intelligence, software as a service, Steve Jobs, strong AI, Stuxnet, the long tail, trade route, unbanked and underbanked, underbanked, upwardly mobile, vertical integration, We are the 99%, web application, WikiLeaks, Y2K

As Anthony Gallippi, CEO of Bitpay, said at a conference I chaired that : “Bitcoin is a new asset class where money can be stored in the cloud and accessed anywhere with any device for free”. Now I like that. That describes it succinctly and perfectly as any money I can store for free in the cloud, use with any device and transact easily at low or zero cost, makes sense to me. The future of Bitcoin Often people think Bitcoins are some sort of dodgy Ponzi scheme used for money laundering and drugs, but that’s just because they don’t understand what’s going on. You see Bitcoin is the Wikicoin for the Wikileaks world. It is disruptive because it has no central issuing authority or control, and that’s where governments have a big issue. It needs to be controlled and this is why some governments, particularly the US government, spread views that Bitcoins are all about subversive disruption.


pages: 309 words: 95,495

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe by Greg Ip

Affordable Care Act / Obamacare, Air France Flight 447, air freight, airport security, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Boeing 747, book value, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Daniel Kahneman / Amos Tversky, diversified portfolio, double helix, endowment effect, Exxon Valdez, Eyjafjallajökull, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, foreign exchange controls, full employment, global supply chain, hindsight bias, Hyman Minsky, Joseph Schumpeter, junk bonds, Kenneth Rogoff, lateral thinking, Lewis Mumford, London Whale, Long Term Capital Management, market bubble, Michael Milken, money market fund, moral hazard, Myron Scholes, Network effects, new economy, offshore financial centre, paradox of thrift, pets.com, Ponzi scheme, proprietary trading, quantitative easing, Ralph Nader, Richard Thaler, risk tolerance, Ronald Reagan, Sam Peltzman, savings glut, scientific management, subprime mortgage crisis, tail risk, technology bubble, TED Talk, The Great Moderation, too big to fail, transaction costs, union organizing, Unsafe at Any Speed, value at risk, William Langewiesche, zero-sum game

The more vivid our sense of danger, the greater care we take. On Wall Street, those who take risks can reap spectacular rewards. Those with longer memories hang back; their performance and profits suffer, and customers go elsewhere. Thus, trading is a young person’s profession. This explains why rogue traders, blowups, and Ponzi schemes appear with distressing frequency on Wall Street. It’s also why, within years of a flood or a hurricane, people drop their flood insurance and again start building expensive homes next to the water. If you go down to Pass Christian, a resort town in Mississippi on the Gulf of Mexico, you’ll see condominium complexes built within blocks of where a shopping center was destroyed by Hurricane Katrina in 2005.


pages: 295 words: 89,280

The Narcissist Next Door by Jeffrey Kluger

Albert Einstein, always be closing, Anthropocene, Apollo 11, Apollo 13, Apple's 1984 Super Bowl advert, Bear Stearns, Bernie Madoff, Columbine, dark triade / dark tetrad, delayed gratification, Donald Trump, Elon Musk, impulse control, Jony Ive, longitudinal study, meta-analysis, mirror neurons, plutocrats, Ponzi scheme, QWERTY keyboard, Ralph Nader, Ronald Reagan, Schrödinger's Cat, Stanford marshmallow experiment, Stephen Hawking, Steve Jobs, the scientific method, theory of mind, Triangle Shirtwaist Factory, twin studies, Walter Mischel, zero-sum game

This played out in the same summer that Lady Gaga—she of the meat dress, which may or may not have had much fashion merit, but undeniably drew eyeballs—released a song called “Applause,” in which she repeats over and over the lyric “I live for the applause, applause, applause,” as frank an admission and as powerful an anthem of the age of narcissism as you could imagine. There is Bernie Madoff as well, a man whose multi-decade Ponzi scheme made him exceedingly rich, but at the cost of $65 billion in other people’s wealth, stolen from a victim list that, in the government’s records, ran 165 pages long. Hedge funds and banks made up much of that inventory of the wronged—admittedly, nobody’s idea of sympathetic victims—but there were also pension funds and charities, as well as individuals like Jack Cutter of Longmont, Colorado, a seventy-nine-year-old oil industry worker who was living with his wife on $1 million in retirement savings, a nest egg that vanished in Madoff’s care, forcing Cutter to take a job stocking supermarket shelves.


pages: 320 words: 90,526

Squeezed: Why Our Families Can't Afford America by Alissa Quart

Affordable Care Act / Obamacare, Airbnb, Alvin Toffler, antiwork, Automated Insights, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, business intelligence, do what you love, Donald Trump, Downton Abbey, East Village, Elon Musk, emotional labour, full employment, future of work, gentrification, gig economy, glass ceiling, haute couture, income inequality, independent contractor, information security, Jaron Lanier, Jeremy Corbyn, job automation, late capitalism, Lyft, minimum wage unemployment, moral panic, new economy, nuclear winter, obamacare, peak TV, Ponzi scheme, post-work, precariat, price mechanism, rent control, rent stabilization, ride hailing / ride sharing, school choice, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, Snapchat, stop buying avocado toast, surplus humans, TaskRabbit, tech worker, TED Talk, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, union organizing, universal basic income, upwardly mobile, wages for housework, WeWork, women in the workforce, work culture , working poor

The way things had been going, she told me, she’d expected to find something unwanted inside: a scam offer perhaps, or yet another unpaid bill. Instead, she found a note informing her that she was no longer in debt for around $1,500 for the two months she attended Everest College. “It sounded too good to be true,” Goldman said. It seemed to her like a Ponzi scheme in reverse. But both the horrors of student debt and the few feel-good rescues like this one are real. The Debt Collective had another solution for those who have wound up in extreme debt to for-profit colleges and universities. Under the collective’s aegis, former students organized in 2015 to go on debt strike and refuse to pay back their loans from the for-profit college Corinthian.


pages: 293 words: 88,490

The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction by Richard Bookstaber

asset allocation, bank run, Bear Stearns, behavioural economics, bitcoin, business cycle, butterfly effect, buy and hold, capital asset pricing model, cellular automata, collateralized debt obligation, conceptual framework, constrained optimization, Craig Reynolds: boids flock, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, data science, disintermediation, Edward Lorenz: Chaos theory, epigenetics, feminist movement, financial engineering, financial innovation, fixed income, Flash crash, geopolitical risk, Henri Poincaré, impact investing, information asymmetry, invisible hand, Isaac Newton, John Conway, John Meriwether, John von Neumann, Joseph Schumpeter, Long Term Capital Management, margin call, market clearing, market microstructure, money market fund, Paul Samuelson, Pierre-Simon Laplace, Piper Alpha, Ponzi scheme, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, Richard Feynman, risk/return, Robert Solow, Saturday Night Live, self-driving car, seminal paper, sovereign wealth fund, the map is not the territory, The Predators' Ball, the scientific method, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, tulip mania, Turing machine, Turing test, yield curve

The additional lending increased the size of the securities-lending program from $70 billion in August 2007 to its all-time high of $94 billion in October 2007. AIG repaid redeeming borrowers with the proceeds of the new securities-lending transactions, a situation one AIG executive likened to “a giant Ponzi scheme.” Over time, as borrowers suspected trouble, they demanded more collateral, to the point where AIG was paying borrowers more for the cash collateral than it received on its investment of that cash. 7. FCIC (2011), 269. 8. FCIC (2011), 244. 9. See FCIC (2011), 269. 10. IKB was also one of the victims of Goldman’s built-to-crash structured products, being an investor in Abacus 2007-AC1.


We Need New Stories: Challenging the Toxic Myths Behind Our Age of Discontent by Nesrine Malik

"World Economic Forum" Davos, affirmative action, Affordable Care Act / Obamacare, barriers to entry, Bernie Sanders, Black Lives Matter, Boris Johnson, Brexit referendum, British Empire, centre right, cognitive dissonance, continuation of politics by other means, currency peg, disinformation, Donald Trump, fake news, feminist movement, financial independence, Francis Fukuyama: the end of history, gender pay gap, gentrification, ghettoisation, glass ceiling, illegal immigration, invisible hand, Jeremy Corbyn, mass immigration, moral panic, Nate Silver, obamacare, old-boy network, opioid epidemic / opioid crisis, Overton Window, payday loans, planetary scale, Ponzi scheme, public intellectual, race to the bottom, Ronald Reagan, Saturday Night Live, sexual politics, Steve Bannon, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas L Friedman, transatlantic slave trade

If attention can be maintained on how you are better off than someone below you, it can be diverted from the fact that there is someone above you who is either exploiting you, or enjoying more unearned privileges than you. If attention can be maintained on how those below you are coming for your resources, then your eyes are fixed downwards, never upwards. By their very nature, hierarchies only have one small group at the top. Believing in a myth is sort of like taking part in a Ponzi scheme. You are constantly being told that your stake is accruing, sometimes you might even get a dividend, but ultimately only the scheme owners make any real money. There is no real value created, it eventually collapses, and the money winners abscond with the spoils. The negative effects of myths are only supposed to affect other people.


pages: 347 words: 91,318

Netflixed: The Epic Battle for America's Eyeballs by Gina Keating

activist fund / activist shareholder / activist investor, AOL-Time Warner, Apollo 13, barriers to entry, Bear Stearns, business intelligence, Carl Icahn, collaborative consumption, company town, corporate raider, digital rights, inventory management, Jeff Bezos, late fees, Mark Zuckerberg, McMansion, Menlo Park, Michael Milken, Netflix Prize, new economy, out of africa, performance metric, Ponzi scheme, pre–internet, price stability, recommendation engine, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Steve Jobs, subscription business, Superbowl ad, tech worker, telemarketer, warehouse automation, X Prize

Icahn’s initial instinct had been to short Blockbuster’s stock, thinking that it was sure to slowly bleed to death as video on demand and online businesses like Netflix came to dominate the movie rental market. But Michael Pachter, an analyst at the financial services firm then known as Wedbush Morgan (now Wedbush Securities), who viewed Netflix as a sort of rental Ponzi scheme, convinced Icahn that Blockbuster was a stock to hold. Its strong brand, huge network of stores, and healthy revenue, would lead it to either eventually buy Netflix or put it out of business by starting its own online rental service. Icahn quietly bought up shares for his own funds, and his interest in the stock spurred purchases from a number of hedge funds that followed the billionaire investor’s moves in hopes of benefiting from what was known on Wall Street as the Icahn effect—an immediate rise in any stock Icahn bought.


pages: 384 words: 93,754

Green Swans: The Coming Boom in Regenerative Capitalism by John Elkington

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, agricultural Revolution, Anthropocene, anti-fragile, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, Berlin Wall, bitcoin, Black Swan, blockchain, Boeing 737 MAX, Boeing 747, Buckminster Fuller, business cycle, Cambridge Analytica, carbon footprint, carbon tax, circular economy, Clayton Christensen, clean water, cloud computing, corporate governance, corporate social responsibility, correlation does not imply causation, creative destruction, CRISPR, crowdsourcing, David Attenborough, deglobalization, degrowth, discounted cash flows, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, drone strike, Elon Musk, en.wikipedia.org, energy transition, Extinction Rebellion, Future Shock, Gail Bradbrook, Geoffrey West, Santa Fe Institute, George Akerlof, global supply chain, Google X / Alphabet X, green new deal, green transition, Greta Thunberg, Hans Rosling, hype cycle, impact investing, intangible asset, Internet of things, invention of the wheel, invisible hand, Iridium satellite, Jeff Bezos, John Elkington, Jony Ive, Joseph Schumpeter, junk bonds, Kevin Kelly, Kickstarter, M-Pesa, Marc Benioff, Mark Zuckerberg, Martin Wolf, microplastics / micro fibres, more computing power than Apollo, move fast and break things, Naomi Klein, Nelson Mandela, new economy, Nikolai Kondratiev, ocean acidification, oil shale / tar sands, oil shock, opioid epidemic / opioid crisis, placebo effect, Planet Labs, planetary scale, plant based meat, plutocrats, Ponzi scheme, radical decentralization, Ralph Nader, reality distortion field, Recombinant DNA, Rubik’s Cube, Salesforce, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, smart cities, smart grid, sovereign wealth fund, space junk, Steven Pinker, Stewart Brand, supply-chain management, synthetic biology, systems thinking, The future is already here, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Tim Cook: Apple, urban planning, Whole Earth Catalog

And that doesn’t just mean how we vote in local and national elections: How many of us with pensions have bothered to check whether shareholder votes cast on our behalf at the annual general meetings of the companies we own reflect values we agree with?” Waygood concluded, “People are ignored unless they cost or spend money. The interests of future generations are literally discounted. The planet is regarded as a free resource and a limitless litter bin. In short, we have a giant Ponzi scheme for the planet—taking from the future in favor [of] some of those alive today. However, with over $300 trillion in the global capital market, capital markets have the potential to solve the [UN Sustainable Development Goals] many times over. We do not lack capital. We lack imagination, compassion, and equality of opportunity.


Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen

3Com Palm IPO, accelerated depreciation, accounting loophole / creative accounting, Airbus A320, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black-Scholes formula, Boeing 747, book value, break the buck, Brownian motion, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, capital controls, Carl Icahn, Carmen Reinhart, carried interest, collateralized debt obligation, compound rate of return, computerized trading, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cross-subsidies, currency risk, discounted cash flows, disintermediation, diversified portfolio, Dutch auction, equity premium, equity risk premium, eurozone crisis, fear index, financial engineering, financial innovation, financial intermediation, fixed income, frictionless, fudge factor, German hyperinflation, implied volatility, index fund, information asymmetry, intangible asset, interest rate swap, inventory management, Iridium satellite, James Webb Space Telescope, junk bonds, Kenneth Rogoff, Larry Ellison, law of one price, linear programming, Livingstone, I presume, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, market bubble, market friction, money market fund, moral hazard, Myron Scholes, new economy, Nick Leeson, Northern Rock, offshore financial centre, PalmPilot, Ponzi scheme, prediction markets, price discrimination, principal–agent problem, profit maximization, purchasing power parity, QR code, quantitative trading / quantitative finance, random walk, Real Time Gross Settlement, risk free rate, risk tolerance, risk/return, Robert Shiller, Scaled Composites, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, Skype, SpaceShipOne, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, systematic bias, Tax Reform Act of 1986, The Nature of the Firm, the payments system, the rule of 72, time value of money, too big to fail, transaction costs, University of East Anglia, urban renewal, VA Linux, value at risk, Vanguard fund, vertical integration, yield curve, zero-coupon bond, zero-sum game, Zipcar

It is only “when the tide goes out that you learn who’s been swimming naked.”8 The tide went out in 2008 and a number of frauds were exposed. One notorious example was the Ponzi scheme run by the New York financier Bernard Madoff.9 Individuals and institutions put about $65 billion in the scheme before it collapsed in 2008. (It’s not clear what Madoff did with all this money, but much of it was apparently paid out to early investors in the scheme to create an impression of superior investment performance.) With hindsight, the investors should not have trusted Madoff or the financial advisers who steered money to Madoff. Madoff’s Ponzi scheme was (we hope) a once-in-a-lifetime event.10 It was astonishingly unethical, illegal, and bound to end in tears.

., 857 Administrative costs in leasing, 641 in pooling risks, 663 Adverse selection risk, 663 Agency costs, 12 Agency for International Development, 794n Agency problem, 295–314, 862–863, 882–883 agents versus principals, 12 compensation plans, 295–314 costs, 12, 298–300, 462–464, 623 monitoring, 298–300 Ponzi schemes, 11–12 reducing agency costs, 623 risk management and, 660, 661–662 risk taking and, 297–298 subprime mortgage crisis, 297–298, 300–301, 335–336, 366–367, 588–589, 886, 888, 889 transparency and, 875–876 Agency theory, 862–863 Agent, 12 Aggarwal, R. K., 314, 845n Aghion, P., 854n Agrawal, A., 826n Agrawal, D., 594n Aguirreamalloa, J., 184 AIG, 51, 366, 512, 589 Airbus, 573–575 Air France-KLM, 298 Aivasian, V., 470n Alcoa, 387, 727 Allayanis, G., 713 Allen, Franklin, 336n, 369, 421, 443, 765, 860n, 874n, 875n, 878, 883, 885n, 889n Allen, J., 857 Allen, L., 603 Allied Crude Vegetable Oil Refining Corporation, 627 Allied Irish Bank, 367 Allman-Ward, M., 799 Allocated overhead, in net present value analysis, 135 All-or-none underwriting, 379n Alpha, 325 Alpine bonds, 616 Alternative minimum tax (AMT), 141–142, 642 Altinkilic, O., 387n Altman, Edward I., 458n, 598n, 603, 839n, 857 Amazon, 401, 778–779 American Airlines (AMR), 358, 588, 594–595, 641–642, 851 American Greetings, 387 American International Group (AIG), 51, 366, 512, 589 American Jobs Creation Act (JOBS) of 2004, 652n American options, 513, 520n, 539n, 552–554 American Stores, 65 Amortization, 31, 734n AMR (American Airlines), 358, 588, 594–595, 641–642, 851 Amran, M., 579, 580 AMT (alternative minimum tax), 141–142, 642 Anders, C., 838n Andrade, G., 458, 458n, 820, 820n, 827, 827n, 829, 830 Angel investors, 373 Anglo-Irish Bank, 845n Anglo-Saxon financial system, 721, 827, 860–864, 869 Annual coupon, 46–47 Annual percentage rate (APR), 35–38 Annually compounded rate, 46–47 Annuities, 27–34.

., 750n, 751, 751n, 799 Plains All American Pipeline LP, 355 Playing for time game, in financial distress, 462 P&O, 821 Poison pill defense, 824–826 Poison-put clauses, 614 Poison put defense, 826 Political risk, 710–712 guaranteeing loans against, 712 scores for sample of countries, 711 Ponzi, Charles, 11n Ponzi schemes, 11n, 11–12, 12n Pooling risks, 365, 662–664 Porsche, 334–335 Porter, Michael E., 279, 279n, 288, 874n Portfolio insurance, 550 Portfolio risk, 160–184 beta and, 178–182, 198–204 calculating, 175–178, 181–182 diversification and, 171–174, 182 historic performance of capital markets and, 160–167 individual securities and, 178–182 measuring, 167–174 relationship to return, 197–200 standard deviation in, 167–170, 171, 181–182 variance in, 167–170, 171–174 Portfolio theory, 190–209 birth of, 190–197 borrowing and lending in, 195–197 developing portfolios, 191–195 efficient portfolios in, 195–197, 199 standard deviation and, 190–191, 193n, 196n variance and, 193n Portfolio variance, 167–170, 171–174 Position diagrams, 514–515, 516–517 Postaudits, in capital budgeting process, 247–248 Postbank, 844 Poterba, J.


pages: 1,088 words: 228,743

Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Black Swan, Bob Litterman, bond market vigilante , book value, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, capital controls, carbon credits, Carmen Reinhart, central bank independence, classic study, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, deal flow, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, G4S, George Akerlof, global macro, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, inverted yield curve, invisible hand, John Bogle, junk bonds, Kenneth Rogoff, laissez-faire capitalism, law of one price, London Interbank Offered Rate, Long Term Capital Management, loss aversion, low interest rates, managed futures, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, pension time bomb, performance metric, Phillips curve, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, savings glut, search costs, selection bias, seminal paper, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, stock buybacks, stocks for the long run, survivorship bias, systematic trading, tail risk, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

In the late 1990s, the Internet boom was the most important factor, but other important factors included improving macro-fundamentals (lower inflation and real yields) and the tendency of middle-aged baby-boomers, with high savings rates, to allocate much of their buying to the stock market. 2. Amplification mechanisms. What gets the bubble to propagate? Shiller calls feedback patterns “natural Ponzi schemes” that are the essence of a bubble. Rising prices and the success of some investors attract public attention and heighten expectations for further price rises, raising investor demand. (The high prices are ultimately not sustainable because they are high only because of expectations of further price increases, so the bubble eventually bursts.)

Here I just make some observations:• Higher moment tradeoffs include peso problems and the greater likelihood, with asymmetric payoff strategies, that the historical track record is biased—overstating returns and understating risks when the rare bad event has not yet materialized in the sample. • The combination of (apparent) high returns and low volatility is often indicative of hidden blowup risks. Low volatility may be achieved by questionable or fraudulent return smoothing (Bernie Madoff’s Ponzi scheme did not offer fantastically high returns but the returns were suspiciously consistent), by holding illiquid assets which are rarely if ever marked to market, or by selling various forms of tail risk insurance. • Even at the asset class level, low volatility in good times may conceal growing imbalances, excessive leverage, stretched market valuations, and vulnerability to regime change.


The Art of Scalability: Scalable Web Architecture, Processes, and Organizations for the Modern Enterprise by Martin L. Abbott, Michael T. Fisher

always be closing, anti-pattern, barriers to entry, Bernie Madoff, business climate, business continuity plan, business intelligence, business logic, business process, call centre, cloud computing, combinatorial explosion, commoditize, Computer Numeric Control, conceptual framework, database schema, discounted cash flows, Dunning–Kruger effect, en.wikipedia.org, fault tolerance, finite state, friendly fire, functional programming, hiring and firing, Infrastructure as a Service, inventory management, machine readable, new economy, OSI model, packet switching, performance metric, platform as a service, Ponzi scheme, power law, RFC: Request For Comment, risk tolerance, Rubik’s Cube, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, six sigma, software as a service, the scientific method, transaction costs, Vilfredo Pareto, web application, Y2K

We’re not sure how issues like Tyco or Enron ultimately start. Nor are we certain how a Ponzi scheme as large as Bernie Madoff’s, which destroyed billions of dollars of wealth, can possibly exist for so many years. We do know, however, that they could have been stopped long before the problems grew to legendary sizes and that each of these events destroyed the size and scale of the companies in question along with a great deal of shareholder value We don’t believe that people start out plotting billion dollar Ponzi schemes and we don’t believe that people start off by misstating tens or hundreds of millions of dollars of revenue or embezzling tens of millions of dollars of money from a company.


pages: 314 words: 101,452

Liar's Poker by Michael Lewis

barriers to entry, Bear Stearns, Bonfire of the Vanities, business cycle, Carl Icahn, cognitive dissonance, corporate governance, corporate raider, disinformation, financial independence, financial innovation, fixed income, Glass-Steagall Act, Home mortgage interest deduction, interest rate swap, Irwin Jacobs, John Meriwether, junk bonds, London Interbank Offered Rate, low interest rates, margin call, Michael Milken, mortgage tax deduction, nuclear winter, Ponzi scheme, risk free rate, The Predators' Ball, yield curve

A managing director won points when he spirited away a popular trainee from other managing directors. The approach of many a trainee, therefore, was to create the illusion of desirability. Then bosses wanted him not for any sound reason but simply because other bosses wanted him. The end result was a sort of Ponzi scheme of personal popularity that had its parallels in the markets. To build it required a great deal of self-confidence and faith in the gullibility of others; this was my chosen solution to the job problem. A few weeks into the training program I made a friend on the trading floor, though not in the area in which 1 wanted to work.


pages: 319 words: 103,707

Against Everything: Essays by Mark Greif

1960s counterculture, back-to-the-land, Bernie Madoff, Black Lives Matter, bread and circuses, citizen journalism, collateralized debt obligation, crack epidemic, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, Desert Island Discs, Donald Trump, fixed-gear, income inequality, informal economy, Joan Didion, managed futures, Norman Mailer, Ponzi scheme, postindustrial economy, Ronald Reagan, technoutopianism, telemarketer, trickle-down economics, upwardly mobile, white flight

“I would like him to be in a solitary cell,” Wiesel said, “with only a screen, and on that screen for at least five years of his life, every day and every night, there should be pictures of his victims, one after the other after the other, all the time a voice saying, ‘Look what you have done to this old lady, look what you have done to that child, look what you have done,’ nothing else.” Madoff had run a Ponzi scheme, which was at least easy to explain: a little money from later investors is paid to early investors to mimic great returns, the rest goes to the swindler himself, and nothing need really be “invested.” This felt as if it helped make sense of the meltdown. The problem was that it had nothing to do with the meltdown.


pages: 337 words: 103,273

The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World by Paul Gilding

"World Economic Forum" Davos, airport security, Alan Greenspan, Albert Einstein, biodiversity loss, Bob Geldof, BRICs, carbon credits, carbon footprint, carbon tax, clean tech, clean water, Climategate, commoditize, corporate social responsibility, creative destruction, data science, decarbonisation, energy security, Exxon Valdez, failed state, fear of failure, geopolitical risk, income inequality, Intergovernmental Panel on Climate Change (IPCC), John Elkington, Joseph Schumpeter, market fundamentalism, mass immigration, Medieval Warm Period, Naomi Klein, negative emissions, Nelson Mandela, new economy, nuclear winter, Ocado, ocean acidification, oil shock, peak oil, Ponzi scheme, precautionary principle, purchasing power parity, retail therapy, Ronald Reagan, shareholder value, systems thinking, The Spirit Level, The Wealth of Nations by Adam Smith, union organizing, University of East Anglia, warehouse automation

In the absence of a monthly statement from the bank, these conclusions are the closest thing we have to a planetary income balance sheet. Their conclusion is we are trading insolvently. As Joe Romm of ClimateProgress.com has observed, what this means is that the global economy is basically a giant Ponzi scheme. We are using our capital to pay out income to the investors (us), and then one day the capital will run out and the scheme will suddenly fall over. The question in this comparison becomes, how long do we have? Is it possible to cut back our spending enough to prevent the capital from running out?


pages: 342 words: 99,390

The greatest trade ever: the behind-the-scenes story of how John Paulson defied Wall Street and made financial history by Gregory Zuckerman

1960s counterculture, Alan Greenspan, banking crisis, Bear Stearns, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, financial engineering, financial innovation, fixed income, index fund, Isaac Newton, Jim Simons, junk bonds, Larry Ellison, Long Term Capital Management, low interest rates, margin call, Mark Zuckerberg, Menlo Park, merger arbitrage, Michael Milken, mortgage debt, mortgage tax deduction, Ponzi scheme, Renaissance Technologies, rent control, Robert Shiller, rolodex, short selling, Silicon Valley, statistical arbitrage, Steve Ballmer, Steve Wozniak, technology bubble, zero-sum game

In 2004, Bret Grebow, a twenty-eight-year-old fund manager, bought a new $160,000 Lamborghini Gallardo as a treat and regularly traveled with his girlfriend between his New York office and a home in Highland Beach, Florida, on a private jet, paying as much as $10,000 for the three-hour flight. “"It’'s fantastic,”" Mr. Grebow said at the time, on the heels of a year of 40 percent gains. “"They’'ve got my favorite cereal, Cookie Crisp, waiting for me, and Jack Daniel’'s on ice.5 (Grebow eventually pled guilty to defrauding investors of more than $7 million while helping to operate a Ponzi scheme that bilked clients without actually trading on their behalf.) A 2006 survey of almost three hundred hedge-fund professionals found they on average had spent $376,000 on jewelry, $271,000 on watches, and $124,000 on “"traditional”" spa services over the previous twelve months. The term traditional was used to distinguish between full-body massages, mud baths, seaweed wraps and the like, and more exotic treatments.


pages: 346 words: 102,625

Early Retirement Extreme by Jacob Lund Fisker

8-hour work day, active transport: walking or cycling, barriers to entry, book value, buy and hold, caloric restriction, caloric restriction, clean water, Community Supported Agriculture, delayed gratification, discounted cash flows, diversification, dogs of the Dow, don't be evil, dumpster diving, Easter island, fake it until you make it, financial engineering, financial independence, game design, index fund, invention of the steam engine, inventory management, junk bonds, lateral thinking, lifestyle creep, loose coupling, low interest rates, market bubble, McMansion, passive income, peak oil, place-making, planned obsolescence, Plato's cave, Ponzi scheme, power law, psychological pricing, retail therapy, risk free rate, sunk-cost fallacy, systems thinking, tacit knowledge, the scientific method, time value of money, Tragedy of the Commons, transaction costs, wage slave, working poor

Buy and hold is an investment strategy with no exit strategy. What this typically means is that stocks are usually liquidated when money is needed, rather than taking into account when a given stock is overvalued. The aggregate effect of workers investing in this manner is to turn the stock market into an elaborate demographical Ponzi scheme, where the value of investments depends on how many people are retiring and how many people are entering the labor market. In particular, it depends on the level of confidence that the most recent entrant has in the system, and hence this becomes a policy matter. Diversification doesn't prevent the effects of something as systemic as this.


pages: 344 words: 96,020

Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success by Sean Ellis, Morgan Brown

Airbnb, Amazon Web Services, barriers to entry, behavioural economics, Ben Horowitz, bounce rate, business intelligence, business process, content marketing, correlation does not imply causation, crowdsourcing, dark pattern, data science, DevOps, disruptive innovation, Elon Musk, game design, gamification, Google Glasses, growth hacking, Internet of things, inventory management, iterative process, Jeff Bezos, Khan Academy, Kickstarter, Lean Startup, Lyft, Mark Zuckerberg, market design, minimum viable product, multi-armed bandit, Network effects, Paul Graham, Peter Thiel, Ponzi scheme, recommendation engine, ride hailing / ride sharing, Salesforce, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, Snapchat, software as a service, Steve Jobs, Steve Jurvetson, subscription business, TED Talk, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, working poor, Y Combinator, young professional

Pretty soon, the tidal wave of new users turned—turned, that is, into an equally rapid deluge of users leaving. At one point, the app was losing more than 4 percent of its monthly active users every day, prompting ERE Media, a recruiting intelligence publication, to describe the app as nothing more than a digital Ponzi scheme.6 BranchOut’s founder, Rick Marini, conceded in a 2012 talk that the company had erred in trying to rush user acquisition without delivering on the product experience. “Often people think there’s a silver bullet to getting traffic and going viral,” he said. “What we’ve learned is that there are times when you can get some spike of virality, but if you really want that long-term major user growth it’s got to start with a good product.


pages: 305 words: 101,743

Trick Mirror: Reflections on Self-Delusion by Jia Tolentino

4chan, Affordable Care Act / Obamacare, Airbnb, Alexander Shulgin, big-box store, Black Lives Matter, cloud computing, Comet Ping Pong, crowdsourcing, Donald Trump, financial independence, game design, Jeff Bezos, Jon Ronson, Kickstarter, knowledge worker, late capitalism, Lyft, Mark Zuckerberg, Mason jar, Norman Mailer, obamacare, pattern recognition, Peter Thiel, Ponzi scheme, prosperity theology / prosperity gospel / gospel of success, public intellectual, QR code, rent control, Saturday Night Live, selective serotonin reuptake inhibitor (SSRI), Sheryl Sandberg, Silicon Valley, Snapchat, Steve Bannon, Steve Jobs, TED Talk, TikTok, uber lyft, upwardly mobile, wage slave, white picket fence

McFarland moved Magnises to the penthouse of the Hotel on Rivington on the Lower East Side. By that point, the company had raised at least $3 million in venture capital, but its customers were getting frustrated. “If you change a couple of words you can define Magnises in a very similar fashion to how one would define a Ponzi scheme,” reads one Yelp review of the Magnises Townhouse from 2016. Another: “I implore you to avoid doing business with this company on any level and am completely embarrassed to have been swindled by this myself.” Magnises chugged along in public, but in private, it was collapsing. McFarland boasted that there were 100,000 members; in reality, fewer than 5,000 people had signed up.


pages: 372 words: 101,678

Lessons from the Titans: What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success by Scott Davis, Carter Copeland, Rob Wertheimer

3D printing, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, airport security, asset light, barriers to entry, Big Tech, Boeing 747, business cycle, business process, clean water, commoditize, coronavirus, corporate governance, COVID-19, data science, disruptive innovation, Elisha Otis, Elon Musk, factory automation, fail fast, financial engineering, Ford Model T, global pandemic, hydraulic fracturing, Internet of things, iterative process, junk bonds, Kaizen: continuous improvement, Kanban, low cost airline, Marc Andreessen, Mary Meeker, megacity, Michael Milken, Network effects, new economy, Ponzi scheme, profit maximization, random walk, RFID, ride hailing / ride sharing, risk tolerance, Salesforce, shareholder value, Silicon Valley, six sigma, skunkworks, software is eating the world, strikebreaker, tech billionaire, TED Talk, Toyota Production System, Uber for X, value engineering, warehouse automation, WeWork, winner-take-all economy

WHY DON’T WE SEE THIS LEVEL OF SUCCESS ELSEWHERE? I’ve had several conversations about TransDigm with an aerospace industry executive at another parts company. He often asks me, “Why do you like those TransDigm guys so much?” before criticizing the company’s model as too aggressive on price and built solely on acquisitions—a Ponzi scheme waiting to unravel. I concede to him that while the company is not alone in its pricing posture, it does sit at the higher end of the peer group for the reasons noted previously. I also emphatically point out that this is just a fraction of its success story. This executive manages his company differently from the way TransDigm is managed in several respects, not just pricing.


pages: 357 words: 99,456

Hate Inc.: Why Today’s Media Makes Us Despise One Another by Matt Taibbi

4chan, affirmative action, anti-communist, Berlin Wall, Bernie Sanders, Chelsea Manning, commoditize, crack epidemic, David Brooks, disinformation, Donald Trump, drone strike, failed state, fake news, Fall of the Berlin Wall, false flag, financial deregulation, Francis Fukuyama: the end of history, Glass-Steagall Act, Gordon Gekko, greed is good, green new deal, Howard Zinn, illegal immigration, immigration reform, interest rate swap, Julian Assange, Kickstarter, Marshall McLuhan, microdosing, moral panic, Nate Silver, no-fly zone, Parents Music Resource Center, Peter Thiel, pink-collar, Ponzi scheme, pre–internet, profit motive, quantitative easing, Ralph Nader, rent-seeking, rolodex, Ronald Reagan, Rubik’s Cube, Saturday Night Live, Seymour Hersh, Silicon Valley, social contagion, Stephen Hawking, Steve Bannon, Steven Pinker, Tipper Gore, traveling salesman, unpaid internship, WikiLeaks, working poor, Y2K

Over a period of years, reporters and pundits were asked to accept a whole range of ideas and concepts, many absurd: that the war would be over in months, that we’d be greeted with flowers as liberators, that sectarian conflict was unlikely because differences between Shia and Sunni Muslims were exaggerated or nonexistent, and so on. Evidence was always over the next hill. It was a pioneering effort in a kind of journalistic Ponzi scheme, in which news organizations justified banner headlines in the present by writing checks against a balance of future revelations. There’s an obvious current parallel with #Russiagate, whose early headlines were driven similarly by unnamed sources promising an ascending schedule of future bombshells.


pages: 320 words: 95,629

Decoding the World: A Roadmap for the Questioner by Po Bronson

23andMe, 3D printing, 4chan, Abraham Maslow, Affordable Care Act / Obamacare, altcoin, Apple's 1984 Super Bowl advert, Asilomar, autonomous vehicles, basic income, Big Tech, bitcoin, blockchain, Burning Man, call centre, carbon credits, carbon tax, cognitive bias, cognitive dissonance, coronavirus, COVID-19, CRISPR, cryptocurrency, decarbonisation, deep learning, deepfake, DeepMind, dematerialisation, Donald Trump, driverless car, dumpster diving, edge city, Ethereum, ethereum blockchain, Eyjafjallajökull, factory automation, fake news, financial independence, Google X / Alphabet X, green new deal, income inequality, industrial robot, Isaac Newton, Jeff Bezos, Kevin Kelly, Kickstarter, Mars Rover, mass immigration, McMansion, means of production, microbiome, microplastics / micro fibres, oil shale / tar sands, opioid epidemic / opioid crisis, Paul Graham, paypal mafia, phenotype, Ponzi scheme, power law, quantum entanglement, Ronald Reagan, Sand Hill Road, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, smart contracts, source of truth, stem cell, Steve Jobs, Steve Jurvetson, sustainable-tourism, synthetic biology, Tesla Model S, too big to fail, trade route, universal basic income, Watson beat the top human players on Jeopardy!, women in the workforce

Every year, the government prints more dollars, diluting every dollar out there by that much. In whale culture, the ultimate honor is holding on for the time Bitcoin’s scarcity drives its value through the roof. They call the ability to hold on forever “diamond hands.” Explain to me why it’s not just a Ponzi scheme—why its value isn’t solely driven by its hype and scarcity. So let’s contemplate a version of the future where Bitcoin replaces gold as extranational value—where enough investors agree that because of its true scarcity, it’s better at playing the role of gold than gold itself. Gold is a pretty nifty metal, but its monetary value far exceeds its inherent merits.


pages: 347 words: 103,518

The Stolen Year by Anya Kamenetz

"Hurricane Katrina" Superdome, 2021 United States Capitol attack, Anthropocene, basic income, Black Lives Matter, contact tracing, coronavirus, COVID-19, crowdsourcing, Day of the Dead, desegregation, disinformation, Donald Trump, East Village, emotional labour, ending welfare as we know it, epigenetics, food desert, George Floyd, glass ceiling, global pandemic, helicopter parent, informal economy, inventory management, invisible hand, Kintsugi, labor-force participation, lockdown, Mark Zuckerberg, Maui Hawaii, medical residency, Minecraft, moral panic, opioid epidemic / opioid crisis, Ponzi scheme, QAnon, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, rent stabilization, risk tolerance, school choice, Sheryl Sandberg, Silicon Valley, social distancing, Thorstein Veblen, TikTok, traveling salesman, trickle-down economics, universal basic income, upwardly mobile, wages for housework, War on Poverty, white flight, women in the workforce, working poor, Works Progress Administration

As journalist Lauren Sandler describes in her 2020 book This Is All I Got, which follows a single mother’s quest for survival in and out of shelters and affordable housing in New York City, welfare reform often means in practice that you drop off your child at the home of another woman living at the edge of poverty, just so you can sit all day in a job center waiting for work that never comes. Or as Katherine Boo, writing for the New Yorker two decades earlier, in 2001, famously put it, “It is possible to see welfare reform as a Ponzi scheme whose currency is children.” ARE YOU “THE MAN”? The lack of solidarity can be uncomfortably personal. Mothers who gain economic power increasingly outsource our household labor. Higher pay means you can order takeout and hire cleaners and babysitters. Most of the time this means hiring other women, especially women of color and immigrants, who earn less than you do.


pages: 335 words: 100,154

Freezing Order: A True Story of Money Laundering, Murder, and Surviving Vladimir Putin's Wrath by Bill Browder

"World Economic Forum" Davos, 3D printing, activist lawyer, Bellingcat, Berlin Wall, Bernie Madoff, bitcoin, Boris Johnson, Clive Stafford Smith, crowdsourcing, disinformation, Donald Trump, estate planning, fake news, MITM: man-in-the-middle, Nelson Mandela, Ponzi scheme, power law, Robert Bork, Ronald Reagan, Seymour Hersh, Silicon Valley, Skype, Steve Bannon

“Harder to walk across a field of snow with two hundred and thirty million dollars and not leave a footprint.” His approach was shrewd. If we could find out who had received the money, we’d have leverage to get Sergei out of jail. But then, on December 11, Bernie Madoff was charged in New York with running the world’s largest Ponzi scheme, defrauding investors in his hedge fund of an astonishing $64.8 billion. Why mention Madoff here? Because this scandal was oddly connected to our story. It was right around this time that John Moscow became almost impossible to reach. I would call him, and sometimes it would take weeks for him to respond.


pages: 289 words: 95,046

Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis by Scott Patterson

"World Economic Forum" Davos, 2021 United States Capitol attack, 4chan, Alan Greenspan, Albert Einstein, asset allocation, backtesting, Bear Stearns, beat the dealer, behavioural economics, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, bitcoin, Bitcoin "FTX", Black Lives Matter, Black Monday: stock market crash in 1987, Black Swan, Black Swan Protection Protocol, Black-Scholes formula, blockchain, Bob Litterman, Boris Johnson, Brownian motion, butterfly effect, carbon footprint, carbon tax, Carl Icahn, centre right, clean tech, clean water, collapse of Lehman Brothers, Colonization of Mars, commodity super cycle, complexity theory, contact tracing, coronavirus, correlation does not imply causation, COVID-19, Credit Default Swap, cryptocurrency, Daniel Kahneman / Amos Tversky, decarbonisation, disinformation, diversification, Donald Trump, Doomsday Clock, Edward Lloyd's coffeehouse, effective altruism, Elliott wave, Elon Musk, energy transition, Eugene Fama: efficient market hypothesis, Extinction Rebellion, fear index, financial engineering, fixed income, Flash crash, Gail Bradbrook, George Floyd, global pandemic, global supply chain, Gordon Gekko, Greenspan put, Greta Thunberg, hindsight bias, index fund, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, Jeffrey Epstein, Joan Didion, John von Neumann, junk bonds, Just-in-time delivery, lockdown, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, Mark Spitznagel, Mark Zuckerberg, market fundamentalism, mass immigration, megacity, Mikhail Gorbachev, Mohammed Bouazizi, money market fund, moral hazard, Murray Gell-Mann, Nick Bostrom, off-the-grid, panic early, Pershing Square Capital Management, Peter Singer: altruism, Ponzi scheme, power law, precautionary principle, prediction markets, proprietary trading, public intellectual, QAnon, quantitative easing, quantitative hedge fund, quantitative trading / quantitative finance, Ralph Nader, Ralph Nelson Elliott, random walk, Renaissance Technologies, rewilding, Richard Thaler, risk/return, road to serfdom, Ronald Reagan, Ronald Reagan: Tear down this wall, Rory Sutherland, Rupert Read, Sam Bankman-Fried, Silicon Valley, six sigma, smart contracts, social distancing, sovereign wealth fund, statistical arbitrage, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, systematic trading, tail risk, technoutopianism, The Chicago School, The Great Moderation, the scientific method, too big to fail, transaction costs, University of East Anglia, value at risk, Vanguard fund, We are as Gods, Whole Earth Catalog

Then they’d show him Madoff’s performance—the uncanny 15 or 20 percent returns per month, every month, year after year. Taleb tried to replicate a strategy on his computer that would provide such unearthly gains. He couldn’t. “Those returns are impossible,” he’d tell them. “You’re just jealous,” they’d snap back. The returns, of course, were fictional. Madoff was running the largest Ponzi scheme in history, and in 2009 he went to prison, where he spent the rest of his life. Taleb and Spitznagel continued to tinker with their strategy, but Taleb was steadily losing interest. The sprawling feature article by Malcom Gladwell in the New Yorker about Taleb and Empirica, called “Blowing Up: How Nassim Taleb Turned the Inevitability of Disaster into an Investment Strategy,” ignited a burst of interest in the fund—and nursed Taleb’s bruised ego.


pages: 318 words: 99,524

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis by Kevin Rodgers

Alan Greenspan, algorithmic trading, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black-Scholes formula, buy and hold, buy low sell high, call centre, capital asset pricing model, collapse of Lehman Brothers, Credit Default Swap, currency peg, currency risk, diversification, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, fixed income, Flash crash, Francis Fukuyama: the end of history, Glass-Steagall Act, Hyman Minsky, implied volatility, index fund, interest rate derivative, interest rate swap, invisible hand, John Meriwether, latency arbitrage, law of one price, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, Minsky moment, money market fund, Myron Scholes, Northern Rock, Panopticon Jeremy Bentham, Ponzi scheme, prisoner's dilemma, proprietary trading, quantitative easing, race to the bottom, risk tolerance, risk-adjusted returns, Silicon Valley, systems thinking, technology bubble, The Myth of the Rational Market, The Wisdom of Crowds, Tobin tax, too big to fail, value at risk, vertical integration, Y2K, zero-coupon bond, zero-sum game

(Frankie Valli and the Four Seasons), 3–5, 9 oil, 139, 148, 149–50, 220 Oktoberfest, 144–5 one-stop shop, 145, 160, 168, 230 online banking, 233–4 OPTICS, 101, 103, 131, 153, 170 option-based recapitalisation charge (OBRC), 217–18 options, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 91–114, 121, 128, 134, 137, 140, 141, 149, 150, 218, 222–3 Asian options, 106 barrier products, 104, 107, 108 carry trade, 108–10 commoditisation, 110–11 delta hedging, 97 double knockouts, 107 exotics, 105–11, 127 foreign exchange, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 95–114, 222–3 gamma, 97–8, 100 Greeks, 98, 99, 101, 105, 107, 110, 111, 112, 114, 127, 129, 150, 157, 158, 182, 219 lattice methods, 112 lookbacks, 107 over-the-counter (OTC) market, 96, 209 power options, 107 pricing of, 91–5, 107, 111–14, 128, 133, 150 range trades, 107, 108 rho, 98 risk-weighted assets (RWA), 124–31, 134, 166, 211 spoofing, 99, 192–3 strike price, 94, 95, 104, 113, 218 theta, 98, 140 time decay, 98 tree approach, 112–14 vega, 98 volatility, 94, 98, 128–9 Organisation for Economic Co-operation and Development (OECD), 124–5, 139, 207 over-the-counter (OTC) market, 96, 209 P Panopticon, 199 Patton, George Smith, 84 pay, 43, 161–3, 210, 216 PayPal, 233 peer-to-peer, 234 pension funds, 9, 61, 76, 96 Philippines, 137 ‘pipes’, 71, 72 ‘pips’, 13, 18, 41, 65, 73, 77 Piranha, 48 Pittsburgh, Pennsylvania, 209 Plankton Strategy, 38, 40, 55, 58 Poland, 117, 167 Ponzi schemes, 205–6 Portugal, 173 power options, 107 Prebon Yamane, 28 Precision Pricing, 65 prime brokerage (PB), 61–3, 66, 120, 209 principal model, 7–8 principles-based regulation (PBR), 201–2 Prisoners’ Dilemma, 84, 186, 197, 201 Procter and Gamble, 109, 136, 155 production credits, 49, 50 proprietary trading, 22, 31, 39, 46–7, 125 Prosper, 234 Pushkin, Alexander, 30 Q quadratic equations, 105–6 quantitative analysis, xiv, 100–1, 103–8, 110–14, 126, 150, 158 quantitative easing, 82 R Rand, Ayn, 202 range trades, 107 ratings agencies, 155–8, 208, 219 rational markets, 202–6 recapitalisation, 217 recovery value, 151, 157, 160 regulation, 73, 80, 131, 148, 152, 168, 174, 180, 186–7, 191–6, 198–9, 200–18, 229, 231, 232 BaFin, 200, 202 bank tax, 216 Basel Accords, 124, 125, 130, 166, 207–9, 211, 217, 231 Big Bang (1986), 201 Central Counterparties (CCPs), 209, 213–15, 229 Commodity Futures Trading Commission (CFTC), 202 computers, 209, 213 ‘cops on the beat’, 215 Dodd–Frank Act (2010), 209, 230 European Banking Authority (EBA), 211–12 Financial Services (Banking Reform) Act (2013), 210 Financial Stability Board (FSB), 212, 214, 216 Glass–Steagall Act (1933), 168, 201, 230 Gramm–Leach–Bliley Act (1999), 168, 201 option-based recapitalisation charge (OBRC), 217–18 principles-based regulation (PBR), 201–2 rational markets, 6, 202–6 Riegle–Neal Act (1994), 168 shadow banking, 214–15 surveillance, 110, 190, 195–9 trade repositories, 209–10 relative value trades, 72–3 repo markets, 171 request for quote (RFQ), 50, 51 retail banking, 169, 229–30, 233 retail FX, retail aggregators, 21, 61, 66, 74, 75, 79, 82–3 Reuters, 9, 22–3, 188 Reuters Dealing machines, 23, 25–8, 31, 32, 50, 59, 73 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 rho, 98 Riegle–Neal Act (1994), 168 risk, risk management, 15, 16, 19, 20–1, 24, 29, 31, 38–9, 40, 44–5, 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 77, 79, 99, 101–8, 110–14, 121–31, 135–6, 139, 142, 144, 150, 152, 157–63, 166– 7, 169–70, 172, 174, 200–1, 206–7, 209, 213, 219, 221, 224–7, 233 agency-like approach, 119, 127 Automated Risk Manager (ARM), 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 79, 101, 129, 169 BTAnalytics, 107, 108, 112, 134, 150 collateralised debt obligations (CDOs), 154, 156, 158–63 complex risk, 159 concentration, 213 counterparty credit risk, 141–2, 172, 201, 202–3, 209 credit default swaps (CDSs), 151–3, 157, 158, 164, 225 credit risk, 7, 8, 62–3, 123, 125–6, 130, 141, 151, 209 DBAnalytics, 150, 153 foreign exchange, 15, 16, 19, 20–1, 24, 29, 31, 38, 39, 40, 44–5, 49, 51, 53, 62, 77, 192 market risk, 7, 62, 123, 126, 130, 167 model dopes, 221–2 OPTICS, 101, 103, 131, 153, 170 perception gap, 220, 224 quantitative analysis, xiv, 100–1, 103–8, 110–14, 126, 150, 158 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 risk-adjusted return on capital (RAROC), 126–7, 131, 144, 219 risk-weighted assets (RWA), 124–31, 134, 166, 208, 211 shares, 92 Spreadsheet Solutions Framework (SSF), 111, 121, 138, 153 value at risk (VaR), 127–31, 135–6, 139, 142, 157, 158, 169, 170, 172, 174, 204, 207, 219, 226, 227 RiskMetrics, 131 rogue systems, 79–80 Rolling Stones, 87, 89, 151, 171, 172 Royal Bank of Scotland (RBS), 48, 217, 233 ‘Rule 575 – Disruptive Practices Prohibited’, 193 Russia, 30, 33, 38, 76, 114–32, 137–42, 146, 148, 150, 151, 152, 163, 172, 175, 199, 202, 204, 207, 221, 224, 228 Financial Crisis (1998), xi–xii, 29, 114, 115–16, 118–22, 124, 137–43, 146, 163, 172, 175, 202, 207, 221, 224, 228 rouble, 115–16, 118–22, 131, 137, 138, 139 rouble-denominated bonds (GKOs), 118–32, 134, 138–43, 149, 152, 158, 159, 173 S sales-traders, 50, 78 salespeople, 8–9, 11, 13–15, 20, 24, 28, 29, 33, 35, 37, 46, 47–52, 68, 96, 120 Salomon Brothers, 122, 133–4 Sanford, Charlie, 35, 126 Sarao, Navinder Singh, 193 Scholes, Myron, 94–5, 97 screen scraping, 32–3, 50, 59 Securities and Exchange Commission, 215 securities, 91, 145, 155 September 11 attacks (2001), 52, 146, 147 settlements, 5, 24, 40, 44, 51, 61, 101, 209 shadow banking, 214–15 shareholders, 25, 35, 47, 73, 84, 90, 124, 169, 172, 205 shares, 50, 60, 91, 113, 128, 212, 217 forward trades, 91–4, 133, 152 recapitalisation, 217 tree approach, 113 volatility, 94, 128–9 short-dated deposits, 8 Silicon Valley, 234 Singapore, 37, 137, 211 skewed prices, 18, 19, 73, 96, 98 slippage, 188–9 smartphones, 233 Soros, George, 24 South Africa, xvi Soviet Union (1922–91), 22, 64, 199, 204 Spain 87–9, 151, 159, 171, 172 ‘special purpose vehicle’, 154 spoofing, 99, 192–3 spot, 3–28, 33–4, 42–4, 46, 48–55, 67, 76, 77, 91, 96, 97, 98–9, 108, 111, 118, 122, 159, 165, 169, 188, 189, 199, 201, 222 automation, 23–8, 31–3, 42, 48–55, 56–84, 111, 199, 201 brokers, 3–28, 33, 43, 63, 192 traders, 3–31, 33, 35, 38, 41, 43, 46, 50, 52–4, 67–8, 73, 76, 78, 96, 99, 122, 189 voice traders, 54, 67, 76, 122 spread, 12, 14–15, 16, 18, 19, 31, 41–2, 44, 45, 53, 55, 61, 64, 68, 69, 75, 80, 96, 225 spread crossing, 18, 19 Spreadsheet Solutions Framework (SSF), 111, 121, 138, 153 spreadsheets, 33, 38, 40, 107, 111, 219 Standard and Poor’s (S&P), 155, 157, 160 Stanford University, 211 stocks, 50, 60, 79, 89, 117, 129, 133, 136, 138, 147–8, 203–4 indexes, 147–8 streamlining, 230–2 Stress VaR, 207, 211 strike price, 94, 95, 104, 113, 218 structured products, 44 structuring, 153, 219 student loans, 155, 231 sub-prime mortgages, 74, 88–90, 159–61, 170–2, 207, 227 suits, 132, 140–1, 149 surveillance, 110, 190, 195–9 swaps, 8, 92, 119–20, 121, 125, 126, 132, 134, 136, 141, 148, 149, 152, 173 Sweden, 148, 167 SWIFT, 23 Switzerland, 10, 81–3, 120, 211 franc, 9, 20, 31, 81–3 Swiss National Bank, 81–3 T Telerate, 9 ‘ten sigma event’, 135 Thailand, 135, 136, 139 theta, 98 ‘Things Can Only Get Better’ (D:Ream), 120, 121 time decay, 98 Tobin Tax, 216 Tokyo, Japan, 72 Tolstoy, Leo, 30 ‘too big to fail’, 90, 217 total return swaps (TRSs), 119–20, 136, 152 tracker funds, 147–8 trade repositories, 209–10 tranches, 154–9, 161, 174, 208 transparency, 141, 143, 151, 170, 212, 219 ‘tree approach’, 112–14 ‘trial by meeting’, 45, 52 triangle arbitrage, 31–2, 42, 54, 91, 122 Triangle Man, 31–2, 42, 54, 91, 122 Triple I High Risk Opportunities Fund, 116, 141 Troubled Asset Relief Program (TARP), 174, 175 Truth and Reconciliation, xvi Turkey, 231 Tuscany, Italy, 78, 115–16, 141 two-way pricing, 11–21, 23, 99 U UBS, 48, 52, 55, 59, 65, 68, 167, 197, 227 Ulster Bank, 233 United Kingdom, 22, 48, 89, 117, 120, 145, 163, 190, 200, 201–2, 203, 210, 233–4 Big Bang (1986), 201 Exchange Rate Mechanism Crisis (1992), xi, 22, 102–3 Financial Services Act (2013), 210 Flash Crash (2010), 79–80, 193 FX-fixing scandal (2013), 190 general election (1997), 120 LIBOR scandal (2012), 181–7, 188, 189, 190, 197, 198 London, England, vii–x, xi, 3, 9, 15, 35, 69, 72, 76, 79, 91, 120, 121, 137, 140, 193, 199, 202, 209 Northern Rock crisis (2007), 89, 163 pound, 9, 13, 28, 53, 184 principles-based regulation (PBR), 201–2 RBS recapitalisation (2008), 217 RBS/Ulster Bank system failure (2012), 233 Vickers Report (2013), 211, 230 United States, vii, xi, 9, 52, 56, 64, 69, 72, 74, 88–90, 108, 120, 143, 159–60, 168, 170–2, 196, 200, 203–6, 207, 209, 210, 212 Black Monday (1987), 108, 138, 204, 207 Comprehensive Capital Analysis and Review (CCAR), 212 Congress, 202, 205 Dodd–Frank Act (2010), 209, 230 dollar, 9, 12, 14, 17–18, 23, 28, 31, 53, 69, 71–2, 73, 79, 88, 96, 97, 99, 100, 104, 118, 119, 135, 136, 140, 184–6, 189 Federal Reserve, xii, 90, 109, 143, 187, 202–6, 212 Flash Crash (2010), 79–80, 193 Glass–Steagall Act (1933), 168, 201, 230 Gramm–Leach–Bliley Act (1999), 168, 201 Lehman Brothers bankruptcy (2008), 75, 89, 172–4, 179, 180, 217, 226, 230, 232 New York, 9, 35, 71, 72, 79, 88, 109, 169, 202 Riegle–Neal Act (1994), 168 September 11 attacks (2001), 52, 146, 147 Subprime Crisis (2007), 74, 88–90, 160–1, 170–2, 207, 227 Treasury bills, 119, 129, 133, 147 Vietnam War (1955–75), 181 Wall Street Crash (1929), 168 universal banking model, 230 V Valli, Frankie, 3–5, 9 value at risk (VaR), 127–31, 135–6, 139, 142, 157, 158, 169, 170, 172, 174, 204, 207, 219, 226, 227 Stress VaR, 207, 211 variation margin, 120, 141 vega, 98 Vickers Report (2013), 211, 230 voice traders, 54, 67, 76, 122 volatility, 14, 26, 46–7, 74–5, 80, 94, 98, 128–9, 137 Volker, Paul, 230 W Wall Street Crash (1929), 168 ‘Watanabe, Mrs’, 61, 75, 79, 82 weather derivatives, 144–5, 146 Wendt, Froukelien, 214 West Texas Intermediate, 139 Wheatley Report (2012), 184, 188 ‘window, the’ 118, 137, 188 ‘wisdom of crowds’, 204 WM/R, 187–8 World Cup 1998 France, 140 2014 Brazil, 195 World War I (1914–18), 207 X XTX, 233 Y Yale University, 110 ‘yours-and-mine’, 15–16, 18, 19, 192 Z zero coupon bonds, 118–32, 134, 138–43, 149, 152, 158, 159, 173 Zombanakis, Minos, 181–2 Zopa, 234 This ebook is copyright material and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased or as strictly permitted by applicable copyright law.


pages: 944 words: 243,883

Private Empire: ExxonMobil and American Power by Steve Coll

addicted to oil, Alan Greenspan, An Inconvenient Truth, anti-communist, Atul Gawande, banking crisis, Benchmark Capital, Berlin Wall, call centre, carbon footprint, carbon tax, clean water, collapse of Lehman Brothers, company town, corporate governance, corporate social responsibility, decarbonisation, disinformation, energy security, European colonialism, Evgeny Morozov, Exxon Valdez, failed state, Fall of the Berlin Wall, financial engineering, Global Witness, Google Earth, Great Leap Forward, hydraulic fracturing, hydrogen economy, Ida Tarbell, illegal immigration, income inequality, industrial robot, Intergovernmental Panel on Climate Change (IPCC), inventory management, kremlinology, market fundamentalism, McMansion, medical malpractice, Mikhail Gorbachev, oil shale / tar sands, oil shock, peak oil, place-making, Ponzi scheme, precautionary principle, price mechanism, profit maximization, profit motive, Ronald Reagan, Saturday Night Live, Scramble for Africa, shareholder value, Silicon Valley, smart meter, statistical model, Steve Jobs, two and twenty, WikiLeaks

To stay afloat, Chavez authorized mass borrowing—$4 billion from China, in exchange for special access to Venezuelan oil, and another $6 billion from international bond and financial markets. He cut oil production and supply deals with Syrian, Iranian, Indian, and Indonesian corporations. By the time of the ExxonMobil art wars, Chavez was running P.D.V.S.A. like a political Ponzi scheme: He overpromised to his impoverished Venezuelan followers, then milked the oil industry’s revenue to pay for those promises as best he could.7 Chavez railed to his followers about the low royalty rates paid to Venezuela by ExxonMobil, Chevron, BP, Total, Statoil, and other international majors during the 1990s, when he had been in opposition.

The gold rush mentality destroys capital and ensures the rule of expediency over science and risk management.” Uncertainty and skepticism of this kind leached out from geological engineers in the form of unfavorable press reporting, some of which went so far as to ask whether the American shale gas boom was some sort of Ponzi scheme in which early investors bid up faulty assets and lured in big-money suckers like ExxonMobil. Unconventional gas wells behaved unlike other wells, and their decline and production rates could be hard to calculate—much about the drilling patterns in these fields still remained to be discovered.


Growth: From Microorganisms to Megacities by Vaclav Smil

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, agricultural Revolution, air freight, Alan Greenspan, American Society of Civil Engineers: Report Card, Anthropocene, Apollo 11, Apollo Guidance Computer, autonomous vehicles, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Boeing 747, Bretton Woods, British Empire, business cycle, caloric restriction, caloric restriction, carbon tax, circular economy, colonial rule, complexity theory, coronavirus, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic dividend, demographic transition, Deng Xiaoping, disruptive innovation, Dissolution of the Soviet Union, Easter island, endogenous growth, energy transition, epigenetics, Fairchild Semiconductor, Ford Model T, general purpose technology, Gregor Mendel, happiness index / gross national happiness, Helicobacter pylori, high-speed rail, hydraulic fracturing, hydrogen economy, Hyperloop, illegal immigration, income inequality, income per capita, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of movable type, Isaac Newton, James Watt: steam engine, knowledge economy, Kondratiev cycle, labor-force participation, Law of Accelerating Returns, longitudinal study, low interest rates, mandelbrot fractal, market bubble, mass immigration, McMansion, megacity, megaproject, megastructure, meta-analysis, microbiome, microplastics / micro fibres, moral hazard, Network effects, new economy, New Urbanism, old age dependency ratio, optical character recognition, out of africa, peak oil, Pearl River Delta, phenotype, Pierre-Simon Laplace, planetary scale, Ponzi scheme, power law, Productivity paradox, profit motive, purchasing power parity, random walk, Ray Kurzweil, Report Card for America’s Infrastructure, Republic of Letters, rolodex, Silicon Valley, Simon Kuznets, social distancing, South China Sea, synthetic biology, techno-determinism, technoutopianism, the market place, The Rise and Fall of American Growth, three-masted sailing ship, total factor productivity, trade liberalization, trade route, urban sprawl, Vilfredo Pareto, yield curve

Nuclear chain reactions end as surely (due to the limited mass of fissile material) as do Ponzi (pyramid investment) schemes (once the inflow of new monies sinks below the redemptions). But in the latter case it can take a while: think of Bernard Madoff, who was able to carry on his fraudulent activities—a Ponzi scheme so elaborate that it had eluded the oversight authorities who had repeatedly investigated his company (although certainly not as diligently as they should have)—for more than 30 years and to defraud about $65 billion from his investors before he was finally undone by the greatest post-WWII economic crisis in the fall of 2008 (Ross 2016).

King, 450 Humans brain, 20, 152–154, 156, 456, 459 embryos, 153 evolution, 309–312 growth of, 151–171 (see also Children; Obesity) height, 6–7, 154–167, 443 lifespan, 85, 325, 459–460 load carrying, 270–271 physical performance, 270, 443–444, 446, 459 running, 267–270 weight, 2, 15, 37–38, 152, 154–162, 168–171, 459 Hydroelectricity, 50, 54, 378, 384, 398 Immigration, 248, 252, 308, 330, 347, 451, 471–474 Income, 3, 10–11, 63, 162, 332, 402, 425, 429, 430, 445, 466, 471, 496 global, 413–414 high, 165, 167, 247, 261, 263, 319, 381, 391, 394 inequality, 351, 407, 413–414, 417, 426, 432–434, 442 low, 11, 125, 129, 161, 267, 329, 338, 347, 350, 385, 391, 401, 405, 413 national, 399, 403–404 Index body mass, 156, 160–161, 169–171, 268 corruption, 436 Dow Jones Industrial (DJI), 23–24, 419 Gross National Happiness (GNH), 10–11, 405–406 harvest, 117–118 Human Development (HDI), 10, 307, 417, 422, 441 Inclusive Development (IDI), 10 Morris, 440–441, 445 NASDAQ Composite, 23–24 Nikkei, 23, 485–486, 489 penetration, 298 price, 293 site, 108 of Social Progress (ISP), 441–442 of sustainable economic welfare (ISEW), 404 wealth, 405 India, 88, 167, 246, 411, 413, 415, 459, 462, 474, 480, 504 crops, 118–122, 125–126, 128 history, 360, 365, 370–371 energy, 181, 205, 213, 217, 283, 343, 346, 381–384, 386 population, 91, 94, 163, 303, 321, 333, 347, 351, 354–355, 503 Influenza, 88–94 avian, 94 epidemics, 88–90 pandemics, 90–94 Innovation, 24, 116, 187, 298, 332, 341, 427, 432, 466, 484, 491 technical, xix, xxi, 22, 43, 51–52, 54, 198, 293, 399, 421–424 Internet, xiii–xiv, 64, 296–300, 401, 446–447 hosts, 298–299 Ishihara, Shintaro, 484, 489 Japan, 56, 85, 91, 206, 289–290, 352, 440, 444 after 1989, 484–490 economy, 248, 251, 297, 378, 384, 400, 405, 407–408, 418, 466, 468 energy, 208, 213, 222, 266, 428 food, 117–118, 120–121, 170 GDP, 23, 304–306, 348, 350, 411–412, 415, 422, 485–486, 489–490 history, 117, 165, 247, 360, 363, 374, 445, 480–481, 483, 484–490 income, 417–418 population, 166, 308, 318–319, 324, 331, 334, 340, 348, 458–460, 474–475, 487–489 transportation, 255, 257–258, 263–264, 266, 276–278, 353, 488 WW II, 363, 480–481 Kerosene, 265, 283 Keynes, Maynard, 399, 425 Kleiber, Max, 64, 68, 133 Korčák, Jaromír, 65–66 Kurzweil, Ray, xvi–xvii, 27, 497, 502 Kuznets, Simon, 298, 399, 403–404, 427, 432–433 Labor, 340–341, 401, 420–421, 426, 429, 439, 487 force, 323, 332, 406, 471, 489 massed, 271 Lactobacillus, 77, 80–81 Laplace, Pierre-Simon, 55 Law ¾, 64, 65, 69, 74–76, 133–134, 139 of accelerating returns, xvii, 27 Boyle’s, 39 of diminishing returns, 39 Gibrat’s, 59, 355–356 Gutenberg-Richter, 65 Kepler’s, 39 Korčák’s, 65–66 Malthus, 316–317 Marshall’s, 340 Moore’s, xii–xiii, xix, xxiv, 25, 287, 289–292, 298, 392, 423, 470 Ohm’s, 14 power, 54, 58, 60, 62–63, 65–68, 340, 353–357 surface, 64, 133 Tobler’s, 342 van Thünen’s, 342 Zipf’s, 60, 63–65, 68, 340, 353–356 Lianas, 104 Lifespan, 85, 97, 100–101, 258, 325, 449, 456, 458 Lights electric, 217–219 Lignin, 82, 455 Litterfall, 81–82 Locomotives, 15, 192–193, 205–206, 276–277, 462, 465, 467–469 London, 95, 194, 241, 246, 254, 280, 285, 352, 355, 360, 377 population, 335–336, 341, 451, 453 Madoff, Bernard, 21 Malnutrition, 73, 152, 161–162, 171, 391, 444, 499 Malthus, Thomas Robert, 11, 19, 307, 316–317, 498–499 Mandelbrot, Benoit, 65, 68 Manhattan, 179, 242–244, 344, 347 Manufacturing, 204, 221–222, 306–307, 400, 421, 439, 460, 483, 485, 488–489 and electricity, 221–222 Marathon, 267–269, 459 Marchetti, Cesare, 46–48 Maya, 450, 470, 479 Meat, 73, 77, 113, 149–151, 154, 168, 343, 376, 413, 458 consumption of, 113, 118, 120, 391 production of, 4, 145–148, 151, 391 Megacities, 246, 254, 339–340, 343–344, 347–353, 393, 403 Mesopotamia, 28, 304, 332–333, 357, 361, 370–372, 440 Microbiome, 72, 168, 226 Milk, 73, 79, 81, 151, 161, 167–168 Modis, Theodore, 44–46, 298, 427, 497 Mokyr, Joel, 409–410, 424, 491, 502 Moore, Gordon, 287, 289–290 Moore’s curse, 392 Moore’s law, xii–xiii, xix, xxiv, 25, 287, 289–292, 298, 392, 423, 470 Morita, Akio, 484, 489 Morris, Ian, 439–441 Mortality animal, 134, 138, 148, 457–458 human, 39–40, 84–94, 308, 310, 317, 319, 326, 417, 447, 457–458, 471 premature, 14, 37, 44, 346, 419, 444 trajectories of, 457–458 tree, 103, 107 Motors electric, 5, 31, 174–175, 184, 217, 219–224, 227, 232, 277, 426, 445 Mozart, Wolfgang Amadeus compositions, 46–47 Mumbai, 344 Mycobacterium tuberculosis, 14, 78, 81, 85 Netherlands, 10, 167, 182, 324, 354, 372, 380, 407, 462–463 history, 108, 165, 319, 410 Newcomb, Simon, 62 New York, 185, 227, 237, 242–243, 246, 249, 254, 257, 272, 274, 341, 344 population, 92, 95, 336, 347–348, 350–351 skyscrapers, 242–244, 246 Nigeria, 13, 128, 167, 308, 321, 347, 354, 401, 413, 432–433, 474 Nitrogen, 4, 79, 81–82, 84, 102, 110, 116, 125 fertilizers, 118, 120–121, 124, 377, 389–390, 403 Obesity, 73, 169–171 Ostwald, Wilhelm, 37 Pandemics, 2, 84, 86, 88, 90–95, 308, 318, 352 Pareto, Vilfredo, 63 Paris, xii, 151, 277, 280, 335, 344, 346, 351, 480, 506, 512 Parsons, Charles Algernon, 24, 190, 194 Passengers airline, 21–22, 31, 44, 95, 280–283 railroad, 277–278 Pathogens, 72, 78, 84–95 Pearl, Raymond, 38–40, 43, 330 Phloem, 96, 455 Phones, xiii–xiv, 31, 242, 249, 225–226, 293–297, 421, 461, 500 embodied energy, 500–501 mobile, xiv, xvi, 225–226, 293–297, 301, 423, 446, 460–461, 491–492, 500–501 smartphones, 294, 296–297, 301, 402, 461, 500 Phonograph, xiv–xv Photosynthesis, 32, 41, 97–98, 104, 113–115, 127, 173, 377, 388, 455, 509 Photovoltaic cells, 196, 215–217, 222, 226, 381, 397, 501 Phytomass, 97–104, 106–107, 110, 113–114, 117, 151, 173, 455 forest, viii, 75, 99–107, 110, 455 oceanic, 4, 84, 97 Phytoplankton, 84, 455, 509 Pigs, 4, 28, 73, 93, 139, 145–149, 156, 458 Pipelines, 44, 197, 213, 224, 252, 264–266 Plague, 86–88, 91 Ponzi schemes, 18–21 Populations, 303–304, 307–336, 470–475 aging, 252, 304, 323, 401, 424, 430, 470–472, 475, 488, 503 decline, 108, 313, 318, 321–322, 340, 466, 474, 477, 487–488 demographic transitions, 308, 310, 317–323, 399, 420, 430 fertility, 308, 319–322, 324, 326, 329, 430, 471–472 forecasting, 303, 314–317, 329–332, 472 future of, 322–332 growth of, 26–27, 33–34, 36, 38, , 303–332, 410, 420, 436, 495, 498 history of, 307–317 life expectancy, 163, 308, 310, 318–319, 322–326, 417, 429, 458–459, 474, 499 limits, 328–330 totals, 312–314, 322–333, 362, 477 Prime movers, vii, xi, 69, 197, 206, 267, 271, 304, 393, 426–427, 462 history of, 54, 175–177, 188, 191, 204, 234, 277 power of, 29, 177, 188, 206 Productivity, 46, 97–98, 386 economic, 5, 161, 234, 329, 340, 404, 409–410, 420–425, 429–430, 488 gross primary (GPP), 97–98, 102, 111 labor, 10, 222, 340, 406, 471, 489 net primary (NPP), 98–100, 102, 114 photosynthetic (primary), 7, 72, 74, 97–102, 106–111, 113, 119, 121–127, 448, 455, 509 Prokaryotes, 454–455 Protein, 11, 53, 76–77, 80, 87, 138, 147, 164, 317, 325–326, 386 food, 112–113, 149–151, 161, 167–168 Pulleys, 174, 229–230 Purchasing power parity (PPP), 412–413, 428, 433, 445, 486, 489, 491 Pyramids, xi, 239–240 Qomolangma, 60–61 Quetelet, Adolphe, 33–34, 37, 55, 57, 156–157 Radio, xiii, 285, 287, 295 Railroads, 252, 259, 262–264, 276–278, 284, 394, 423, 426, 488 tunnels, 254–256 Rates birth, 308, 313, 317–320, 330, 429 metabolic, 42, 64, 69, 74, 132–134, 141, 153 total fertility, 308, 319–322, 324, 326, 329 Ratio bypass, 15, 208–211 compression, 199 dependency, 471–472, 474–475 encephalization, 153 feeding, 147, 149 grain-to-straw, 117 length/beam, 171, 236–237 mass/power, 393 memory/mass, 8 power/mass, 31, 194, 196–197, 199, 202–203, 393 sex (at birth), 474 surface/volume, 130–131, 138 thrust-to-weight, 207–211 Reactors nuclear, 174–176, 194, 196, 213–215, 276, 384–385, 487 Recordings music, xiv–xv, 293, 447, 462, 466, 468 Respiration, 75, 97–100, 110–111, 114, 139 autotrophic, 97–98, 110–111, 114 heterotrophic, 99–100, 111, 139 Rice, 15, 17, 72, 110–113, 117–118, 120–122, 127, 277, 445 yields, 122, 128, 444 Roads, 258–262 Robertson, T.


pages: 343 words: 102,846

Trees on Mars: Our Obsession With the Future by Hal Niedzviecki

"World Economic Forum" Davos, Ada Lovelace, agricultural Revolution, Airbnb, Albert Einstein, Alvin Toffler, Amazon Robotics, anti-communist, big data - Walmart - Pop Tarts, big-box store, business intelligence, Charles Babbage, Colonization of Mars, computer age, crowdsourcing, data science, David Brooks, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, Flynn Effect, Ford Model T, Future Shock, Google Glasses, hive mind, Howard Zinn, if you build it, they will come, income inequality, independent contractor, Internet of things, invention of movable type, Jaron Lanier, Jeff Bezos, job automation, John von Neumann, knowledge economy, Kodak vs Instagram, life extension, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Neil Armstrong, One Laptop per Child (OLPC), Peter H. Diamandis: Planetary Resources, Peter Thiel, Pierre-Simon Laplace, Ponzi scheme, precariat, prediction markets, Ralph Nader, randomized controlled trial, Ray Kurzweil, ride hailing / ride sharing, rising living standards, Robert Solow, Ronald Reagan, Salesforce, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, TaskRabbit, tech worker, technological singularity, technological solutionism, technoutopianism, Ted Kaczynski, TED Talk, Thomas L Friedman, Tyler Cowen, Uber and Lyft, uber lyft, Virgin Galactic, warehouse robotics, working poor

Canadian thinker and novelist Ronald Wright calls the ratchet effect the “progress trap” and notes that it made a significant contribution to the collapse of empires as iconic and powerful as those of the Romans and the Mayans. In Wright’s A Short History of Progress, he describes civilization as basically a Ponzi scheme. He argues that we’ve built our incredible wealth and comfort by borrowing on the future. He talks about native people coming up with the buffalo run, the idea of driving an entire herd off a cliff rather than hunting them one by one.20 It seemed like a great idea at the time and it gave the tribes almost unimaginable wealth and security.


The Permanent Portfolio by Craig Rowland, J. M. Lawson

Alan Greenspan, Andrei Shleifer, asset allocation, automated trading system, backtesting, bank run, banking crisis, Bear Stearns, Bernie Madoff, buy and hold, capital controls, correlation does not imply causation, Credit Default Swap, currency risk, diversification, diversified portfolio, en.wikipedia.org, fixed income, Flash crash, high net worth, High speed trading, index fund, inflation targeting, junk bonds, low interest rates, margin call, market bubble, money market fund, new economy, passive investing, Ponzi scheme, prediction markets, risk tolerance, stocks for the long run, survivorship bias, technology bubble, transaction costs, Vanguard fund

Rule #10: Don't Depend on Any One Investment, Institution, or Person for Your Safety In the 2008 banking crisis, some institutions that existed for over a century went bankrupt almost overnight inflicting large losses on investors. In the same year Bernie Madoff, one of the founders of the NASDAQ stock exchange, was revealed to have been running a multibillion-dollar Ponzi scheme that caused tremendous losses to investors, many of whom had entrusted him with their life savings. The process above repeated itself in 2011 when another large firm, MF Global, went bankrupt and many investors found that their accounts had apparently been plundered by corrupt management. The sort of financial mismanagement, incompetence, and fraud described above has happened throughout history.


pages: 438 words: 109,306

Tower of Basel: The Shadowy History of the Secret Bank That Runs the World by Adam Lebor

Alan Greenspan, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, central bank independence, corporate governance, corporate social responsibility, deindustrialization, eurozone crisis, fiat currency, financial independence, financial innovation, foreign exchange controls, forensic accounting, Glass-Steagall Act, Goldman Sachs: Vampire Squid, haute cuisine, IBM and the Holocaust, Kickstarter, low interest rates, Occupy movement, offshore financial centre, Ponzi scheme, power law, price stability, quantitative easing, reserve currency, special drawing rights

Wall Street had welcomed Kreuger with open arms and checkbooks. Thanks to McKittrick and his colleagues, Kreuger’s reputation had preceded him. The London Higginson partners told their American colleagues that Kreuger had already made them a fortune. But it was a fortune built on fraud. Kreuger had constructed a massive Ponzi scheme that demanded a never-ending stream of new investors to pay their predecessors. In 1931 one of the brokers at Lee, Higginson wrote to Kreuger that some of his bank creditors would like more information about the company and how it worked. The broker asked Krueger to explain what he meant by “loans secured by real-estate mortgages,” which was an eerie precursor of the bundled mortgages that triggered the subprime meltdown in 2007.


pages: 471 words: 109,267

The Verdict: Did Labour Change Britain? by Polly Toynbee, David Walker

Alan Greenspan, An Inconvenient Truth, banking crisis, Big bang: deregulation of the City of London, blood diamond, Bob Geldof, Boris Johnson, call centre, central bank independence, congestion charging, Corn Laws, Credit Default Swap, Crossrail, decarbonisation, deglobalization, deindustrialization, Etonian, failed state, first-past-the-post, Frank Gehry, gender pay gap, Gini coefficient, high net worth, hiring and firing, illegal immigration, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, labour market flexibility, market bubble, mass immigration, military-industrial complex, millennium bug, moral panic, North Sea oil, Northern Rock, offshore financial centre, pension reform, plutocrats, Ponzi scheme, profit maximization, purchasing power parity, Right to Buy, shareholder value, Skype, smart meter, social distancing, stem cell, The Spirit Level, too big to fail, University of East Anglia, working-age population, Y2K

That was the basic arithmetic, even before the planners thought about greening the housing stock, improving the homes people already lived in or ensuring buyers could afford what the market demanded. House-price inflation was like a drug. In the year to April 2010, as if the crash and recession had never happened, house prices rose 10.5 per cent; we were swapping a more or less static stock of homes at ever higher prices, not so dissimilar, commentators pointed out, to a Ponzi scheme. Three-quarters of bank loans were going into property, not into building new homes, nor into productive investment. When 0.3 per cent of the population owned 70 per cent of British land, the rewards were bound to be skewed. The 1997–2010 government might have addressed the problem if it had anything like an urban vision – a strategic sense of how towns and cities might be.


pages: 379 words: 109,612

Is the Internet Changing the Way You Think?: The Net's Impact on Our Minds and Future by John Brockman

A Declaration of the Independence of Cyberspace, Albert Einstein, AltaVista, Amazon Mechanical Turk, Asperger Syndrome, availability heuristic, Benoit Mandelbrot, biofilm, Black Swan, bread and circuses, British Empire, conceptual framework, corporate governance, Danny Hillis, disinformation, Douglas Engelbart, Douglas Engelbart, Emanuel Derman, epigenetics, Evgeny Morozov, financial engineering, Flynn Effect, Frank Gehry, Future Shock, Google Earth, hive mind, Howard Rheingold, index card, information retrieval, Internet Archive, invention of writing, Jane Jacobs, Jaron Lanier, John Markoff, John Perry Barlow, Kevin Kelly, Large Hadron Collider, lifelogging, lone genius, loss aversion, mandelbrot fractal, Marc Andreessen, Marshall McLuhan, Menlo Park, meta-analysis, Neal Stephenson, New Journalism, Nicholas Carr, One Laptop per Child (OLPC), out of africa, Paul Samuelson, peer-to-peer, pneumatic tube, Ponzi scheme, power law, pre–internet, Project Xanadu, Richard Feynman, Rodney Brooks, Ronald Reagan, satellite internet, Schrödinger's Cat, search costs, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, Skype, slashdot, smart grid, social distancing, social graph, social software, social web, Stephen Hawking, Steve Wozniak, Steven Pinker, Stewart Brand, synthetic biology, Ted Nelson, TED Talk, telepresence, the medium is the message, the scientific method, the strength of weak ties, The Wealth of Nations by Adam Smith, theory of mind, trade route, upwardly mobile, Vernor Vinge, Whole Earth Catalog, X Prize, Yochai Benkler

A Gift to Conspirators and Terrorists Everywhere Marcel Kinsbourne Neurologist and cognitive neuroscientist, the New School; author, Children’s Learning and Attention Problems The Internet has supplied me with an answer to a question that has exercised me interminably: When I reach Heaven (surely!), how can I possibly spend infinite time without incurring infinite boredom? Well, as long as they provide an Internet connection, I now see that I can. The instant response, correct or otherwise, to every question sets up an intellectual Ponzi scheme. The answer multiplies the questions, which, in a potentially infinite progress, prompt yet more. Having previously functioned in serial fashion, digging for new vistas through largely unexplored libraries, I now have to neither interact with any other human being nor even move, except my fingers.


pages: 367 words: 108,689

Broke: How to Survive the Middle Class Crisis by David Boyle

anti-communist, AOL-Time Warner, banking crisis, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, bonus culture, call centre, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, delayed gratification, Desert Island Discs, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial deregulation, financial independence, financial innovation, financial intermediation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, gentrification, Goodhart's law, housing crisis, income inequality, Jane Jacobs, job satisfaction, John Bogle, junk bonds, Kickstarter, knowledge economy, knowledge worker, low interest rates, market fundamentalism, Martin Wolf, Mary Meeker, mega-rich, Money creation, mortgage debt, Neil Kinnock, Nelson Mandela, new economy, Nick Leeson, North Sea oil, Northern Rock, Ocado, Occupy movement, off grid, offshore financial centre, pension reform, pensions crisis, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, positional goods, precariat, quantitative easing, school choice, scientific management, Slavoj Žižek, social intelligence, subprime mortgage crisis, too big to fail, trickle-down economics, Vanguard fund, Walter Mischel, wealth creators, Winter of Discontent, work culture , working poor

This is particularly crazy when you think that the houses have long since been built and paid for. They may need some repair but they are complete, the builder pocketed his cheque generations back, but we insist on using our homes like a giant pyramid scheme because it might fund our pensions in the long run. We vest our property with this fantastical aura, a Ponzi scheme that our lives now depend on. So there lies the great threat to the middle-class life of independence: shrinking houses, shrinking leisure, shrinking green space, shrinking chance to do what you want to with your life, and all because — in order to repeat the middle-class life we were brought up with — we have to sign ourselves into indentured servitude to our mortgage provider.


pages: 375 words: 109,675

Railways & the Raj: How the Age of Steam Transformed India by Christian Wolmar

Beeching cuts, British Empire, collective bargaining, colonial rule, James Dyson, John Snow's cholera map, joint-stock company, Khyber Pass, Kickstarter, low cost airline, Mahatma Gandhi, Meghnad Desai, Ponzi scheme, railway mania, strikebreaker, Suez canal 1869, trade route, women in the workforce

On some contracts, notably in the USA, millions of dollars were purloined in corrupt arrangements created precisely for that purpose by contractors or promoters.26 In India, there was no single figure found to be responsible for purloining vast amounts of cash, such as George Hudson, the Railway King, who created the Midland Railway in the 1840s, only to then cheat his shareholders in a kind of Victorian version of a Ponzi scheme. Despite lots of petty corruption, Kerr argues that ‘India’s railways had fewer major scandals, massive corruption, and speculative chicanery than railways in many other countries’.27 This was a result of the relatively tight control exercised by the Indian government, but also because of the absence, during the early days, of a white-collar criminal class able to exploit the huge amount of money pouring into the country from UK investors.


pages: 359 words: 110,488

Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou

Affordable Care Act / Obamacare, bioinformatics, corporate governance, Donald Trump, El Camino Real, Elon Musk, fake it until you make it, Google Chrome, John Markoff, Jony Ive, Kickstarter, Larry Ellison, Marc Andreessen, Mark Zuckerberg, Mars Rover, medical malpractice, Menlo Park, obamacare, Ponzi scheme, reality distortion field, ride hailing / ride sharing, Right to Buy, Sand Hill Road, Seymour Hersh, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, stealth mode startup, Steve Jobs, stock buybacks, supply-chain management, Travis Kalanick, ubercab, Wayback Machine

He also liked to think of himself as a pretty good judge of character. After all, he’d dealt with his share of dishonest people over the years, having worked in a prison during law school and later writing at length about such fraudsters as the carpet-cleaning entrepreneur Barry Minkow and the lawyer Marc Dreier, both of whom went to prison for masterminding Ponzi schemes. Sure, Elizabeth had a secretive streak when it came to discussing certain specifics about her company, but he found her for the most part to be genuine and sincere. Since his angle was no longer the patent case, he didn’t bother to reach out to the Fuiszes. * * * — WHEN PARLOFF’S COVER STORY was published in the June 12, 2014, issue of Fortune, it vaulted Elizabeth to instant stardom.


pages: 440 words: 108,137

The Meritocracy Myth by Stephen J. McNamee

Abraham Maslow, affirmative action, Affordable Care Act / Obamacare, American ideology, antiwork, Bernie Madoff, British Empire, business cycle, classic study, collective bargaining, computer age, conceptual framework, corporate governance, deindustrialization, delayed gratification, demographic transition, desegregation, deskilling, Dr. Strangelove, equal pay for equal work, estate planning, failed state, fixed income, food desert, Gary Kildall, gender pay gap, Gini coefficient, glass ceiling, helicopter parent, income inequality, informal economy, invisible hand, job automation, joint-stock company, junk bonds, labor-force participation, longitudinal study, low-wage service sector, marginal employment, Mark Zuckerberg, meritocracy, Michael Milken, mortgage debt, mortgage tax deduction, new economy, New Urbanism, obamacare, occupational segregation, old-boy network, pink-collar, plutocrats, Ponzi scheme, post-industrial society, prediction markets, profit motive, race to the bottom, random walk, Savings and loan crisis, school choice, Scientific racism, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, upwardly mobile, We are the 99%, white flight, young professional

It is more difficult to detect white-collar crime since enforcement efforts of the criminal-justice system are directed toward crimes committed by the poor rather than the rich (Messner and Rosenfeld 2007; Reiman and Leighton 2013), and people are often unaware that they have been victimized. When white-collar crimes are exposed, the sums procured in their commission are often shocking—often totaling in the millions and sometimes even in the billions of dollars. The Ponzi scheme stock fraud perpetrated by Bernard Madoff (an ironic surname for a white-collar criminal) totaling $65 billion is one particularly noteworthy example. Other examples include the notorious and illegal stock manipulations of Ivan Boesky (deal stocks), Michael Milken (junk bonds), and Charles Keating (the savings-and-loan scandal); corporate wrongdoing, including ethics scandals at Enron, WorldCom, Arthur Andersen, Adelphia, Global Crossing, Tyco, and many others; and suspected misconduct in the vast mutual funds and mortgage industries that led to the near collapse of credit markets and the debilitating Great Recession that followed.


pages: 356 words: 105,533

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson

Alan Greenspan, algorithmic trading, automated trading system, banking crisis, bash_history, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, butterfly effect, buttonwood tree, buy and hold, Chuck Templeton: OpenTable:, cloud computing, collapse of Lehman Brothers, computerized trading, creative destruction, Donald Trump, financial engineering, fixed income, Flash crash, Ford Model T, Francisco Pizarro, Gordon Gekko, Hibernia Atlantic: Project Express, High speed trading, information security, Jim Simons, Joseph Schumpeter, junk bonds, latency arbitrage, Long Term Capital Management, machine readable, Mark Zuckerberg, market design, market microstructure, Michael Milken, military-industrial complex, pattern recognition, payment for order flow, pets.com, Ponzi scheme, popular electronics, prediction markets, quantitative hedge fund, Ray Kurzweil, Renaissance Technologies, seminal paper, Sergey Aleynikov, Small Order Execution System, South China Sea, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stochastic process, three-martini lunch, Tragedy of the Commons, transaction costs, uptick rule, Watson beat the top human players on Jeopardy!, zero-sum game

He’d become convinced that the powerful bank was manipulating markets for its own benefit. Now it seemed a federal prosecutor was confirming his suspicions. By the summer of 2009, Zero Hedge had become a must-read for Wall Street insiders. The blog was breaking all the rules, calling all of Wall Street a massive Ponzi scheme that was on the verge of collapsing, crashing the stock market and leaving the global economy in ruins. The blog’s observations combined the sentiment of a crackpot conspiracy theorist with hard-edged economic reporting, often backed with complex analysis of statistics and charts. With Aleynikov’s arrest, Zero Hedge became an even bigger hit.


pages: 392 words: 108,745

Talk to Me: How Voice Computing Will Transform the Way We Live, Work, and Think by James Vlahos

Albert Einstein, AltaVista, Amazon Mechanical Turk, Amazon Web Services, augmented reality, Automated Insights, autonomous vehicles, backpropagation, Big Tech, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, Colossal Cave Adventure, computer age, deep learning, DeepMind, Donald Trump, Elon Musk, fake news, Geoffrey Hinton, information retrieval, Internet of things, Jacques de Vaucanson, Jeff Bezos, lateral thinking, Loebner Prize, machine readable, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Mark Zuckerberg, Menlo Park, natural language processing, Neal Stephenson, Neil Armstrong, OpenAI, PageRank, pattern recognition, Ponzi scheme, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Rubik’s Cube, self-driving car, sentiment analysis, Silicon Valley, Skype, Snapchat, speech recognition, statistical model, Steve Jobs, Steve Wozniak, Steven Levy, TechCrunch disrupt, Turing test, Watson beat the top human players on Jeopardy!

For starters, a single word can have anywhere from a few to more than a hundred meanings and serve as various parts of speech. Pity the computer faced with “run,” which has more than two hundred possible definitions. You can run down the street, of course, but you can also run for Congress or run a Ponzi scheme. Engines run on gasoline, singers run up scales, and trains run between cities. You can run a car off the road, run the risk of discovery, or run a river. Score a run in baseball? Have a run of bad luck? Got a run in your stocking? Got the runs? The difficulties multiply when computers try to figure out which words are grouped to form units of meaning—predicates or prepositional phrases, for example—and how those units relate to one another.


pages: 414 words: 108,413

King Icahn: The Biography of a Renegade Capitalist by Mark Stevens

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Bear Stearns, book value, Carl Icahn, classic study, company town, corporate governance, corporate raider, Donald Trump, financial engineering, flag carrier, Gordon Gekko, Irwin Jacobs, junk bonds, laissez-faire capitalism, low interest rates, Michael Milken, old-boy network, Ponzi scheme, profit motive, shareholder value, yellow journalism

‘There can’t be a recession,’ he says, as if there’s some law against them. “‘Why not?’ I ask. Because, he says, ‘The government will take care of that.’ “I’m supposed to accept that. Maybe it’s not so stupid to think that I would. Because that’s the way these airline guys behave. They’re willing participants in a Ponzi scheme. They keep buying planes and adding seats but there’s no one to fly on them.” On another occasion, the airplane salesman tried to convince Icahn to buy a new generation of jets on the premise that glasnost would bring a surge in Russian tourism and that the aircraft would transport Russians from Moscow to Paris an hour earlier.


Pure Invention: How Japan's Pop Culture Conquered the World by Matt Alt

4chan, Apollo 11, augmented reality, Black Lives Matter, blue-collar work, coronavirus, COVID-19, Donald Trump, fake news, financial engineering, game design, glass ceiling, global pandemic, haute cuisine, hive mind, late capitalism, lateral thinking, lolcat, Mark Zuckerberg, mass immigration, megacity, military-industrial complex, New Urbanism, period drama, Ponzi scheme, Saturday Night Live, Silicon Valley, Silicon Valley startup, Skype, social distancing, Social Justice Warrior, Steve Bannon, Steve Jobs, Steve Wozniak, strikebreaker, three-martini lunch, union organizing, work culture , zero-sum game

Just twelve months later, at the end of 1999, Nintendo announced that the series had earned $5 billion—roughly a cumulative equivalent to the size of the entire U.S. game industry that year—all by itself. America—no, the world—had never seen anything like this before. Well, maybe Star Wars, but that was a Hollywood spectacle, not some silly monsters from Japan. “Pokemania,” Time declared it in a cover story dedicated to the phenomenon. “A pestilential Ponzi scheme.” It was a business success the likes of which Nintendo had never dreamed—not at first, anyway—but it was also something more: a truly Pokémon-esque moment, in which Japan the nation evolved into Japan the fantasy superpower. So too was it proof that the string of made-in-Japan pop-cultural hits that seized the hearts of Western children the decade before weren’t lucky breaks but the result of canny craftsmanship.


pages: 367 words: 110,161

The Bond King: How One Man Made a Market, Built an Empire, and Lost It All by Mary Childs

Alan Greenspan, asset allocation, asset-backed security, bank run, Bear Stearns, beat the dealer, break the buck, buy and hold, Carl Icahn, collateralized debt obligation, commodity trading advisor, coronavirus, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, diversification, diversified portfolio, Edward Thorp, financial innovation, fixed income, global macro, high net worth, hiring and firing, housing crisis, Hyman Minsky, index card, index fund, interest rate swap, junk bonds, Kevin Roose, low interest rates, Marc Andreessen, Minsky moment, money market fund, mortgage debt, Myron Scholes, NetJets, Northern Rock, off-the-grid, pneumatic tube, Ponzi scheme, price mechanism, quantitative easing, Robert Shiller, Savings and loan crisis, skunkworks, sovereign wealth fund, stem cell, Steve Jobs, stocks for the long run, The Great Moderation, too big to fail, Vanguard fund, yield curve

He was not getting paid enough given the huge risk on the horizon, which was the imminent removal of the Federal Reserve as a buyer of $100 billion in Treasuries a month. The Fed said that, in June, it would stop the extraordinary stimulus measure that had it snapping up 70 percent of all debt Treasury issued every year. The government buying up the government’s debt? Wasn’t it obvious? It was a Ponzi scheme. “The right hand is buying from the left,” Gross told the Post. “We’ve been supporting Treasuries almost one for one,” he told The Atlantic. “At 8 A.M., the Fed calls up and asks our Treasuries desk for offers to buy, and one hour later, the Fed’s asking for bids to sell them.” In doing so, the Fed was lowering rates across the spectrum, from safe savings accounts, money market funds, bonds that mutual funds could buy, and onward—“picking the pockets,” in his view, of people who’d saved or invested their hard-earned money.


pages: 464 words: 117,495

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Alexander Elder

additive manufacturing, Atul Gawande, backtesting, behavioural economics, Benoit Mandelbrot, buy and hold, buy low sell high, Checklist Manifesto, computerized trading, deliberate practice, diversification, Elliott wave, endowment effect, fear index, loss aversion, mandelbrot fractal, margin call, offshore financial centre, paper trading, Ponzi scheme, price stability, psychological pricing, quantitative easing, random walk, Reminiscences of a Stock Operator, risk tolerance, short selling, South Sea Bubble, systematic trading, systems thinking, The Wisdom of Crowds, transaction costs, transfer pricing, traveling salesman, tulip mania, zero-sum game

In January 2010, the CFTC identified a “number of improper practices” in the retail foreign exchange market, “among them solicitation fraud, a lack of transparency in the pricing and execution of transactions, unresponsiveness to customer complaints, and the targeting of unsophisticated, elderly, low net worth and other vulnerable individuals.” It proposed new rules limiting leverage to 10 to 1. Frauds may include churning customer accounts, selling useless software, improperly managing “managed accounts,” false advertising, and Ponzi schemes. All the while, promoters claim that trading foreign exchange is a road to profits. The real forex market is a zero sum game, in which well-capitalized professional traders, many of whom work for banks, devote full-time attention to trading. An inexperienced retail trader has a significant information disadvantage.


pages: 385 words: 118,901

Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street by Sheelah Kolhatkar

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "World Economic Forum" Davos, Bear Stearns, Bernie Madoff, Carl Icahn, Donald Trump, Fairchild Semiconductor, family office, fear of failure, financial deregulation, hiring and firing, income inequality, junk bonds, light touch regulation, locking in a profit, margin call, Market Wizards by Jack D. Schwager, medical residency, Michael Milken, mortgage debt, p-value, pets.com, Ponzi scheme, proprietary trading, rent control, Ronald Reagan, Savings and loan crisis, short selling, Silicon Valley, Skype, The Predators' Ball

The previous fall, Lehman Brothers had gone bankrupt, banks were collapsing, and millions of people were watching the value of their retirement savings go down with the plunging stock market. House prices had plummeted, revealing the corrupt machinery inside investment banks that had packaged low-quality subprime mortgages and sold them to investors all over the world. Bernie Madoff’s $20 billion Ponzi scheme had been discovered, along with the fact that the SEC missed obvious warning signs for many years. Morale had never been lower. For decades after its founding in 1934, the SEC was a feared and respected force on Wall Street, its lawyers priding themselves on their discretion and political independence.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

If the prices of these assets were to fall due to pessimistic market conditions, the value of the firm’s liabilities (i.e., debt) could exceed the value of its assets. In this case the value of the firm’s equity drops as well. Hence, higher leverage levels create situations of insolvency. Ultimately, excessive debt resembles a Ponzi scheme (Das, 2016). Households, firms, and nations need to borrow increasing amounts of debt to repay existing loans and maintain economic growth. The fact that the credit system has been allowed to develop in this direction on an international scale with the aid of shadow banking is the final piece needed to understand this puzzle.


pages: 549 words: 116,200

With a Little Help by Cory Efram Doctorow, Jonathan Coulton, Russell Galen

autonomous vehicles, big-box store, Burning Man, call centre, carbon credits, carbon footprint, carbon tax, death of newspapers, don't be evil, game design, Google Earth, high net worth, lifelogging, lolcat, margin call, Mark Shuttleworth, offshore financial centre, packet switching, Ponzi scheme, reality distortion field, rolodex, Sand Hill Road, sensible shoes, skunkworks, Skype, traffic fines, traveling salesman, Turing test, urban planning, Y2K

All your data is fed into a big hopper that checks for 'suspicious patterns' and gradually builds the case against you, using deviation from statistical norms to prove that you're guilty of something. It's just a variation of the way we spot search-spammers" -- the "optimizers" who tried to get their Viagra scams and Ponzi schemes to come to the top of the search results "-- but instead of lowering your search rank, we increase your probability of being sent to Syria. And of course, they google all of us, everyone who works on anything 'sensitive.'" 642 "Naturally," Greg said. He felt like he was going to throw up. He felt like never using a search engine again.


pages: 412 words: 115,266

The Moral Landscape: How Science Can Determine Human Values by Sam Harris

Albert Einstein, banking crisis, Bayesian statistics, behavioural economics, cognitive bias, cognitive load, end world poverty, endowment effect, energy security, experimental subject, framing effect, higher-order functions, hindsight bias, impulse control, John Nash: game theory, language acquisition, longitudinal study, loss aversion, meta-analysis, mirror neurons, Monty Hall problem, out of africa, Paradox of Choice, pattern recognition, peak-end rule, placebo effect, Ponzi scheme, public intellectual, Richard Feynman, risk tolerance, scientific worldview, stem cell, Stephen Hawking, Steven Pinker, TED Talk, the scientific method, theory of mind, traumatic brain injury, trolley problem, ultimatum game, World Values Survey

Neuroimaging research on belief and disbelief may one day enable researchers to put this equivalence to use in the study of deception.62 It is possible that this new approach could circumvent many of the impediments that have hindered the study of deception in the past. When evaluating the social cost of deception, we need to consider all of the misdeeds—premeditated murders, terrorist atrocities, genocides, Ponzi schemes, etc.—that must be nurtured and shored up, at every turn, by lies. Viewed in this wider context, deception commends itself, perhaps even above violence, as the principal enemy of human cooperation. Imagine how our world would change if, when the truth really mattered, it became impossible to lie.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, biodiversity loss, Black Swan, Bretton Woods, business cycle, capital controls, carbon credits, carbon tax, Cass Sunstein, central bank independence, classic study, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial engineering, financial innovation, floating exchange rates, foreign exchange controls, full employment, Gini coefficient, Glass-Steagall Act, global macro, global reserve currency, global village, high net worth, high-speed rail, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inverted yield curve, invisible hand, Just-in-time delivery, Kenneth Rogoff, Long Term Capital Management, low interest rates, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, precautionary principle, price stability, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Ronald Reagan, Savings and loan crisis, sovereign wealth fund, special drawing rights, subprime mortgage crisis, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, Washington Consensus, Westphalian system, WikiLeaks, women in the workforce, yield curve

PATRONAGE SYSTEM: The postelection practice in which loyal supporters of a winning candidate and/or party are rewarded with appointive public offices. PERESTROIKA: Policies instituted by Mikhail Gorbachev in the 1980s that brought about governmental and economic reforms. PERSONAL CONSUMPTION EXPENDITURE: Goods and services that are purchased by a person. POLITBURO: A Communist party’s principal policymaking and executive committee. PONZI SCHEME: An investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. PREMIUM: The amount by which an investment vehicle sells above its par value. PRIMA FACIE: At first appearance. PRIMARY PRODUCTS: Raw materials and resources that are used in the productive process.


pages: 443 words: 112,800

The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World by Jeremy Rifkin

3D printing, additive manufacturing, Albert Einstein, American ideology, An Inconvenient Truth, barriers to entry, behavioural economics, bike sharing, borderless world, carbon footprint, centre right, clean tech, collaborative consumption, collaborative economy, Community Supported Agriculture, corporate governance, decarbonisation, deep learning, distributed generation, electricity market, en.wikipedia.org, energy security, energy transition, Ford Model T, global supply chain, Great Leap Forward, high-speed rail, hydrogen economy, income inequality, industrial cluster, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, job automation, knowledge economy, manufacturing employment, marginal employment, Martin Wolf, Masdar, megacity, Mikhail Gorbachev, new economy, off grid, off-the-grid, oil shale / tar sands, oil shock, open borders, peak oil, Ponzi scheme, post-oil, purchasing power parity, Ray Kurzweil, rewilding, Robert Solow, Ronald Reagan, scientific management, scientific worldview, Silicon Valley, Simon Kuznets, Skype, smart grid, smart meter, Spread Networks laid a new fibre optics cable between New York and Chicago, supply-chain management, systems thinking, tech billionaire, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transaction costs, trickle-down economics, urban planning, urban renewal, Yom Kippur War, Zipcar

Millions of Americans, who thought they were rich, now suddenly found themselves unable to pay the interest on mortgages that had been deferred but were now coming due. Foreclosures skyrocketed. Banks and other lending institutions in America—that had willingly bought into what amounted to a sophisticated global Ponzi scheme—went into paralysis. In September 2008 Lehman Brothers went under. Then AIG—a company that held subprime mortgage bonds and loans totaling billions—was threatened with a meltdown; if this had occurred, it would have taken the rest of the American economy and much of the world economy down with it.


pages: 429 words: 120,332

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens by Nicholas Shaxson

Asian financial crisis, asset-backed security, bank run, battle of ideas, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, collapse of Lehman Brothers, computerized trading, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, Double Irish / Dutch Sandwich, export processing zone, failed state, financial deregulation, financial engineering, financial innovation, Fractional reserve banking, full employment, Glass-Steagall Act, Global Witness, Golden arches theory, high net worth, income inequality, Kenneth Rogoff, laissez-faire capitalism, land reform, land value tax, light touch regulation, Londongrad, Long Term Capital Management, low interest rates, Martin Wolf, Money creation, money market fund, New Journalism, Northern Rock, offshore financial centre, oil shock, old-boy network, out of africa, passive income, plutocrats, Ponzi scheme, race to the bottom, regulatory arbitrage, reserve currency, Ronald Reagan, shareholder value, Suez crisis 1956, The Spirit Level, too big to fail, transfer pricing, vertical integration, Washington Consensus

Likewise, the Caymans bank lent money to a stockholder who would use it to create capital in the Luxembourg bank. From just $2.5 million in equity capital at the beginning, BCCI had raised nearly $850 million by 1990, with the help of this offshore bootstrap.8 Abedi also wrote off his friends’ debts but kept expanding by operating a Ponzi scheme: milking the staff pension fund and taking in more deposits simply to pay its outgoings. Many of its eighty thousand depositors were relatively poor people from the developing world who had no idea that this apparently London-based bank, backed by wealthy Arab Sheikhs, was a fiction piled on a fiction.


pages: 380 words: 118,675

The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

airport security, Amazon Mechanical Turk, Amazon Web Services, AOL-Time Warner, Apollo 11, bank run, Bear Stearns, Bernie Madoff, big-box store, Black Swan, book scanning, Brewster Kahle, buy and hold, call centre, centre right, Chuck Templeton: OpenTable:, Clayton Christensen, cloud computing, collapse of Lehman Brothers, crowdsourcing, cuban missile crisis, Danny Hillis, deal flow, Douglas Hofstadter, drop ship, Elon Musk, facts on the ground, fulfillment center, game design, housing crisis, invention of movable type, inventory management, James Dyson, Jeff Bezos, John Markoff, junk bonds, Kevin Kelly, Kiva Systems, Kodak vs Instagram, Larry Ellison, late fees, loose coupling, low skilled workers, Maui Hawaii, Menlo Park, Neal Stephenson, Network effects, new economy, off-the-grid, optical character recognition, PalmPilot, pets.com, Ponzi scheme, proprietary trading, quantitative hedge fund, reality distortion field, recommendation engine, Renaissance Technologies, RFID, Rodney Brooks, search inside the book, shareholder value, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, Skype, SoftBank, statistical arbitrage, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, the long tail, Thomas L Friedman, Tony Hsieh, two-pizza team, Virgin Galactic, Whole Earth Catalog, why are manhole covers round?, zero-sum game

By 1993, he was remotely running the firm’s Chicago-based options trading group and then its high-profile entry into the third-market business, an alternative over-the-counter exchange that allowed retail investors to trade equities without the usual commissions collected by the New York Stock Exchange.4 Brian Marsh, a programmer for the firm who would later work at Amazon, says that Bezos was “incredibly charismatic and persuasive about the third-market project. It was easy to see then he was a great leader.” Bezos’s division faced constant challenges, however. The dominant player in the space was one Bernard Madoff (the architect of a massive Ponzi scheme that would unravel in 2008). Madoff’s own third-market division pioneered the business and preserved its market lead. Bezos and his team could see Madoff’s offices in the Lipstick Building on the East Side through their windows high above the city. While the rest of Wall Street saw D. E. Shaw as a highly secretive hedge fund, the firm viewed itself somewhat differently.


pages: 406 words: 113,841

The American Way of Poverty: How the Other Half Still Lives by Sasha Abramsky

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, American Legislative Exchange Council, bank run, basic income, benefit corporation, big-box store, collective bargaining, deindustrialization, fixed income, Francis Fukuyama: the end of history, full employment, ghettoisation, Gini coefficient, government statistician, guns versus butter model, housing crisis, illegal immigration, immigration reform, income inequality, indoor plumbing, job automation, Kickstarter, land bank, Mark Zuckerberg, Maui Hawaii, microcredit, military-industrial complex, mortgage debt, mortgage tax deduction, new economy, Occupy movement, off-the-grid, offshore financial centre, payday loans, plutocrats, Ponzi scheme, Potemkin village, profit motive, Ronald Reagan, school vouchers, upwardly mobile, War on Poverty, Washington Consensus, women in the workforce, working poor, working-age population, Works Progress Administration

In reality, however, it has created a public sector defined by squalor and an insecure citizenry unable to define itself by commonly accessed, and accessible, institutions. The method is simple: defund public services, ensure that the government only delivers second-rate goods, convince the electorate that long-term societal investments such as Social Security and Medicare are Ponzi schemes unlikely to survive down the generations, and it becomes ever easier to convince ordinary people that taxes are a mugging rather than an investment. There is, after all, a reason that Swedes—who receive quality education, healthcare, childcare, vacation times, and pensions courtesy of their government—tolerate far higher taxes than do Americans.


pages: 386 words: 113,709

Why We Drive: Toward a Philosophy of the Open Road by Matthew B. Crawford

1960s counterculture, Airbus A320, airport security, augmented reality, autonomous vehicles, behavioural economics, Bernie Sanders, Big Tech, Boeing 737 MAX, British Empire, Burning Man, business logic, call centre, classic study, collective bargaining, confounding variable, congestion pricing, crony capitalism, data science, David Sedaris, deskilling, digital map, don't be evil, Donald Trump, driverless car, Elon Musk, emotional labour, en.wikipedia.org, Fellow of the Royal Society, Ford Model T, gamification, gentrification, gig economy, Google Earth, Great Leap Forward, Herbert Marcuse, hive mind, Ian Bogost, income inequality, informal economy, Internet of things, Jane Jacobs, labour mobility, Lyft, mirror neurons, Network effects, New Journalism, New Urbanism, Nicholas Carr, planned obsolescence, Ponzi scheme, precautionary principle, Ralph Nader, ride hailing / ride sharing, Ronald Reagan, Sam Peltzman, security theater, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, social graph, social intelligence, Stephen Hawking, surveillance capitalism, tacit knowledge, tech worker, technoutopianism, the built environment, The Death and Life of Great American Cities, the High Line, time dilation, too big to fail, traffic fines, Travis Kalanick, trolley problem, Uber and Lyft, Uber for X, uber lyft, Unsafe at Any Speed, urban planning, Wall-E, Works Progress Administration

By having earlier investors massively subsidize rides through low fares, the firm aimed for “growth at all costs,” knowing that there are segments of the investment world that regard explosive growth as “the only important determinant of how start-up companies should be valued.” Once the firm went public, its business model was essentially that of a Ponzi scheme, made possible by diverting attention from the massive fare subsidies (supplied by investors) responsible for its growth. Horan writes that Uber is indeed an innovative company. But its innovation has little to do with “tech” or with finding efficiencies that had previously eluded the taxi industry.


pages: 409 words: 112,055

The Fifth Domain: Defending Our Country, Our Companies, and Ourselves in the Age of Cyber Threats by Richard A. Clarke, Robert K. Knake

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Affordable Care Act / Obamacare, air gap, Airbnb, Albert Einstein, Amazon Web Services, autonomous vehicles, barriers to entry, bitcoin, Black Lives Matter, Black Swan, blockchain, Boeing 737 MAX, borderless world, Boston Dynamics, business cycle, business intelligence, call centre, Cass Sunstein, cloud computing, cognitive bias, commoditize, computer vision, corporate governance, cryptocurrency, data acquisition, data science, deep learning, DevOps, disinformation, don't be evil, Donald Trump, Dr. Strangelove, driverless car, Edward Snowden, Exxon Valdez, false flag, geopolitical risk, global village, immigration reform, information security, Infrastructure as a Service, Internet of things, Jeff Bezos, John Perry Barlow, Julian Assange, Kubernetes, machine readable, Marc Benioff, Mark Zuckerberg, Metcalfe’s law, MITM: man-in-the-middle, Morris worm, move fast and break things, Network effects, open borders, platform as a service, Ponzi scheme, quantum cryptography, ransomware, Richard Thaler, Salesforce, Sand Hill Road, Schrödinger's Cat, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Skype, smart cities, Snapchat, software as a service, Steven Levy, Stuxnet, technoutopianism, The future is already here, Tim Cook: Apple, undersea cable, unit 8200, WikiLeaks, Y2K, zero day

With a stolen credit card or a compromised account, criminals can spin up a virtual server on Amazon as easily as you can buy an ebook. According to data from Spamhaus, a nonprofit corporation that tracks online spam propagation, Amazon is one of the worst sources of all kinds of malicious cyber activity. Out of its data centers spew many of the ads for CheapPills and Ponzi schemes that clog up your junk mail folder. Amazon’s servers host many of the domains that cyber criminals try to get you to click on. Of course, Jeff Bezos isn’t relying on spam or botnets to make his billions. As with the internet itself, the cloud has turned out to be a neutral medium, a mirror that reflects the intentions, good or bad, of those who are using it.


pages: 361 words: 117,566

Money Men: A Hot Startup, a Billion Dollar Fraud, a Fight for the Truth by Dan McCrum

air gap, Amazon Web Services, Bernie Madoff, Big Tech, bitcoin, Brexit referendum, Buckminster Fuller, call centre, Cambridge Analytica, centre right, Citizen Lab, corporate governance, corporate raider, COVID-19, Donald Trump, Elon Musk, fake news, forensic accounting, Internet Archive, Kinder Surprise, lockdown, Market Wizards by Jack D. Schwager, multilevel marketing, new economy, off-the-grid, offshore financial centre, pirate software, Ponzi scheme, Potemkin village, price stability, profit motive, reality distortion field, rolodex, Salesforce, short selling, Silicon Valley, Skype, SoftBank, sovereign wealth fund, special economic zone, Steve Jobs, Vision Fund, WeWork

‘Nelson knows everybody in the industry, he’ll be sure to bring business. Plus, just think of his family, a job would be great for them, they could stay in Dublin. You wouldn’t have to say what work he’d do for now, just get him in the door.’ ‘Have you got a screw loose?’ Smaul briefly wondered how it would look to write ‘Ponzi scheme’ in the box under former employment on the application form for an Irish work visa. Marsalek, as ever, didn’t take it personally. Smaul wasn’t sure if he treated these arguments like a game or really believed them, trying to talk the other person into submission. (Marsalek hadn’t even sounded out Burtnick, who ultimately wound up working with Rüdiger Trautmann at Inatec, having first flown to New York to surrender and plead guilty to charges of conspiracy, bank fraud and money laundering in connection to illegal internet gambling operations, in a deal which saw Burtnick avoid prison.)


pages: 389 words: 111,372

Raising Lazarus: Hope, Justice, and the Future of America’s Overdose Crisis by Beth Macy

2021 United States Capitol attack, Affordable Care Act / Obamacare, Bernie Sanders, big-box store, Black Lives Matter, coronavirus, COVID-19, critical race theory, crowdsourcing, defund the police, Donald Trump, drug harm reduction, Easter island, fake news, Haight Ashbury, half of the world's population has never made a phone call, knowledge economy, labor-force participation, Laura Poitras, liberation theology, mandatory minimum, mass incarceration, medical malpractice, medical residency, mutually assured destruction, New Journalism, NSO Group, obamacare, off grid, opioid epidemic / opioid crisis, Overton Window, pill mill, Ponzi scheme, QAnon, RAND corporation, rent-seeking, Ronald Reagan, shareholder value, single-payer health, social distancing, The Chicago School, Upton Sinclair, working poor, working-age population, Y2K, zero-sum game

Goldin’s lawyer, Mike Quinn—the lone attorney whose firm wasn’t billing for the case—was working nights and weekends trying to shift blame to the Sacklers. Quinn still had his regular caseload to tend to between writing anti-Purdue filings and feeding the press stories. Before the bankruptcy, Quinn’s most high-profile case had been to defend an investor who’d been rooked in 2017 by the Ponzi-scheming organizers of the ill-fated Fyre Festival in the Bahamas. The law firm where he works, with twenty lawyers headquartered in New York’s Union Square, was supportive of his knight’s quest for justice against the Sacklers, he said, though his colleagues had yet to read his fiery briefs, he was relieved to say.


pages: 654 words: 120,154

The Firm by Duff McDonald

"World Economic Forum" Davos, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset light, Bear Stearns, benefit corporation, book value, borderless world, collective bargaining, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, family office, financial independence, Frederick Winslow Taylor, Glass-Steagall Act, income inequality, invisible hand, Jeff Bezos, Joseph Schumpeter, Ken Thompson, Kickstarter, laissez-faire capitalism, Mahatma Gandhi, Nelson Mandela, new economy, pets.com, Ponzi scheme, Ralph Nader, risk tolerance, risk-adjusted returns, Robert Solow, scientific management, shareholder value, Sheryl Sandberg, Silicon Valley, Steve Jobs, supply-chain management, The Nature of the Firm, vertical integration, young professional

The value of McKinsey’s Supplemental Retirement Plan declined by 21 percent in 2008, shedding $780 million out of a total of $3.8 billion at the start of the year. When it came to investments, the firm’s bust-era results could be as spotty as some of its advice. What’s more, McKinsey could be as gullible as any other investor: The firm lost $193.5 million in the Petters Group Ponzi scheme. On the other hand, McKinsey did manage to benefit from investment banks’ and hedge funds’ rigging of the CDO game, as it had investments in the Magnetar hedge funds, creators of the now-infamous “Magnetar trade.” Swiss bank UBS hired McKinsey to help it decide whether or not to enter the leveraged buyout market for midsize companies in 2002.


pages: 460 words: 122,556

The End of Wall Street by Roger Lowenstein

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, benefit corporation, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, break the buck, Brownian motion, Carmen Reinhart, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, fixed income, geopolitical risk, Glass-Steagall Act, Greenspan put, high net worth, Hyman Minsky, interest rate derivative, invisible hand, junk bonds, Ken Thompson, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Martin Wolf, Michael Milken, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, Ponzi scheme, profit motive, race to the bottom, risk tolerance, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, savings glut, short selling, sovereign wealth fund, statistical model, the payments system, too big to fail, tulip mania, Y2K

John Dugan, a lawyer and former Treasury official who became comptroller in the summer of 2005, was horrified by what he heard from his examiners—especially about no-doc mortgages and option ARMs.20 The mortgage industry, Dugan realized, had become obsessively focused on offering loans with the lowest possible initial payment—with the expectation that each mortgage would be refinanced before it adjusted. This had elements of a Ponzi scheme, for the old loans were to be redeemed not from income but with new borrowings. Dugan began to push aggressively for regulatory guidance that would instruct banks to evaluate mortgage applicants on the basis of their ability to pay the eventual adjusted rate—not just the teaser. But Dugan needed the cooperation of the Fed, as well as the Federal Deposit Insurance Corporation and the Office of Thrift Supervision (OTS), which proved slow going.


Hedgehogging by Barton Biggs

activist fund / activist shareholder / activist investor, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Big Tech, book value, Bretton Woods, British Empire, business cycle, buy and hold, diversification, diversified portfolio, eat what you kill, Elliott wave, family office, financial engineering, financial independence, fixed income, full employment, global macro, hiring and firing, index fund, Isaac Newton, job satisfaction, junk bonds, low interest rates, margin call, market bubble, Mary Meeker, Mikhail Gorbachev, new economy, oil shale / tar sands, PalmPilot, paradox of thrift, Paul Samuelson, Ponzi scheme, proprietary trading, random walk, Reminiscences of a Stock Operator, risk free rate, Ronald Reagan, secular stagnation, Sharpe ratio, short selling, Silicon Valley, transaction costs, upwardly mobile, value at risk, Vanguard fund, We are all Keynesians now, zero-sum game, éminence grise

“And investors now know that the accountants were corrupt and that reported earnings of even the icons of American capitalism were manipulated by hero CEOs so they could exercise their options. Even some of the best firms underwrote trash and had analysts who were liars. Brokers were pawns and are being thrown to the wolves. Investors always knew Wall Street was a casino, but they thought that at least it was an honest casino. Instead, it was a giant sophisticated Ponzi scheme, and they were the suckers. People are not going to ccc_biggs_ch08_95-118.qxd 102 11/29/05 7:02 AM Page 102 HEDGEHOGGING forgive and forget these grievous wounds in a year or two. This is secular, not cyclical.” “Yeah,” I said, “but everything you say has been on TV and the front pages and is already mostly discounted.These are all the reasons why equity markets were down three years in a row.


pages: 405 words: 121,999

The Human Tide: How Population Shaped the Modern World by Paul Morland

active measures, agricultural Revolution, Ayatollah Khomeini, Berlin Wall, British Empire, clean water, Corn Laws, demographic dividend, demographic transition, Donald Trump, European colonialism, failed state, Fall of the Berlin Wall, feminist movement, global pandemic, Great Leap Forward, mass immigration, megacity, Mikhail Gorbachev, Mohammed Bouazizi, Nelson Mandela, open immigration, Ponzi scheme, RAND corporation, rent-seeking, sceptred isle, stakhanovite, Thomas Malthus, transatlantic slave trade, women in the workforce, working-age population

In Western Europe, although lower than Japan, it will be twice as high in 2050 as it was in 2005.36 Pensions in the developed world as a whole are set to double as a share of GDP without significant reform by 2050, and the greater demands of older people on health services will also be a fiscal challenge for a developed world where budgets are already under strain and debt to GDP ratios are seen by many as perilously high.37 There will also be a sharp rise in the ‘older old’–in the UK there are 1.4 million people aged over eighty-five today, and this figure will double in twenty years and treble in thirty years as the baby boomers move from the frontiers of ageing into its more advanced stage.38 Some would argue that the welfare state as we have known it since the Second World War has the characteristics of a Ponzi scheme: it works only if each new generation of workers is larger than the last. Where old-age pensions are funded from current taxation, there is certainly something in this, and it seems unlikely that welfare states will be able to carry on in anything like their current form as societies age. Yet, at the same time, with more and more people having no children to care for them, reliance on the state will grow.


pages: 435 words: 127,403

Panderer to Power by Frederick Sheehan

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, book value, Bretton Woods, British Empire, business cycle, buy and hold, California energy crisis, call centre, central bank independence, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversification, financial deregulation, financial innovation, full employment, Glass-Steagall Act, Greenspan put, guns versus butter model, inflation targeting, interest rate swap, inventory management, Isaac Newton, John Meriwether, junk bonds, low interest rates, margin call, market bubble, Mary Meeker, McMansion, Menlo Park, Michael Milken, money market fund, mortgage debt, Myron Scholes, new economy, Nixon triggered the end of the Bretton Woods system, Norman Mailer, Northern Rock, oil shock, Paul Samuelson, place-making, Ponzi scheme, price stability, reserve currency, rising living standards, Robert Solow, rolodex, Ronald Reagan, Sand Hill Road, Savings and loan crisis, savings glut, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, stock buybacks, stocks for the long run, supply-chain management, supply-chain management software, The Great Moderation, too big to fail, transaction costs, trickle-down economics, VA Linux, Y2K, Yom Kippur War, zero-sum game

Arthur Levitt, chairman of the SEC, also gave a speech at the conference, in which he warned that retail investors did not fully understand markets and “may fall victim to their own wishful thinking.”38 These would be the investors whom Greenspan had told the senators would find it difficult to leverage their Internet stocks if the Fed raised margin requirements. Julian Robertson, a hedge fund manager who produced at least 27 percent annual returns for close to two decades, threw in the towel. “The current craze in Internet stocks was creating a Ponzi scheme and that makes the process self-perpetuating until the pyramid eventually collapses under its own excess.” He closed his career by telling the New York Times: “I’m 67 years old, who needs this?”39 The Federal Reserve chairman did not seem to be influenced by the dissonance, which is not surprising.


pages: 432 words: 124,635

Happy City: Transforming Our Lives Through Urban Design by Charles Montgomery

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Abraham Maslow, accelerated depreciation, agricultural Revolution, American Society of Civil Engineers: Report Card, Apollo 11, behavioural economics, Bernie Madoff, Boeing 747, British Empire, Buckminster Fuller, car-free, carbon credits, carbon footprint, centre right, City Beautiful movement, clean water, congestion charging, correlation does not imply causation, data science, Donald Shoup, East Village, edge city, energy security, Enrique Peñalosa, experimental subject, food desert, Frank Gehry, General Motors Futurama, gentrification, Google Earth, happiness index / gross national happiness, hedonic treadmill, Home mortgage interest deduction, housing crisis, income inequality, income per capita, Induced demand, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, license plate recognition, McMansion, means of production, megacity, Menlo Park, meta-analysis, mortgage tax deduction, New Urbanism, Panopticon Jeremy Bentham, peak oil, Ponzi scheme, power law, rent control, restrictive zoning, ride hailing / ride sharing, risk tolerance, science of happiness, Seaside, Florida, Silicon Valley, starchitect, streetcar suburb, the built environment, The Death and Life of Great American Cities, the High Line, The Spirit Level, The Wealth of Nations by Adam Smith, trade route, transit-oriented development, upwardly mobile, urban planning, urban sprawl, wage slave, white flight, World Values Survey, zero-sum game, Zipcar

They are also fighting climate change by producing less greenhouse gas emissions (left) than residents in Atlanta’s sprawling suburbs. In both cases, the savings are a result of system design. (Scott Keck/Cole Robertson and Center for Neighborhood Technology: Housing and Transportation Index) Many North American cities are just waking up to the fact that they have been engaging in a massive urban Ponzi scheme, with new development creating short-term benefits in development fees and tax revenues but even bigger long-term costs that pile up faster than cities’ ability to pay them off. In the boom years, cities kicked the great reckoning down the road. But now the maintenance costs are coming due, the development fee revenues from the boom years have dried up, and giant potholes are appearing in civic budgets.


pages: 413 words: 128,093

On the Grand Trunk Road: A Journey Into South Asia by Steve Coll

affirmative action, airport security, anti-communist, Ayatollah Khomeini, back-to-the-land, Berlin Wall, British Empire, colonial rule, disinformation, Fall of the Berlin Wall, foreign exchange controls, full employment, global village, income inequality, income per capita, Indoor air pollution, Khyber Pass, land reform, Mahatma Gandhi, market bubble, mass immigration, Mikhail Gorbachev, New Urbanism, Ponzi scheme, Ronald Reagan, upwardly mobile, urban sprawl, yellow journalism

In Washington, he turned to former U.S. defense secretary Clark Clifford, whose reputation as an accomplished courtier was well established long before he met Abedi. Ultimately, this pattern of growth became untenable—the total amount of the unrecoverable loans, gifts, stipends, and charity donations outstripped the amount of deposits and other obligations BCCI owed to its customers. New York district attorney Morgenthau called this type of fraud a “giant Ponzi scheme,” meaning that Abedi kept racing to raise new deposits from customers in order to cover his fraudulent dealings with friends, employees, and cronies. In South Asia, the pattern was seen differently. There it seemed obvious that Abedi had tried foolishly to extend to the West a style of business commonplace in his own world but unacceptable abroad.


pages: 494 words: 121,217

Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency by Andy Greenberg

2021 United States Capitol attack, Airbnb, augmented reality, bitcoin, Bitcoin Ponzi scheme, Black Lives Matter, blockchain, Brian Krebs, Cody Wilson, commoditize, computerized markets, COVID-19, crowdsourcing, cryptocurrency, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, forensic accounting, Global Witness, Google Glasses, Higgs boson, hive mind, impulse control, index card, Internet Archive, Jeff Bezos, Julian Assange, Large Hadron Collider, machine readable, market design, operational security, opioid epidemic / opioid crisis, pirate software, Ponzi scheme, ransomware, reserve currency, ride hailing / ride sharing, rolodex, Ross Ulbricht, Satoshi Nakamoto, Skype, slashdot, Social Justice Warrior, the market place, web application, WikiLeaks

* * * · · · As Meiklejohn had trawled cryptocurrency forums for discussions of interesting addresses worth scrutinizing, one mysterious mountain of money in particular stood out: This single address had, over the course of 2012, accumulated 613,326 bitcoins—5 percent of all the coins in circulation. It represented around $7.5 million at the time, a figure nowhere near the billions it would represent today, but a heady sum nonetheless. Rumors among Bitcoin users suggested that the hoard was possibly a Silk Road wallet, or perhaps the result of an unrelated, notorious Bitcoin Ponzi scheme carried out by a user known as pirate@40. Meiklejohn couldn’t say which of the two rumors might be correct. But with her clustering techniques, she could now follow that giant sum of cryptocurrency. She saw that after conspicuously gathering at one address, the pile of money had been broken up in late 2012 and sent on forking paths around the blockchain.


pages: 428 words: 134,832

Straphanger by Taras Grescoe

active transport: walking or cycling, Affordable Care Act / Obamacare, airport security, Albert Einstein, big-box store, bike sharing, Boeing 747, Boris Johnson, British Empire, call centre, car-free, carbon credits, carbon footprint, carbon tax, City Beautiful movement, classic study, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, correlation does not imply causation, David Brooks, deindustrialization, Donald Shoup, East Village, edge city, Enrique Peñalosa, extreme commuting, financial deregulation, fixed-gear, Frank Gehry, gentrification, glass ceiling, Golden Gate Park, Great Leap Forward, high-speed rail, housing crisis, hydraulic fracturing, indoor plumbing, intermodal, invisible hand, it's over 9,000, Jane Jacobs, Japanese asset price bubble, jitney, Joan Didion, Kickstarter, Kitchen Debate, laissez-faire capitalism, Marshall McLuhan, mass immigration, McMansion, megacity, megaproject, messenger bag, mortgage tax deduction, Network effects, New Urbanism, obamacare, oil shale / tar sands, oil shock, Own Your Own Home, parking minimums, peak oil, pension reform, Peter Calthorpe, Ponzi scheme, Ronald Reagan, Rosa Parks, sensible shoes, Silicon Valley, Skype, streetcar suburb, subprime mortgage crisis, the built environment, The Death and Life of Great American Cities, the High Line, transit-oriented development, union organizing, urban planning, urban renewal, urban sprawl, walkable city, white flight, working poor, young professional, Zipcar

In the 1980s, visionary city planning director Calvin Hamilton came up with the “centers strategy,” which would have concentrated high-density commercial and apartment development in thirty-five nodes in the city, to be linked by mass transit. But the region has resisted rationalization. The economy of Orange County, for example, has for most of its history been a slow-motion Ponzi scheme based on the conversion of vast tracts of former ranch lands into a centerless edge city of endless suburbia, with minimal provision for culture or public space. While a city like New York or Chicago can bank on commuters riding trains to a central business district to sustain public transport, Los Angeles’s freeway system has dispersed employment centers to office parks alongside interchanges.


pages: 500 words: 145,005

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler

3Com Palm IPO, Alan Greenspan, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, behavioural economics, Berlin Wall, Bernie Madoff, Black-Scholes formula, book value, business cycle, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, low interest rates, market clearing, Mason jar, mental accounting, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, PalmPilot, Paul Samuelson, payday loans, Ponzi scheme, Post-Keynesian economics, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, risk free rate, Robert Shiller, Robert Solow, Ronald Coase, Silicon Valley, South Sea Bubble, Stanford marshmallow experiment, statistical model, Steve Jobs, sunk-cost fallacy, Supply of New York City Cabdrivers, systematic bias, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

The problem with this argument is that it can be hard to find a true expert who does not have a conflict of interest. It is illogical to think that someone who is not sophisticated enough to choose a good portfolio for her retirement saving will somehow be sophisticated about searching for a financial advisor, mortgage broker, or real estate agent. Many people have made money selling magic potions and Ponzi schemes, but few have gotten rich selling the advice, “Don’t buy that stuff.” A different version of the argument is that the forces of competition inexorably drive business firms to be maximizers, even if they are managed by Humans, including some who did not distinguish themselves as students. Of course there is some merit to this argument, but I think it is vastly overrated.


pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

"World Economic Forum" Davos, Airbnb, altcoin, Alvin Toffler, asset-backed security, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, business logic, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, commons-based peer production, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, currency risk, decentralized internet, digital capitalism, disintermediation, disruptive innovation, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Future Shock, Galaxy Zoo, general purpose technology, George Gilder, glass ceiling, Google bus, GPS: selective availability, Hacker News, Hernando de Soto, Higgs boson, holacracy, income inequality, independent contractor, informal economy, information asymmetry, information security, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Neal Stephenson, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, radical decentralization, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, search costs, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, Snow Crash, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, systems thinking, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Soul of a New Machine, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Tyler Cowen, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, vertical integration, Vitalik Buterin, wealth creators, X Prize, Y2K, Yochai Benkler, Zipcar

Gox exchange or the conviction of Ross William Ulbricht, founder of the Silk Road darknet market seized by the Federal Bureau of Investigation for trafficking illegal drugs, child pornography, and weapons using the bitcoin blockchain as a payment system. Bitcoin’s price has fluctuated drastically, and the ownership of bitcoins is still concentrated. A 2013 study showed that 937 people owned half of all bitcoin, although that is changing today.11 How do we get from porn and Ponzi schemes to prosperity? To begin, it’s not bitcoin, the still speculative asset, that should interest you, unless you’re a trader. This book is about something bigger than the asset. It’s about the power and potential of the underlying technological platform. This is not to say that bitcoin or cryptocurrencies per se are unimportant, as some people have suggested as they scramble to disassociate their projects from the scandalous ventures of the past.


pages: 482 words: 125,429

The Book: A Cover-To-Cover Exploration of the Most Powerful Object of Our Time by Keith Houston

clean water, Commentariolus, dumpster diving, Eratosthenes, financial innovation, invention of movable type, Islamic Golden Age, Kickstarter, knowledge economy, means of production, Murano, Venice glass, paper trading, Ponzi scheme, Suez crisis 1956, wikimedia commons

Mainz operated a system of annuities, where wealthy citizens who could afford to loan the city a sizeable lump sum received yearly repayments thereafter of around 5 percent, payable in perpetuity to the annuitant and their heirs. The guilds, whose members were heavily taxed in order to fund this municipal Ponzi scheme, fought the patricians at every turn, and the city was thus locked in a vicious cycle. Periodically, the guilds would gain the upper hand in the city’s council, or pack its offices with their sympathizers; in response, the patrician families would retreat in high dudgeon to their out-of-town estates, taking their money with them; and finally, with the city on the brink of financial ruin, the guilds would climb down.


pages: 385 words: 133,839

The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding

"World Economic Forum" Davos, An Inconvenient Truth, carbon footprint, classic study, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, military-industrial complex, MITM: man-in-the-middle, Naomi Klein, Nelson Mandela, New Journalism, Pepsi Challenge, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, stock buybacks, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair, Wayback Machine

Srivastava stood up to blast operations in India, warning investors that Coke may be forced to pay hefty fines in India. Next Camilo Romero blamed Coke for failing to bargain in good faith with the Colombians. Then it was Kellett, describing Coke’s newly announced global “water neutrality” policy as just a big Ponzi scheme, sucking down water in one part of the world while conserving it in another. And so it went. Emerging into the bright Georgia sunshine, Rogers was elated. “If Neville Isdell thought it was his swan song, that he was going to end on a high note, then he was wrong,” he said. In real terms, of course, the meeting achieved nothing.


pages: 442 words: 130,526

The Billionaire Raj: A Journey Through India's New Gilded Age by James Crabtree

"World Economic Forum" Davos, accounting loophole / creative accounting, Asian financial crisis, behavioural economics, Big bang: deregulation of the City of London, Branko Milanovic, business climate, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial rule, commodity super cycle, Cornelius Vanderbilt, corporate raider, creative destruction, crony capitalism, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, facts on the ground, failed state, fake news, Francis Fukuyama: the end of history, global supply chain, Gunnar Myrdal, income inequality, informal economy, Joseph Schumpeter, land bank, liberal capitalism, Mahatma Gandhi, McMansion, megacity, Meghnad Desai, middle-income trap, New Urbanism, offshore financial centre, open economy, Parag Khanna, Pearl River Delta, plutocrats, Ponzi scheme, post-truth, public intellectual, quantitative easing, rent-seeking, Rubik’s Cube, Shenzhen special economic zone , Silicon Valley, Simon Kuznets, smart cities, special economic zone, spectrum auction, tech billionaire, The Great Moderation, Thomas L Friedman, transaction costs, trickle-down economics, vertical integration, Washington Consensus, WikiLeaks, yellow journalism, young professional

journalist Tamal Bandyopadhyay, who wrote a book on Sahara, asked Roy outright in 2014, around the time that his businesses began to come under serious official scrutiny.31 “Is Sahara a vehicle for turning black money white?” Roy firmly denied both accusations, just as Sahara consistently rejected the charge that its investment schemes were structured like a Ponzi scheme. Still, the question of where exactly Sahara raised its money remained mysterious. Back in 2012, regulators demanded that Roy refund more than $3 billion to his investors.32 Three years later, then aged sixty-five, he was sent to New Delhi’s Tihar jail on charges of contempt of court, having failed to appear at a hearing investigating another of his financial products.


pages: 510 words: 141,188

Bottle of Lies: The Inside Story of the Generic Drug Boom by Katherine Eban

Affordable Care Act / Obamacare, Bernie Madoff, Frances Oldham Kelsey, global pandemic, Mahatma Gandhi, Nelson Mandela, offshore financial centre, old-boy network, Ponzi scheme, rolodex, Ronald Reagan, Skype, Upton Sinclair, urban planning

For the first time in its history, TAFEF had invited all the whistleblowers it had helped over the years to spend a weekend together in the Florida Keys. About eighteen of them came. Some were unknown, while others were marquee names, like the financial sleuth Harry Markopolos, who had first alerted the Securities and Exchange Commission to Bernie Madoff’s Ponzi scheme. Cheryl Eckard, a former quality assurance manager at GlaxoSmithKline, helped host the event. She’d been granted $96 million, the largest whistleblower recovery ever, for exposing nonsterile manufacturing at a GSK plant in Puerto Rico. Patrick Burns, the acting executive director of Taxpayers Against Fraud, had been worried about getting whistleblowers together: “They don’t herd well,” he later said.


pages: 545 words: 137,789

How Markets Fail: The Logic of Economic Calamities by John Cassidy

Abraham Wald, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Andrei Shleifer, anti-communist, AOL-Time Warner, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, book value, Bretton Woods, British Empire, business cycle, capital asset pricing model, carbon tax, Carl Icahn, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, different worldview, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Garrett Hardin, George Akerlof, Glass-Steagall Act, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Nixon triggered the end of the Bretton Woods system, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, precautionary principle, price discrimination, price stability, principal–agent problem, profit maximization, proprietary trading, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, subprime mortgage crisis, tail risk, Tax Reform Act of 1986, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, transaction costs, Two Sigma, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game

Greed is another oft-mentioned factor; stupidity, a third. (How could those boneheads on Wall Street not have known that lending money to folks with no income, no jobs, and no assets—the infamous “NINJA” mortgage loans—was a bad idea?) In the wake of the revelations about Bernie Madoff and his multibillion-dollar Ponzi scheme, criminality is yet another thing to consider. At the risk of outraging some readers, I downplay character issues. Greed is ever present: it is what economists call a “primitive” of the capitalist model. Stupidity is equally ubiquitous, but I don’t think it played a big role here, and neither, with some obvious exceptions, did outright larceny.


pages: 448 words: 142,946

Sacred Economics: Money, Gift, and Society in the Age of Transition by Charles Eisenstein

Albert Einstein, back-to-the-land, bank run, Bernie Madoff, big-box store, bread and circuses, Bretton Woods, capital controls, carbon credits, carbon tax, clean water, collateralized debt obligation, commoditize, corporate raider, credit crunch, David Ricardo: comparative advantage, debt deflation, degrowth, deindustrialization, delayed gratification, disintermediation, diversification, do well by doing good, fiat currency, financial independence, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, full employment, global supply chain, God and Mammon, happiness index / gross national happiness, hydraulic fracturing, informal economy, intentional community, invisible hand, Jane Jacobs, land tenure, land value tax, Lao Tzu, Lewis Mumford, liquidity trap, low interest rates, McMansion, means of production, megaproject, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, multilevel marketing, new economy, off grid, oil shale / tar sands, Own Your Own Home, Paul Samuelson, peak oil, phenotype, planned obsolescence, Ponzi scheme, profit motive, quantitative easing, race to the bottom, Scramble for Africa, special drawing rights, spinning jenny, technoutopianism, the built environment, Thomas Malthus, too big to fail, Tragedy of the Commons

In an economy plagued by overproduction, such opportunities are rare. So, the financial industry played numbers games instead. The CDOs and so on were a symptom, not a cause, of the financial crisis that originated in the impossibility of economic growth keeping pace with interest. Various pundits have observed that Bernard Madoff’s Ponzi scheme was not so different from the financial industry’s pyramid of mortgaged-based derivatives and other instruments, which themselves formed a bubble that, like Madoff’s, could only sustain itself through an unceasing, indeed exponentially growing, influx of new money. As such, it is a symbol of our times—and even more than people suppose.


pages: 483 words: 134,377

The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly

air freight, Andrei Shleifer, battle of ideas, Bretton Woods, British Empire, business process, business process outsourcing, Carmen Reinhart, classic study, clean water, colonial rule, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, Deng Xiaoping, desegregation, discovery of the americas, Edward Glaeser, en.wikipedia.org, European colonialism, Ford Model T, Francisco Pizarro, fundamental attribution error, gentrification, germ theory of disease, greed is good, Gunnar Myrdal, income per capita, invisible hand, James Watt: steam engine, Jane Jacobs, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, low interest rates, M-Pesa, microcredit, Monroe Doctrine, oil shock, place-making, Ponzi scheme, public intellectual, risk/return, road to serfdom, Robert Solow, Silicon Valley, Steve Jobs, tacit knowledge, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, urban renewal, Washington Consensus, WikiLeaks, World Values Survey, young professional

When financial markets and institutions mobilize savings from disparate households to invest in these promising projects, this represents a second crucial step in fostering growth.33 There may indeed be more scope in finance than in goods markets for activities that generate private returns that are not social returns, such as deception, embezzlement, and outright Ponzi schemes. As explained by the great book satirically titled This Time Is Different, by Carmen Reinhart and Kenneth Rogoff, cheating in finance did not start with the horrific financial crisis of 2007 to 2008; it has been happening for centuries.34 Yet somehow, despite the cheating, finance keeps providing the essential services without which large-scale success would not be possible.


pages: 537 words: 144,318

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny

Albert Einstein, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bear Stearns, Bernie Madoff, Black Swan, bond market vigilante , book value, Bretton Woods, BRICs, British Empire, business cycle, business process, buy and hold, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, commoditize, commodity super cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, equity risk premium, family office, fiat currency, fixed income, follow your passion, full employment, George Santayana, global macro, Greenspan put, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, inverted yield curve, invisible hand, junk bonds, Kickstarter, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, market microstructure, Minsky moment, moral hazard, Myron Scholes, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, proprietary trading, purchasing power parity, quantitative easing, random walk, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, savings glut, selection bias, Sharpe ratio, short selling, SoftBank, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, stocks for the long run, stocks for the long term, survivorship bias, tail risk, The Great Moderation, Thomas Bayes, time value of money, too big to fail, Tragedy of the Commons, transaction costs, two and twenty, unbiased observer, value at risk, Vanguard fund, yield curve, zero-sum game

The industry started to look overinvested in 2007 with large amounts of capital chasing marginal strategies and managers, but the recent crisis has taken the bubble elements out of the industry for now. Weaker managers are gone and investors are focusing on a smaller number of better managers. For the most part, hedge funds held up very well through the crisis. Minus a $65 billion Ponzi scheme masquerading as a hedge fund, there weren’t any major hedge fund blow ups of note. You cannot say that about the banks or even the governments that are supposed to be monitoring them. The hedge fund industry can say to any critics that it actually aided liquidity during the recent crisis, helping to keep the whole financial system together in a way that the commercial banks certainly could not.


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

"Friedman doctrine" OR "shareholder theory", Abraham Wald, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Andrei Shleifer, AOL-Time Warner, asset allocation, asset-backed security, bank run, beat the dealer, behavioural economics, Benoit Mandelbrot, Big Tech, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Carl Icahn, Cass Sunstein, collateralized debt obligation, compensation consultant, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, democratizing finance, Dennis Tito, discovery of the americas, diversification, diversified portfolio, Dr. Strangelove, Edward Glaeser, Edward Thorp, endowment effect, equity risk premium, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Glass-Steagall Act, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Bogle, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, market design, Michael Milken, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, power law, prediction markets, proprietary trading, prudent man rule, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, rolodex, Ronald Reagan, seminal paper, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Skinner box, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, tech worker, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, Two Sigma, Tyler Cowen, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

By 1929 there were hundreds of these trusts, with a total of $7 billion under management (about 8 percent of the stock market’s total value).6 They raised money in public offerings, bought stock with it, and after that they often kept shareholders in the dark while making their founders rich. Some trusts became virtual Ponzi schemes, borrowing money to buy back their own shares and drive prices upward. After the crash, shares in many of these closed-end trusts were close to worthless. At MIT and the other open-ended funds there were losses, of course, but few wipeouts. By the end of the 1930s it was clear that the MIT model was a winner.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, Alan Greenspan, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, Bear Stearns, behavioural economics, Big Tech, bonus culture, Bretton Woods, British Empire, business cycle, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, data science, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, electricity market, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial intermediation, Ford Model T, Frederick Winslow Taylor, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Greenspan put, guns versus butter model, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Bogle, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, London Whale, Long Term Capital Management, low interest rates, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, proprietary trading, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Ronald Reagan, Satyajit Das, Savings and loan crisis, scientific management, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, TED Talk, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, Tragedy of the Commons, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, vertical integration, zero-sum game

It’s a perverse cycle that people like John Bogle, the founder of the Vanguard Group and one of the few reform-minded people in the mutual fund business, have decried. Bogle, who testified before the Senate Finance Committee on the topic in 2014, says today’s stock market itself is not unlike a Ponzi scheme. In fact, he estimates that our bloated financial system might be sucking up some 60 percent of the returns that ordinary retirement savers could otherwise earn on their money. “Individual investors who rely on the historical stock market returns presented by mutual fund marketers will be shocked at the paltry amounts they’ve accumulated in their retirement accounts.


pages: 520 words: 129,887

Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future by Robert Bryce

Abraham Maslow, addicted to oil, An Inconvenient Truth, Apollo 11, Bernie Madoff, carbon credits, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, clean tech, collateralized debt obligation, corporate raider, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, decarbonisation, Deng Xiaoping, disinformation, electricity market, en.wikipedia.org, energy security, energy transition, flex fuel, Ford Model T, Glass-Steagall Act, greed is good, Hernando de Soto, hydraulic fracturing, hydrogen economy, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, James Watt: steam engine, Jevons paradox, Menlo Park, Michael Shellenberger, new economy, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, purchasing power parity, RAND corporation, Ronald Reagan, Silicon Valley, smart grid, Stewart Brand, Ted Nordhaus, Thomas L Friedman, uranium enrichment, Whole Earth Catalog, WikiLeaks

We had the fraud perpetrated by Dennis Kozlowski of Tyco International, who felt entitled to a $6,000 shower curtain.7 There were the two Bernies: Bernie Ebbers of WorldCom, who’s now serving a twenty-five-year sentence for fraud and conspiracy, and, of course, Bernie Madoff, the gold-digging mastermind of a multibillion-dollar Ponzi scheme who’s now serving 150 years in prison. The sports pages were full of news about cheaters, from Major League Baseball players such as Mark Mc-Gwire and Barry Bonds to the ongoing doping scandals at the Tour de France. And we saw the carnage created by the pirates on Wall Street who engineered a multitrillion-dollar mess of toxic derivatives—from collateralized debt obligations to credit default swaps—that would have made even a privateer such as Enron’s Jeffrey Skilling blush in embarrassment.8 We cannot, must not, be Enroned when it comes to energy and energy policy.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

Abraham Maslow, Adam Curtis, addicted to oil, affirmative action, Alan Greenspan, Amazon Mechanical Turk, An Inconvenient Truth, anti-globalists, AOL-Time Warner, banks create money, Bear Stearns, benefit corporation, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, congestion pricing, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, digital divide, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, General Motors Futurama, gentrification, Glass-Steagall Act, global village, Google Earth, greed is good, Herbert Marcuse, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, military-industrial complex, moral hazard, multilevel marketing, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, planned obsolescence, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, public intellectual, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, scientific management, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, vertical integration, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

As if passed over by the headlines, this mania is occurring in late 2008, well after the real-estate bubble popped. These are the very victims of the predatory lending practices and frenzied “flipping” that undermined whatever legitimacy there might have been to this sector of the economy in the first place. They don’t realize that they’re simply being trained to serve as the dupes in yet another Ponzi scheme. “I’m looking for partners,” explains Merrill. “We are looking for joint ventures.” It’s not just talk. Merrill may be making a few hundred thousand dollars selling his DVD package today, but that’s not the entirety of his or any of the other instructors’ business plans. No, the real economic activity is occurring in a large, windowless room in the middle of the convention floor.


pages: 447 words: 141,811

Sapiens: A Brief History of Humankind by Yuval Noah Harari

Admiral Zheng, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, An Inconvenient Truth, Apollo 11, Atahualpa, British Empire, cognitive dissonance, correlation does not imply causation, credit crunch, David Graeber, Easter island, Edmond Halley, European colonialism, Francisco Pizarro, glass ceiling, global village, Great Leap Forward, greed is good, income per capita, invention of gunpowder, Isaac Newton, joint-stock company, joint-stock limited liability company, Kickstarter, liberal capitalism, life extension, low interest rates, Mahatma Gandhi, megacity, Mikhail Gorbachev, military-industrial complex, Neil Armstrong, out of africa, personalized medicine, Ponzi scheme, Silicon Valley, South China Sea, stem cell, Steven Pinker, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, urban planning, zero-sum game

Banks are allowed to loan $10 for every dollar they actually possess, which means that 90 per cent of all the money in our bank accounts is not covered by actual coins and notes.2 If all of the account holders at Barclays Bank suddenly demand their money, Barclays will promptly collapse (unless the government steps in to save it). The same is true of Lloyds, Deutsche Bank, Citibank, and all other banks in the world. It sounds like a giant Ponzi scheme, doesn’t it? But if it’s a fraud, then the entire modern economy is a fraud. The fact is, it’s not a deception, but rather a tribute to the amazing abilities of the human imagination. What enables banks – and the entire economy – to survive and flourish is our trust in the future. This trust is the sole backing for most of the money in the world.


Commodity Trading Advisors: Risk, Performance Analysis, and Selection by Greg N. Gregoriou, Vassilios Karavas, François-Serge Lhabitant, Fabrice Douglas Rouah

Asian financial crisis, asset allocation, backtesting, buy and hold, capital asset pricing model, collateralized debt obligation, commodity trading advisor, compound rate of return, constrained optimization, corporate governance, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, discrete time, distributed generation, diversification, diversified portfolio, dividend-yielding stocks, financial engineering, fixed income, global macro, high net worth, implied volatility, index arbitrage, index fund, interest rate swap, iterative process, linear programming, London Interbank Offered Rate, Long Term Capital Management, managed futures, market fundamentalism, merger arbitrage, Mexican peso crisis / tequila crisis, p-value, Pareto efficiency, Performance of Mutual Funds in the Period, Ponzi scheme, proprietary trading, quantitative trading / quantitative finance, random walk, risk free rate, risk-adjusted returns, risk/return, selection bias, Sharpe ratio, short selling, stochastic process, survivorship bias, systematic trading, tail risk, technology bubble, transaction costs, value at risk, zero-sum game

Managed Futures Investing 241 During 2002, the CFTC continued to pursue regulatory reform in accordance with the Commodity Futures Modernization Act, including a hard look at derivatives clearing organizations, rules governing margins for security futures, and dual trading by floor brokers. The agency also embarked on a massive review of energy trading in the wake of the 2001 Enron scandal and has been acknowledged publicly due only to widespread public interest. In addition, fraud related to unregistered commodity pool operators (CPOs) and CTAs, as well as Ponzi schemes, tops the CFTC’s list of issues. A comprehensive risk management assessment is also an agency focus. To further protect investors, the provisions of the 2001 U.S.A. Patriot Act now require certain registered CTAs to establish anti–money laundering provisions. HEDGERS VERSUS SPECULATORS Individuals or entities that transact in futures markets historically have been described as one of two types: hedgers or speculators.


pages: 464 words: 139,088

The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, classic study, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial engineering, financial innovation, financial intermediation, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Glass-Steagall Act, Great Leap Forward, Hyman Minsky, inflation targeting, invisible hand, Japanese asset price bubble, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, no-fly zone, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Solow, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

The estimate includes provisions made by banks of around $70 billion for future settlements of conduct cases relating to past behaviour. 20 Moggridge (1992), p. 95. 21 Keynes in a 1934 letter quoted by Chambers et al. (2014). 22 Bernie Madoff, former chairman of the NASDAQ stock exchange, for many years managed funds for private investors in which the money paid out was financed by new money coming in – what is known as a Ponzi scheme. He is estimated to have defrauded his investors of around $18 billion and in 2009 was sentenced to the maximum term in prison of 150 years. 23 Quoted in Alan Harrington, ‘The Tyranny of Forms’, Life in the Crystal Palace (Knopf, 1959). 24 This is not to say that accounting standards guarantee a fair and accurate description of the health of a bank (Dowd, 2015, Kerr, 2011). 25 The success of an investment in Berkshire Hathaway is in part the judgement of Warren Buffett and in part the fact that he does not operate his company as a hedge fund, which would typically charge an annual fee of 2 per cent of capital and 20 per cent of profits.


pages: 511 words: 132,682

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

"Friedman doctrine" OR "shareholder theory", affirmative action, Airbnb, Alan Greenspan, Albert Einstein, Andrei Shleifer, behavioural economics, Bernie Sanders, Boeing 737 MAX, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, disinformation, Donald Trump, en.wikipedia.org, fake news, Garrett Hardin, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, incognito mode, income inequality, income per capita, independent contractor, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta-analysis, Milgram experiment, military-industrial complex, mortgage debt, Network effects, out of africa, Paradox of Choice, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Ronald Reagan, search costs, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, sunk-cost fallacy, surveillance capitalism, techlash, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, Tragedy of the Commons, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, vertical integration, winner-take-all economy, Yochai Benkler

For example, the closest thing we have to perfect competition—the stock market—is also one of the most heavily regulated, precisely because regulations are needed to provide guardrails to prevent competition from turning toxic. Without the safeguards imposed by the US Securities and Exchange Commission, Commodity Futures Trading Commission (CFTC), and self-regulatory organizations like the New York Stock Exchange, investors would be exploited by all kinds of unethical strategies, like insider trading, Ponzi schemes, and accounting fraud. The state should play at least two key roles in protecting its citizens from the damage done by toxic competition—first, by using a variety of legal strategies to promote healthy competition; and second, by stepping in to provide what competition itself cannot deliver. Using our legislative process to protect and promote a competition ideal embedded within a vision of a just society In the 1990s, well before the financial crisis, the CFTC became alarmed by the lack of oversight of the secretive, multitrillion-dollar, over-the-counter derivatives market, which included the credit derivatives that spawned the mortgage and housing boom (and later bust).


pages: 407 words: 135,242

The Streets Were Paved With Gold by Ken Auletta

benefit corporation, British Empire, business climate, business logic, clean water, collective bargaining, full employment, Gunnar Myrdal, guns versus butter model, hiring and firing, invisible hand, Jane Jacobs, job satisfaction, Joseph Schumpeter, Lewis Mumford, military-industrial complex, mortgage debt, Norman Mailer, North Sea oil, offshore financial centre, Parkinson's law, Ponzi scheme, price stability, profit motive, Ralph Nader, RAND corporation, rent control, rent stabilization, Ronald Reagan, social contagion, The Death and Life of Great American Cities, union organizing, Upton Sinclair, upwardly mobile, urban decay, urban renewal, War on Poverty, working-age population

Also named were the blue-chip law firms retained as bond counsel—Hawkins, Delafield & Wood, White & Case, Wood Dawson Love & Sabatine, Sykes, Galloway & Dikeman—which “should have conducted additional investigation” and disclosed “material facts” to the public before allowing the sales to proceed. The underwriters were as important to New York’s Ponzi scheme as public officials. All governments or businesses rely on banks. They go to the bond market to finance their long-term or capital budget needs. They go to the note market to meet shortterm cash needs because expenditures usually must be made before revenues are received (i.e., taxes or intergovernmental aid usually don’t arrive when expenditures must be made).


pages: 524 words: 130,909

The Contrarian: Peter Thiel and Silicon Valley's Pursuit of Power by Max Chafkin

3D printing, affirmative action, Airbnb, anti-communist, bank run, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Monday: stock market crash in 1987, Blitzscaling, Boeing 747, borderless world, Cambridge Analytica, charter city, cloud computing, cognitive dissonance, Cornelius Vanderbilt, coronavirus, COVID-19, Credit Default Swap, cryptocurrency, David Brooks, David Graeber, DeepMind, digital capitalism, disinformation, don't be evil, Donald Trump, driverless car, Electric Kool-Aid Acid Test, Elon Musk, Ethereum, Extropian, facts on the ground, Fairchild Semiconductor, fake news, Ferguson, Missouri, Frank Gehry, Gavin Belson, global macro, Gordon Gekko, Greyball, growth hacking, guest worker program, Hacker News, Haight Ashbury, helicopter parent, hockey-stick growth, illegal immigration, immigration reform, Internet Archive, Jeff Bezos, John Markoff, Kevin Roose, Kickstarter, Larry Ellison, life extension, lockdown, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, Maui Hawaii, Max Levchin, Menlo Park, military-industrial complex, moral panic, move fast and break things, Neal Stephenson, Nelson Mandela, Network effects, off grid, offshore financial centre, oil shale / tar sands, open borders, operational security, PalmPilot, Paris climate accords, Patri Friedman, paypal mafia, Peter Gregory, Peter Thiel, pets.com, plutocrats, Ponzi scheme, prosperity theology / prosperity gospel / gospel of success, public intellectual, QAnon, quantitative hedge fund, quantitative trading / quantitative finance, randomized controlled trial, regulatory arbitrage, Renaissance Technologies, reserve currency, ride hailing / ride sharing, risk tolerance, Robinhood: mobile stock trading app, Ronald Reagan, Sam Altman, Sand Hill Road, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, skunkworks, social distancing, software is eating the world, sovereign wealth fund, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, surveillance capitalism, TaskRabbit, tech billionaire, tech worker, TechCrunch disrupt, techlash, technology bubble, technoutopianism, Ted Kaczynski, TED Talk, the new new thing, the scientific method, Tim Cook: Apple, transaction costs, Travis Kalanick, Tyler Cowen, Uber and Lyft, uber lyft, Upton Sinclair, Vitalik Buterin, We wanted flying cars, instead we got 140 characters, Whole Earth Catalog, WikiLeaks, William Shockley: the traitorous eight, Y Combinator, Y2K, yellow journalism, Zenefits

I heard of an early Thiel Fellow who seemed to be wrestling with mental health issues and drug addiction, but, according to two early fellows, administrators were slow to intervene. Another Thiel Fellow was quietly removed from the program, but only after police showed up at a house he shared with a few other fellows. The two fellows said that San Francisco police told them they were investigating his involvement with a cryptocurrency Ponzi scheme. Many fellows described feeling like second-class citizens within Thiel’s orbit. They were told that Founders Fund would not, as a rule, invest in any Thiel Fellows out of fear that that would create the perception of picking favorites. But the policy was always shifting—a handful of companies raised small sums—and Thiel himself put $2 million into Hello, a manufacturer of a $149 alarm clock and sleep tracker founded by James Proud, who entered the fellowship at age nineteen and whom Thiel said “stood out from the start.”


pages: 491 words: 131,769

Crisis Economics: A Crash Course in the Future of Finance by Nouriel Roubini, Stephen Mihm

Alan Greenspan, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, dark matter, David Ricardo: comparative advantage, debt deflation, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, Glass-Steagall Act, global pandemic, global reserve currency, Gordon Gekko, Greenspan put, Growth in a Time of Debt, housing crisis, Hyman Minsky, information asymmetry, interest rate swap, invisible hand, Joseph Schumpeter, junk bonds, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, means of production, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, Northern Rock, offshore financial centre, oil shock, Paradox of Choice, paradox of thrift, Paul Samuelson, Ponzi scheme, price stability, principal–agent problem, private sector deleveraging, proprietary trading, pushing on a string, quantitative easing, quantitative trading / quantitative finance, race to the bottom, random walk, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Satyajit Das, Savings and loan crisis, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, subprime mortgage crisis, Suez crisis 1956, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, too big to fail, tulip mania, Tyler Cowen, unorthodox policies, value at risk, We are all Keynesians now, Works Progress Administration, yield curve, Yom Kippur War

Financial firms slid toward the abyss, and though a few investment banks—most notably Goldman Sachs—managed to escape the conflagration, other storied firms collapsed overnight. Lines of credit evaporated, and the financial system’s elaborate machinery of borrowing and lending seized up, leaving otherwise creditworthy companies scrambling to refinance their debts. As the stock market crashed, foreclosures mounted, firms failed, and consumers stopped spending. Vast Ponzi schemes came to light, as did evidence of widespread fraud and collusion throughout the financial industry. By then the sickness in the United States had spread to the rest of the world, and foreign stock markets, banks, and investment firms came crashing down to earth. Unemployment soared, industrial production plummeted, and falling prices raised the specter of deflation.


pages: 642 words: 141,888

Like, Comment, Subscribe: Inside YouTube's Chaotic Rise to World Domination by Mark Bergen

23andMe, 4chan, An Inconvenient Truth, Andy Rubin, Anne Wojcicki, Big Tech, Black Lives Matter, book scanning, Burning Man, business logic, call centre, Cambridge Analytica, citizen journalism, cloud computing, Columbine, company town, computer vision, coronavirus, COVID-19, crisis actor, crowdsourcing, cryptocurrency, data science, David Graeber, DeepMind, digital map, disinformation, don't be evil, Donald Trump, Edward Snowden, Elon Musk, fake news, false flag, game design, gender pay gap, George Floyd, gig economy, global pandemic, Golden age of television, Google Glasses, Google X / Alphabet X, Googley, growth hacking, Haight Ashbury, immigration reform, James Bridle, John Perry Barlow, Justin.tv, Kevin Roose, Khan Academy, Kinder Surprise, Marc Andreessen, Marc Benioff, Mark Zuckerberg, mass immigration, Max Levchin, Menlo Park, Minecraft, mirror neurons, moral panic, move fast and break things, non-fungible token, PalmPilot, paypal mafia, Peter Thiel, Ponzi scheme, QAnon, race to the bottom, recommendation engine, Rubik’s Cube, Salesforce, Saturday Night Live, self-driving car, Sheryl Sandberg, side hustle, side project, Silicon Valley, slashdot, Snapchat, social distancing, Social Justice Warrior, speech recognition, Stanford marshmallow experiment, Steve Bannon, Steve Jobs, Steven Levy, surveillance capitalism, Susan Wojcicki, systems thinking, tech bro, the long tail, The Wisdom of Crowds, TikTok, Walter Mischel, WikiLeaks, work culture

Eventually, YouTube added a button on its back-end site for creators to exit an MCN with a simple click. These networks, once considered the next vanguard of media and Hollywood, found that it was impossible to build such a business on YouTube—at least by playing it straight. “It was as close to a Ponzi scheme as I will ever get in my life,” recalled one MCN executive. “We were just aggregating other people’s work and channels, telling them that we were going to help them make more money. A few of them did. Most didn’t.” At one point Dan Weinstein convened a gathering to call a truce on the network race to the bottom.


pages: 526 words: 144,019

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History by Diana B. Henriques

Alan Greenspan, asset allocation, bank run, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Black Monday: stock market crash in 1987, break the buck, buttonwood tree, buy and hold, buy low sell high, call centre, Carl Icahn, centralized clearinghouse, computerized trading, Cornelius Vanderbilt, corporate governance, corporate raider, Credit Default Swap, cuban missile crisis, Dennis Tito, Edward Thorp, Elliott wave, financial deregulation, financial engineering, financial innovation, Flash crash, friendly fire, Glass-Steagall Act, index arbitrage, index fund, intangible asset, interest rate swap, It's morning again in America, junk bonds, laissez-faire capitalism, locking in a profit, Long Term Capital Management, margin call, Michael Milken, money market fund, Myron Scholes, plutocrats, Ponzi scheme, pre–internet, price stability, proprietary trading, quantitative trading / quantitative finance, random walk, Ronald Reagan, Savings and loan crisis, short selling, Silicon Valley, stock buybacks, The Chicago School, The Myth of the Rational Market, the payments system, tulip mania, uptick rule, Vanguard fund, web of trust

See Chris Welles, The Last Days of the Club (New York: Dutton, 1975), pp. 86–89. lawyers with the Justice Department: Ibid. said populist lawmakers suspicious of Wall Street: One of the hottest new trading firms in this new market was Bernard L. Madoff Investment Securities, whose well-respected owner would be unmasked in 2008 as the architect of the largest Ponzi scheme in history. See Diana B. Henriques, The Wizard of Lies: Bernie Madoff and the Death of Trust (New York: Times Books/Henry Holt, 2011), pp. 49–50. The Big Board found few friends in Washington: In 1972, NYSE president James Needham initially argued that Wall Street’s finances were too precarious to permit a change in commission rates, then offered to end fixed commissions if regulators shut down the trading in Big Board stocks away from the exchange.


pages: 535 words: 158,863

Superclass: The Global Power Elite and the World They Are Making by David Rothkopf

"World Economic Forum" Davos, airport security, Alan Greenspan, anti-communist, asset allocation, Ayatollah Khomeini, bank run, barriers to entry, Bear Stearns, Berlin Wall, Big Tech, Bob Geldof, Branko Milanovic, Bretton Woods, BRICs, business cycle, carried interest, clean water, compensation consultant, corporate governance, creative destruction, crony capitalism, David Brooks, Doha Development Round, Donald Trump, fake news, financial innovation, fixed income, Francis Fukuyama: the end of history, Gini coefficient, global village, high net worth, income inequality, industrial cluster, informal economy, Internet Archive, Jeff Bezos, jimmy wales, John Elkington, joint-stock company, knowledge economy, Larry Ellison, liberal capitalism, Live Aid, Long Term Capital Management, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, mass immigration, means of production, Mexican peso crisis / tequila crisis, Michael Milken, Mikhail Gorbachev, military-industrial complex, Nelson Mandela, old-boy network, open borders, plutocrats, Ponzi scheme, price mechanism, proprietary trading, Savings and loan crisis, shareholder value, Skype, special economic zone, Steve Jobs, Thorstein Veblen, too big to fail, trade liberalization, trickle-down economics, upwardly mobile, vertical integration, Vilfredo Pareto, Washington Consensus, William Langewiesche

I think it is awful, a tedious mob scene, but we are part of that world whether we like it or not. It’s the liberal internationalist world. However, it has no real policy implications. It is a big show these days and Klaus, well, Klaus is a complicated businessman, the great P. T. Barnum of our time, and he has created in Davos the world’s greatest Ponzi scheme.” Philippe Bourguignon, a former co-CEO of the World Economic Forum, offered a more balanced view. “Davos played this role in at least developing awareness among leaders, governments, and businesspeople. Like HIV/AIDS or global warming. But I think today it has also become in some ways a big missed opportunity.


pages: 632 words: 159,454

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt by Kwasi Kwarteng

accounting loophole / creative accounting, Alan Greenspan, anti-communist, Asian financial crisis, asset-backed security, Atahualpa, balance sheet recession, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, California gold rush, capital controls, Carmen Reinhart, central bank independence, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, Deng Xiaoping, discovery of the americas, Etonian, eurozone crisis, fiat currency, financial engineering, financial innovation, fixed income, floating exchange rates, foreign exchange controls, Francisco Pizarro, full employment, German hyperinflation, Glass-Steagall Act, guns versus butter model, hiring and firing, income inequality, invisible hand, Isaac Newton, it's over 9,000, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, land bank, liberal capitalism, low interest rates, market bubble, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, plutocrats, Ponzi scheme, price mechanism, quantitative easing, rolodex, Ronald Reagan, South Sea Bubble, subprime mortgage crisis, Suez canal 1869, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, The Wealth of Nations by Adam Smith, too big to fail, War on Poverty, Yom Kippur War

There can be ‘no doubt that the American consumer is overextended financially.’ Duncan prophesied in 2003 a sharp reversal in the property market. As personal incomes were depressed and unemployment was beginning to rise, it would not be long, he believed, for the ‘property market to become unaffordable to many’. ‘Every Ponzi scheme’, he observed, ‘ends in crisis. The Great-End-of-the-Century Consumer Credit bubble will be no different.’ He went on, ‘When the consumer folds and begins to rein in his debt, there will be ramifications throughout the debt market.’ The consequences of such retrenchment would be severe. ‘Hardest hit will be the financial sector.’


pages: 590 words: 153,208

Wealth and Poverty: A New Edition for the Twenty-First Century by George Gilder

accelerated depreciation, affirmative action, Albert Einstein, Bear Stearns, Bernie Madoff, book value, British Empire, business cycle, capital controls, clean tech, cloud computing, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversified portfolio, Donald Trump, equal pay for equal work, floating exchange rates, full employment, gentrification, George Gilder, Gunnar Myrdal, Home mortgage interest deduction, Howard Zinn, income inequality, independent contractor, inverted yield curve, invisible hand, Jane Jacobs, Jeff Bezos, job automation, job-hopping, Joseph Schumpeter, junk bonds, knowledge economy, labor-force participation, longitudinal study, low interest rates, margin call, Mark Zuckerberg, means of production, medical malpractice, Michael Milken, minimum wage unemployment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, mortgage debt, non-fiction novel, North Sea oil, paradox of thrift, Paul Samuelson, plutocrats, Ponzi scheme, post-industrial society, power law, price stability, Ralph Nader, rent control, Robert Gordon, Robert Solow, Ronald Reagan, San Francisco homelessness, scientific management, Silicon Valley, Simon Kuznets, Skinner box, skunkworks, Solyndra, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas L Friedman, upwardly mobile, urban renewal, volatility arbitrage, War on Poverty, women in the workforce, working poor, working-age population, yield curve, zero-sum game

The focus on budgetary issues becoming acute a decade or so from now implies that liberal policies are not already infecting our economy with a multiple sclerosis of tax and regulatory curbs, destroying jobs and families with webs of rules and pettifoggery, price controls, skewed social policies, and litigation. A budgetary focus obscures the continuing devastation of vast expanses of our environment with archaic windmills, ethanol farms, and subsidized Druidical sun-henges. It downplays the continuing degradation of schools by agitprop campaigns and Ponzi schemes of self-esteem. It diverts attention from the stultification of our health care systems by misconceived insurance fragmented through fifty states and denatured by coverage of every human frailty and daily need (rendering it not insurance at all but merely government overreach). Most of all, the budgetary preoccupation obscures the ongoing assault on the families of the poor, ensnaring them in a welfare state for women and children and a police state for two generations of black boys.


pages: 469 words: 145,094

Endgame: Bobby Fischer's Remarkable Rise and Fall - From America's Brightest Prodigy to the Edge of Madness by Frank Brady

anti-communist, Charles Lindbergh, El Camino Real, illegal immigration, index card, long peace, offshore financial centre, Ponzi scheme, Socratic dialogue

The president of the bank, Jezdimir Vasiljevic, had given his executives the authority to offer a purse of $5 million with one stipulation: The match had to commence in three weeks in Yugoslavia. Bobby had no idea, really, who Vasiljevic was. He’d later learn that the banker was one of the most powerful men in Serbia, was involved in currency speculation, was suspected of illegally trafficking arms, and was also supposedly promoting a Ponzi scheme. He was six years younger than Bobby but acted in a fatherly way toward him. The negotiations went back and forth, but Fischer’s current demands were minor compared to the 132 conditions he’d stipulated in 1975 in order for him to play Karpov. In this proposed Fischer-Spassky match, he asked for the winner to receive $3.35 million, the loser $1.65 million.


Poking a Dead Frog: Conversations With Today's Top Comedy Writers by Mike Sacks

Bernie Madoff, Columbine, David Sedaris, Dr. Strangelove, fake it until you make it, hive mind, index card, iterative process, Neil Armstrong, Norman Mailer, period drama, Peter Pan Syndrome, Ponzi scheme, pre–internet, Saturday Night Live, Upton Sinclair

He’d hear things that no other dogs, or people, could hear. The Ferrell character in The Other Guys is like that. He almost had an Asperger’s quality to him. I remember learning about this financial analyst [Harry Markopolos] who uncovered, years before anyone else—way back in 2000—the Bernie Madoff crimes. He knew what Madoff was doing was a Ponzi scheme. He went to the SEC and even The Wall Street Journal. Neither did a thing. Meanwhile, Madoff was making comments about this guy, really dismissive comments: “This guy is a joke. Everyone on Wall Street laughs at that guy.” Well, guess what? The guy was right, and he had the guts to stand before everyone and say as much.


pages: 495 words: 144,101

Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns

Abraham Maslow, Alan Greenspan, Alvin Toffler, anti-communist, Apollo 11, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, gentleman farmer, George Gilder, Herbert Marcuse, invisible hand, jimmy wales, Joan Didion, John Markoff, Joseph Schumpeter, knowledge worker, laissez-faire capitalism, Lewis Mumford, lone genius, Menlo Park, minimum wage unemployment, Mont Pelerin Society, new economy, Norman Mailer, offshore financial centre, Ponzi scheme, profit motive, public intellectual, RAND corporation, rent control, road to serfdom, Robert Bork, rolodex, Ronald Reagan, side project, Stewart Brand, The Chicago School, The Wisdom of Crowds, union organizing, urban renewal, We are as Gods, white flight, Whole Earth Catalog

Like “The Little Street,” the play was heavily tinctured with her interpretation of Nietzsche. She drew on yet another highly publicized criminal case to shape one of her characters, Bjorn Faulkner, who was loosely modeled on the infamous “Swedish Match King” Ivar Kreuger. In 1932 Kreuger shot himself when his financial empire, in reality a giant Ponzi scheme, collapsed in scandal. Rand still found criminality an irresistible metaphor for individualism, with dubious results. Translated by Rand into fiction, Nietzsche’s transvaluation of values changed criminals into heroes and rape into love. Rand intended Bjorn Faulkner to embody heroic individualism, but in the play he comes off as little more than an unscrupulous businessman with a taste for rough sex.


pages: 467 words: 154,960

Trend Following: How Great Traders Make Millions in Up or Down Markets by Michael W. Covel

Albert Einstein, Alvin Toffler, Atul Gawande, backtesting, Bear Stearns, beat the dealer, Bernie Madoff, Black Swan, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, Carl Icahn, Clayton Christensen, commodity trading advisor, computerized trading, correlation coefficient, Daniel Kahneman / Amos Tversky, delayed gratification, deliberate practice, diversification, diversified portfolio, Edward Thorp, Elliott wave, Emanuel Derman, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, fiat currency, fixed income, Future Shock, game design, global macro, hindsight bias, housing crisis, index fund, Isaac Newton, Jim Simons, John Bogle, John Meriwether, John Nash: game theory, linear programming, Long Term Capital Management, managed futures, mandelbrot fractal, margin call, market bubble, market fundamentalism, market microstructure, Market Wizards by Jack D. Schwager, mental accounting, money market fund, Myron Scholes, Nash equilibrium, new economy, Nick Leeson, Ponzi scheme, prediction markets, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Feynman, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, shareholder value, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, survivorship bias, systematic trading, Teledyne, the scientific method, Thomas L Friedman, too big to fail, transaction costs, upwardly mobile, value at risk, Vanguard fund, William of Occam, zero-sum game

Loss I began to realize that the big money must necessarily be in the big swing. Jesse Livermore You are going to have ups and downs in your trading account. Losses are a part of the trading game. You say you want no losses? You want positive returns every month? Well, you could have had your money with the Ponzi-scheme of Bernard Madoff, but we all know how that turned out! Life equals having losses and you’re going to have losses with trend following. “You can’t make money if you are not willing to lose. It’s like breathing in, but not being willing to breathe out.”36 If you don’t have losses, you are not taking risks.


pages: 569 words: 156,139

Amazon Unbound: Jeff Bezos and the Invention of a Global Empire by Brad Stone

activist fund / activist shareholder / activist investor, air freight, Airbnb, Amazon Picking Challenge, Amazon Robotics, Amazon Web Services, autonomous vehicles, Bernie Sanders, big data - Walmart - Pop Tarts, Big Tech, Black Lives Matter, business climate, call centre, carbon footprint, Clayton Christensen, cloud computing, Colonization of Mars, commoditize, company town, computer vision, contact tracing, coronavirus, corporate governance, COVID-19, crowdsourcing, data science, deep learning, disinformation, disintermediation, Donald Trump, Downton Abbey, Elon Musk, fake news, fulfillment center, future of work, gentrification, George Floyd, gigafactory, global pandemic, Greta Thunberg, income inequality, independent contractor, invisible hand, Jeff Bezos, John Markoff, Kiva Systems, Larry Ellison, lockdown, Mahatma Gandhi, Mark Zuckerberg, Masayoshi Son, mass immigration, minimum viable product, move fast and break things, Neal Stephenson, NSO Group, Paris climate accords, Peter Thiel, Ponzi scheme, Potemkin village, private spaceflight, quantitative hedge fund, remote working, rent stabilization, RFID, Robert Bork, Ronald Reagan, search inside the book, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Snapchat, social distancing, SoftBank, SpaceX Starlink, speech recognition, Steve Ballmer, Steve Jobs, Steven Levy, tech billionaire, tech bro, techlash, TED Talk, Tim Cook: Apple, Tony Hsieh, too big to fail, Tragedy of the Commons, two-pizza team, Uber for X, union organizing, warehouse robotics, WeWork

In May, she embarked on a whirlwind trip, traveling to Tokyo, London, Paris, and Munich, to try to yoke together a confederation of Amazon’s merchandisers, marketers, and supply chain executives to get behind an initiative that almost everyone was dubious about. Prime Day did not exist yet, so there was little reason for Amazon’s retail and advertising teams to drop everything and convince suppliers to support it. “I felt like I was running a Ponzi scheme,” Wulff said. Only the imprimatur of Bezos motivated other Amazon execs to abandon their apathy and fall into line. As the date approached, Wulff and Rupp started to realize there might be more riding on Prime Day than they’d suspected. Bezos wanted to wade into the details and review the promotional materials.


pages: 469 words: 149,526

The War Came to Us: Life and Death in Ukraine by Christopher Miller

2021 United States Capitol attack, Airbnb, An Inconvenient Truth, Bellingcat, Boris Johnson, coronavirus, COVID-19, disinformation, Donald Trump, fake it until you make it, false flag, friendly fire, game design, global pandemic, military-industrial complex, Ponzi scheme, private military company, rolling blackouts, Saturday Night Live, special economic zone, stakhanovite, wikimedia commons

“And this is a beautiful war.” 10 “Look at Our Republic” Donetsk, Mariupol and Bakhmut, Donetsk Oblast, 9 May 2014 On 9 May, two days before the referendum, the DNR held a Victory Day celebration on Donetsk’s central Lenin Square. Among the many speakers was Denis Pushilin, a former security guard, casino croupier and candy salesman who then worked for MMM, selling shares in a notorious Russian Ponzi scheme that swindled thousands of people out of their savings. It was also his birthday. Addressing the crowd of mostly older people, including Soviet veterans the DNR had wheeled in with chests full of ribbons and medals, he cast the “republic’s” struggle against Kyiv as a continuation of the Soviet’s fight against European fascism.


pages: 684 words: 173,622

Going Clear: Scientology, Hollywood, and the Prison of Belief by Lawrence Wright

Albert Einstein, call centre, Columbine, hydroponic farming, Jeff Hawkins, military-industrial complex, Naomi Klein, Peoples Temple, Ponzi scheme, profit motive, Ronald Reagan, We are Anonymous. We are Legion, WikiLeaks, yellow journalism

Brackett, an OT V, had been featured in a church ad for the Super Power Building, identified as a “key contributor.” “Mankind needs your help,” Brackett was quoted as saying in the ad. He later took his life by jumping off a bridge on Pacific Coast Highway near Big Sur.4 The biggest financial scandal involving church members was a Ponzi scheme operated by Reed Slatkin; he was one of the co-founders, with Paul Haggis’s friend Sky Dayton, of EarthLink. Slatkin’s massive fraud involved more than half a billion dollars in investments; much of the initial “profit” was returned to Scientology investors, such as Daniel and Myrna Jacobs, who earned nearly $3 million on a $760,500 “investment.”


pages: 579 words: 164,339

Countdown: Our Last, Best Hope for a Future on Earth? by Alan Weisman

air freight, Albert Einstein, Anthropocene, anti-communist, Ayatollah Khomeini, Berlin Wall, biodiversity loss, Bretton Woods, British Empire, call centre, carbon footprint, clean water, colonial rule, David Attenborough, degrowth, demographic transition, Deng Xiaoping, Edward Jenner, El Camino Real, epigenetics, Filipino sailors, Garrett Hardin, Great Leap Forward, Haber-Bosch Process, happiness index / gross national happiness, haute couture, housing crisis, ice-free Arctic, Ignaz Semmelweis: hand washing, illegal immigration, immigration reform, Intergovernmental Panel on Climate Change (IPCC), land reform, liberation theology, load shedding, Louis Pasteur, Mahatma Gandhi, Mahbub ul Haq, megacity, Menlo Park, Michael Shellenberger, microdosing, Money creation, new economy, ocean acidification, oil shale / tar sands, out of africa, Pearl River Delta, planetary scale, Ponzi scheme, race to the bottom, rolling blackouts, Ronald Reagan, Satyajit Das, Seymour Hersh, Silicon Valley, South China Sea, stem cell, Stephen Hawking, Stewart Brand, unemployed young men, upwardly mobile, urban sprawl, Whole Earth Catalog, WikiLeaks

As I slowly walked around Lake of the Isles, I noted that several of the grand houses along the lakeside parkway, once the address of milling families and cereal magnates, were now for sale. Toward the end of the previous decade, the housing market, that sacrosanct standard of economic health, proved to be a delusion akin to chain letters and Ponzi schemes. We all know what happened next: The ripples are still shaking the underpinnings of the European Union and world banking systems. But say you owned a corporation, and you hired as a consultant one of those economists who failed to see the inevitable mortgage debacle coming. Even though they obsess about growth as the measure of a company’s strength—the mantra they never question—you already know what they’re going to tell you to do to make your corporation healthy: “You need to get lean.


pages: 543 words: 157,991

All the Devils Are Here by Bethany McLean

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, Bear Stearns, behavioural economics, Black-Scholes formula, Blythe Masters, break the buck, buy and hold, call centre, Carl Icahn, collateralized debt obligation, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, diversification, Dr. Strangelove, Exxon Valdez, fear of failure, financial innovation, fixed income, Glass-Steagall Act, high net worth, Home mortgage interest deduction, interest rate swap, junk bonds, Ken Thompson, laissez-faire capitalism, Long Term Capital Management, low interest rates, margin call, market bubble, market fundamentalism, Maui Hawaii, Michael Milken, money market fund, moral hazard, mortgage debt, Northern Rock, Own Your Own Home, Ponzi scheme, proprietary trading, quantitative trading / quantitative finance, race to the bottom, risk/return, Ronald Reagan, Rosa Parks, Savings and loan crisis, shareholder value, short selling, South Sea Bubble, statistical model, stock buybacks, tail risk, Tax Reform Act of 1986, telemarketer, the long tail, too big to fail, value at risk, zero-sum game

Among other consequences, this practice helped perpetuate the worst, most dangerous securities, because they were the ones that had the highest yield relative to their rating. One Wall Street executive would later liken CDOs to “purifying uranium until you get to the stuff that’s the most toxic.” Lang Gibson, a former Merrill Lynch CDO research analyst, wrote a novel after the crisis in which a character describes the CDO market as a Ponzi scheme. You can see his point. As the triple-Bs were endlessly recycled, CDOs begat CDO squareds (in which triple-B portions of CDOs were reassembled into a new CDO) and even CDO cubeds (reassembed triple-B tranches of CDO squareds). The rise of ratings arbitrage helped push sales of CDOs from $69 billion in 2000 to around $500 billion in 2006.


pages: 598 words: 172,137

Who Stole the American Dream? by Hedrick Smith

Affordable Care Act / Obamacare, Airbus A320, airline deregulation, Alan Greenspan, anti-communist, asset allocation, banking crisis, Bear Stearns, Boeing 747, Bonfire of the Vanities, British Empire, business cycle, business process, clean water, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Deng Xiaoping, desegregation, Double Irish / Dutch Sandwich, family office, financial engineering, Ford Model T, full employment, Glass-Steagall Act, global supply chain, Gordon Gekko, guest worker program, guns versus butter model, high-speed rail, hiring and firing, housing crisis, Howard Zinn, income inequality, independent contractor, index fund, industrial cluster, informal economy, invisible hand, John Bogle, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, laissez-faire capitalism, Larry Ellison, late fees, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, market fundamentalism, Maui Hawaii, mega-rich, Michael Shellenberger, military-industrial complex, MITM: man-in-the-middle, mortgage debt, negative equity, new economy, Occupy movement, Own Your Own Home, Paul Samuelson, Peter Thiel, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, Powell Memorandum, proprietary trading, Ralph Nader, RAND corporation, Renaissance Technologies, reshoring, rising living standards, Robert Bork, Robert Shiller, rolodex, Ronald Reagan, Savings and loan crisis, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Solyndra, Steve Jobs, stock buybacks, tech worker, Ted Nordhaus, The Chicago School, The Spirit Level, too big to fail, transaction costs, transcontinental railway, union organizing, Unsafe at Any Speed, Vanguard fund, We are the 99%, women in the workforce, working poor, Y2K

And the investors assumed that they didn’t need to worry about what they were buying, because it was blessed by the credit rating agencies’ AAA ratings.” The secondary market turned the New Mortgage Game into a game of musical chairs that was destined for disaster. Because of the financial disconnect, it worked like a multitrillion-dollar Ponzi scheme. The secondary market grew so enormous that it constantly needed new money to cover losses and to keep the game going. But when the music stopped, the game brought down Bear Stearns, Lehman Brothers, Washington Mutual, Countrywide, and hundreds of regional banks, and it left millions of average Americans foreclosed out of their homes and millions more vastly poorer—$9 trillion poorer—from both equity stripping and plunging home values.


pages: 673 words: 164,804

Peer-to-Peer by Andy Oram

AltaVista, big-box store, c2.com, combinatorial explosion, commoditize, complexity theory, correlation coefficient, dark matter, Dennis Ritchie, fault tolerance, Free Software Foundation, Garrett Hardin, independent contractor, information retrieval, Kickstarter, Larry Wall, Marc Andreessen, moral hazard, Network effects, P = NP, P vs NP, p-value, packet switching, PalmPilot, peer-to-peer, peer-to-peer model, Ponzi scheme, power law, radical decentralization, rolodex, Ronald Coase, Search for Extraterrestrial Intelligence, semantic web, SETI@home, Silicon Valley, slashdot, statistical model, Tragedy of the Commons, UUNET, Vernor Vinge, web application, web of trust, Zimmermann PGP

For instance, a publishing company was able to identify the several dozen bookstores across America that are used as sample points for the New York Times bestseller list; they purchased thousands of copies of their author’s book at these bookstores, skyrocketing the score of that book in the charts.[74] In some domains, it is to most raters’ perceived advantage that everyone agree with the rater. This is how chain letters, Amway, and Ponzi schemes get their shills: they establish a system in which customers are motivated to recruit other customers. Similarly, if a vendor offered to discount past purchases if enough future customers buy the same product, it would be hard to get honest ratings for that vendor. This applies to all kinds of investments; once you own an investment, it is not in your interest to rate it negatively so long as it holds any value at all.


pages: 782 words: 187,875

Big Debt Crises by Ray Dalio

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, break the buck, Bretton Woods, British Empire, business cycle, buy the rumour, sell the news, capital controls, central bank independence, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, declining real wages, equity risk premium, European colonialism, fiat currency, financial engineering, financial innovation, foreign exchange controls, German hyperinflation, global macro, housing crisis, implied volatility, intangible asset, it's over 9,000, junk bonds, Kickstarter, land bank, large denomination, low interest rates, manufacturing employment, margin call, market bubble, market fundamentalism, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Northern Rock, Ponzi scheme, price stability, private sector deleveraging, purchasing power parity, pushing on a string, quantitative easing, refrigerator car, reserve currency, risk free rate, Savings and loan crisis, short selling, short squeeze, sovereign wealth fund, subprime mortgage crisis, too big to fail, transaction costs, universal basic income, uptick rule, value at risk, yield curve

In other words, when there are too many debt liabilities/assets, they either have to be reduced via debt restructurings or monetized. Policy makers tend to use monetization at this stage primarily because it is stimulative rather than contractionary. But monetization simply swaps one IOU (debt) for another (newly printed money). The situation is analogous to a Ponzi scheme. Since there aren’t enough goods and services likely to be produced to back up all the IOUs, there’s a worry that people may not be willing to work in return for IOUs forever. Low interest rates together with low premiums on risky assets pose a structural challenge for monetary policy. With Monetary Policy 1 (interest rates) and Monetary Policy 2 (QE) at their limits, the central bank has very little ability to provide stimulus through these two channels—i.e., monetary policy has little “gas in the tank.”


pages: 603 words: 182,826

Owning the Earth: The Transforming History of Land Ownership by Andro Linklater

agricultural Revolution, Alan Greenspan, anti-communist, Anton Chekhov, Ayatollah Khomeini, Bear Stearns, Big bang: deregulation of the City of London, British Empire, business cycle, colonial rule, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, electricity market, facts on the ground, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, Google Earth, Great Leap Forward, income inequality, invisible hand, James Hargreaves, James Watt: steam engine, John Perry Barlow, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kibera, Kickstarter, land reform, land tenure, light touch regulation, market clearing, means of production, megacity, Mikhail Gorbachev, Mohammed Bouazizi, Monkeys Reject Unequal Pay, mortgage debt, Northern Rock, Peace of Westphalia, Pearl River Delta, plutocrats, Ponzi scheme, profit motive, quantitative easing, Ralph Waldo Emerson, refrigerator car, Right to Buy, road to serfdom, Robert Shiller, Ronald Reagan, spinning jenny, Suez canal 1869, The Chicago School, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, three-masted sailing ship, too big to fail, trade route, transatlantic slave trade, transcontinental railway, ultimatum game, wage slave, WikiLeaks, wikimedia commons, working poor

Large mortgage lenders like Countrywide Financial were leaned on by the administration to take “proactive creative efforts” to make loans easier; Congress chastized officials at Fannie Mae (the Federal National Mortgage Association) who were responsible for insuring mortgages against default and thus acted as the first gatekeeper on the road to securitizing home loans, for not guaranteeing riskier borrowers; and Wall Street and Washington agreed that, with house prices rising five times as fast as incomes, the buoyant market would at last square the circle that had bedevilled private property economies since the sixteenth century—there need be no more losers, everyone with a property would win. It vindicated the political beliefs of Ludwig von Mises, Ayn Rand, and others born into an imperial world, that there was no need to care for the poor: they would be lifted on the rising tide of prosperity created by the triumph of the entrepreneurs. But what it rested on was a worldwide Ponzi scheme. The question of ownership lay at the heart of the boom and of the crash. Once the regulatory barriers were removed in the private property economies, the investment strategies adopted on Wall Street and in the City of London meshed directly with the economy of the industrial home. The growth of lending, from $500 million in 1990 to $2.6 trillion in 2007, drove property values up, powering the phenomenal expansion of the consumer economy and creating an apparently unquenchable appetite for automobiles, electronics, toys, clothes, and furniture.


pages: 1,007 words: 181,911

The 4-Hour Chef: The Simple Path to Cooking Like a Pro, Learning Anything, and Living the Good Life by Timothy Ferriss

Airbnb, Atul Gawande, Blue Bottle Coffee, Buckminster Fuller, Burning Man, confounding variable, correlation does not imply causation, crowdsourcing, deliberate practice, digital nomad, en.wikipedia.org, Golden Gate Park, happiness index / gross national happiness, haute cuisine, Hugh Fearnley-Whittingstall, Isaac Newton, Johann Wolfgang von Goethe, Kevin Kelly, Kickstarter, language acquisition, Loma Prieta earthquake, loss aversion, Louis Pasteur, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Mason jar, microbiome, off-the-grid, Parkinson's law, Paul Buchheit, Paul Graham, Pepsi Challenge, Pepto Bismol, Ponzi scheme, Ralph Waldo Emerson, San Francisco homelessness, Silicon Valley, Skype, spaced repetition, Stephen Hawking, Steve Jobs, TED Talk, the High Line, Y Combinator

Stressing the animal by chasing it can lead to off-tasting meat and, sometimes, a condition known to beef processors as a ‘red cutter.’”7 Steve Rinella’s tutelage in all things hunting was encyclopedic. My 6 a.m. brain struggled to absorb a motley assortment of miscellanea: Deer are classified as “crepuscular”; in simple terms, they move mostly at dawn and at dusk. Kiefer Sutherland was once swindled in a cattle-rustling Ponzi scheme. If Steve could eat only one meat for the rest of his life—a monthly 50-lb allotment of any wild or domesticated animal—it would absolutely be elk. Specifically, cow elk or young bull elk. The original version of The Joy of Cooking had instructions for how to fatten a trapped opossum with milk and cereals for 10 days before slaughtering and cooking it.


pages: 583 words: 182,990

The Ministry for the Future: A Novel by Kim Stanley Robinson

"World Economic Forum" Davos, agricultural Revolution, airport security, Anthropocene, availability heuristic, basic income, bitcoin, blockchain, Bretton Woods, cakes and ale, carbon tax, centre right, clean tech, clean water, cryptocurrency, dark matter, decarbonisation, degrowth, distributed ledger, drone strike, European colonialism, failed state, fiat currency, Food sovereignty, full employment, Gini coefficient, global village, green new deal, happiness index / gross national happiness, High speed trading, high-speed rail, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, Jevons paradox, Kim Stanley Robinson, land reform, liberation theology, liquidity trap, Mahbub ul Haq, megacity, megastructure, Modern Monetary Theory, mutually assured destruction, nuclear winter, ocean acidification, off grid, off-the-grid, offshore financial centre, place-making, plutocrats, Ponzi scheme, post-oil, precariat, price stability, public intellectual, quantitative easing, rewilding, RFID, Robert Solow, seigniorage, Shenzhen special economic zone , Silicon Valley, special economic zone, structural adjustment programs, synthetic biology, time value of money, Tragedy of the Commons, universal basic income, wage slave, Washington Consensus

Thus economists in our time. In fact, entirely new organizational possibilities now emerging with power of AI. Big data analyzed for best results, all money tracked in its movement all the time, allocations made before price competition distorts real costs into lies and universal multi-generational Ponzi scheme, and so on. Particulars here got both pretty technical and pretty theoretical at the same time, but important to do one’s best to sketch out some things Mary might both understand and consider worth ordering team to do. Dick already up to speed on most of this. Mary sighed, trying to focus on computer talk without boredom.


pages: 1,336 words: 415,037

The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

affirmative action, Alan Greenspan, Albert Einstein, anti-communist, AOL-Time Warner, Ayatollah Khomeini, barriers to entry, Bear Stearns, Black Monday: stock market crash in 1987, Bob Noyce, Bonfire of the Vanities, book value, Brownian motion, capital asset pricing model, card file, centralized clearinghouse, Charles Lindbergh, collateralized debt obligation, computerized trading, Cornelius Vanderbilt, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, do what you love, Donald Trump, Eugene Fama: efficient market hypothesis, Everybody Ought to Be Rich, Fairchild Semiconductor, Fillmore Auditorium, San Francisco, financial engineering, Ford Model T, Garrett Hardin, Glass-Steagall Act, global village, Golden Gate Park, Greenspan put, Haight Ashbury, haute cuisine, Honoré de Balzac, If something cannot go on forever, it will stop - Herbert Stein's Law, In Cold Blood by Truman Capote, index fund, indoor plumbing, intangible asset, interest rate swap, invisible hand, Isaac Newton, it's over 9,000, Jeff Bezos, John Bogle, John Meriwether, joint-stock company, joint-stock limited liability company, junk bonds, Larry Ellison, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, Marshall McLuhan, medical malpractice, merger arbitrage, Michael Milken, Mikhail Gorbachev, military-industrial complex, money market fund, moral hazard, NetJets, new economy, New Journalism, North Sea oil, paper trading, passive investing, Paul Samuelson, pets.com, Plato's cave, plutocrats, Ponzi scheme, proprietary trading, Ralph Nader, random walk, Ronald Reagan, Salesforce, Scientific racism, shareholder value, short selling, side project, Silicon Valley, Steve Ballmer, Steve Jobs, supply-chain management, telemarketer, The Predators' Ball, The Wealth of Nations by Adam Smith, Thomas Malthus, tontine, too big to fail, Tragedy of the Commons, transcontinental railway, two and twenty, Upton Sinclair, War on Poverty, Works Progress Administration, Y2K, yellow journalism, zero-coupon bond

“I used to love to take the opposite side of any argument,” he says, “no matter what. I could turn in a second.” People thought it was nervy of him to ask for money to invest without telling them what he would be buying. “There were people in Omaha who thought what I was doing was some sort of Ponzi scheme,” he recalls. It had repercussions. When Warren had reapplied for full membership in the Omaha Country Club, he was blackballed. To be blackballed from the country club was a serious matter; someone disliked him enough to show it in a tangible and embarrassing way. It was one thing to identify with outsiders, but he also wanted to belong.

After a five-minute business meeting, the question-and-answer session opened as usual, with shareholders lined up at microphones positioned around the auditorium, lobbing questions on how to value stocks. Somebody asked about technology stocks. “I don’t want to speculate about high-tech,” Buffett said. “Anytime there have been real bursts of speculation, it eventually gets corrected.” He compared the market to the phony riches of chain letters and Ponzi schemes. “Investors may feel richer, but they’re not.” Pause. “Charlie?” Munger opened his mouth. The audience perked up slightly. Munger often said, “Nothing to add.” But whenever Buffett handed the microphone to him, the auditorium hummed with the subtlest sensation of danger. It was like watching an experienced lion tamer working with a chair and a whip.


pages: 706 words: 206,202

Den of Thieves by James B. Stewart

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Bear Stearns, Black Monday: stock market crash in 1987, book value, Carl Icahn, corporate raider, creative destruction, deal flow, discounted cash flows, diversified portfolio, fixed income, fudge factor, George Gilder, index arbitrage, Internet Archive, Irwin Jacobs, junk bonds, margin call, Michael Milken, money market fund, Oscar Wyatt, Ponzi scheme, rolodex, Ronald Reagan, Savings and loan crisis, shareholder value, South Sea Bubble, Tax Reform Act of 1986, The Predators' Ball, walking around money, zero-coupon bond

page 429 The collapse of the UAL deal is the subject of Jeff Bailey, Asra Nomani, and Judith Valente, "Flawed Portent," Wall Street Journal, Oct. 16, 1990. page 430 One of the harshest indictments of Milken's business is Benjamin J. Stein, "Was Drexel/Milken the Biggest Scam Ever?" Barron's Feb. 19, 1990. "Drexel/Milken, a critic charges, was a vast Ponzi scheme. There never was a Wizard of Oz or nerd/genius, but only Michael the Cheerleader," was how Barron's described the piece in its table of contents. The article enraged the Milken camp, but quickly became the most talked-about survey of Milken's economics. page 430 The statistics on the performance of junk bonds and other investments are from George Anders and Constance Mitchell, "Junk King's Legacy," Wall Street Journal, Nov. 20, 1990.


pages: 772 words: 203,182

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, benefit corporation, Black Swan, blood diamond, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, company town, compensation consultant, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Glass-Steagall Act, Gordon Gekko, Greenspan put, hiring and firing, Ida Tarbell, income inequality, independent contractor, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, Money creation, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, Paul Volcker talking about ATMs, pension reform, performance metric, Pershing Square Capital Management, pirate software, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, rolling blackouts, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, stock buybacks, subprime mortgage crisis, The Chicago School, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Now you see why Benjamin Friedman of Harvard has concluded, “Overmighty finance levies a tithe on growth.”19 Finance Deregulation Reduced Productivity These analyses form the weight of evidence that financial deregulation, when coupled with the other features of Reaganomics such as short-termism, account for the drop in American productivity growth rates. It would be strange indeed to think otherwise, to seriously entertain the notion that productivity is enhanced by a business sector prospering due to risky speculation, credit booms and busts, betting against customers, insider trading, Ponzi schemes, computerized arbitrage, and illegally front running clients (by placing bets immediately before placing their customer bets). Its prosperity has come at the expense of American society, draining resources from sectors characterized by innovation and real engineering. Sustained and robust productivity growth year after year is scarcely likely from a sector where output is highly volatile, risky behavior is routine, time horizons are measured in months, and income is highly skewed and gyrates wildly.


pages: 845 words: 197,050

The Gun by C. J. Chivers

air freight, Berlin Wall, British Empire, cuban missile crisis, defense in depth, G4S, illegal immigration, joint-stock company, Khartoum Gordon, military-industrial complex, mutually assured destruction, no-fly zone, offshore financial centre, Ponzi scheme, RAND corporation, South China Sea, Suez canal 1869, trade route, Transnistria

In the early 1990s, Albania maintained a veneer of control over its postcommunist affairs. Appearances did not hold. Its leaders knew little of business, and beneath their assurances that an orderly transition from totalitarian bunker state to market economy was under way, the country’s economy was carried along by Ponzi schemes fronting as legitimate investments. A large fraction of the population poured savings into these traps. In 1996 the end came. The schemes ran dry. The funds defaulted. The population’s savings vanished. Panic came quickly as the pyramids collapsed. In 1997, public anger turned to rage. Rioting broke out early in the year, driven by popular fury at the government for not protecting the people from nationwide fraud.


pages: 695 words: 194,693

Money Changes Everything: How Finance Made Civilization Possible by William N. Goetzmann

Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, Cass Sunstein, classic study, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, Cornelius Vanderbilt, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, delayed gratification, Detroit bankruptcy, disintermediation, diversified portfolio, double entry bookkeeping, Edmond Halley, en.wikipedia.org, equity premium, equity risk premium, financial engineering, financial independence, financial innovation, financial intermediation, fixed income, frictionless, frictionless market, full employment, high net worth, income inequality, index fund, invention of the steam engine, invention of writing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, laissez-faire capitalism, land bank, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, means of production, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, new economy, passive investing, Paul Lévy, Ponzi scheme, price stability, principal–agent problem, profit maximization, profit motive, public intellectual, quantitative trading / quantitative finance, random walk, Richard Thaler, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, tontine, too big to fail, trade liberalization, trade route, transatlantic slave trade, tulip mania, wage slave

Instead it declared bankruptcy. The Miller Company had been using issuance proceeds to cover, among other things, payments to bondholders of earlier issues. As James Grant, financial historian, commentator on bonds markets, and author of Money of the Mind noted, “the Miller enterprise was a kind of Ponzi scheme.”14 Part of the common lore of the 1920s is the great Florida Land Bubble that burst in 1925. We still chuckle to this day when someone brings up buying swampland in Florida. It is worth considering that perhaps skyscrapers built in Manhattan were the real bubble, driven by a demand for bonds that backed them rather than by a demand for the amazing new machines to make the land pay.


pages: 613 words: 200,826

Unreal Estate: Money, Ambition, and the Lust for Land in Los Angeles by Michael Gross

Albert Einstein, Ayatollah Khomeini, bank run, Bear Stearns, Bernie Madoff, California gold rush, Carl Icahn, clean water, Cornelius Vanderbilt, corporate raider, cotton gin, Donald Trump, estate planning, family office, financial engineering, financial independence, Henry Singleton, Irwin Jacobs, Joan Didion, junk bonds, Maui Hawaii, McMansion, Michael Milken, mortgage debt, Norman Mailer, offshore financial centre, oil rush, passive investing, pension reform, Ponzi scheme, Right to Buy, Robert Bork, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Steve Wozniak, tech billionaire, Teledyne, The Predators' Ball, transcontinental railway, yellow journalism

To ensure he could pay for it all, Mark also made a deal with his old boss Larry Huff to amp up his distribution network after domestic sales of Herbalife products plummeted from $400 million in 1985 to $42 million in 1991. Huff was but one figure from his past who’d joined Herbalife; several of his executives were friends from reform school. But Huff’s hiring in 1990 raised eyebrows, since he had recently been released from federal prison, where he’d served two years for his part in yet another Ponzi scheme that bilked twenty-seven thousand victims. Nonetheless, it did seem that Hughes might be settling down. In December 1991, he and Suzan had a son they named Alexander. But the following October, Hughes decided to move again and bought Grayhall from Boutboul, who’d just completed a $10 million high-tech renovation.


pages: 650 words: 204,878

Reminiscences of a Stock Operator by Edwin Lefèvre, William J. O'Neil

activist fund / activist shareholder / activist investor, bank run, behavioural economics, Black Monday: stock market crash in 1987, book value, British Empire, business process, buttonwood tree, buy and hold, buy the rumour, sell the news, clean water, Cornelius Vanderbilt, cotton gin, Credit Default Swap, Donald Trump, fiat currency, Ford Model T, gentleman farmer, Glass-Steagall Act, Hernando de Soto, margin call, Monroe Doctrine, new economy, pattern recognition, Ponzi scheme, price stability, refrigerator car, Reminiscences of a Stock Operator, reserve currency, short selling, short squeeze, technology bubble, tontine, trade route, transcontinental railway, traveling salesman, Upton Sinclair, yellow journalism

In the pit, where futures contracts were traded, a reporter in the mid-1880s said buyers and sellers were “indiscriminately blended in the compact, throbbing, surging mass.”10 The scene is not unlike what you would find on any futures exchange today. Behind the pit was the call room, a 500-seat amphitheater where spot commodities were sold through an auctioneer. In was in these areas that the young “Napoleon of finance,” Ferdinand Ward, who ruined Civil War hero and president Ulysses S. Grant in a Ponzi scheme, got his start. The Produce Exchange failed in the aftermath of the Salad Oil Scandal of 1963. In this massive scam, wholesaler and commodity broker Anthony DeAngelis of New Jersey cornered the market for soybean oil—used in salad dressing—by fraudulently filling oil tanks held as collateral with water.


pages: 716 words: 192,143

The Enlightened Capitalists by James O'Toole

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, activist fund / activist shareholder / activist investor, anti-communist, Ayatollah Khomeini, benefit corporation, Bernie Madoff, Bletchley Park, book value, British Empire, business cycle, business logic, business process, California gold rush, carbon footprint, City Beautiful movement, collective bargaining, company town, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, desegregation, do well by doing good, Donald Trump, double entry bookkeeping, end world poverty, equal pay for equal work, Frederick Winslow Taylor, full employment, garden city movement, germ theory of disease, glass ceiling, God and Mammon, greed is good, high-speed rail, hiring and firing, income inequality, indoor plumbing, inventory management, invisible hand, James Hargreaves, job satisfaction, joint-stock company, Kickstarter, knowledge worker, Lao Tzu, Larry Ellison, longitudinal study, Louis Pasteur, Lyft, Marc Benioff, means of production, Menlo Park, North Sea oil, passive investing, Ponzi scheme, profit maximization, profit motive, Ralph Waldo Emerson, rolodex, Ronald Reagan, Salesforce, scientific management, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Socratic dialogue, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, stock buybacks, stocks for the long run, stocks for the long term, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Tim Cook: Apple, traveling salesman, Uber and Lyft, uber lyft, union organizing, Vanguard fund, white flight, women in the workforce, young professional

Understandably, the public is deeply worried that it could happen again. But financial shenanigans are not limited to risky mortgages, credit default swaps, and derivatives, or even to such blatantly unethical actions as the millions of false customer accounts fabricated at Wells Fargo. The Enron scandal, followed by Bernie Madoff’s Ponzi scheme, has highlighted the fact that more ethical misbehavior occurs in finance than in any other industry or in any other aspect of corporate management. Significantly, because financial ethics is one arena where the public interest and the interests of investors are often in sync—and because nothing is more important than money—it is safe to predict continuing public demand for greater accountability and transparency from bank executives and corporate financial officers.


Console Wars: Sega, Nintendo, and the Battle That Defined a Generation by Blake J. Harris

air freight, airport security, Apollo 13, back-to-the-land, Berlin Wall, disruptive innovation, Fall of the Berlin Wall, game design, inventory management, junk bonds, Larry Ellison, Maui Hawaii, Michael Milken, Pepsi Challenge, pneumatic tube, Ponzi scheme, rolodex, Ronald Reagan, Saturday Night Live, Silicon Valley, SimCity, Steve Jobs, uranium enrichment, Yogi Berra

The first was an issue of public perception. Nintendo of America had known that the lack of backward compatibility would be a problem but hadn’t anticipated the scope of the backlash. Around the country, parents reacted as if they had just discovered that Nintendo was operating some kind of electronic Ponzi scheme. This outrage prompted a carousel of newspaper headlines like “Parents Say Nintendo Isn’t Playing Fair” (Kansas City Star), “Nintendo Game Plan Infuriates Parents” (Atlanta Journal), and “Parents Vow to Resist Onslaught of New, More Costly, Nintendo” (Patriot-News). Parents weren’t just upset by the compatibility issue but also irate that Nintendo didn’t sell a converter that could resolve the compatibility problem—especially when such a device was being sold by Sega, who presented the other major obstacle to Nintendo’s American launch.


pages: 726 words: 210,048

Hard Landing by Thomas Petzinger, Thomas Petzinger Jr.

airline deregulation, Boeing 747, buy and hold, Carl Icahn, centralized clearinghouse, Charles Lindbergh, collective bargaining, cross-subsidies, desegregation, Donald Trump, emotional labour, feminist movement, index card, junk bonds, low cost airline, low skilled workers, Marshall McLuhan, means of production, Michael Milken, mutually assured destruction, Neil Armstrong, Network effects, offshore financial centre, oil shock, Ponzi scheme, postindustrial economy, price stability, profit motive, Ralph Nader, revenue passenger mile, Ronald Reagan, scientific management, Silicon Valley, strikebreaker, technological determinism, the medium is the message, The Predators' Ball, Thomas L Friedman, union organizing, yield management, zero-sum game

Regardless of the economic imperative to continue growing, Burr did not know where or when to stop—or even how; whenever an airplane bared a little shoulder, Burr had to have it. He was soon bringing in planes at the rate of one every three weeks or less. Burr, it began to appear, knew how to manage only growth. People Express was like a Ponzi scheme of emotions, in which everything would remain fine so long as each day brought more thrills and chills than the last. “High growth is important to hotshot people,” he told a reporter. “It’s where you get your excitement and your learning. It makes for commitment and high levels of energy.” People Express needed growth.


pages: 725 words: 221,514

Debt: The First 5,000 Years by David Graeber

Admiral Zheng, Alan Greenspan, anti-communist, back-to-the-land, banks create money, behavioural economics, bread and circuses, Bretton Woods, British Empire, carried interest, cashless society, central bank independence, classic study, colonial rule, commoditize, corporate governance, David Graeber, delayed gratification, dematerialisation, double entry bookkeeping, financial innovation, fixed income, full employment, George Gilder, informal economy, invention of writing, invisible hand, Isaac Newton, joint-stock company, means of production, microcredit, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, oil shock, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, place-making, Ponzi scheme, Post-Keynesian economics, price stability, profit motive, reserve currency, Right to Buy, Ronald Reagan, scientific management, seigniorage, sexual politics, short selling, Silicon Valley, South Sea Bubble, subprime mortgage crisis, Thales of Miletus, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transatlantic slave trade, tulip mania, upwardly mobile, urban decay, working poor, zero-sum game

Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked “insufficient funds.” One can see the great crash of 2008 in the same light—as the outcome of years of political tussles between creditors and debtors, rich and poor. True, on a certain level, it was exactly what it seemed to be: a scam, an incredibly sophisticated Ponzi scheme designed to collapse in the full knowledge that the perpetrators would be able to force the victims to bail them out. On another level it could be seen as the culmination of a battle over the very definition of money and credit. By the end of World War II, the specter of an imminent working-class uprising that had so haunted the ruling classes of Europe and North America for the previous century had largely disappeared.


The Oil Kings: How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East by Andrew Scott Cooper

addicted to oil, Alan Greenspan, An Inconvenient Truth, anti-communist, Ayatollah Khomeini, banking crisis, Boycotts of Israel, energy security, falling living standards, friendly fire, full employment, Future Shock, Great Leap Forward, guns versus butter model, interchangeable parts, Kickstarter, land reform, MITM: man-in-the-middle, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, Post-Keynesian economics, RAND corporation, rising living standards, Robert Bork, rolodex, Ronald Reagan, Seymour Hersh, strikebreaker, unbiased observer, uranium enrichment, urban planning, Yom Kippur War

Also on December 9, Italy repaid a $486 million loan to Britain so that the British government could repay the first installment on its $5.9 billion standing credit. The British met their deadline but Italy was left with less than $2 billion in foreign exchange reserves. The finances of the Western industrialized world were beginning to resemble a giant Ponzi scheme. SHEIKH YAMANI’S CHRISTMAS BOX During his trip to Mexico City to attend the inauguration of President López Portillo, Henry Kissinger had quietly received an envoy sent by King Juan Carlos of Spain. Manuel del Prado, chairman of the board of Iberia, Spain’s national airline, warned Kissinger that the king was worried about the possibility of right-wing revolt by disaffected army officers.


pages: 824 words: 218,333

The Gene: An Intimate History by Siddhartha Mukherjee

Albert Einstein, Alfred Russel Wallace, All science is either physics or stamp collecting, Any sufficiently advanced technology is indistinguishable from magic, Asilomar, Asilomar Conference on Recombinant DNA, autism spectrum disorder, Benoit Mandelbrot, butterfly effect, CRISPR, dark matter, discovery of DNA, double helix, Drosophila, epigenetics, Ernest Rutherford, experimental subject, Gregor Mendel, Internet Archive, invisible hand, Isaac Newton, longitudinal study, medical residency, military-industrial complex, moral hazard, mouse model, New Journalism, out of africa, phenotype, Pierre-Simon Laplace, planned obsolescence, Ponzi scheme, Ralph Waldo Emerson, Recombinant DNA, Scientific racism, seminal paper, stem cell, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas Malthus, twin studies

Genentech was living in borrowed space on borrowed money. Scratched even a millimeter below its surface, the “pharma company” was, in truth, a rented cubicle in an office space in San Francisco with an offshoot in a microbiology lab at UCSF, which, in turn, was about to subcontract two chemists at yet another lab to make genes—a pharmaceutical Ponzi scheme. Still, Boyer convinced Swanson to give somatostatin a chance. They hired an attorney, Tom Kiley, to negotiate the agreements among UCSF, Genentech, and the City of Hope. Kiley had never heard the term molecular biology, but felt confident because of his track record of representing unusual cases; before Genentech, his most famous former client had been Miss Nude America.


Global Catastrophic Risks by Nick Bostrom, Milan M. Cirkovic

affirmative action, agricultural Revolution, Albert Einstein, American Society of Civil Engineers: Report Card, anthropic principle, artificial general intelligence, Asilomar, availability heuristic, backpropagation, behavioural economics, Bill Joy: nanobots, Black Swan, carbon tax, carbon-based life, Charles Babbage, classic study, cognitive bias, complexity theory, computer age, coronavirus, corporate governance, cosmic microwave background, cosmological constant, cosmological principle, cuban missile crisis, dark matter, death of newspapers, demographic transition, Deng Xiaoping, distributed generation, Doomsday Clock, Drosophila, endogenous growth, Ernest Rutherford, failed state, false flag, feminist movement, framing effect, friendly AI, Georg Cantor, global pandemic, global village, Great Leap Forward, Gödel, Escher, Bach, Hans Moravec, heat death of the universe, hindsight bias, information security, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, Kevin Kelly, Kuiper Belt, Large Hadron Collider, launch on warning, Law of Accelerating Returns, life extension, means of production, meta-analysis, Mikhail Gorbachev, millennium bug, mutually assured destruction, Nick Bostrom, nuclear winter, ocean acidification, off-the-grid, Oklahoma City bombing, P = NP, peak oil, phenotype, planetary scale, Ponzi scheme, power law, precautionary principle, prediction markets, RAND corporation, Ray Kurzweil, Recombinant DNA, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, Singularitarianism, social intelligence, South China Sea, strong AI, superintelligent machines, supervolcano, synthetic biology, technological singularity, technoutopianism, The Coming Technological Singularity, the long tail, The Turner Diaries, Tunguska event, twin studies, Tyler Cowen, uranium enrichment, Vernor Vinge, War on Poverty, Westphalian system, Y2K

Are you living in a computer simulation? Philos. Quarterly, 53, 243-25 5 . Brillouin, L . ( 1 962). Science and Information Theory (New York: Academic Press). Brin, G.D. ( 1983). The Great S ilence - the controversy concerning extraterrestrial intelligent life. Quarterly]. Royal Astron. Soc., 24, 283. Bulgatz, ). ( 1 992). Ponzi Schemes, Invaders from Mars and More Extraordinary Popular Delusions and the Madness of Crowds (New York: Harmony Books). Cantril, H . ( 1947). The Invasionfrom Mars: A Study in the Psychology of Panic (Princeton, NJ: Princeton University Press). Carter, B . ( 1983). The anthropic principle and its implications for biological evolution.


pages: 851 words: 247,711

The Atlantic and Its Enemies: A History of the Cold War by Norman Stone

affirmative action, Alvin Toffler, Arthur Marwick, Ayatollah Khomeini, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, British Empire, business cycle, central bank independence, Deng Xiaoping, desegregation, disinformation, Dissolution of the Soviet Union, European colonialism, facts on the ground, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, gentrification, Gunnar Myrdal, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Herbert Marcuse, illegal immigration, income per capita, interchangeable parts, Jane Jacobs, Joseph Schumpeter, junk bonds, labour mobility, land reform, long peace, low interest rates, mass immigration, means of production, Michael Milken, Mikhail Gorbachev, military-industrial complex, Mitch Kapor, Money creation, new economy, Norman Mailer, North Sea oil, oil shock, Paul Samuelson, Phillips curve, Ponzi scheme, popular capitalism, price mechanism, price stability, RAND corporation, rent-seeking, Ronald Reagan, Savings and loan crisis, scientific management, Seymour Hersh, Silicon Valley, special drawing rights, Steve Jobs, Strategic Defense Initiative, strikebreaker, Suez crisis 1956, The Death and Life of Great American Cities, trade liberalization, trickle-down economics, V2 rocket, War on Poverty, Washington Consensus, Yom Kippur War, éminence grise

Peking PEN club Peng Pai Penguin (publishers) penicillin Penn Central railway ‘Pentagon Papers’ People’s Liberation Army see Red Army (Chinese) perestroyka Perkins, Thomas Perle, Richard Persepolis Peter the Great Petőfi, Sandor petrochemicals industries Pflimlin, Pierre Philadelphia Philby, Kim Philipe, Gérard Philippines Phillips, Alban William Phillips Curve Phillips, Melanie Phnom Penh Phoenix, Arizona Piaf, Édith Picasso, Pablo Pieck, Walter pieds noirs Pill, contraceptive Pinay, Antoine Piñera, José Pinochet, Augusto ‘Pinochet solution’ Pinter, Harold Pipes, Richard Piscator, Erwin Pitsunda PKK (Kurdistan Workers’ Party) Platts-Mills, John Playboy (magazine) Plaza Agreement (1985) Pleiku Pleven, René PLO (Palestine Liberation Organization) Plojhar, Mgr Josef Plumb, Sir John plutonium Plyushch, Leonid Podolia Poindexter, John Poitiers Pol Pot Poland: agricultural collectivization anti-semitism anti-Soviet demonstrations aristocracy Catholic Church coal industry collapse of communism Communist Party communist takeover Convention of Targowice (1792) emigrants to Germany ethnic German population and France under Gierek under Gomułka inflation intelligentsia Jews in and Khrushchev’s relaxation attempts and Marshall Plan martial law (1981-2) ‘modernization’ oil money invested in peasantry relations with USSR relations with West Germany Second World War Solidarność (‘Solidarity’) Stalinization steel industry territorial losses trade unions UB (secret police) Ukrainians in universities Warsaw Uprising (1944) WRON (national security council) Polaris (missile) Poll Tax (Britain) Pollitt, Brian Pomerania Pompidou, Georges Ponomarev, Boris Ponzi schemes Poos, Jacques population growth collapse of Porsche, Ferdinand Port Said Port Talbot Port-au-Prince Portugal Potsdam Potsdam conference (1945) POUM (Spanish anarchist organization) Powell, Charles, Baron Poznan Pozsgay, Imre Prague: architecture Communists’ organized discontent Czernin Palace Kinsky Palace museum of security police revolution of 1989 Smichov Stalinization undamaged by war working class ‘Prague Spring’ Prats, Carlos Pravda (newspaper) Prebisch, Raúl Presley, Elvis Preuves (magazine) Primakov, Yevgeney Prisender, Edgar privatization of industry and services: Britain Chile West Germany prostitution Protestant churches: and economic development in Germany in Hungary missionaries in China Thirty Years War see also Calvinist Church; Lutheran Church Prussia PUK (Patriotic Union of Kurdistan) Punjab ‘pursuit of happiness’ Pusan Pushkin, Alexander ‘Pushtunistan’ Putin, Vladimir Quang Tri (US combat base) Queen Elizabeth, RMS Quemoy islands Quennell, Peter Raab, Julius radar Radio Urumchi Rákosi, Mátyás Rakowski, Mieczysław Rambouillet summit (1975) Ramsay, Douglas Rangel, Charles Rangoon Rapallo, Treaty of (1922) Rasputin, Valentin rationing: Britain East Germany France Ravenscraig steel works Reader’s Digest (magazine) Reagan, Nancy Reagan, Ronald: background and character and Ceauşescu and collapse of communism core beliefs defence policy economic policy election as President (1980); (1984) enemies of on failure of Johnson’s Great Society and Goldwater campaign Governor of California Iran-Contra affair marriages oratory skills and Poland popularity relationship with Margaret Thatcher retirement Savings and Loans crisis ‘The Speech’ (1980) Strategic Defense Initiative (‘Star Wars’) and universities visits Britain work regimen and leadership style Récsk Red Army (Chinese; ‘People’s Liberation Army’) Red Army (Soviet): atrocities committed by conquering of eastern and central Europe Second World War casualties Red Army Faction Red Brigades Redford, Robert Reece, Sir Gordon Rees-Mogg, William, Baron ‘Reg Q’ (American interest rate regulation) Regan, Donald Reich, Robert Reider, Jonathan Reinhardt, Max Remington Rand (corporation) Rémond, René Renault (automobile manufacturer) reparations, First World War reparations, Second World War: German Japanese Soviet demands Republican Party (United States) Rerum Novarum (papal enyclical) Reuter, Ernst Reuther, Walter revolutions of 1848 Rez, Adam Rhee, Syngman Rhineland Rhodesia Richter, Horst-Eberhard Richter, Svyatoslav Ridley, Nicholas, Baron Ridley of Liddesdale Riesman, David, The Lonely Crowd Rimbaud, Arthur Robbins, Lionel, Baron Robespierre, Maximilien Robinson, Joan Rocard, Michel Rochet, Waldeck Rockefeller, Nelson Rodriguez, Carlos Roe.


The Rough Guide to New York City by Rough Guides

3D printing, Airbnb, Bear Stearns, Berlin Wall, Bernie Madoff, bike sharing, Blue Bottle Coffee, Bonfire of the Vanities, Broken windows theory, Buckminster Fuller, buttonwood tree, car-free, centre right, Chuck Templeton: OpenTable:, clean water, collateralized debt obligation, colonial rule, congestion pricing, Cornelius Vanderbilt, crack epidemic, David Sedaris, Donald Trump, Downton Abbey, East Village, Edward Thorp, Elisha Otis, Exxon Valdez, Frank Gehry, General Motors Futurama, gentrification, glass ceiling, greed is good, haute couture, haute cuisine, Howard Zinn, illegal immigration, index fund, it's over 9,000, Jane Jacobs, junk bonds, Kickstarter, Lewis Mumford, Lyft, machine readable, Nelson Mandela, Norman Mailer, paper trading, Ponzi scheme, post-work, pre–internet, rent stabilization, ride hailing / ride sharing, Saturday Night Live, Scaled Composites, starchitect, subprime mortgage crisis, sustainable-tourism, The Death and Life of Great American Cities, the High Line, transcontinental railway, Triangle Shirtwaist Factory, uber lyft, upwardly mobile, urban decay, urban planning, urban renewal, white flight, Works Progress Administration, Yogi Berra, young professional

Third, Second and First avenues The construction of the Citigroup Center spurred the development of Third Avenue in the late 1970s. One 1980s postmodern entry on that stretch, the so-called Lipstick Building at no. 885, is a tiered, oval-shaped steel tower created by Philip Johnson and John Burgee; it also holds the former offices of disgraced (and incarcerated) Ponzi-scheme broker Bernard Madoff. Nightlife, however, congregates on Second Avenue, which also has some architectural attractions lying on or around 42nd Street. Daily News Building 220 E 42nd St • Closed Sat & Sun • Subway S, #4, #5, #6, #7 to Grand Central-42nd St The stone facade of the sombre yet elegant former Daily News Building fronts a surprising Art Deco interior.


pages: 1,066 words: 273,703

Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze

"there is no alternative" (TINA), "World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Apple's 1984 Super Bowl advert, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bond market vigilante , book value, Boris Johnson, bread and circuses, break the buck, Bretton Woods, Brexit referendum, BRICs, British Empire, business cycle, business logic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, company town, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, dark matter, deindustrialization, desegregation, Detroit bankruptcy, Dissolution of the Soviet Union, diversification, Doha Development Round, Donald Trump, Edward Glaeser, Edward Snowden, en.wikipedia.org, energy security, eurozone crisis, Fall of the Berlin Wall, family office, financial engineering, financial intermediation, fixed income, Flash crash, forward guidance, friendly fire, full employment, global reserve currency, global supply chain, global value chain, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, high-speed rail, housing crisis, Hyman Minsky, illegal immigration, immigration reform, income inequality, interest rate derivative, interest rate swap, inverted yield curve, junk bonds, Kenneth Rogoff, large denomination, light touch regulation, Long Term Capital Management, low interest rates, margin call, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, military-industrial complex, mittelstand, money market fund, moral hazard, mortgage debt, mutually assured destruction, negative equity, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, old-boy network, open economy, opioid epidemic / opioid crisis, paradox of thrift, Peter Thiel, Ponzi scheme, Post-Keynesian economics, post-truth, predatory finance, price stability, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, reserve currency, risk tolerance, Ronald Reagan, Savings and loan crisis, savings glut, secular stagnation, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, Steve Bannon, structural adjustment programs, tail risk, The Great Moderation, Tim Cook: Apple, too big to fail, trade liberalization, upwardly mobile, Washington Consensus, We are the 99%, white flight, WikiLeaks, women in the workforce, Works Progress Administration, yield curve, éminence grise

The trauma of defeat in Vietnam, America’s urban crisis and angry Japan bashing—thirty years on Trump was still harping on those fears, but now transposed onto new enemies: China, Islam and undocumented Latino immigrants. His main shtick was that he was a businessman, a deal maker. And because his business was real estate, Trump lived the American business cycle close up. As Hyman Minsky, the legendary analyst of financial crises, observed already in 1990, Donald Trump was the very epitome of a Ponzi scheme capitalist, living hand to mouth by borrowing against the expected appreciation of his assets.19 As a result, crises punctuated Trump’s career. He was hit hard by the early 1990s recession, almost losing his business. By 2008 he was less vulnerable, having diversified into media and branding. But his real estate exposure was still significant.


pages: 864 words: 272,918

Palo Alto: A History of California, Capitalism, and the World by Malcolm Harris

2021 United States Capitol attack, Aaron Swartz, affirmative action, air traffic controllers' union, Airbnb, Alan Greenspan, Alvin Toffler, Amazon Mechanical Turk, Amazon Web Services, Apple II, Apple's 1984 Super Bowl advert, back-to-the-land, bank run, Bear Stearns, Big Tech, Bill Gates: Altair 8800, Black Lives Matter, Bob Noyce, book scanning, British Empire, business climate, California gold rush, Cambridge Analytica, capital controls, Charles Lindbergh, classic study, cloud computing, collective bargaining, colonial exploitation, colonial rule, Colonization of Mars, commoditize, company town, computer age, conceptual framework, coronavirus, corporate personhood, COVID-19, cuban missile crisis, deindustrialization, Deng Xiaoping, desegregation, deskilling, digital map, double helix, Douglas Engelbart, Edward Snowden, Elon Musk, Erlich Bachman, estate planning, European colonialism, Fairchild Semiconductor, financial engineering, financial innovation, fixed income, Frederick Winslow Taylor, fulfillment center, future of work, Garrett Hardin, gentrification, George Floyd, ghettoisation, global value chain, Golden Gate Park, Google bus, Google Glasses, greed is good, hiring and firing, housing crisis, hydraulic fracturing, if you build it, they will come, illegal immigration, immigration reform, invisible hand, It's morning again in America, iterative process, Jeff Bezos, Joan Didion, John Markoff, joint-stock company, Jony Ive, Kevin Kelly, Kickstarter, knowledge worker, land reform, Larry Ellison, Lean Startup, legacy carrier, life extension, longitudinal study, low-wage service sector, Lyft, manufacturing employment, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Max Levchin, means of production, Menlo Park, Metcalfe’s law, microdosing, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, Mont Pelerin Society, moral panic, mortgage tax deduction, Mother of all demos, move fast and break things, mutually assured destruction, new economy, Oculus Rift, off grid, oil shale / tar sands, PageRank, PalmPilot, passive income, Paul Graham, paypal mafia, Peter Thiel, pets.com, phenotype, pill mill, platform as a service, Ponzi scheme, popular electronics, power law, profit motive, race to the bottom, radical life extension, RAND corporation, Recombinant DNA, refrigerator car, Richard Florida, ride hailing / ride sharing, rising living standards, risk tolerance, Robert Bork, Robert Mercer, Robert Metcalfe, Ronald Reagan, Salesforce, San Francisco homelessness, Sand Hill Road, scientific management, semantic web, sexual politics, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social web, SoftBank, software as a service, sovereign wealth fund, special economic zone, Stanford marshmallow experiment, Stanford prison experiment, stem cell, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, stock buybacks, strikebreaker, Suez canal 1869, super pumped, TaskRabbit, tech worker, Teledyne, telemarketer, the long tail, the new new thing, thinkpad, Thorstein Veblen, Tim Cook: Apple, Tony Fadell, too big to fail, Toyota Production System, Tragedy of the Commons, transcontinental railway, traumatic brain injury, Travis Kalanick, TSMC, Uber and Lyft, Uber for X, uber lyft, ubercab, union organizing, Upton Sinclair, upwardly mobile, urban decay, urban renewal, value engineering, Vannevar Bush, vertical integration, Vision Fund, W. E. B. Du Bois, War on Poverty, warehouse robotics, Wargames Reagan, Washington Consensus, white picket fence, William Shockley: the traitorous eight, women in the workforce, Y Combinator, Y2K, Yogi Berra, éminence grise

But when their buyers wrote off the purchases, these men (they were mostly men) didn’t adjust their self-image downward. After all, they still had the money. Paul Graham sold a web storefront software company called Viaweb to Yahoo! for around $50 million in Yahoo! stock and had the sense to cash out quickly. “By 1998, Yahoo was the beneficiary of a de facto Ponzi scheme,” he wrote later. “Investors were excited about the internet. One reason they were excited was Yahoo’s revenue growth. So they invested in new internet start-ups. The start-ups then used the money to buy ads on Yahoo to get traffic. Which caused yet more revenue growth for Yahoo, and further convinced investors the internet was worth investing in.”3 In 2005, he and some colleagues from the Yahoo!


pages: 1,073 words: 302,361

Money and Power: How Goldman Sachs Came to Rule the World by William D. Cohan

"Friedman doctrine" OR "shareholder theory", "RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Alan Greenspan, asset-backed security, Bear Stearns, Bernie Madoff, Bob Litterman, book value, business cycle, buttonwood tree, buy and hold, collateralized debt obligation, Cornelius Vanderbilt, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, deal flow, diversified portfolio, do well by doing good, fear of failure, financial engineering, financial innovation, fixed income, Ford paid five dollars a day, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, high net worth, hiring and firing, hive mind, Hyman Minsky, interest rate swap, John Meriwether, junk bonds, Kenneth Arrow, London Interbank Offered Rate, Long Term Capital Management, managed futures, margin call, market bubble, mega-rich, merger arbitrage, Michael Milken, moral hazard, mortgage debt, Myron Scholes, paper trading, passive investing, Paul Samuelson, Ponzi scheme, price stability, profit maximization, proprietary trading, risk tolerance, Ronald Reagan, Saturday Night Live, short squeeze, South Sea Bubble, tail risk, time value of money, too big to fail, traveling salesman, two and twenty, value at risk, work culture , yield curve, Yogi Berra, zero-sum game

But then the SEC stopped responding to S&C and to Goldman, which tried again to contact the SEC during the first quarter of 2010 to see if a settlement could be reached. The next communication from the SEC came with the filing of the complaint on April 16, which happened to be the same day the SEC inspector general issued a critical report about the SEC’s bungling of its investigation into the Ponzi scheme perpetrated by Bernard Madoff. The news media—understandably—focused on the fraud charges against Goldman, rather than the SEC’s poor handling of the Madoff case, a fact Goldman noted in its communications with journalists. When Goldman eventually responded to the SEC’s complaint, it denied all allegations.


pages: 892 words: 91,000

Valuation: Measuring and Managing the Value of Companies by Tim Koller, McKinsey, Company Inc., Marc Goedhart, David Wessels, Barbara Schwimmer, Franziska Manoury

accelerated depreciation, activist fund / activist shareholder / activist investor, air freight, ASML, barriers to entry, Basel III, Black Monday: stock market crash in 1987, book value, BRICs, business climate, business cycle, business process, capital asset pricing model, capital controls, Chuck Templeton: OpenTable:, cloud computing, commoditize, compound rate of return, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, currency risk, discounted cash flows, distributed generation, diversified portfolio, Dutch auction, energy security, equity premium, equity risk premium, financial engineering, fixed income, index fund, intangible asset, iterative process, Long Term Capital Management, low interest rates, market bubble, market friction, Myron Scholes, negative equity, new economy, p-value, performance metric, Ponzi scheme, price anchoring, proprietary trading, purchasing power parity, quantitative easing, risk free rate, risk/return, Robert Shiller, Savings and loan crisis, shareholder value, six sigma, sovereign wealth fund, speech recognition, stocks for the long run, survivorship bias, technology bubble, time value of money, too big to fail, transaction costs, transfer pricing, two and twenty, value at risk, yield curve, zero-coupon bond

Nobel Prize winner Robert Shiller writes, “Fundamentally, stock markets are driven by popular narratives, which don’t need basis in solid facts.”1 Bill Gross, cofounder and former chief investment officer of PIMCO, one of the world’s largest fixed-income investment managers, claims that the last 100 years of U.S. stock returns “belied a commonsensical flaw much like that of a chain letter or yes—a Ponzi scheme.”2 Does it make sense to view the stock market as an arena where emotions rule supreme? We think not. Certainly, irrational behavior can drive prices for some stocks in some sectors in the short term. And for shorter periods of time, even the market as a whole can lose touch with economic fundamentals.


pages: 1,009 words: 329,520

The Last Tycoons: The Secret History of Lazard Frères & Co. by William D. Cohan

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist fund / activist shareholder / activist investor, Alan Greenspan, AOL-Time Warner, bank run, Bear Stearns, book value, Carl Icahn, carried interest, cognitive dissonance, commoditize, computer age, corporate governance, corporate raider, creative destruction, credit crunch, deal flow, diversification, Donald Trump, East Village, fear of failure, financial engineering, fixed income, G4S, Glass-Steagall Act, hiring and firing, interest rate swap, intermodal, Joseph Schumpeter, junk bonds, land bank, late fees, Long Term Capital Management, Marc Andreessen, market bubble, Michael Milken, offshore financial centre, Ponzi scheme, proprietary trading, Ralph Nader, Ralph Waldo Emerson, rolodex, Ronald Reagan, shareholder value, short squeeze, SoftBank, stock buybacks, The Nature of the Firm, the new new thing, Yogi Berra

The documents were forged; so were the signatures of Messrs. Corcoran and Wilkis. The Libman balance sheet was made out of whole cloth. The Peter Corcoran that Ivor Hopkyns had phoned in Florida was, in reality, Robert H. Libman doing an impersonation." Grambling and his Florida accomplice, Libman, had systematically set up a nationwide Ponzi scheme designed to defraud banks all across the country. The idea was to keep one step ahead of the old creditors by borrowing money from new ones and using the proceeds to repay the old. In the end, of course, that can go on for only so long. They tried to steal a total of $36.5 million and made off with $13.5 million "without pointing a gun at anybody," as the Journal put it.


pages: 1,318 words: 403,894

Reamde by Neal Stephenson

air freight, airport security, autism spectrum disorder, book value, crowdsourcing, digital map, drone strike, Google Earth, industrial robot, informal economy, Jones Act, large denomination, megacity, messenger bag, MITM: man-in-the-middle, Neal Stephenson, new economy, off-the-grid, pattern recognition, Ponzi scheme, pre–internet, ransomware, restrictive zoning, scientific management, side project, Skype, slashdot, Snow Crash, South China Sea, SQL injection, the built environment, the scientific method, young professional

For she had been careful to say “I was going” to do this and that. “When I got there, all was chaos,” she said. The look on her face was fascinated. Going from Eritrea to Iowa would definitely give a young person some interesting perspectives on chaos. “Something funny was going on with the money people. One of those hedge fund Ponzi schemes. They filed for bankruptcy a month ago.” “You’re unemployed,” Richard said. “That’s one way to look at it, Uncle Richard.” she said, and smiled. Now Richard had a new item on his list, which, unlike Zula’s, was a stew of nagging worries, vague intentions, and dimly perceived karmic debts that he carried around in his head.


pages: 1,202 words: 424,886

Stigum's Money Market, 4E by Marcia Stigum, Anthony Crescenzi

accounting loophole / creative accounting, Alan Greenspan, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Black-Scholes formula, book value, Brownian motion, business climate, buy and hold, capital controls, central bank independence, centralized clearinghouse, corporate governance, credit crunch, Credit Default Swap, cross-border payments, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, disintermediation, distributed generation, diversification, diversified portfolio, Dutch auction, financial innovation, financial intermediation, fixed income, flag carrier, foreign exchange controls, full employment, Glass-Steagall Act, Goodhart's law, Greenspan put, guns versus butter model, high net worth, implied volatility, income per capita, intangible asset, interest rate derivative, interest rate swap, inverted yield curve, junk bonds, land bank, large denomination, locking in a profit, London Interbank Offered Rate, low interest rates, margin call, market bubble, market clearing, market fundamentalism, Money creation, money market fund, mortgage debt, Myron Scholes, offshore financial centre, paper trading, pension reform, Phillips curve, Ponzi scheme, price mechanism, price stability, profit motive, proprietary trading, prudent man rule, Real Time Gross Settlement, reserve currency, risk free rate, risk tolerance, risk/return, Savings and loan crisis, seigniorage, shareholder value, short selling, short squeeze, tail risk, technology bubble, the payments system, too big to fail, transaction costs, two-sided market, value at risk, volatility smile, yield curve, zero-coupon bond, zero-sum game

They do not mark their portfolios to market daily, and the interest credited each day to the investors in such funds equals the average yield on all securities in the fund’s portfolio. A few individuals on the Street and at the SEC once voiced concern that such straight-line-accrual funds could operate like a Ponzi scheme—Ponzi in honor of Charles Ponzi, a Boston swindler who ran a con game in which early investors were paid off with funds supplied by later investors, leaving nothing for the last investors getting out. How does Charles Ponzi enter the picture with respect to straight-line-accrual funds? Suppose short-term interest rates were to rise sharply; then the market value of the securities in the fund’s portfolio would be temporarily depressed.