THE SKIM AND THE PARTIAL PONZI: PART II

Let’s start off with the definition of a Ponzi scheme:

“An investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.”

A Partial-Ponzi, is the lower than advertised Return On Capital (ROC)1 that most publicly traded corporations in America are achieving.

Though I previously highlighted a new phenomenon of disappearing earnings (45%), the real story is how money is being skimmed by the executives of corporate America, in return for which the rest of us are not really getting any value-added for this munificence.  While Wall Street gets the blame for financial excess and ruin (and ruinous practices)2, the major driver of income inequality is being led by publicly traded corporations – those supposedly owned by all of us in our savings and retirement accounts. Continue reading

  1. or similarly Internal Rate of Return (IRR), or the derivative but far from identical Return On Equity (ROE),  etc. []
  2. and maybe that’s really their purpose: taking the blame/flack []