Ezra Merkin, the (presumably outgoing) Chair of GMAC, funneled large amounts of other people’s investment money into Bernie Madoff’s funds.
Ironically, Merkin wrote the Introduction to Chapter 3 of the 6th edition of Graham and Dodd’s Security Analysis
Merkin decries the “temptation to speculate.” He argues (p. 266):
[P]ropositions that would ordinarily sound ridiculous become strangely plausible. It's just like when Big Julie, in the classic Broadway musical Guys and Dolls, challenged Nathan Detroit to a game of craps played with dice that had no dots, other than those Big Julie claimed he could see.
Yet this is just what Merkin did. Ezra Merkin invested in “a game of craps played with dice that had no dots, other than those [Bernie Madoff] claimed he could see." The strategy that Madoff said he used (a “split-strike conversion strategy”) worked for no one except Madoff, booking profits that only Madoff could see.
I hope that none of GMAC’s assets were invested with Madoff or we would be bailing out the victims of a Ponzi scheme. The US government can’t afford to do that when it is already running the world’s largest Ponzi scheme.
or perhaps you were just noting your agreement.
And any attempt to end the game is met with scorn and derision by most on the left and the MSM.
Is this intentional or unintentional (self-)parody?
I guess they took it down from their current website. I guess they couldn't even write it without snickering a little.
Color me dense, but your attempt at clarity is ambiguous
No - ambiguous means that it is subject to more than one meaning - I think the word you are looking for is "inane" or "assinine"
If you are going to run a Ponzi scheme purportedly in equity investments, it pays to be short the market so that there is cash when most of the redemptions are requested.
But the Ponzi moniker still applies!
As for the Ponzi scheme analogy with Social Security, I actually think the old explanation they posted is compelling. Moreover, the sustainability or otherwise of a pay as you go system funded by the full faith and credit of a sovereign, democratically accountable government is not comparable in any meaningful sense to a complex fraud of the kind Ponzi and Madoff created. It might be bad policy, or unrealistic, or stupid, or involve unrealized liabilities that should be realized, but a fraud? That's too cute by half.
First, they compare SS to a Ponzi scheme guaranteeing a 100% profit in some short time period. If the Ponzi scheme had some crappy rate of return like SS does, then you'd near far fewer people to sustain it. Moreover, so long as prior investors are willing to re-invest in the scheme (as they apparently did with Madoff), it can keep going for quite a while since the schemers won't "run out" of new people.
Second, the government claims in the article that a growing number of people are necessary to sustain a Ponzi scheme. But a growing working population certainly makes sustaining SS much easier, and may be necessary (at least as a political matter) to meeting the government's promises. If the the ratio of retirees to workers significantly increases, so that the payroll tax burden on current workers would have to sharply increase to maintain SS benefits at their current rates, then chances are high that social security benefits would be sharply reduced. That'd be especially true if the political culture had frequent rioting and strikes by workers to protest government action (that is, if the US becomes more like France)
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