Live Well Without Working

How can this be ? One would expect to work hard in order to live well. Woah, you don’t know the inside story. There is another way. Some people think its unpalatable, but once you get used to it its great. And it is not something brutally criminal. It is just – lets say – imaginative, kind of resourceful. Legal, most of the time.
You can get rich from other peoples’ money or – more generally – at the expense of the rest of the world. Some call it ‘creating wealth’. Sounds nicer. Here are a few examples:

1 - Remember the dotcom bubble ? The entrepreneur invents those grandiose gadgets, with loads of potential, milllions of prospective clients, billlions of dollars in potential revenue. Hey, he says, why don’t I float the company ? Never mind there is no proven track record. The suckers will come running to make sure they are in on the deal. They’ll buy my Initial Public Offering, my shares will suddenly be worth millions. I'l sell quickly, then the company goes bust. Well, I did it. It worked like a dream. I won, they lost. So what.

2- Have you ever tried a fraudulent bankruptcy ? Great. It works almost everywhere, because bankruptcy laws are so user-friendly – well - debtor-friendly. It involves several steps, so you better employ an accountant to get it right. But things don’t have to be complicated. Junk bonds used to be popular. They paid high interest and had "not really any risks". Thats why mom and dad bought them. Then the debtor defaulted and your mom and dad lost their capital – and you lost the inheritance. Mr Milken and his mates won huge commissions. Well, thats how it is. This avenue has now been made more difficult, unfortunately.

3 - Asset stripping sounds unfriendly, where in reality you are doing society a favour. Take a company with a lack-lustre performance and its shares trading cheaply on the stock exchange. Upon closer inspection you find their assets (land, buildings, equipment) are quite valuable. You ask your bank for a loan of say $50 million with which you raid the company’s shares overnight. As the new owner you sell off their assets for a total of $55 million. After paying back the bank loan, you pocket the difference, $5 million. The company, of course, no longer exists. Nor the jobs of its 500 staff. But as economists say, you’ve done a great service to the economy, because society is better off without this non-performing company. Some call this "creative destruction".

4 - ‘Shorting’ is a great game. Say friends in the Secret Service tell you there will be a terrorist attack on airplanes of the UZ airline next week. Their shares are currently $55 each. You offer a contract to sell 100,000 UZ shares for $45 in two weeks time. The contract will be snapped up very quickly, because the buyer is salivating to make $10 per share, ie $1m. Don’t worry that you haven’t got any UZ shares. Just wait until after the terror attack. The share price will drop immediately to something like $25. Now buy your 100,000 shares. Then honour the contract and deliver the shares. The buyer must pay you $45. This leaves you with a gain of $20 per share, ie $2 million. Economists will applaud this, because you have bought shares at a time when everyone else was wanting to sell them. Again, you have done a great service. You think this is a strange and unpleasant thing to do ? Not at all. A respected investment guru like George S. did it with the English Pound, only on a much grander scale. Of course, his move did not involve insider trading. His was intuition.

5 - If you are into energy, buy large-scale electricity futures at today’s price, then cause a few power cuts at peak time. Spot prices will go berserk and you can fetch top dollars for your electricity contracts. Sure, causing a deliberate power cut is illegal, but then it was accidental, wasn’t it. This scheme works with all sorts of commodities. George S. did it – amongst other things – with silver, oil, grain, coal.

These are just a few examples. The sky is the limit. There are even more exotic schemes like the "Dead Peasant" insurance, the "Great Eskimo Loss" recycling, the "Greenmail" threat, etc. All of these schemes ‘create wealth’ for the inventor and cause substantial damage for the rest of us, often out of proportion. The "Great Eskimo Loss", for instance, generated $10m profit for the initiator and caused a $1 billion loss for the country’s tax base - thats $100 damage for each $1 gained. Coming up with these schemes takes creativity and a particular mindset . And an experienced accountant like, for instance, the good people at Kolossal-Profit-Margin-Gurus .

PS: After these legendary gains please spend a few bucks to improve the World.

PPS: Lets stop here for a moment and reflect: The cynicism and the a-morality of such get-rich-quick schemes is one thing. But the serious damage it does to the ‘losers’ is another. Currency speculation, for instance, has done enormous harm to the economies of smaller countries. Why should millions of people suffer because one individual is creaming off beyond comprehension ? Its OK to get angry. But: The scandal is not that some swine is doing it, the scandal is that we (thats you and me) allow it to happen.