Your Questions About Is The Stock Market A Big Ponzi Scheme

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Charles asks…

SLV ETF: A Real Silver Investment or A Big Ben Bernie ponzi scheme manipulation mechanism ala JPMorgan?

If the SLV ETF can’t be independently audited or verified, are we supposed to just trust JPMorgan that the massive pile of physical silver is really there in the vault when they are arguably the biggest concentrated naked short silver manipulator in the world? Isn’t that just like letting the fox guard the hen-house? Fox says all the hens are good (in his stomach)?

A serious investment or another sucker’s game?? I found the SLV open and close price facts on the following video extremely interesting and revealing. How is it that silver substantially and consistently trades higher while the US markets are closed, as the Asians and eastern traders take over trading?? Do Asians somehow need silver more than Americans, or are they just smarter??

If SLV is just another manipulation mechanism… What if a lot of serious silver investors and mining company stock-holders suddenly put in a flood of under-priced buy orders for SLV? Could the manipulation scheme backfire on the trustee custodians who seek to artificially manipulate the price of silver and thus drive the price upward in a parabolic move?

Justin answers:

SLV just produced a terrific realized capital gain for me. If Bernanke and JP Morgan want to keep manipulating it up, I still have more to sell.

Silver is up almost 10% in the last 10 days. It hardly seems unusual that it rose 8 of 10 days overseas. That’s what a bullish phase looks like for a commodity.

If you look back to January when silver pulled back, there were 5 days in a row where the US open was lower than the previous close.

Michael asks…

Is the economy continuing to get worse?

Don’t tell me about the stock market. Obama said he was for “Main Street, not Wall Street.”

The number of Americans filing new claims for jobless benefits rose by 30,000 in the week ended July 18, the Labor Department reported Thursday. The total for the week was 554,000.

With nearly 15 million people out of work, according to official figures, and 6.5 million jobs having been eliminated since the recession began in December of 2007, this week’s initial jobless claims report spells increasing social misery for millions of workers.

Wall Street, however, responded to the jobless claims report, along with better-than-expected corporate earnings and a slight increase in June existing home sales, by pushing the Dow Jones Industrial Average up 188 points, ending the day above the 9,000 mark for the first time since last November.

The Dow is up more than 5 percent this month and has added nearly 1,000 points in two weeks.

The diverging fortunes of workers and the corporate elite are the result of ruthless cost-cutting by big business, which is taking advantage of the recession to slash jobs and wages and drive up productivity. The banks and big corporations are being aided and abetted by the policies of the Obama administration.

More:

http://www.wsws.org/articles/2009/jul2009/econ-j24.shtml

Justin answers:

Depends on what you mean by “the economy”. As recent numbers of the Dow, Goldman-Sachs, and so on show — the boys at the wheel (or trough depending on your point of view) are making progress. But the everyday person is still suffering and headed further down.

The point is that this is neither the “V-shaped” recovery touted by the optimists, nor the “U”-shaped one suggested by the economic conservatives (in the old sense of the term). It is, as discussed recently on NPR, an “L-shaped” recovery — if such a shape can be called a recovery at all.

The problem is that whereas financial institutions may to some extent have capital again, the average member of the public does not, and continues to be beseiged by grossly inflated debt. Notice that debt is called “equity” by banks which hold it. What we call “The Market” has been a generalized Ponzi scheme for the last ten years and more. Also, it is worth noting that the numbers on foreclosures are actually greater than published. Many properties (dozens in my condo building in Miami Beach) are in limbo because the banks have not filed foreclosure papers which would oblige them to begin paying maintenance and common charges when they take possession for units which are unsaleable in the present market, even at half their value of one year ago.

Note, too, the extravagant numbers declared for the last quater by J.P Morgan Chase. $3.47 Bn profit! But has everyone forgotten that they were gifted the entire assets of WAMU when it was siezed by the FDIC? Before it failed, WAMU jacked the interest on my credit card up to 31.4%, despite my never missing a payment. Since the failure and takeover, Chase claims it cannot lower the interest on the exhorbitant payments I now make to it for a debt for which they paid nothing — because they “did not write the contract”. Now THAT is what I would call profit. I was assured in September by my own bank manager that WAMU’s October statement would show it was sound, despite the rumors that were flying. Two weeks later, WAMU disappeared, its stock reduced to $0 value. Under the circumstances, the words “motive and opportunity” come to mind as regards J.P. Morgan Chase. It’s time to call a spade a spade. What we are talking about is not a “mistake” or “bad management”, but an orchestrated and pre-meditated crime by the financial community. They got away with it for years — but that does not make it right or normal in any way, much less something that the public should be expected to continue to underwrite.

Question: If the point is that it is necessary to get money into the hands of the consumer to turn the debacle around (I is what we have to do, but we don’t know how,” said the pundit on NPR) — why not, instead of giving more money to banks in the form of another bailout — simply amnesty the debt of people like myself who were victimized by the soon-to-be-illegal bait and switch banks’ tactics? I have paid off the principle at least three times! So why not directly help people like myself who have met their obligations instead of the selfsame banks and other big speculators which lost billions, and continue to abuse the public? Writing off my debt instead of providing another tax-funded bailout would give me $600 per month in my pocket — money that now goes to the banks ALONG with my taxes! Now, with the collapse of the labor market I have no means to pay any more short of a miracle despite denying myself any luxuries. Meanwhile, the crooks continue to collect their bonuses, and crow about their newfound fiscal viability.

I disagree with your last paragraph which points to the complicity of the Obama administration. I think that there are very few who realize the depth of the hole created by the corrupt practices championed by so-called “Supply-side Economics”, and Obama is discreetly doing all he can faced with an almost impossible situation. My information is that the actual total of toxic debt is in reality greater than the combined GNP of all the nations on earth. If the truth were generally broadcast, the result would be generalized panic. The fact is, society has been raped by these criminals — and whether the recovery comes or not, we will be supporting the hardship and strife that are the children of their crime for years, if not for an entire generation.

Obama represents and is doing his best to bolster the only remaining commodity which has true value — the sense of integrity, common cause, and hope in the average American. This is a great resource, and has meaning — unlike the drivel of the self-styled experts and analysts.

Donald asks…

How to make money for a Business project (school project so it’s imaginary money)?

My partner and I were assigned a a project that would have us start our own business. We are only given 100,000$ and were planning on opening a pawn shop in either Las Vegas or somewhere in the South Beach area. We are planning to get most of our items by buying storage auctions, much like the show Storage Wars.
Given that renting or leasing a place in that area is going to be expensive, we are worried that we won’t have enough money to do everything that we want. Our teacher said that we must make our money legally and are not allowed to do anything illegal to make money such as money laundering or Ponzi scheme. We are also not allowed to bet on any sports events since we could possibly lose all our money as we do not know the outcome.
Any help with getting a legal way to make money would be appreciated, and unfortunately investing isn’t really an option as the project is due in 3 weeks and any way we increase our money is done by real time standards, so we have 3 weeks to get more money essentially.

Justin answers:

I see people going to public household auctions, where they auction everything, buying up cheap stuff for $1-$5 investing a total of $50-$100, then selling on eBay for 2, 3, or 4 times the money.

The problem with storage lockers is the risk is far too great. You would have less risk in the stock market. It isn’t like the TV show. Even the characters on the show admit, you lose money on 50 units before you hit it big. And there are scams.

You might be better off with a legal scam. Go rent a storage locker. Let the charges add up to say a $500 bill you are delinquent on, and they auction it off. The way it works is the auctioneer gets like 30%. After that, the storage facility gets what is owed. But if there more money left over after that, the renter gets the money. So you put a bunch of empty Nike shoe boxes, empty boxes of things very expense to make it look to the bidders like there is $20000 worth of merchandise in the unit. They bid up to $4000. The auctioneer gets $1200, the storage facility gets the $500 and costs, say $200 it is owed ($700 total), and you get the $2100 left over.

John asks…

AIG is failing, why did we just accept 25 billion in stock from them as payback for the bailout?

This article talks about how bad of shape AIG is in and then reveals (towards the end) that we just accepted 25 billion in stock from this dying company instead of cash. http://finance.yahoo.com/news/AIG-slumps-after-analyst-rb-3438036954.html?x=0
Sadcat that is good to hear hopefully it goes up for our sake. It just seems to me that this article describes a very gloomy picture of AIG and a stock that could turn for the worst still.
gosam777, I agree it’s a long term scam.

Justin answers:

Truth is, the banking system and American economy, headed by the Fed, turned into a giant ponzi scheme. When money is deposited into the bank, the bank must send 10 cents per dollar deposited to the Federal Reserve. They then lent the other 90cents per dollar to other banks, who in turn sent 10% to the Fed, lent the rest to another. Wealth wasn’t being created by making profit or earning interest, which is why interest rates could go so low. It was created by taking in more new deposits than was going out. It was all worthless paper monetary gains. When housing and commodities, as well as the stock market collapsed, the new deposits stopped coming in, and the loans couldn’t be repayed.

The bailouts were never designed to “fix” anything. Simply to delay the total collapse. The strategy now is you have a hole in your oil pan. As you drive down the road losing oil, you pour more into the engine to keep it going. That’s all that’s happening right now. Thus far, the biggest benefits of the bailouts to the government, is it has delayed the real disaster of the receding economy and depression from hitting the middle and poor sectors as hard as it will when it melts sown.

William asks…

what is autosurff in google?

what is autosurff in google? and how does it work?

Justin answers:

This will answer any questions

http://www.sec.gov/investor/pubs/autosurf.htm

In the world of marketing, people often get compensated — with cash or free products and services— for doing fairly easy things, like sampling new ice-cream flavors, filling out surveys, or allowing a firm to monitor the television shows you watch or the websites you visit. While some “money for nothing” opportunities may be perfectly legitimate, others can turn out to be frauds.

“Auto-surfing” is a form of online advertising that purportedly generates advertising revenue for companies that want to increase traffic to their websites. The premise behind auto-surfing is that companies that advertise on the Internet are willing to pay to increase traffic to their web sites. These companies hire an auto-surf firm or “host,” which in turn pays individual web surfers to view certain websites on an automatically rotating basis. The more sites the individual visits, the more money he or she stands to earn.

While auto-surfing may sound easy and appealing — and risk-free — there can be a hitch. Some auto-surf programs require their surfers to pay to participate, although perhaps not initially. When you first sign up to auto-surf, the firm might assign a limited number of sites for you to visit and pay you accordingly. Once you’ve made a modest amount of money, the firm might encourage — or even require — you to purchase a “membership” so that you can maximize your earnings. The program will promise high — often double or triple digit — returns on your investment in the program, often within days or weeks of joining.

The line you’ll hear is that the more you click, the more you collect. But the reality is that any scheme that requires you to pay to participate — and promises handsome rewards in no time at all for little to no effort on your part — bears many of the hallmarks of a “Ponzi” or pyramid scheme. These schemes look deceptively legitimate because the fraudsters behind them typically use money coming in from new recruits to pay off early stage investors. But eventually the pyramid will collapse when it gets too big. It’s simply not possible to “rob-Peter-to-pay-Paul” forever.

The SEC warns investors to be wary of any sort of “get rich scheme quick” scheme — and to be especially leery of opportunities that require you to pay to play. Before you pay a dime to make extra cash in your spare time, be sure to do a little due diligence:

If it sounds too good to be true, it probably is. Compare promised yields with current returns on well-known stock indexes. Any investment opportunity that claims you’ll get substantially more could be highly risky — and that means you might lose money.

Check out the company before you invest. Contact the secretary of state where the company is incorporated to find out whether the company is a corporation in good standing. Also call your state securities regulator to see whether the company, its officers, or the promoters of the opportunity have a history of complaints or fraud. If a supposedly upright business lists only a P.O. Box, you’ll want to do a lot of work before sending your money!

Steer Clear of Testimonials. Watch out if the company’s promotional materials, contain “testimonials” from supposedly satisfied customers, especially if all the “testimonials” are full of praise.

“Guaranteed returns” aren’t. Every investment carries some degree of risk, and the level of risk typically correlates with the return you can expect to receive. Low risk generally means low yields, and high yields typically involve high risk. If your money is perfectly safe, you’ll most likely get a low return. High returns represent potential rewards for folks who are willing to take big risks. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or “can’t miss.” Don’t believe it.
For more information on investing wisely and avoiding costly mistakes, please visit the Investor Information section of the SEC’s website at www.sec.gov/investor.shtml.

Chris asks…

Why tax the successful?

When I leave law school, I almost certainly will have over 40 percent of my earnings taken by the government. I worked hard through elementary and high school to get an undergraduate scholarship; then worked hard again for four years to get a law school scholarship.

Why should I be punished by losing 40 percent of my earnings to largely finance programs that will prop up my peers who failed to do as well as me?

I am not against paying for necessities, but I cannot see how its fair for someone to have 40 percent of their income taken away for doing all the right things and succeeding?

Justin answers:

Government has overstepped it’s bounds by taxing success. This country is in terrible condition and increasing taxes is not the solution to the problem. Even Barack Obama has admitted that when you reduce taxes the economy grows AND the US Government brings in more money to the treasury. So … Since there is not a legitimate reason to raise taxes to fill fill the government coffers, the biggest reason the democrats want to raise taxes is to buy votes due to wealth envy.

Another point … The writer talking about Obama’s $250,000 cap … Do you realize that that INCLUDES small businesses. 78% of the population of this country works for small business. Small businesses are included in that $250,000 annual earning tax … If their taxes go up, they can’t afford to pay their employees as much … Or perhaps even need to lay them off, further damaging our economy.

The free market economy and capitalism is what made this country great … Not nanny state politics. Name one socialist or fascist government that has survived for more than 225 years AND has the level of success and the economy of the US … There isn’t one. Government has virtually no examples of being able to run anything efficiently. (Ex. Social Security is a Ponzi Scheme).

I encourage everyone to read up on the Fairtax. It greatly benefits the so-called “poor” by giving them more benefits and fully funding social security AND will create and economic boom like this country has never seen before. Please … Before you just write this off … Read about it … The poor and middle class will benefit beyond belief … Don’t fall for the Dogma and bias of the naysayers.

FOLLOW-UP:
Truth Seeker … Read the stats on Warren Buffet … He pays a smaller percentage on his INCOME TAX than his secretary … But only because he doesn’t make an INCOME tax as it is defined under the income tax system. The bulk of Warren Buffet’s money comes from investment interest on his 62 Billion dollars of stocks, etc. Interest income is taxed at 15% capital gaines … So … If his secretary is making 150 grand a year … She’s paying 38% income tax vs. His 0% …. Hence a bigger percentage! BUT if he makes a very conservative 10% income on his investments … That is 6 Billion dollars a year … Taxed at 15% or 900 Million dollars a year. Warren Buffet is paying FAR more in tax than his secretary. I’m guessing you were “tricked” like many other people by Buffet’s willful deception aimed at manipulating people’s opinions.

David asks…

who is MADOFF MADOFFMADOFFMADOFFMADOFF?

Justin answers:

Bernard Lawrence “Bernie” Madoff (pronounced /?me?d?f/[3]; born April 29, 1938) is an American convict, who was a financier, and Chairman of the NASDAQ stock exchange. He is the admitted operator of the Ponzi scheme that may be “the largest investment fraud in Wall Street history”.[4]

In March 2009, Madoff pled guilty to 11 felonies and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1980s, and the investment operation may never have been legitimate.[5] The amount missing from client accounts, including fabricated gains, was almost $65 billion.[6] The court appointed trustee estimated actual losses to investors of $18 billion.[5] On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed.[7][8]

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008.[9][10] The firm was one of the top market maker businesses on Wall Street,[11] which bypassed “specialist” firms by directly executing orders over the counter from retail brokers.[12]

On December 10, 2008, Madoff’s sons told authorities that their father had just confessed to them that the asset management arm of his firm was a massive Ponzi scheme, and quoting him as saying it was “one big lie.”[13][14][15] The following day, Federal Bureau of Investigation agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted several investigations into Madoff’s business practices since 1992, which critics contend were incompetently handled

Mark asks…

who is MADOFF MADOFFMADOFFMADOFFMADOFF?

Justin answers:

Bernard Lawrence “Bernie” Madoff (pronounced /?me?d?f/[3]; born April 29, 1938) is an American convict, who was a financier, and Chairman of the NASDAQ stock exchange. He is the admitted operator of the Ponzi scheme that may be “the largest investment fraud in Wall Street history”.[4]

In March 2009, Madoff pled guilty to 11 felonies and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1980s, and the investment operation may never have been legitimate.[5] The amount missing from client accounts, including fabricated gains, was almost $65 billion.[6] The court appointed trustee estimated actual losses to investors of $18 billion.[5] On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed.[7][8]

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008.[9][10] The firm was one of the top market maker businesses on Wall Street,[11] which bypassed “specialist” firms by directly executing orders over the counter from retail brokers.[12]

On December 10, 2008, Madoff’s sons told authorities that their father had just confessed to them that the asset management arm of his firm was a massive Ponzi scheme, and quoting him as saying it was “one big lie.”[13][14][15] The following day, Federal Bureau of Investigation agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted several investigations into Madoff’s business practices since 1992, which critics contend were incompetently handled

Joseph asks…

The stock market has been falling at the same rate since Oct 2008, how did Obama’s Presidency go back in time?

….or…gasp….could it have been republican policies that caused it and led to Obama’s election?
Rocket: that’s a great link:
Urban Legends:
Claim: The 2008 U.S. economic downturn resulted from Democratic control of Congress in 2007.

Status: False.This piece is one of the more ludicrous examples of the post hoc ergo propter hoc (“after this, therefore because of this”) fallacy we’ve received in a long time.

Justin answers:

It started tanking when Bush and McCain finally admitted that the economy was in desparate straits. It has continued to tank every time some new bit of information has come out about just how bad Bush left the economy.

Also, there are the typical market scumbags who are short selling and driving the market down to make more money. Why isn’t Congress looking into this and stopping it? Naked short selling is what tanked Lehman Brothers. Why is it allowed? The stock market is a big Ponzi scheme which can be easily manipulated and people are talking about it like it is some true indicator of our country’s economic health.

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