Incredible India: Usurping Sly Bastards (USB)

These are no deals

I remember writing years ago about deals that people get from hawkers of fake watches and gadgets that roam the social outlets around Gran Canaria commercial centres.

In my view, greed is almost always at play, the hawker looking almost too respectable to be true, sweet-talking patrons about an unmissable deal.

The patrons out for some fun are caught in the trap of viewing what they do not need and depending on how pliable they are will almost always acquire what they do not want.

Weeping in silence

If the deal is struck, the hawker makes away with the cash, a veritable confidence-trickster who has taken advantage of the gullible who have irresistibly allowed they vanity to get the better of them and in so doing acquired a dud with no guarantee but the word of a stranger with no address, shop or traceable from of contact.

When the dust settles, the patron realises they have been taken for fools, though they silently mourn their stupidity and in self-flagellation and self-pity swear to themselves never to be caught in such a scam again, but they do.

Usurping Sly Bastards

Now, in New Delhi, as I went for a walk, I was accosted by persons hawking off 64GB USB sticks for prices that made your eyes pop – surely, those goods must have fallen off a lorry.

I did not need a USB stick and there was no reason to add to my collection of sticks just because it looked like a deal. The best deal is one where you can return it if you are not satisfied.

A few days ago, I was told those USB sticks were duds, now, I did not know how dud they were until this afternoon after lunch, a trainee colleague showed off his bargain buy.

Another colleague took it off him and prised it open to show an empty cavity – that blew me away, I expected some circuitry, at least – nothing but a USB connector and a plastic case pretending to be a product of Kingston Technology, one of the market leaders in memory and storage products.

Bang them up

It is one thing to sell counterfeit products, maybe another to sell stolen goods but to be a purveyor of goods where the hawker deliberately sets out to cajole, deceive, extort and dishonestly con unsuspecting tourists on the streets of New Delhi, one is well advised of the need to walk with caution and offer no acknowledgement to persons unknown, no matter how attractive their wares.

One would hope these people are taken off the streets but it probably is part of the mystique of Incredible India to which some have unwittingly become the fool soon parted from their money and left holding a dud for a souvenir of their dumbness.

Old-fashioned Ponzi Schemes as HYIPs

Making Mo-Sense about money

I have to give credit to Roosevelt at MoThanSkin who has enlightened me on a matter that has quite fascinated me.

I have lately been reading of so-called High Yield Investment Plans (HYIP) in Nigeria where in one instance a bread-winner took her life with rat poison having been swindled out of her entire savings.

The draw of these “Get Rich Quick” schemes that promise outrageous returns not obtainable in any legal business setting is amazing; the person has to suspend belief in financial reality to be involved; though many participants proselytised into these schemes never realise how they are being conned until they have been completely fleeced.

Persuading the greedy

Generally, a person is persuaded to invest a sum for a guaranteed return well above the odds, sometimes 200%, the wary investor tests the waters with a token amount and gets paid in the allotted time.

This emboldens the investor to jump in with both feet, if not borrowing to invest, at which point the investment goes into a black hole and the agency either has tales to tell or the personnel just disappear into thin air.

No shelter for the fool

Considering these schemes do not have regulatory control of financial agencies or customer protection, the need to beware is evident as customers can also be profiled for their greed and gullibility see how much more they can be enticed to part with their money as fools.

The play on words that redefines an old scam as a new financial instrument is interesting, but like I read on MoThanSkin, these are all variations on Ponzi Schemes. At various times know as Pyramid Scheme, Multi-Level Marketing and now the more professionally sounding High Yield Investment Program, Global Currency Arbitrage or Hedge Futures Trading.

They are all like snake-oil remedies that have the bite of a snake and are lethal enough to cause fatalities, both financially and literally.

Playing on trust

The scheme are generally unsustainable over time, relying on new entrants to feed the promised returns of the earlier entrants; eventually, new entrants run out leaving everyone out of pocket apart from the promoters who would have gone to ground and disappeared.

Whilst I am not saying people should not invest in these schemes much as the risk of loss is too compelling to do otherwise, sometimes like the gambler in Kenny Roger’s Gambler, those who have made it have known when to walk away and been intuitive enough to know when to run.

However, if the investor is entranced by initial returns, they should reflect on the standard small print on any financial investment document – past performance is no guarantee of future success, even if it is your very next investment.

Looking out for a scam

These are elaborate confidence tricks that earn your trust and confidence to then scam, defraud and dispossess the victim.

Like Roosevelt notes from culling the Wikipedia entry that I have also quoted below; the characteristics of Ponzi Schemes are simple.

* In a Ponzi scheme, the schemer acts as a “hub” for the victims, interacting with all of them directly. In a pyramid scheme, those who recruit additional participants benefit directly (in fact, failure to recruit typically means no investment return).

* A Ponzi scheme claims to rely on some esoteric investment approach, insider connections, etc., and often attracts well-to-do investors; pyramid schemes explicitly claim that new money will be the source of payout for the initial investments.

* A pyramid scheme is bound to collapse a lot faster, simply because of the demand for exponential increases in participants to sustain it. By contrast, Ponzi schemes can survive simply by getting most participants to "reinvest" their money, with a relatively small number of new participants.

Get out now!

Someone somewhere is in one of these schemes who has gained some return from a business model that has no underlying fundamentals and is ready to sell the world to get similar returns but would come completely short and lose everything like the gambler that has gone “all in” against a Royal Flush with just a high card.

Any scheme like this is a sinking ship and you had better bale out or jump like a rat before you go down into a watery grave of the many that belong to the fraternity with the motto – A fool and his money are so soon parted.

Reference

Pyramid Schemes Never Die; Just Evolve