Toby on Tuesday

'Ponzi Schemes and Political Scams'

 

Last week I wrote about the Italian author Carlo Collodi and his “Adventures of Pinocchio”, the little wooden puppet who told dreadful lies just for the fun of it.   Today I want to write about another creative Italian, but a far more sinister and malign one, Carlo Ponzi, creator of the Ponzi Scheme, the financial scam that bears his name.   Now Carlo Ponzi was born in Lugo, Italy in 1882.   At the age of 21 he left for Boston with less than 3 Dollars in his pocket but a wealth of money-making plans.   America was full of Italian immigrants then including his mobster friend Ignazio “The Wolf” Lupo.   Dealing first in postal coupons, Ponzi promised investors that he would double their money in 90 days.   The cash poured into his Securities Exchange Company and, sure enough, the first investors certainly doubled their money, paid from the funds that continued to come in from greedy speculators.   Of course his venture, the original Ponzi Scheme, crashed but there will always be gullible investors and the financial world is still awash with fraudulent projects – the equivalent of “best of both worlds” political offerings.

 

Now on Thursday the European Council will meet to approve our very own David Cameron’s personal Ponzi Scheme.   Like the clients of Carlo Ponzi, or more recently of Bernie Madoff or of China’s Ding Ning, we are being asked to take on trust a financial package that is unverified, unaudited and unstable.   For David Cameron is trying to bounce us into a referendum on 23rd June on an improbable deal the terms of which can be altered in the European Parliament during July.   In the words of Guy Verhofstadt, Prime Minister of Belgium until 2008 and founder of the Spinelli Group in the European Parliament, in speaking of Cameron’s agreement, the European Parliament will then be able “to accept it, to change it, to modify it.”   And Martin Schulz, President of the European Parliament, has added that any decision taken at this week’s meeting of the European Council can be reversed, “Nothing in our lives is irreversible.   Therefore legally binding decisions are also reversible.”   In addition countries in Eastern Europe have been assured that there will be time “to modify” the proposals as they pass through the Brussels system.

 

We all know why David Cameron is so anxious to push us all into a referendum in June before his agreement comes before the European Parliament in July, the month when both the Eurozone and migrant crises are likely to explode again.   Carlo Ponzi would certainly have been proud of David Cameron’s gifts of persuasion but in the world of politics, just as in the world of high finance, scams are eventually found out and those who commit them receive their just reward!

 

Until next Tuesday!

Toby