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-- Posted Monday, 15 December 2008 | Digg This Article | Source: GoldSeek.com
It is a feature of financial crashes that fraudsters and embezzlers emerge. As Warren Buffett put it: ‘When the tide goes out you see who has been swimming naked’. Before that it can be hellishly difficult spotting them. Who would have though 70 year old, ex-Nasdaq excutive and highly respected Wall Street trader, Bernard Madoff was masterminding a $50 billion Ponzi scheme as he admitted last week. Ponzi returnsMadoff says he is guilty of orchestrating a multi-year fraud that produced generous returns for sophisticated investors. As BreakingViews.com explained: ‘The technique was the usual Ponzi scheme. Old investors were paid off by the new funds lured into to Madoff’s art-laden New York headquarters.’ This probably makes Madoff the biggest fraudster in history and knocks the Asian Financial Crisis’s Nick Leeson into the margins. The historian and economist JK Galbraith has noted that throughout history speculative periods have allowed dishonest people to prosper, and the better the times the worse the outcome in terms of fraud and embezzlement. Who is next?You have to wonder if this will be the last such case. Hedge funds with their huge borrowings and opaque financial techniques have provided a legion of opportunities for malpractice. The problem is also that frauds act as a downward pressure on legitimate investment activity. Presently US investors are buying zero-coupon t-bonds because they trust the US Government and not the banks that pay interest. Confidence is pretty shot to pieces which is why I wonder if the current stock market rally has much life in it, and whether we will not see new lows in the first half of next year, as well as more cases like Madoff. What will it take to make investors stop sitting on their cash? Inflation perhaps, but then deflation is the more immediate prospect, and inflation might send them into gold and not stocks.
-- Posted Monday, 15 December 2008 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Who Is The Next Billion-Dollar Fraudster?
