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alstry (35.86)

Is the WHOLE economy a Ponzi scheme?????

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January 09, 2009 – Comments (11)

Alstrynomics has given you the heads up for a few years.

Bill Gross gave it to you yesterday.

Madoff, Petters and a slew of others are providing pieces to the mosiac.

Now this......

Jan. 9 (Bloomberg) -- Lennar Corp. fell as much as 28 percent in New York trading after Barry Minkow’s Fraud Discovery Institute alleged that the company operates joint ventures “like a Ponzi scheme.” Lennar denied the allegations.

Minkow posted his accusations today on a Web site called lenn-ron.com. The company has failed to disclose material transactions, Minkow said on the site.

“These are false allegations,” Lennar Chief Financial Officer Bruce Gross said in an interview. He declined to be more specific and said the company will issue a statement later today.

Minkow served more than seven years in prison, from 1988 to 1995, after being convicted of fraud while running a company called ZZZZ Best Co. Minkow’s group investigates what it suspects to be corporate fraud, according to the Web site.

In a video on his Web site, Minkow said Lennar is “a financial crime in progress and they have a pattern of behavior that is an environment that is hurting the little guy.”

Minkow accused Lennar of concealing debt off its books and misappropriating funds between joint ventures. Lennar’s approach is “sue me if you want to get paid,” Minkow said.

Minkow said in an interview today his report was “based on the public record of multiple claims against Lennar in like situations for breach and fraud.”

Lennar Chief Executive Officer Stuart Miller told CNBC that the Minkow is an “angry litigant.”

Lennar fell $2.39, or 21 percent, to $9.03 at 11:47 a.m. in New York Stock Exchange composite trading. Earlier, the shares touched $11.28.

The cost of protecting against a Lennar default jumped the most in seven weeks. Credit-default swaps linked to Lennar bonds climbed 55 basis points to 630 basis points, according to broker Phoenix Partners Group. That means it would cost $630,000 a year for five years to protect $10 million of Lennar bonds.

If my detailed forensic analysis is close to being right, there is a boatload of allegations like this coming.  Just go back and read my posting on Yahoo about SPF over a two year period of time.  You would have seen this coming a long long time ago.

GET READYand grab your surfboard....this is one big wave.

11 Comments – Post Your Own

#1) On January 09, 2009 at 4:16 PM, angusthermopylae (40.01) wrote:

Short answer:  "Yes"

Ponzi scheme = Get investors.  Get new investors and use their money to pay old investors.  Get more new investors and user their money to pay all the previous investors.  Rinse and repeat until a nice man from the SEC, IRS, and/or FBI shows up at your door.

Economy/Market = Get people to buy a stock/product.  Get more people to buy the same stock/product, increasing the value of your first investor's holdings.  Get more people to buy the stock/product and therefore increase the value of all the previous investors.  Rinse and repeat until either a) the product is eaten/installed/broken/replaced; b) everyone starts asking "Why the hell am I buying this crap?"; or c) a nice man from your creditor, the bank, or the bankruptcy court shows up at your door.

(Of course, the long answer is "meh...maybe."  But who am I to judge?  :-)

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#2) On January 09, 2009 at 4:35 PM, socialconscious wrote:

Alstry I believe you are right . We may differ on how systemic it is. Logically and allegorically the SEC is the cat that was away when Madoff played. I bet he wasn't the only mouse that played.The market is indeed strange the last 8-9 months up is down and vice-versa and reactions to news are gross overeactions.Daily and weekly fluctuations whatever their nature are normal.Month to Month the price of gold and the collapse of oil beyond demand destruction especially the former are unbelievable. I would garner to examine IMHO that if we took into account standard deviations( I have not yet) something is amiss with a few players or a rare ocuurence has happened.

Well all best always respectfully submitted and just all my opinion.Social C

 

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#3) On January 09, 2009 at 6:29 PM, TMFAleph1 (94.96) wrote:

The answer is no, of course not.

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#4) On January 09, 2009 at 6:49 PM, cbwang888 (25.41) wrote:

No as a whole. Some parts of it maybe.

Social security in US may look like one. 

 

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#5) On January 09, 2009 at 7:01 PM, XMFRael (63.04) wrote:

The answer is yes. So is life. The world turns on faith alone. No one gets out alive.

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#6) On January 09, 2009 at 7:40 PM, jeffduby (21.49) wrote:

yes, I wrote just this in my last blog verbatim. This entire economy is a ponzie scheme.

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#7) On January 09, 2009 at 7:40 PM, brookbrownell (< 20) wrote:

  Yes,  banks loan 10 to 100 times their deposits (fractional reserve system) that is a legal "Ponzi" scheme.

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#8) On January 09, 2009 at 8:30 PM, alstry (35.86) wrote:

The problem with Ponzi schemes is that when they are revealed, everyone finds out that money they thought they had really doesn't exist.

Pensions are underfunded.  Companies run out money.  Retirements that people were counting on never materialize.

Running out of cash and facing a $42 billion budget deficit over the next 18 months, California will shut down state offices on the first and third Fridays of each month beginning in February.

In a memo Friday, the state's personnel administration department notified agency leaders of the closures, which will likely affect offices such as the Department of Motor Vehicles. Workers in offices that cannot close, such as prisons and hospitals, will take off two days of their choosing each month or at a later time, the memo said.

This is effectively a 10% paycut for CA workers.  Fewer get fired, but people make less.  Imagine if you were only able to save 5% of your income prior to the furlough......

This is happening all over America and not counted in the unemployment numbers.  Do you guys really think this is inflation???

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#9) On January 09, 2009 at 9:27 PM, nuf2bdangrus (< 20) wrote:

Short treasuries.

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#10) On January 09, 2009 at 9:43 PM, starbucks4ever (98.74) wrote:

" Do you guys really think this is inflation???"

In short, yes. Rewind the tape back to June. How many of you would have asked then, "do you guys really think this is oil bubble bursting"? The situation is extremely fluid. The whole landscape could change 180 degrees in just 90 days.

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#11) On January 10, 2009 at 2:59 PM, dwot (51.69) wrote:

Very confusing when you make reference to Bill Gross and then you have an article with Bruce Gross.

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