Thursday, May 26, 2005
quoteable from atrios:
Blowout government [update: bustout is the slightly more common name for this scam]
At the newly merged Electrolite/Making Light from Patrick Nielsen Hayden and Teresa Nielsen Hayden, there's a hot thread about the filibuster deal by Patrick in which Teresa leaves this comment:
Huh. I've suddenly realized that I know the form of this scam: it's a blowout.
Here's the deal: Your basic blowout starts when crooks take control of a legitimate business that has a good credit rating, most often by entering into an agreement to buy it from its original owners, and possibly making a token initial payment.
In the next phase, the crooks start placing large orders for easily liquidated merchandise with the business's regular suppliers, and also with new suppliers who think they've acquired a valuable new customer. And since the orders are coming from an established business with a good credit rating, the suppliers don't ask for payment up front.
Meanwhile, the goods are being resold as fast as they come in, often at a fraction of their value. It's hugely wasteful, but the crooks don't care. Essentially, they're selling off other people's stuff and keeping the money, so anything they make off the deal is pure profit for them.
The suppliers send in their bills in due course, and meet with delays in payment. That's not an uncommon thing; and in the meantime, nobody wants to lose a customer that's obviously doing so much business. It takes some time for suppliers to start balking, and more time for them to start aggressive collection procedures.
At that point the business's new owners vanish, and all the money vanishes with them. Since they've never actually paid the agreed-upon price for the business, it reverts to the original owners. Unfortunately, what they get back is a plundered company that's deeply in debt to its suppliers and has a wrecked credit rating.
(Er, I should have been more clear that the really fascinating thread you might want to read all of broadened to include a discussion of the entire picture of everything the Republicans are doing.)
-Avedon 3:30 PM
Comment (1) Trackback (0)
--
I'm a big fan of using con man/organized crime lingo to explain political theory.
There was at one time a "chicago school" of anthropologists who did that.
Our local gas utility was caught up in a blowout - sold in a stock trade, and within a year the other stock was worthless.
It's the core of my take on why government can't be trusted to run retirement funds - it attacts the kind of people who run these scams.
Blowout government [update: bustout is the slightly more common name for this scam]
At the newly merged Electrolite/Making Light from Patrick Nielsen Hayden and Teresa Nielsen Hayden, there's a hot thread about the filibuster deal by Patrick in which Teresa leaves this comment:
Huh. I've suddenly realized that I know the form of this scam: it's a blowout.
Here's the deal: Your basic blowout starts when crooks take control of a legitimate business that has a good credit rating, most often by entering into an agreement to buy it from its original owners, and possibly making a token initial payment.
In the next phase, the crooks start placing large orders for easily liquidated merchandise with the business's regular suppliers, and also with new suppliers who think they've acquired a valuable new customer. And since the orders are coming from an established business with a good credit rating, the suppliers don't ask for payment up front.
Meanwhile, the goods are being resold as fast as they come in, often at a fraction of their value. It's hugely wasteful, but the crooks don't care. Essentially, they're selling off other people's stuff and keeping the money, so anything they make off the deal is pure profit for them.
The suppliers send in their bills in due course, and meet with delays in payment. That's not an uncommon thing; and in the meantime, nobody wants to lose a customer that's obviously doing so much business. It takes some time for suppliers to start balking, and more time for them to start aggressive collection procedures.
At that point the business's new owners vanish, and all the money vanishes with them. Since they've never actually paid the agreed-upon price for the business, it reverts to the original owners. Unfortunately, what they get back is a plundered company that's deeply in debt to its suppliers and has a wrecked credit rating.
(Er, I should have been more clear that the really fascinating thread you might want to read all of broadened to include a discussion of the entire picture of everything the Republicans are doing.)
-Avedon 3:30 PM
Comment (1) Trackback (0)
--
I'm a big fan of using con man/organized crime lingo to explain political theory.
There was at one time a "chicago school" of anthropologists who did that.
Our local gas utility was caught up in a blowout - sold in a stock trade, and within a year the other stock was worthless.
It's the core of my take on why government can't be trusted to run retirement funds - it attacts the kind of people who run these scams.
Comments:
Post a Comment
