Bailout Fatigue: Public Restless, But It’s No Reason To Permit Ponzi Schemes

When the $700 billion U.S. government bailout plan was announced, some people warned it could lead to a slippery slope. Banks, the auto industry and the home-building trade now want a share, and there’s a chance the incoming Obama administration will package a stimulus plan that will trickle down to consumers in the form of tax-rebate checks next year. President Bush took a similar approach earlier this year.

The U.S. has lost some international prestige in the bailout, with some publications and giddy governments declaring capitalism as we know it dead. It’s hard to imagine that the business dependency class has grown so large so quickly.

But it’s a mistake to think that what the government is doing makes the “anything goes in a free market as long as it generates cash” argument a valid one.

Some online opportunists are seizing on the bailout as a means of defending the autosurf business model, for example. The linchpin of this argument is that right-thinking capitalists could create wealth — and mitigate the need for bailouts — if only the government would mind its own business.

In other words, throw as much cash as you can afford to an autosurf and become a winner during lean economic times.

We’d thought the alleged Bernard Madoff $50 billion Ponzi scheme would have taken that argument off the table, but people have gone into overdrive to sell the autosurf model — which commonly is associated with Ponzi schemes — as a wealth-generation system.

Some promoters actually are suggesting that cash-strapped nonprofits should participate in autosurfs as a means of generating revenue during lean times. Others are trading on government resentment and class envy to rationalize their autosurf “opportunity.”

Feel bad? Join an autosurf. You’ll feel good as soon as you see money streaming in. Feel good? Join an autosurf. You’ll soon feel even better. Worried about the economy? Join an autosurf and scotch your fears. Hate the government? Join an autosurf and experience the joy of free enterprise as practiced in offshore locations that actually embrace free trade.  Run a nonprofit? Worried that people won’t have money next year to donate to help fund your good deeds? Join an autosurf and soar to new heights of community service.

Just spend perhaps 10 minutes a day viewing ads from like-minded business people and you’ll prosper. You won’t have to purchase anything. Just view the ads, cash out and take your check to the bank — perhaps even to one of the banks that got a government bailout.

Families are becoming increasingly cash-strapped. Unemployment is increasing. The U.S. housing market is suffering. Big companies are bleeding money. Small businesses can’t make ends meet. Charities are suffering — and the autosurf market-makers have been using all of these reasons to get you to throw money at them.

None of these reasons, however, makes a Ponzi scheme any less of a Ponzi scheme. Even at this moment people are clamoring to get refunds from failed autosurfs. There is no way to police them, no way to do legitimate due diligence, no way to know if you’re doing business with criminals.