A Very Subtle Form of Theft

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by Simon Black: Surprise!
Guess Where the World's Most Profitable Banking Center Is…

Say what you
want about him, but Bernie Madoff was a guy who knew how to keep
the party going. For years, he ran one of the largest private-sector
Ponzi schemes in history and always heeded the golden rule of financial
scams: make sure your inflows are greater than your outflows.

He was finally
done in when redemptions exceeded new investments. He didn’t
have enough cash to pay out investors, and he wasn’t able to
scam more people into paying in to the scheme. As a result, Madoff
finally had to admit that the whole thing was a total fraud.

around the world are in similar situations right now with their
own public sector Ponzi schemes. Faced with failed auctions, declining
demand, and rising yields, politicians are having to resort to desperate

Like any good
scam artist, they’re appealing to the masses first; all over
Europe, governments are sponsoring new marketing campaigns suggesting
that it’s people’s patriotic duty to buy government debt.

In Spain, they’re
actually issuing instruments called ‘Bonos Patrioticos,’
or ‘patriotic bonds’. Ad campaigns say that the bonds
are “good for you, good for the future.”

In Ireland,
they’ve issued “Prize Bonds” which carry a 0% interest
rate; instead of receiving interest, bondholders are entered into
a weekly lottery contest. Naturally, lottery winnings are only possible
as long as people keep buying the bonds… pretty much the definition
of a Ponzi scheme!

In Italy, they’re
rolling out the country’s sports celebrities to encourage everyone
to buy Italian sovereign debt.

ironic is that Italy’s dismal balance sheet is almost universally
acknowledged. It’s as if everyone knows the country has almost
no chance of making good on its obligations, but they still feel
the need to willingly throw away their hard earned savings for the
greater good of political incompetence.

Thing is, it’s
not the millionaire sports stars, wealthy business leaders, or political
elite who are buying these bonds… at least, not in anything
beyond a token, symbolic amount. It’s the average guy on the
street who really stands to get hurt when the government finally

This is a truly
despicable act and amounts to theft, plain and simple.

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