Brian’s Morning Newsletter for June 19th 2009

In preparation for closing the BMN Google group I’ve added the email addresses from this list to http://outfitnm.com/forum You should receive a temporary password and a username, both can be changed.
Good Morning
This morning I will post some news items I hope you haven’t already seen. Interesting information, well at least I believe it worthy of a reprint. This information is what I have been reading this morning and pretty much it is all news to me. Of course I hope you find at least some of it enlightening as well. I started out scanning the news this morning and before my eyes were fully open I saw a headline stating the a billionaire was arrested. Okay, that makes me happy right off the bat. I know I don’t have to tell you why I like seeing the ultra-rich businessmen cornered by law enforcement agents,  I can overlook the predictable outcome and be happy with the illusion that our government is cracking down on financial swindlers. Cool, get em. 

Also this morning I wanted to verify what I assumed a Ponzi scheme was. I found the Wiki article to be helpful and informative so you get that in its entirety as well as the story, "Billionaire Financier Stanford Surrenders to FBI." While scanning http://albuquerque.craigslist.org/ for step-vans which might contain the Cummins 4BT, (4 cyl diesel) Ford transmission and motor mounts, which unfortunately I didn’t spot, however I did find this: "Double Eagle Ultralight – $2200" I thought of Kevin right away, and imagined flying this baby here at the ranch, indeed right off the hill our shop rests upon, smiles.

And oh yeah, I keep coming back to health-care reform. What the hell does this mean? Someone please tell me. I am not completely stupid when it comes to health care, but I am pretty uninformed, probably because everything I read sounds like double speak and rhetoric. Politics is so full of misinformation that I can’t deal with it.  Indeed along with our wonderful age of information (via the Internet) comes forty layers of bull shit. I don’t have time to sort it all out. I am getting to the stage where if I read it in the news, my first assumption is that one of the corporations placed it there for their own benefit.

How can we tell anymore what the hell is really happening? It really is all too much for me to figure out. I would rather immerse myself in  old-school technological issues any day. At least I can believe what I see with my own eyes. I don’t know about you, but I am sick of being played for a sucker. I choose not to play, and perhaps this was their plan all along: Make politics so fucking complicated that a degree in political science is needed to sort it out, the rest of us are dolts, consumers and dysfunctional walking carcasses.

So instead of finding a rock to climb under and hide from the sharks like Madoff and this newly headlined billionaire-crook, Stanford I choose to make my life better by leaning about the simpler things in life. Making our own biodiesel was the first, then I played with photovoltaics, now wind turbines for electrical production. I am always doing my projects outside of the established system. Unfinanced, (see the spell checker doesn’t think unfinanced is even a word), not just under funded, unfinanced, what does this even mean? Well I can tell you several things it means to me. First, since I do not care to spend mega-bucks on inverters and electrical grid interconnection devices the establishment doesn’t want anything to do with me.

Makes sense don’t it? Let’s say I want to get a grant for research and development of a better DIY off-grid electrical generation system.  What type corporate sponsorship can I expect to help with a system designed primarily to shun big money? Hmm, no brainer here folks. Now switch my off-grid anti establishment stance 180 degrees with corporate logos slathered all over our cars and renewable energy workshop and the bucks doubtless will start to roll in continuously, especially if said money was funneled back to the corporations like Outback and Xantrex, or perhaps I would use a government grant to purchase $50,000 worth of photovoltaic panels and get a tax credit plus pennies on the dollar for sell back to the other  crooks at Mora San Miguel electric.

Hmmm, maybe we can work a deal Mr. Rodgers, let’s see your financial statement. Yes yes yes, I see a tax write-off for you… What the hell are you talking about? We don’t need a tax write offs, we barely have jobs to eat food with. We need some of that free money the government is giving to bankers and auto-manufacturers, So we can buy some over priced hardware from  energy companies like

Kyocera Solar Panels	Evergreen Solar Panels	BP Solar Panels	Sharp Solar Panels

:

So yeah, I struggle to remain a happy go lucky anti-establishment and independent soul, and be assured I am glad the government leaves me alone enough to keep doing what I’m doing.

Because in the end, I don’t have to laugh all the way to the bank.

There is no bank milking us, and since we trully don’t make any extra money, we don’t need to cheat on our taxes.

So yeah, I’m happy to see a billionaire at least get taken away in an black FBI Suburban, whether or not he is still in custody or his lawyers already have him out makes no matter to me.
After all, we know it’s all  just a show for the benefit of the poor and downtrodden.
I don’t even wonder what Stanford did that pissed off the other mega-rich elite, but it does seem like they threw him to the peasants for show.
Hear hear, a good show it is!
Ya all have a swell weekend, and hopefully I’ll be back without that case of the "Mondays" next week.
Brian Rodgers

        
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Double Eagle Ultralight – $2200 (Albuquerque)

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Reply to: see below

 

Date: 2009-06-19, 6:30AM MDT

 

1983 American Aerolight Double Eagle weight shift.  It was damaged by a wind storm.  It has a few holes in the fabric and one bent tube in the front canard.  You can still buy sails, parts, and manuals for this ultralight.  This would be a great project for the vintage ultralight collector.  Motor is a 430 cuyuna that runs strong and starts on the first or second pull.  It is a great ultralight for the beginner because the forward canard makes it almost impossible to stall, it flies very smooth and gental. This is the best ultralight i have owned and i hate to get rid of it but i dont have the time or know how to fix it.  The wing spand is 36 feet and it is 14 feet long.  The motor is 30 horse twin and will haul 250 payload with a 125 foot runway.  This is a favorite for floats and skis. 
Get pictures and details

 

Critical Single Payer Health Care Mobilization: Bringing The Issue Home For Real

We Have A New National Leader On Single Payer Health Care (If We Will

  Get Behind Her)   Please read this whole alert as there is a new video issue ad, a new   "text to" cell phone number, a new action page, a critical and   groundbreaking conceptional analysis you will find NOWHERE else and   more.   First, Marcy Winograd has produced a stunning new issue advocacy   video ad on single payer health care. We want to make this a national   example of what EVERYBODY needs to be doing in their own districts   right now, for us to win the policy change we deserve. In just 30   seconds Marcy takes control of the terms of the health care debate   and redefines them. And you really need to see this video right now.   New Single Payer Advocacy Video:
http://winograd4congress.com/petitions/single_payer_video.php Please watch the video above. And then do everything you can to help   get it out there, propagate the link, tell your friends about it, or   if you can make a contribution to help get it on the air.   Marcy’s underlying point is resoundingly simple. To get Congress to   actually act on good policy, each individual member must feel their   OWN re-election directly threatened if they do not. That is why Marcy   is about to start running issue challenge campaign ads a YEAR before   the primary election in CA-36.   And Marcy has tremendous credibility issuing this challenge to the   Democratic incumbent, Jane Harman, having pulled 38% against her   opponent in 2006. Harman is one of the worst of the worst, having   interceded with the New York Times to stop the publication of a story   on George Bush that would have defeated him back in 2004, having   being briefed on all the torture as it was happening and doing   nothing to stop it, and slavishly serving AIPAC to the detriment of   the national interests of her own constituents.   There is a massive industry sponsored conspiracy afoot, to pass off   some kind of watered down, phony health care reform bill as the   change we believed in. And it all revolves around two MEANINGLESS   marketing buzz words they are spending millions of dollars to implant   in our brains, and you may not have realized how sinister these two   words were until you read this entire alert.   And the two words they are trying to make come out of all our mouths   are "quality, affordable".   Those two words mean NOTHING and stand only for rejection of any   fundamental change, and yet they are propagating wildly in the mass   media, driven by slick diversionary ads, and perhaps you have   unknowingly and unconsciously even uttered them yourself already.   Nobody can "afford" NOT to have health care, regardless of the cost,   up to their entire net worth. And we don’t have a shortage of   "quality" doctors and nurses, our problem is getting heartless   insurance megacorporations to authorize our quality doctors to treat   us.   It is no secret that the most mortal sworn enemies of real health   care reform got together and concocted this deceptive marketing   campaign, as they saw that the compelling majority of the American   people favored and were pressing for REAL change. They literally sat   down in a room to conspire on what marketing words they could use to   SELL their status quo system of gouging us as something new and   different.   And if we are to win, those two words must NEVER pass our lips ever   again.   What Marcy does so brilliantly in this new video ad is lay claim to   and define two truly NEW words, "economical and efficient", to   COUNTERBRAND single payer health care with what it really represents,   so that all America can really understand the difference. The disease   in health care is the 30% of our resources that medical industry   paper pushers steal from every health care dollar. Single payer   health care would save that money, thus it is "economical". And by   eliminating insurance conglomerate middlemen, it would be more   "efficient". That is the only cure for what ails us and there is no   other real cure.   New Single Payer Advocacy Video:
http://winograd4congress.com/petitions/single_payer_video.php Do you get it? The enemies of real change have been trying to brand   single payer health care with supposedly negative coined expressions   like "socialized medicine", while at the same time branding their own   fake reform initiative with those OTHER words (the Q word and the A   word), which we must ALL agree to never utter again. Do you get it?   Do you really get it? It is the marketing campaign of our policy   change enemies, and for us to prevail, the Q word and the A word must   be surgically excised entirely from our own discourse and replaced   with the "economical and efficient" mental transplant.   The fact is while Congress fools around trying to concoct a phony   "public" option, the original bill proposed in 2005 for single payer   health care, H.R. 676 STILL has more co-sponsors than any other. So   we need to CONTINUE to press our support for HR 676. Each of us must   make a point of submitting an action page on this like clockwork once   a week, and we will have new action page links on this for you once a   week from now on. Here is the latest action page Marcy has on her   site.   New HR 676 Action Page:
http://winograd4congress.com/petitions/pnum995.php To further support this whole initiative there is a new cell phone   "text to" number. All you need to do is text the word "HR676" to   30644, and we will get you in touch with Marcy to help you organize   in your own districts. We need everyone in the country who cares   about real health care reform to text "HR676" to the 30644 short   code, to give this out on radio shows, at public events, and   everywhere else we can.   THEN, what Marcy will do is put people in their own Congressional   districts in touch with each other, to empower you to do exactly what   Marcy herself is doing in her own district. We literally need serious   candidates NOW, to start running their own issue advocacy ads on   single payer right now. The American people are behind us if we just   get out there and represent them.   Let Marcy be a national example of just what we ALL need to be doing.   Every bought off member of Congress must feel the heat on the single   payer issue in a very personal way from a direct challenger breathing   down their neck on this issue right now. Then and only then will be   get the change we believed in.   And yes, you can also respond to this action through the new Twitter   gateway. Just send the following Twitter reply, and add any personal   comment you like.   @cxs #p995   And if you want a step by step explanation of how to set up the   Twitter thing here is the link for that.   Twitter Activism Step-By-Step: http://tcxs.net/step_by_step.php Paid for by Winograd for Congress   Please take action NOW, so we can win all victories that are supposed   to be ours, and forward this alert as widely as possible.   If you would like to get alerts like these, you can do so at
http://www.peaceteam.net/in.htm Or if you want to cease receiving our messages, just use the function   at http://www.peaceteam.net/out.htm usalone320b:39457

Billionaire Financier Stanford Surrenders to FBI

   
Bloomberg News
Friday, June 19, 2009; 2:20 AM

R. Allen Stanford, under investigation in an alleged $8 billion fraud involving sales of certificates of deposit through his Antiguan bank, surrendered to federal agents yesterday, his attorney said.

The case is one of the largest alleged financial frauds in U.S. history and comes just months after New York financier Bernard L. Madoff pleaded guilty to charges in a Ponzi scheme of up to $50 billion.

Stanford, 59, was taken into custody yesterday by FBI agents who were waiting outside his girlfriend’s house in Fredericksburg, Va., said Dick DeGuerin, an attorney for the Texas financier.

"Federal agents in black SUVs surrounded his girlfriend’s house this afternoon, and just sat there," DeGuerin said. "I told him to walk out and introduce himself. So he did, and he asked them, ‘If you’ve got a warrant, take me into custody. If you don’t, I’m going to Houston.’ And they did, so they arrested him."

Stanford is scheduled to appear in federal court in Richmond this morning. DeGuerin said he didn’t know whether Stanford would be returned to Houston to face criminal charges handed down yesterday in a sealed indictment by a federal grand jury.

Federal prosecutors may announce as early as today charges against Stanford on securities fraud, according to a government official who spoke on condition of anonymity.
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The Securities and Exchange Commission filed a civil lawsuit against Stanford and business associates in February, accusing them of running a massive fraud through Antigua-based Stanford International Bank.

Stanford has said he did nothing wrong. "I’m not a damn swindler," he told Bloomberg News in April.

The Mexia, Tex., native, who was knighted by the government of Antigua and Barbuda in 2006, has publicly asserted his constitutional right against self-incrimination and refused to testify or provide documents to federal investigators.

Stanford, with citizenship in the United States and Antigua and Barbuda, is one of the world’s richest men, with an estimated worth of $2 billion, according to Forbes magazine.

The grand jury in Houston also is expected to level criminal charges against Stanford’s associate, Laura Pendergest-Holt, 35, chief investment officer for Stanford Group Co. Her attorney, Dan Cogdell, said he didn’t know what charges were returned against his client yesterday but that "she will surrender to a summons in Houston some day next week." Grand jury deliberations are closed, and no details of the proceedings were made public.

U.S. Magistrate Judge Frances Stacy in Houston yesterday said two sealed indictments would be handed up by the grand jury and then closed her courtroom to receive them. Prosecutors and FBI agents involved in the Stanford investigation remained in the courtroom.

The Stanford Group Co. sold $8 billion of certificates of deposit in Stanford International Bank. The company’s network of financial advisers told clients their money would be placed primarily in easily sold financial instruments monitored by more than 20 analysts and audited by Antiguan regulators, according to the SEC lawsuit.

Instead the "vast majority" of the portfolio was managed by Stanford and James M. Davis, the company’s chief financial officer, who invested much of it in private equity and real estate, according to the regulatory agency. Davis, who was named in the SEC suit, is cooperating with prosecutors, his attorney, David Finn, said in April.

Stanford International Bank touted "improbable, if not impossible" returns, the SEC said in its complaint.

"We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world," Rose Romero, director of the SEC’s Fort Worth office, said in a February statement.

FBI agents arrested Pendergest-Holt in February and she was charged with obstructing the SEC’s investigation and accused of making misrepresentations to its representatives while under oath. She plead not guilty in May; a trial date is set for July 20.

A U.S. district judge presiding over the SEC case in Dallas in February froze the assets of the Stanford companies and those belonging to Stanford, Pendergest-Holt and Davis.
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Also yesterday, 16 members of Congress asked the SEC to release all documents in the Stanford investigation. In a letter to SEC Chairman Mary Schapiro, they requested internal memos and information the agency received discussing potential wrongdoing by Stanford and his associates.

The lawmakers also called for an audit of expenses incurred by Dallas attorney Ralph Janvey in his role as the receiver appointed to recover funds for Stanford’s clients.

Stanford has given campaign contributions to some of the nation’s top lawmakers. A Stanford Group political action committee contributed more than $100,000 to various causes last year.

Washington Post staff and the Associated Press contributed to this report.
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Ponzi scheme

From Wikipedia, the free encyclopedia

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned. The Ponzi scheme usually offers returns that other investments cannot guarantee in order to entice new investors, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors in order to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.

The scheme is named after Charles Ponzi,^[1] who became notorious for using the technique after emigrating from Italy to the United States in 1903. Ponzi did not invent the scheme (Charles Dickens‘ 1857 novel Little Dorrit described such a scheme decades before Ponzi was born, for example), but his operation took in so much money that it was the first to become known throughout the United States. His original scheme was in theory based on arbitraging international reply coupons for postage stamps, but soon diverted investors’ money to support payments to earlier investors and Ponzi’s personal wealth.

Knowingly entering a Ponzi scheme, even at the last round of the scheme, can be rational in the economic sense if a government will probably bail out those participating in the Ponzi scheme.^[2]

Contents [hide] 1 Hypothetical example 2 What is not a Ponzi scheme 3 Notable Ponzi schemes 4 See also 5 References 6 Further reading 7 External links

[edit] Hypothetical example

Suppose an advertisement is placed that promises extraordinary returns on an investment — for example, 20 percent on a 30-day contract. The objective is usually to deceive laymen who have no in-depth knowledge of finance or financial jargon. Verbal constructions that sound impressive but are essentially meaningless will be used to dazzle investors: terms such as "hedge futures trading," "high-yield investment programs," "offshore investment" might be used. The promoter will then proceed to sell stakes to investors — who are essentially victims of a confidence trick — by taking advantage of a lack of investor knowledge or competence. The Madoff scandal of 2008 showed that investors presumed to be sophisticated, such as hedge fund managers and international bankers, can also be tricked into joining a Ponzi scheme by a promoter with a well-established (if spurious) reputation for financial skill. Claims of a "proprietary" investment strategy, which must be kept secret to ensure competitive edge, may also be used to hide the nature of the scheme. Bernard Madoff, for example, only permitted one accounting firm, run by his brother-in-law, to perform audits on his hedge fund, claiming the need to keep his strategy secret.

Without the benefit of precedent or objective prior information about the investment, only a few investors are tempted, usually for small sums. Thirty days later, the investor receives the original capital plus the 20 percent return. At this point, the investor will have more incentive to put in additional money and, as word begins to spread, other investors grab the "opportunity" to participate, leading to a cascade effect deriving from the promise of extraordinary returns. However, the "return" to the initial investors is being paid out of the investments of new entrants, and not out of profits.

One reason that the scheme initially works so well is that early investors — those who actually got paid the large returns — commonly reinvest their money in the scheme (it does, after all, pay out much better than any alternative investment). Thus, those running the scheme do not actually have to pay out very much (net) — they simply have to send statements to investors showing them how much they earned by keeping the money, in order to maintain the deception that the scheme is a fund with high returns.

Promoters also try to minimize withdrawals by offering new plans to investors, often where money is frozen for a longer period of time, in exchange for higher returns. The promoter sees new cash flows as investors are told they could not transfer money from the first plan to the second. If a few investors do wish to withdraw their money in accordance with the terms allowed, the requests are usually promptly processed, which gives the illusion to all other investors that the fund is solvent.

The catch is that at some point one of three things will happen:

1. The promoter will vanish, taking all the remaining investment money (minus the payouts to investors) with him.
2. The scheme will collapse under its own weight as investment slows and the promoter starts having problems paying out the promised returns (the higher the returns, the greater the chance of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.
3. The scheme is exposed because the promoter fails to validate the claims when asked to do so by legal authorities.

[edit] What is not a Ponzi scheme

• A multilevel pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a disbelief in financial reality, including the hope of an extremely high rate of return. However, several characteristics distinguish these schemes from Ponzi schemes:
  • In a Ponzi scheme, the schemer acts as a "hub" for the victims, interacting with all of them directly. In a multilevel scheme, those who recruit additional participants benefit directly. (In fact, failure to recruit typically means no investment return.)
  • A Ponzi scheme claims to rely on some esoteric investment approach (insider connections, etc.) and often attracts well-to-do investors; whereas multilevel schemes explicitly claim that new money will be the source of payout for the initial investments.
  • A multilevel scheme is bound to collapse much faster because it requires exponential increases in participants to sustain it. By contrast, Ponzi schemes can survive simply by persuading most existing participants to "reinvest" their money, with a relatively small number of new participants.

• A bubble: A bubble relies on suspension of disbelief and an expectation of large profits, but it is not the same as a Ponzi scheme. A bubble involves ever-rising (and unsustainable) prices in an open market (be that shares of a stock, housing prices, the price of tulip bulbs, or anything else). As long as buyers are willing to pay ever-increasing prices, sellers can get out with a profit, and there doesn’t need to be a schemer behind a bubble. (In fact, a bubble can arise without any fraud at all – for example, housing prices in a local market that rise sharply but eventually drop sharply because of overbuilding.) Bubbles are often said to be based on the "greater fool" theory. Although, according to the Austrian Business Cycle Theory, bubbles are caused by expanding the money supply beyond what genuine capital investment supports, and in this case would qualify as a Ponzi scheme, with expanded credit taking the place of an expanded pool of investors.

• Robbing Peter to pay Paul: When debts are due and the money to pay them is lacking, whether because of bad luck or deliberate theft, debtors often make their payments by borrowing or stealing from other investors they have. It does not follow that this is a Ponzi scheme, because from the basic facts set out there is no indication that the lenders were promised unrealistically high rates of return via claims of unusual financial investments. Nor (from these basic facts) is there any indication that the borrower (banker) is progressively increasing the amount of borrowing ("investing") to cover payments to initial investors.

• Multi-level marketing: Multi-level marketing (MLM), a marketing strategy that compensates promoters of direct selling companies not only for product sales they personally generate, but also for the sales of others they introduced to the company, is sometimes difficult to distinguish from illegal pyramid or Ponzi schemes, although legal and reputable MLMs exist.

• Pay-as-you-go social insurance: Detractors of the Social Security program in the United States often draw parallels between it and a Ponzi scheme, because people who make payments receive benefits later from payments made by others.^[3] Conservative economist Walter Williams adds, "Social Security is unsustainable because it is not meeting the first order condition of a Ponzi scheme, namely expanding the pool of suckers."^[4] However, as the Social Security Administration points out, "There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system," and "as long as the amount of money coming in the front end of the pipe maintains a rough balance with the money being paid out, the system can continue forever."^[1] See also Social Security debate (United States)#Criticism of Social Security as a Ponzi Scheme.

[edit] Notable Ponzi schemes

[edit] See also

• High-yield investment program
• Bucket shop (stock market)
• Get-rich-quick scheme
• Matrix scheme
• Double Shah
• White-collar crime

[edit] References

This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (December 2008)

[edit] Further reading

• Dunn, Donald (2004). Ponzi: The Incredible True Story of the King of Financial Cons (Library of Larceny) (Paperback). New York: Broadway. ISBN 0767914996. 

• Zuckoff, Mitchell (2005). Ponzi’s Scheme: The True Story of a Financial Legend. New York: Random House. ISBN 1400060397. 

[edit] External links

• Ponzi scheme definition with distinctions, history, and other information

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