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Old 12-18-2008, 02:21 PM   #21
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two words precious metals Food Ammo
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Old 12-18-2008, 02:34 PM   #22
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The insurance business model really is almost exactly like a Ponzi scheme, except that it's tweaked to be sustainable and legal. In the insurance industry you take in premiums (as Ponzi schemes take investments) and most of the time they are kept, never returned to the clients. Instead they are used to fund the rare payouts (as Ponzi schemes fund redemptions).

This is why it's so important for the government to regulate the insurance industry to insure they can handle their redemptions (payouts). If there were no such regulation, companies would simply start taking premiums and "invest" the reserves in the owners pockets until it all collapsed at the time a big payout was needed.
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Old 12-18-2008, 03:38 PM   #23
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Social Security works the same way as what Madoff was running...........
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Old 12-18-2008, 03:54 PM   #24
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Now I've gone cross-eyed ...
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Old 12-18-2008, 05:17 PM   #25
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Disclosure: Vanguard is paying me. They deposited a 5 figure sum in my MMkt account a few days ago. The money is laundered through my Wellesley fund.
Good God, it IS a Ponzi scheme.... we just put a 5-figure amount into a Vanguard MF.

Somebody better pony up the $15 in dividends I'm supposed to be getting at the end of the year....
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Old 12-18-2008, 05:35 PM   #26
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Might not be a bad idea to split Funds assets between Fido and VG.
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Old 12-18-2008, 05:43 PM   #27
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My life 4 U Vanguard.
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Old 12-18-2008, 08:28 PM   #28
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I guess we'd all have to sue our FAs.
What makes you so sure you can sue your FA?

What if he's secretly the Albanian ambassador and has diplomatic immunity?
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Old 12-18-2008, 08:43 PM   #29
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The other potential ponzi scheme I'm thinking about is Berkshire Hathaway. The stock never pays a dividend and the primary business is insurance. The performance isn't as consistent as Madoff, but the result are in theory even more impressive.

Sure Geico and General Re pays the occasional claim, and Buffett is folksy as hell.
Everyone says the stock will tank when Warren dies, but maybe it is less because of his investing prowess and more because when they audit the books, they'll find it is a giant 100+ billion ponzi scheme.

"Just because you are paranoid doesn't mean they aren't out to get you."
Uh, you are aware that insurance companies are heavily regulated, right?
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Old 12-18-2008, 09:23 PM   #30
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The latest scandal has made me think...how do I know Vanguard really exists? What if it's just a PO Box in a strip mall in Valley Forge? Sure, they send me nice statements every quarter, but it's not that hard to generate nice looking letterhead. They're audited, but so was Madoff. Vanguard has, at times, refused to take my money (closed funds) just like Madoff did to help build credibility. John Bogle is a very persuasive guy, just like Madoff was. And so far, Vanguard has always honored requests to transfer money out, but maybe one day they wake up and their $1T is gone.
I used to work in Valley Forge for another company. I wnet to school with many Vanguard employees, and by the fact that they told me that working for Vanguard sucks eggs pretty much told that they weren't actors hired by Vanguard.
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Old 12-18-2008, 09:50 PM   #31
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I used to work in Valley Forge for another company. I wnet to school with many Vanguard employees, and by the fact that they told me that working for Vanguard sucks eggs pretty much told that they weren't actors hired by Vanguard.
How do we know who you are? This is exactly the type of info Vanguard would give out to back up their complicated lie.

How do I know that this whole board isn't just a big Vanguard Potemkin Village run by a special staff. Gee--and in this time of tight budgets, Vanguard would be trying to reduce their costs in running this big deception--any coincidence that the Soapbox is going away and non-financial posts are to be discouraged! Less work for them, downsizing of the deception staff, no doubt! It's all falling into place now.

Hey, there's someone at my door. If I don't come back---they've gotten me just like they got CFB!

"Ahh, but the strawberries that's, that's where I had them. They laughed at me and made jokes but I proved beyond the shadow of a doubt and with ... geometric logic ... "
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Old 12-18-2008, 10:11 PM   #32
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CD's baby....cd's. Of course as soon as I get everything converted over, the gov't will go belly up.
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Old 12-18-2008, 10:13 PM   #33
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CD's baby....cd's. Of course as soon as I get everything converted over, the gov't will go belly up.
I don't think so but the market may go up 50%
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Old 12-18-2008, 10:15 PM   #34
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I used to work in Valley Forge for another company. I wnet to school with many Vanguard employees, and by the fact that they told me that working for Vanguard sucks eggs pretty much told that they weren't actors hired by Vanguard.

Plus no ponzi scheme would ever give such crappy service to its dupes.
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Old 12-18-2008, 10:44 PM   #35
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Uh, you are aware that insurance companies are heavily regulated, right?
Yup. For instance AIG was heavily regulated and they only lost 100 billion, ok admittedly on one of there less regulated units.

Berkshire being a Ponzi scheme is a joke that is the point of the . But there are some similarities.... both Berkshire and Medoff were held in high regard and deliver extraordinary returns over long periods of time with large sums of money.

I think what is unnerving is if you asked me (or even somebody more knowledgeable about Wall St. like yourself) could the former head of the NASDAQ stock exchange run a 50 billion Ponzi scheme, we both would have laughed and called for the tin foil hats.

I have believed that American capitalist system while far from perfect is basically a fair system. I have laughed at people who rant that the system is really rigged and run by cabal, moving around the world in Black Helicopters and called them nut cases. (albeit politely)

I'll I can say is that recent events have shaken my opinion that I am right and they are wrong. More importantly if somebody like myself who is a natural skeptic about conspiracy is seeing there faith in the system shaken, what does that say about the vast majority of folks who lack our financial sophistication?
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Old 12-19-2008, 12:01 AM   #36
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Yup. For instance AIG was heavily regulated and they only lost 100 billion, ok admittedly on one of there less regulated units.

Berkshire being a Ponzi scheme is a joke that is the point of the . But there are some similarities.... both Berkshire and Medoff were held in high regard and deliver extraordinary returns over long periods of time with large sums of money.
Actually, Berkshire is an even better Ponzi scheme than Madoff's... Think about it, Madoff paid some money out. Berkshire never ever pays anything out no dividends nothin!
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Old 12-19-2008, 12:11 AM   #37
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Actually, Berkshire is an even better Ponzi scheme than Madoff's... Think about it, Madoff paid some money out. Berkshire never ever pays anything out no dividends nothin!
Yup that exact thought has crossed my mind more than once :-) Now I am going to work on my post explaining why recently Ziggy who bought Berkshire at $2500 made a great investment.

I think I need a handle for my dark side thoughts, maybe pfilc. :confused:
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Old 12-19-2008, 05:48 AM   #38
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Originally Posted by clifp View Post
Yup. For instance AIG was heavily regulated and they only lost 100 billion, ok admittedly on one of there less regulated units.

Berkshire being a Ponzi scheme is a joke that is the point of the . But there are some similarities.... both Berkshire and Medoff were held in high regard and deliver extraordinary returns over long periods of time with large sums of money.

I think what is unnerving is if you asked me (or even somebody more knowledgeable about Wall St. like yourself) could the former head of the NASDAQ stock exchange run a 50 billion Ponzi scheme, we both would have laughed and called for the tin foil hats.

I have believed that American capitalist system while far from perfect is basically a fair system. I have laughed at people who rant that the system is really rigged and run by cabal, moving around the world in Black Helicopters and called them nut cases. (albeit politely)

I'll I can say is that recent events have shaken my opinion that I am right and they are wrong. More importantly if somebody like myself who is a natural skeptic about conspiracy is seeing there faith in the system shaken, what does that say about the vast majority of folks who lack our financial sophistication?
It is curious that "bailouts" and "stimulus packages" are happening all over the world. The "financial markets" all need infusions of extraordinary volumes of cash. Somehow, "they" are getting it.

Bloomberg.com: News

Taxpayers are forced to buy bad investments from banks "so that they will be able to lend - to free up financial markets".

All of this is because a housekeeper in Jamaica Plains, NY making $22,000 per year bought a $500,000 house.

Meanwhile the shell game goes on.

The money is under the mortgage default shell. No, it's under the CDO shell. No, it's under the CDS shell.

There is some good news though. The aluminum for your new hat is getting cheaper every day!
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Old 12-19-2008, 08:11 AM   #39
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A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?
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Old 12-19-2008, 09:37 AM   #40
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A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?

I think that's the beauty of leverage. Too much horsepower can kill you.
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