Word: ponzi
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Apart from, you know, all the financial catastrophes, 2008 wasn't a terrible year. We grew financially poor but politically hopeful-unless you were Rod Blagojevich or Ted Stevens, in which case federal authorities contended that pretty much the opposite was true. We weathered recessions, bailouts, Ponzi schemes and pirates; gawked at political sex scandals and bribery; and watched Britney inch her way back toward normalcy as Amy Winehouse continued her freefall into madness. As the calendar turns, this wild year's definitive soundtrack was unveiled by the awesomely named DJ Earworm, whose second annual United State of Pop video...
...would any self-respecting scoundrel pick a scheme that's guaranteed to end in handcuffs and a perp walk? That's what a lot of people are asking as 70-year-old Bernie Madoff cools his heels under house arrest, charged with masterminding a decades-long, $50 billion Ponzi scheme that has incinerated wealth around the world. (See the top 10 scandals...
...Ponzi scheme - as anyone smart enough to engineer one knows - is a plan that is uniquely without an exit strategy. It requires a constant infusion of new investors to pay off a growing body of existing ones, and ultimately it becomes impossible to find enough suckers. When that happens, the scam collapses. Sure, you could always flee the country before the roof caves in, but many scammers don't and Madoff famously didn't. The reason lies in the personality - or, more accurately, the personality disorder - that drives them to such frauds in the first place...
...bipolar or manic disorders may be involved as well, particularly since they are characterized by grandiosity and impulsiveness, with little regard for consequences. But grandiosity and impulsiveness can also be self-limiting, and lead to smaller-bore crimes that don't require the patience and plotting of a Ponzi scheme. Madoff, says Galietta, "was very planful...
...those investors like me who never heard of Madoff, privacy and propriety were the camouflage that kept his name from so many hundreds, maybe thousands, of private and public investors. Secrecy enabled him to create his global Ponzi-on-steroids scheme undercover, and helps explain why it worked so brilliantly for so long. The fact the Securities and Exchange Commission gave Madoff multiple free passes to sidestep closer inspection is even more troubling for any investor looking to put a hard-earned buck into this system. (How I Got Screwed by Bernie Madoff...