Have you heard of HerbalLife? It's probably the world's biggest...

Have you heard of HerbalLife? It's probably the world's biggest Ponzi scheme today - well, maybe second biggest, right behind the current property "exuberance". Bill Ackman has been shorting it for a few years now... last I heard the guy's some $500M in the hole.

Does that mean Ackman is wrong? Well, just take a look at HerbalLife's business model - it's a scam. A very well managed, very well oiled scam that managed to be a few state, a few countries ahead of the last group of victims. So if there's enough investors and buyers out there for a Ponzi, it could go on for longer than even Ackman could remain solvent (to steal a phrase).
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I heard an interesting bit about Prof. Steve Keen. The guy was out of his mind rude by telling an American Nobel Prized economist and columnist - Freidman ? - that banks don't just act as intermediaries between savers and borrowers. You know, rich people work hard, go without to save their hard-earned so that entrepreneurs and slackers can benefit right now.

So Keen embarrassed Freidman (and most of today's mainstream economists) by saying that banks can just make up money. That they can just look at a borrower's earning capacity, reckon the paper works are legit then just simply write the loan on its books. There are limits, fractional this and that, but anyway... point was...

Keen upset the establishment so much they want him fired. Couldn't really do that because it would be against academic freedom and that nonsense... so they close down the university's entire economic department. ::thumb::

Keen eventually sued and they settled on a $1M so he'd quit it and go to England.

So that's Keen. As for me wanting to be like him... I'm not smart enough.


Now back to this crying wolf business... if you think about it, when some academics and regulators, when the typical home buyer see that property is just out of reach... and have been seeing this some years now.. .the fact that prices just kept going and going and going does in no way mean that there is no affordability issue. It's actually the reverse.

I mean, what you're saying is this: "they said it's bad and will end in tears; it's been years and things have gotten worst but it still hasn't ended. Therefore they are wrong and it will go on for a while."

Has it gotten worst for that average Joe? Has their wages rise in line with other living essentials, rise at or above housing? Are their jobs more secure? Have they birthed a kid or two since? Won the jackpot?

If things haven't gotten much better for the majority of people, but their housing affordability has gotten way worst... unless those houses are all going to be flipped to the few that's been doing great, it's not going to last.