Ponzi schemes aren’t necessarily born that way. They can start off legit, as long as the model works. They can run with a gap between the value of the assets “in the books” and their “real” or “market” value (is the “market” really “real”?) for a while as long as the assets are performing and there is cash in the bank. For that to happen deposit growth only has to equal or exceed expenses minus investment income.
In a good year the gap may even narrow some. But there comes a point when the gap becomes too large, too obvious and it is filled in with a lie. And the “bank” becomes a beast.
The beast gets hungry. It needs money to cover the lie and it needs souls to bring it that food. So it stretches its tentacles into the world in search of the unsavvy, the trusting, the needy and food. More food. To enlist those souls it gives them what they crave: belonging, self-importance, and material wealth. And it becomes a cult. A cult with a leader, blind faith, and a golden shield.
On CNBC, analyst Mike Holland was reviewing Stanford material and said wisely “This doesn’t pass the smell test”. He’s right. It doesn’t. Mike’s a smart guy and knows this stuff. But the beast doesn’t want Mike’s money. It will never get Mike Holland’s money, so its tentacles never touch him. They go around him and find Johnny Damon. And Johnny isn’t stupid or foolish or even greedy; he doesn’t know what LIBOR is and he shouldn’t have to know; because he’s busy playing ball and earning his deserved rewards. So he sees the smartly dressed woman with the golden shield and the word “bank” and he signs the check. And the beast is fed.
So I wrote “Duck Tales” and I wrote it the way I did because it wanted it to be read. By Mike Holland. And Johnny Damon. And particularly the lost souls. To starve the beast. And maybe spare Mike or Johnny from this beast, or the next.
You see “Duck Tales” isn’t about Stanford or the SEC or how smart I am. It’s about forgiveness, and not judging, and about opening your eyes and seeing through the façade. Because we are all Mike Holland, and Johnny Damon and even Allen Stanford sometimes. So I wrote it for them. And I wrote it for me.
Monday, February 23, 2009
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Dear Alex,
ReplyDeleteI have read your blog many times. Thank you for content and style writing for all the Johnny Damons in us. It has been and continues to be a painful learning process. As my understanding of this whole mess deepens, sometimes I go back and re-read some of your older posts, like this one.
A couple of weeks ago, I was Johnny Damon and knew little more than what LIBOR is, and now that I'm a bit smarter and actually know what a word like clawback means and implies, I find myself pondering about your words in the last parragraph of "Starving the Beast".
Why do you say "Duck Tales" is about forgiveness and not judging? I can only think of forgiving myself for being such a fool! Or are you talking about forgiving and not judging Stanford & Co. for destroying so many peoples lives?
I'm Johnny Damon sometimes and it would be nice if I could be Mike Holland, but why do you say, we are even Allen Stanford sometimes? That's a very scaring thought.
I realize the whole point of being philosophical/metaphorical is that each person draws its own conclusions. In this case, I just thought I'd ask...
There is a tendency for people to judge those who get trapped in these things. But we all get fooled, in some way at some time. And it usually is because we "judge" things superficially (Stanford = Billionaire),
ReplyDeleteThings are not what the seem to be and people are not what they portray themselves to be.
...and Mr. Stanford, yes there is a little Stanford in all of us, because he was a cheater, but more than that he was a liar. And that lie grew and engulfed thousands of peoples lives.
It's very sad...but we have all lied to hide something at some time. And it usually doesn't end well.