Ponzi Finance and the MMM in Ukraine | Loans: Personal loans ...

Con artists and thieves have always existed, but their number and activity increase during crises. This thesis is even more valid in relation to financial fraudsters who are now in Ukraine almost a majority. They cynically used by the financial illiteracy of our people, glaring deficiencies of financial markets regulation, involvement in fraudulent financial sphere petty officials and impunity, ravaging the pockets of Ukrainians. It is high time to restore order here, or at least begin to put things (see ZN.UA ? 12 dated March 30, 2012).

It so happened that in the early 90s I worked in leading financial centers in Europe and the world. And maybe that's why then turned to me often, even presidents and prime ministers of Ukraine (let's face it, not stupid people) to help evaluate proposals financial crooks and swindlers with respect to a fantastically lucrative monetary (financial) schemes for Ukraine. I especially remember the first meeting with a group of ?global financial investors from the East?, which in 1991 offered Ukraine $ 5 billion for 10 years at 1% per annum. At the request of then-Prime Minister, I met with them, although a priori knew it?? small international con artists, but it was interesting to learn, what they would earn. As a result of discussions it became clear that their earnings?? on the ... travel expenses. Having, for example, a letter to Prime Minister in a developing country's readiness to take a loan at 1%, they are then asked to pay for them to just fly in first or business class, expensive hotel and per diem. Instead of promising a miracle, that is, costs (risks) and the results (profits)?? incommensurate! In the case of 30 thousand dollars traveling the country was to receive $ 5 billion in just under 1% per annum. When I asked, ?What is your benefit???? They themselves scarce, and then tried to be philanthropists ... I called the Prime Minister, I am informed that, in my opinion, this small financial frauds, earning?? travel expenses with the hope that in your letter, they then with the addition of a bank withdraw yet another ?business trip?.

Here are typical methods of financial fraud, with which they extort money from both Prime Ministers, as well as from ordinary citizens.

You offer a ?miracle??? unreasonably high income for the month, two, three ... even a year!

Do you cultural and non-aggressive begging for money, and quickly (tomorrow will be too late).

In a conversation with you is used a large number of pseudo-scientific terms, the stream which you know only two: your income (you get a very fast) and your contribution (which you should make right now?? tomorrow will be too late).

As a rule, many financial frauds smile, tell stories and look demagogues.

In conversation they give you to understand that they have no earnings there, everything is going to cost, and that they are all idealists and altruists, while sitting in expensive offices.

If the five characteristics of the behavior of financial scams from your counterparts appear three or more?? beware!

By the way, finish the memories of those ?investors? from the East. A few days after talking with them I was flying to Tokyo. In the same row with me saw the familiar ?investors? who stole a stuffed cups, knives, forks and other utensils in a bag, but the steward had been exposed and covered with shame, returned stolen items ...

Before moving to the phenomenon of MMM in Ukraine, we turn to the origins of the construction of financial pyramids. The beginning of the construction associated with the name of Charles Ponzi, who in the early 1920s, managed the company to extend credit suburban Boston, USA. Ponzi promised his investors 30% monthly. Within three months he had fulfilled its obligations, but on the fourth the amount of borrowed funds was less than the interest payments. As a result, he was arrested and died in poverty.

To date, the term "Ponzi-finance 'is generally accepted to refer to financial bubbles. The borrowers can fulfill their obligations under the high interest payments, just getting a new loan.

Since in many cases, the interest rate is quite high (around 30-40% per month) are required to maintain the solvency of more and more money, which often involved at a higher interest rate. Initially, many investors are so pleased with the high interest income, which agree on the accession of interest to the principal amount of debt. It is believed that they were ?earning interest on interest.? But as some investors receive their interest income in cash, such a scheme can work only as long as the amount removed from the accounts of cash less than their inflows. So describe the technique and the Ponzi Ch.Kindlberger R.Aliber.

It is important to emphasize three points. The first?? the organizer of the scheme knows in advance that this is a pyramid, which runs through the manipulation of consciousness, financial literacy, and sometimes because of greed and the actual organizer of the promotion of its members.

The second point?? this is fraud, that is, a criminal offense to seize people's property.

The third?? the existence of such schemes discredits the right financial companies that perform socially useful function to attract capital into the real economy, and sometimes even getting a small but steady income for ordinary investors. Such schemes and companies to apply not only to destroy the Ukrainian budget, stock market, but also to demoralize society.

In the U.S., the slightest hint of ?Ponzi Finance? (MMM?? for the countries of the former Soviet Union) is checking suspicious of companies not only regulators but also the FBI. And not only validated the investment banks, but also by their funds and their auditors (without ?their? auditors such schemes impossible to implement). Schemes are closed, the guilty punished, the organizers sent to prison. All known Madoff Ponzi pyramid with his in 2009, was sentenced to 150 years in prison. Not so long ago for the same period and the scheme was Sir Alan Stanford, who was accused of fraud amounting to $ 8 billion!

Unlike the U.S., MMM, MMM, and not only continue to plunder the Ukrainians. The problem is compounded by the fact that, according to the hypothesis of Minsky (famous economist), during the economic slowdown, some of the financial companies that belong to a group of secured finance (the company who make the payment of both interest and capital), transferred to a group of speculative finance (company who make only interest payments). In turn, some companies in this group are in the group of Ponzi.

In my opinion, after the 2008 crisis, Minsky hypothesis can already be considered as proven, it became a law Minsky. In turn, propose their own hypothesis: the transition of companies from the group of speculative finance in Ponzi finance group depends on the moral qualities of the organizers of the financial companies. Financiers are without morals very quickly turn into crooks and thieves, and those who have a moral, honest, and prefer a quick bankruptcy.

Among the financial companies in Ukraine, in my estimation, is now about half way or another, are at Ponzi finance. And if you do not put a barrier in their way, then a large number of loss-making public funds, they ?managed? (if you tell the truth, they are robbing them), according to the law of the genre, you should see an even greater number of loss-making public funds. Due to these new funds will be paid in part at least the crumbs to those who are robbed.

Incidentally, this is a very good criterion for identification of financial companies to Ponzi pyramid. If a company closes its older public funds with a net (ie, investors have not earned, and lost money), and thus opens up new public funds?? be careful, you are sucked into the construction of a Ponzi scheme.

Alexander Savchenko

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