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Archive for the ‘Economy’ Category

There is a CNN television show called Your $$$$$ and I saw an interesting discussion back in March.  I highly recommend everyone to watch this show, especially during this recession.  In this economic crisis, with countless home foreclosures, financial banks and automotive companies desperate for bail out packages and mass layoffs across the board, the last thing you ever want to hear is a story about how one man managed to fool and rip off so many people in a tasteless ponzi scheme.  He got away with this for years until now.

Enter Mr. Bernard Madoff.   Madoff made off with your money.  $65 billion, that is.  Some people who were about to retire no longer have that money to retire on and have no choice but to find work to survive.  Thanks for nothing, Bernie.

According to Merriam-Webster dictionary online, a Ponzi scheme is “an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.”

Basically, if investor #1 puts forth $10,000 to Madoff, at some point in time Madoff needs to return that investment with profit.  The question is this: where is that money coming from?  Clearly, it won’ t come from his pockets.  It comes from investor #2 (and possibly others), who(m) must invest at least the amount to be returned (at least $10,000) to previous investors like investor #1.  So what about investor #2’s return of investment?  It comes from investor #3’s investment. 

Interesting, you could keep doing this forever, unless you’re Madoff and sentenced to, what is it, 150 years in prison?  Good Lord, the man is turning 71 next week!  At the very least, we should be glad that justice was served but unfortunately it doesn’t help to undo the damages that have already been done.