(For previous posts in this series, see here.) In a provocative article, Pulitzer Prize-winning war correspondent Chris Hedges warns that those people who have elite educations often make the biggest blunders because they have been trained to think highly of themselves, and thus become less reflective and more overconfident. These institutions [i.e., elite prep schools …
Category Archive: Financial frauds
Apr 14 2009
Financial frauds-5: The problem with smart people
(For previous posts in this series, see here.) Many of the people who were swindled by Madoff were those who suffer from what William Deresiewicz, a professor of English at Yale, calls ‘entitled mediocrity’. These are people who see themselves as smart merely because of their background and formal education and not out of any …
Apr 13 2009
Financial frauds-4: Bernard Madoff’s scam
(For previous posts in this series, see here.) While Bernie Madoff has pleaded guilty to various charges of fraud, what he actually did has not yet been unraveled and who else was involved not revealed, though all the signs are that it was a pyramid, or ‘Ponzi’, scheme in the classic tradition, pretending to have …
Apr 10 2009
Financial frauds-3: Introducing Bernie Madoff
(For previous posts in this series, see here.) Bernard Madoff has reportedly swindled investors out of $50 billion of their money. You might have noticed that news stories repeatedly emphasize their surprise that the people who were defrauded were ‘smart’ people. If you look at the stories more closely, you will find that they do …
Apr 09 2009
Financial frauds-2: The original Ponzi model
(For previous posts in this series, see here.) Following up on yesterday’s post, Charles Ponzi’s scheme used the fact that a person could legally buy postal coupons in one country using the currency of that country, but in the denomination of the currency of another country. If you mailed the coupons to the other country, …
Apr 08 2009
Financial frauds-1: Introducing Charles Ponzi
Recently there have been two major fraud scandals in the US, one perpetrated by Bernard Madoff and the other by Allen Stanford, both based on so-called ‘Ponzi’ schemes. These exploded on the financial world as big surprises. But there was a similar huge scandal that took place in 2006 but since its impact was felt …
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