What kind of 'tard ping-pong is this? Most everybody knows that a healthy bank is not expected to be able to pay all its depositors and debts in cash at any given moment. Just like most everybody knows that a banks solvency and general health is a simple enough ratio of assets to debits, just like everybody else.
And just as gonzo points out, the banks have assets. And that is the crucial difference, that is why a Ponzi scheme is never solvent, because it has no assets. Zero. Zip. Nada a damn thing.
Ponzi spent all the money, he didn’t buy anything as an “asset”! Supposedly he was buying foreign postage and cashing it in for a profit (don’t ask…it makes the whole tulip thing look sensible…). He used just enough of the income to offer cash outs to his customers. Heres the genius part: most of his customers handed him the money right back! They made a huge return on their investment, so they increased their investment.
And then he spent the money, Boy, did he spend money! He never had any assets, ever. I submit that an utter absence of assets is an utter lack of solvency.
Here’s a Department of the Treasury study of income mobility over time (from 1996 to 2005). Plenty to sink your teeth into for those who are interested.
Could someone explain to me why Kanye West and Russel Simmons are considered “good” millionares while people who run businesses and banks are bad ones?
Because they produce something of value. Not great value, but greater than zero.
By and large, the probelm people have is not neccessarily with people who run buisnesses - look at the adopration of Steve Jobs, for instance. It’s the bankers and number crunchers who do nothing except move money around and then take most of it home with them that most people are angry at.
This whole solvency thing. You are just wrong. I know you know this. I’m sad that you won’t admit, because to me it’s proof that it’s a waste of time arguing with you. You will not acknowledge an error, or the merits of an opposing argument.
If you are nailing to do it on a simple thing like this, which is just semantics than why should anybody invest the time to engage you in bigger topics?
Now on to Ponzi. The Ponzi scheme is named after him, but it was going on before him and after him. In order to be a ponzi scheme it doesn’t have to be exactly the same way ponzi did it, we are talking about a general category of scam.
A ponzi scheme can have assets. The two I’ve cited did. Having assets doesn’t mean you aren’t a ponzi scheme.
Again, words have specific means. Something becomes a ponzi scheme at the point that new investors assets are funding fraudulent “profits” of earlier investors and are paid out.
Submit away. But this, too, is wrong. A Ponzi scheme’s key point is not the utter lack of assets. Think about that for a moment: if a fund manager could defeat the charge of Ponzism by owning assets, then every would-be schemer would simply purchase some minor income-generating assets and wave them smugly in the face of SEC agents when they arrived with the indictments.
No – the Ponzi key element is simply its use of investor money to pay gains to other investors.
But as long as I have money to pay, I am solvent. Because that’s what the word means. This is not a hypertechnical term of art. It’s what the dictionary says.
You would be wise to just say, “OK, look, even someone as brilliant as I am gets the occasional detail slightly wrong.” Because you’re simply wrong here. Stop digging.
Let’s imagine I convince ten friends to invest with me. And I use their money to buy shares of Solyndra and other green companies, confident that the share price will rise. So far, everything’s good. And note, please: I have assets.
Now let’s imagine that instead some of those share prices fall. If I simply report to my friends that the share prices fell, and they won’t be getting any dividends or profits, then I’m an honest, if incompetent, fund manager.
But instead if I report to my friends that the stocks I invested in for them are doing fantastically, and they should let their friends and families know… and when those extra friends and families invest, I use some of their initial investments to pay phony dividends to my first customers, then I have a Ponzi scheme. Note that this is true even if I don’t take a dime for myself – I’m so ashamed of my failure to pick winning stocks I don’t take a cent in fees, and desperately try to pick a second round of winning stocks, intending to make everything right after they take off… that’s a Ponzi scheme.
Notice that (a) I have assets, and (b) I’m not making a penny. A Ponzi scheme happens when investor principal is used to pay gains to other investors. Period.
Christ almighty, you’re lazy, ignorant turd. And you revel in it. You’re the mirror image of Starving Artist … “don’t trouble me with having to think or (gasp) read … just give me a soundbite, so I can decide if it comports with my predetermined answer. Numbers and facts give me headaches.”
You’re Michelle Bachmann with different nouns, Diogenes with a smaller vocabulary. Why the fuck people engage with you for any purpose other than ridicule is beyond me.
Amen, furt. Many an argument with luci has ended with me just giving up once the full wieght of his stupidity dawned on me (again–I seem to have recurring temporary amnesia on that subject).
This. You can go to the record store and buy a Kanye record. You can pick up an iPhone and marvel at the fact that it’s aesthetically pleasing and highly functional.
And then you can look at all the investing materials that your 401k provider gave you asserting consistent 10% gains look at this chart you should totally go a little risky at your age the gains are worth it, and then you look at your losses over the last three years of your hard-earned money just disappearing into the ether while those guys get paid MORE? Then you think about how they told your dad the same thing and he’s planning on working 80 hours weeks until he’s 70 because he moved money from savings to the stock market on the advice of numerous “financial professionals” in 1997, and then lost 75% of it in the tech bubble. Yeah, fuck those guys. It’s not that they’re rich, it’s that they’re rich because they’re horrible caretakers of our money.
I would say it’s more complicated than that. Wall Street, and by extension Big Law, Big-4 professional services firms and white shoe management consultancies have become a sort of corporate overclass. Don’t get me wrong. People who work at these places are certainly very smart and have to work very hard. But there are very real class barriers to get into these types of companies. You need to go to the right schools, have the right background and right mannarisms. It has become a self-perpetuating class that most Americans are not smart or educated enough to ever join.
Silicon Valley / Silicon Alley(NYC) / Rt 128 (Boston) might be a bit more egalitarian, since they are dependent on smart people to invent shit. But even that industry seems to have formed an elitist class of “startup junkies” and “visionary entrepreneur ninjas” who mostly consist of ex-McKinsey, ex-investment banker MBAs with money fianced by their VC friends creating bullshit knockoffs of each other’s companies.
Yeah, except then that is basically just “giving away free money you don’t have”. People give Madoff money to invest because he promises them 20% returns on their investment. Well the assets that Madoff is managing don’t produce those kinds of returns. So he has to pay old investor’s returns with new investor’s money.
A bank has to have enough assets to cover all their customer’s deposits, plus interest. Those assets don’t need to be actual cash sitting in a vault (beyond reserve requirements). Money they loan out is considered an asset on the books because it is receivable. The problem is when too many people default. All of a sudden people realize the bank doesn’t have enough assets to cover everyone’s deposits and you get a run on the bank.
I have no problem with some people making more than others, even a lot more. I just would like you to explain to me why it should be these bozos. The fact of the matter is, America was much better off under the 19th Century railroad barons, because at least with them, you ended up with railroads.
I think executive suite level salaries are ridiculous and indefensible across the board throughout corporate America, so no, I don.'t wish to defend it.
Yeah, keep telling yourself that. I’ll just continue being on the management team of a successful small business, and you’ll keep being a bootlicker for the financial sector.
The bankers and financial experts were glorious failures. They broke the establishments they worked for and imperiled the economy of the world. That is failure on a grand scale. The pricks should have been tossed in jail or run out of town in ignominy.
They should not make huge salaries and bonuses. What the fuck do you have to do to get fired?
But our righties break out the knee pads as soon as Goldman gets mentioned.
The banks are the problem not the solution. They should be busted up. Both sides decried the “too big to fail” conditions, yet during the crisis they made them worse. Break them up now. Do the world a favor.