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Showing posts from March, 2009

They "Madoff" With It...

Bernie's not the only fella who "Madoff" with his investors' money...during a recent family roundtable at Komang's home, the topic of a small bank paying over 300% interest to depositors over 4 months came to the forefront of the discussion. This particular bank pays interest and returns the principal on $300 in the form of a $1,200 scooter or even cars for larger deposits. "Not possible", I piped up. Her brother laughed in agreement, and her parents, despite having friends who have successfully "invested" were skeptical enough not to take it seriously.
I explained that in order for the bank to pay such interest, it must find investments of its own that pay returns in excess of those it provides its depositors. Then it hit me...Bernie Madoffs and ponzi schemes are alive and at work, even in small villages in Indonesia. This particular bank had been open for a couple of years, and apparently had no problem attracting myriads of new money as it…