The bezzle is shrinking
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. there is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks. This inventory – it should be called the bezzle. It also varies in size with the business cycle."
Well, it seems history is repeating itself because the bezzle is shrinking again as many frauds are now uncovered. Witness the latest in South Africa:
Hundreds of investors have been fleeced of up to 10 billion rand ($1.5 billion) in what could be South Africa’s biggest corporate fraud, a private investigator and lawyer said on Thursday.
Barry Tannenbaum, a South African businessman living in Australia, lured investors with the promise of 200 per cent annual returns linked to pharmaceutical imports, and forged AIDS drug orders to reassure funders when money started to dry up.
The scheme is still unravelling but lawyers and investigators believe hundreds of investors including top businessmen from South Africa, the United States, Germany and Australia, were involved, losing up to 10 billion rand.
To my mind, the fact that so many frauds are being uncovered speaks to an economic climate of laxity of regulation which was not only manifest in the U.S. This was a global phenomenon as the above story attests. Paul Kedrosky has a nice post out called “More Good News: A Bear Market for Ponzis.” Definitely worth a read.
My question is this: now that we see what kinds of blatant thievery was being perpetrated while regulators were sleeping at the wheel, do we have enough political will to make the necessary changes?
To date, the answer to this question seems to have been no. The Obama Administration will tell you the answer is yes because they are making sweeping regulatory changes – in part, by giving the Fed more power as the systemic risk regulator. But, as I see it, the Fed hasn’t really been knocking the ball out of the park. Why would we give them more power? A gift to the Fed – To “SiRR,” with love?
Here’s the video:
Comments are closed.