Scheming The Citizenry

Charles Ponzi must be spinning in his grave while Bernie Madoff is presumably bewildered in his jail cell.

During the CNN GOP debate last night in Tampa, GOP front runners Mitt Romney and Rick Perry battled it out once again over whether Social Security is a Ponzi scheme. Take a listen:



This debate is very healthy, and quite telling about how we arrived in the mess we are in and where we stand as a nation.

For decades, folks from both sides of the political aisle have accurately labeled Social Security as a Ponzi scheme. For example, Jonathan Hoenig often battles Democratic strategerists on FOX Business Network making the case in pinpoint fashion.

In fact, Social Security is worse than a Ponzi scheme, as those involved with a Ponzi scheme engage the activity on their own, rather than being forced to partake.

Rick Perry is quite correct that this program is in need of extensive reform, as it is currently bankrupt and unsustainable. Although, as Perry correctly points out, Mitt Romney and a large contingent of pundits are attempting to scare seniors by implying they will not receive their benefits, they will not be impacted by any proposed changes. President Obama even proclaimed he could not guarantee checks for our seniors, in yet another inaccuracy out his arrogant mouth. Scare tactics aimed at our seniors in this perilous economic environment is pathetic, and it implies our seasoned citizens are ill informed.

Our senior community, as well as many of those who have freshly entered the workforce, understand that changes to the program are vital for it to survive, for the status quo is doomed for failure sooner than later. They appreciate the truth, something that is far too often missing in politics. Like health care, a private sector component to Social Security would be beneficial, and gives participants choices in investment vehicles which offer opportunities for greater return on investment.

It is time for the truth, and the Ponzi scheme known as Social Security is a great place to start the debate on reforming, or with any luck eliminating, dozens of entitlement programs that are in fact bankrupting our country.

Ultimately, the federal government should be out of this business, allowing individuals to plan for retirement in ways that best serve their particular interests. If a base of support is necessary, each state can produce programs that best suit the needs of its citizens. It will take decades for this to occur, but steps taken now through a broad initiative can begin the lengthy process.

For folks my age, mid forties, and below, retirement plan forecasts should not include anticipation of any return from Social Security. Folks saving for retirement should indeed focus on a collection of market base instruments for a solid return on investment.

Extraordinary Evil

U.S. District Judge Denny Chin accurately discarded a plea for leniency by the defense and sentenced Bernie Madoff to 150 years in prison for unprecedented financial fraud. It has been labeled the scam of the century, and rightfully so.

The level of losses for the victims is record setting and mind boggling to be sure. Certainly, there were others involved in this ponzi scheme, including Madoffs wife and two sons. I suspect the FEDs will be knocking on their doors soon.

Here are some thoughts about what investors can take away from this incredible story of fraud leaving scores of victims financially and emotionally brutalized:

If you think this is the last case of fraud you will be reading about in the newspapers you are going to be mistaken. Unfortunately, this type of activity will continue to take place. Educate yourself and take steps to make sure you are not among the next victims.

Potential investors must engage in some due diligence, as in any transaction of commerce, Caveat Emptor reigns supreme. Let the buyer beware! As a regulating body, after being tipped off and doing nothing, the enforcement of the Securities and Exchange Commission was horrendous. Although the agency has much on the plate, that level of incompetence should not be tolerated. Investors should not have placed total confidence in any governmental agency to "handle" their responsibilities in managing their investments. In fact, America seems eager to place the government in charge of just about everything, and actions in this regard will fail miserably and handicap our economy.

Capitalism in itself is a series of checks and balances, and at the end of the day unethical players are removed in some fashion from the marketplace. Little, if any, further regulation in this arena is needed, although we are going to get plenty. This will only raise the cost of investment and reduce rates of return for investors.

In addition, under no circumstances should an investor put "all their eggs in one basket". Suppose some of the victims has placed on 25% of their investments with Madoff and the other 75% spread amongst three other firms or in other areas of investment.

While Madoff will ultimately rot in hell, it will be interesting to see the list of others who will find themselves in federal court. I did notice in a video on CNBC one of Madoffs sons hoping in his car today after seemingly lounging around in shorts and flip flops. One might think if the firm I worked at had no assets and I had no money stashed away I might be out seeking employment. Call me crazy.

Take a listen to CNBC's Rebecca Jarvis, Melissa Francis and Larry Kudlow kick around the case with some selected panel members. Great stuff:

Congressional Idiots Assault Prosperity

While we were debating, or being told about, health care, the other hand was hard at work rushing the newest piece of legislation down our throat, and this will be particularly painful. The largest tax increase in the history of the United States was narrowly passed by the House of Representatives yesterday, so get ready to shell out some cash for a monster shell game Bernie Madoff would be proud of. All in the name of global warming, which is the greatest hoax of all time.

Most folks are barely getting by these days as it is, due to the fallout of the housing crisis, caused in large part by you know who. Now, due to this nonsense, prices, particularly for energy, are set to "skyrocket" and slap silly any chance of a powerful economic comeback.



Treasury Secretary Timothy Geithner testified that "we can't address the problems with climate change or our dependence on foreign oil without changing the incentive people face for how they use energy". I reject the whole premise since I do not concur there are problems with global warming or climate change. These bozos don't know if it is going to rain 2 hours from now, and while looking out the window, neither do I.

Incentives do work, and given the complete idiocy of our dependence on foreign oil, why are we not drilling off our coasts? What this cap and trade legislation will do is incentivize people and firms to use less energy, and guess what, that means less production and less output, translating to lower profits, fewer jobs, less competition and a contracting economy. Sounds great!



On a side bar, remember those on left pining for the perp walks of those in charge over at Houston based Enron. Have yourself a look at portions of the business model of Enron and the cap and trade legislation. Notice any similarities?

I was going to ask my local representative about it, but historical evidence indicates that might not go well.


I will work as hard as I can to defeat the idiots supporting this bill when the next election comes around, particularly my local representative, Alan Grayson. Not only am I opposed to his line of thinking, I think his conduct is appalling.