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May 29, 2009


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Sheeyoot. If we don't get better oversight, then the golden age of fraud is still to come.


"For the Charlotte man who invested with the late Bruce Kramer, the profits were part of the allure, he said. According to court documents, Kramer claimed to be an expert mathematician who used a proprietary system to guarantee monthly returns of 3-4 percent or more."

It doesn't take an expert mathematician to generate 3-4% MONTHLY returns (40-60% annual), it takes Harry Potter, or Doc Brown.

It is a sad story, but people who expect returns above treasury, and in this case ridiculously above, with no principal risk are inviting fraud.

The govt should be insuring less debt, not more, and investors need to accept risk across ALL investments.
source - Klein, WaPo
Felix Salmon @ Reuters

"Riskless" assets do not exist. The risk of your FDIC insured account lies with the FDIC. "If you have a world where people are all looking for risk-free assets, you end up shunting all that risk into the tails." That tail risk is paid for by us at bailout time.

From here, 2007, albeit related to mortgages: "A mortgage has a risk of default which should translate to a rate, given the level of risk. If the loan is carrying a lower rate, someone is still holding and paying for that risk."


This will be known as the paper and ink age of investment fraud. What, if any, incentive does the realm have for providing oversight for money and money policies monopolized by the realm. The scheme they have going is so perfect that they can confiscate assets from their subjects and voters, then name an index after the scheme and publish it, without causing a stampede. At the same time, the subjects and voters believe the monopolized paper will always be redeemable.

If the herd fails to perform due diligence, before you know it, the put/call ratio will be closing under 1.00 for 30 straight days and the VIX will approach the levels of 2007-2008, when there was no perceived risk. This is where the herd is now-back to the euphoric stage of when the empire had clothes.

How can you provide oversight when the herd is sporting a brand on their hindquarter which says "devour me" and are constantly sticking their heads into the predator's mouth. Is there an implied contract with the metaphysical state which the herd pledged their allegiance to?

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