Columns » Outsider


Robbing us blind


Every once in a while, we suffer through an "epidemic" of bank robberies. Some schlub in a baseball cap robs half a dozen banks, makes the evening news a bunch of times, and eventually gets caught and led away in handcuffs by grim-faced FBI agents. Usually turns out that the total take was only about 15 Gs -- pretty slim pickin's for 20 to life in the federal pen.

Yup, if ours were a kinder, gentler nation, the robber wouldn't even have to go to jail. He'd just have to give the money back, say that he's sorry, and promise not to do it again. Too bad he didn't choose a career in the mutual fund industry; he could have stolen millions, thanks to unsuspecting shareholders and asleep-at-the-wheel regulators, and gotten off scot-free.

Here's how the recently exposed scam worked: Mutual fund management companies allowed certain so-called "hedge funds" to profit from short-term market swings by buying fund shares after markets had closed, thereby benefiting from anticipated up-moves in the next day's trading. Risky? Not at all -- the hedge funds would only make buys if, after the markets closed, some information was released (an interest rate cut by the Fed, for example) that would be sure to propel markets upward the next day. Then they'd immediately sell their position and wait for the next opportunity.

By allowing such maneuvers, the mutual fund managers allowed powerful insiders to profit at the expense of ordinary shareholders and enriched themselves in the process. The victims weren't even aware that they were being robbed, so murky and sophisticated was the process. Absent a whistleblower, the scam, in which literally dozens of mutual fund management companies (prominent among them Denver's Janus funds group) gleefully participated, would have gone on forever.

The moral of the story? If you want to be crook, don't be like the schlub in the baseball cap. Don't go after the cash. Go for the skim-invisible money. Don't steal what people have; steal what they might have and don't even know about.

Politicians, instinctively larcenous, don't have to be taught. They just know that they're in the business of removing small sums from the masses and giving big sums to the classes.

Locally, the city extracts a few bucks from every hapless visitor who stays in a hotel and/or rents a car and passes on most of the millions collected to the tourist industry's promotional arm (aka the Convention & Visitors Bureau). Up in Denver, the intrepid Mayor John Hickenlooper wants the taxpayers to give Wal-Mart $10 million, hoping that a new superstore will be built on the site of an aging shopping mall. And Colorado, along with 23 other co-conspirator states, takes a cut of the Powerball game, one of the cleverest gambling scams ever created.

And why is it a scam? Its creators, realizing that lottery players are fatally attracted to enormous jackpots, so designed it that the odds of winning are over 80 million to one. Months go by, the jackpot runs up to $100 million or more, and players (most of 'em ignorant schlubs in baseball caps) flood the game with money. As Texas Guinan once said: "Never give a sucker an even break!" Far from getting an even break, these suckers get no break at all -- as Indy publisher John Weiss once pointed out, at 80 million to one, your odds of winning are about the same whether you buy a ticket or not. After all, statistically you're just as likely to find the winning ticket blowing down Tejon Street ...

Let me propose a simple rule: The rewards of larceny increase in direct proportion to the amount stolen, while the penalties for getting caught decrease accordingly. And if the sums become large enough, the penalties pass through a kind of quantum wormhole and become rewards.

That's why our amiable dullard of a president can give his rich buddies hundreds of billions in tax breaks, spend a few hundred billion more in a quixotic attempt to recolonize the Middle East, and stay first in the hearts of his countrymen. George W. Bush seems like such a nice guy -- so how could his policies be as crazy and misguided as those Godless Communist Democrats claim? No way!

And come 2008, when he retires to his Texas ranch, leaving Hillary and the Dems to deal with a fiscal train wreck at home (Social Security? What Social Security?) and the Islamic Republic of Iraq abroad, he'll have a fine second act as a rich, wise and benevolent statesman.

Still just a regular guy ... baseball cap and all.

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