July 2014
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GOD AND THE PONZI SCHEME

by SY SCHECHTMAN

In both the Jewish Scriptures (The Torah) and the New Testament, the story on the origin of our world cosmos is the same. The Lord God created the known universe in six days and rested on the seventh day, the so called Sabbath. And the Lord God pronounced his total creation “very good”. This is Sunday for most religions but is Saturday for those stubborn Jews. There are many more gentiles than Jews in this world today, which is in itself a most fascinating story, but our main “culprit” today is Carlo Ponzi who beguiled many Jews as well as gullible gentiles in his mostly nefarious schemes. Which were essentially “robbing Peter to pay Paul”. This is, regrettably, the most practical way to make functional sense of some serious road bumps in the almost smooth flow of our capitalistic enterprise roadway to general prosperity. However, there can be some detours or turn backs or sad events on the this most event full adventure.

The prime obstacle to happy fulfillment of this adventure is the need for current funds to patch over the current illiquidity usually evident in the project. Current funds must be made available to start this most desirable goal. Credit in the form of a loan is usually the necessary convenient mode of generating such money if the fund in question has no current cash position. This is easily determined since the market’s the daily fluctuations readily establishes the true value of the stock at any stated time. Either for the present or even deeply in the past. And hence, standing almost meekly in the middle of this most tempting path to almost complete fulfillment is the most tempting Ponzi approach. This path provides the new innocent prospect an almost satisfying new investment fund which at its inception provides most positive profits, leading to higher priced reinvested capital. Mostly by the innocent, naïve duped “sucker”. Soon those involved in the cabal to raise the price sell out, leaving the inevitably higher priced owners “holding the bag”. Or, somewhat inflated, over priced stock. Eventually, one can only hope, “a rising market will lift all boats” even somewhat manipulated dubious “dogs”. The Ponzi Scheme, of course, comes into play because the rising price was due to only the temporary price boost which was soon liquidated by the speculators. These latter scoundrels had profits, which they cashed in a few years ago. The market is now somewhat lower and still above the bear market lows. Should more stock now be sold or kept for the next eventual surge?

The crucial thing about the illegal Ponzi problem is that in this most current swindle the so called “dividends” were really not from successful stock trades but simply from continuing new incoming investments lured by the false claims of the firm of Bernard L. Madoff Investments Securities. Bernie Madoff had earned much esteem for his reliable return of so called profits to his clientele for over two decades. Also his reputation was reinforced by his helping to establish the Nasdaq stock exchange and serving as its chair for a few years. Most importantly whenever his customers wanted a withdrawal Madoff and Company paid off most promptly. No matter the amount. It is estimated that over a nearly a two decade time span Madoff and company took not only the very rich and famous—such as Zsa Zsa Gabor, Kevin Bacon, Stevin Spielberg, but several important college endowment moneys.

Over almost two decades, before Madoff confessed, it is estimated that over 65 billion dollars in trading went on between Madoff and his prime customers, a good many who were Jewish, loyal and unaware of coming bankruptcy as Madoff’s Ponzi Scheme’s became evident, and “cooking the books” became so evident that the SEC decided after more rigorous overseeing of Madoff’s machinations that a real Ponzi scheme was involved and that the “profits” were only illusory based on Madoff’s exaggerated figures and the only liquid assets that were still supplying new investment money was based on Madoff’s false figures. (Madoff is now serving about a 150 years combined sentence for his duplicity).

A somewhat ghoulish footnote is that quite a bit of Jewish extraneous capital was probably involved. Hitler tried in this own macabre way to make the “world judenrein” (free of Jews) with the Holocaust, and Madoff deliberately was happily trying to defraud many of his fellow surviving Jews beyond Hitler and impoverish them with his fraudulent Ponzi tactics. But, in essence, sometimes the world does take on a malevolent Ponzi scheme essence. New found wailing and unjust distress in the path of the Jew. And the still deadly credo by many misguided Arabs “ to sweep all the Jews back into the sea”.!

But for almost over four thousand years the Jewish flower and faith has remained vital. And also a beacon of light and hope for a struggling humanity, forever striving to overcome and transcend its human imperfections. And overcome his brother’s indifference. A Caring and sharing. The golden rule…. The Ponzi Scheme without the bitter ending…….GOD, ARE YOU LISTENING? Something like parting of the Red Sea to let the Jews escape Egyptian troops, or the daily manna from heaven during that escape!!