Feds Call Full-Tilt Poker a 'Global Ponzi Scheme' 436
blair1q writes "Popular (and heavily advertised) poker website Full-Tilt Poker was sued today by the U.S. government, following an investigation that revealed it to be a massive Ponzi Scheme. The principals in the company set up a complicated system to direct funds from subscribers' poker accounts into their own bank accounts. This was in contravention of their own claim that users' money was untouched. Players' accounts amounted to $390 million, but the company only has $60 million in the bank, having over time distributed $440 million to its own directors and executives."
And I wonder what happens to the intl. monies (Score:4, Informative)
I wonder if there is any precedent or international agreement that the US government has to abide by in order to get monies back to international players? Probably not. Can you imagine players begging the US for their money and us just saying "well, we'll have it to you as soon as we can." *years and years pass.*
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It's sure as hell not giving money back to any players. They don't give a flying about the players, they view the players as willing participants in illegal operations. I don't think the nationality ff the player really makes a difference.
One time the feds set up a racket to rip off US players and used the funds to buy weapons (with no money taken off the actual illegal casino), http://odenton.patch.com/articles/county-police-net-470000-in-online-gambling-seizure [patch.com]
Re:And I wonder what happens to the intl. monies (Score:4, Informative)
The trouble is that if you read between the lines carefully - and the Wall Street Journal article makes this more obvious [wsj.com] - they had enough money to pay out players' balances, but can't access all of this money due to US government interference. Basically, the DoJ and the US government interfered with their banking to the point they didn't have enough money readily available to pay out all player balances at once, then accused Full Tilt Poker of running a Ponzi scheme because of this inability to pay everyone. It looks like players are probably going to lose out, but it's not going to be because Full Tilt Poker is a fraud or a scam, it'll be because the US government is going to take players' funds and keep them.
The US government is very much involved in this.
When Mitt Romney asks, "Why punish success?"... (Score:2, Insightful)
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Yeah, why isn't GE paying any taxes?
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Wha...? If someone is making money by doing something harmful/fraudulent, then that thing should be illegal. In this case, it already is. And so any money made this way (or goods purchased therewith) will be seized to the extent possible.
How on earth you do you go from "Some successful businesses don't deserve their profits and are actively harmful" to "Let's punitively tax all of 'the rich' in the hope we snare the bad ones"?
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correction. It isn't quite 50% now, but will be if Obama gets his way. Right now it's about 45% for long term investments.
Re:When Mitt Romney asks, "Why punish success?"... (Score:4, Informative)
That's not the way it works. You don't pay income tax on (long term) capital gains, you pay the capital gains tax. You pay income tax on ordinary income, including short term capital gains.
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I'm not sure where I said any of what you just said I said. You pay capital gains tax on what your long term investments earn (which was already taxed as corporate income tax).
Re:When Mitt Romney asks, "Why punish success?"... (Score:5, Informative)
You said "If you want to compare apples to apples, look at capital gains PLUS corporate income tax. It amounts to over 50%, except for companies that are in bed with the white house (GE)."
You are not double taxed on capital gains. Yes, you (may have) paid income tax on the money you earned to make the investment. However, you don't pay tax on that amount a second time, it's capital, not a gain. You only pay capital gains tax on the long-term "gain" you earned from that investment, which is to say, you deduct out your initial investment from the sale price, leaving only the "gain" that you pay "capital gains" tax on. Neither the corporate income tax, nor the capital gains tax is over 50%.
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*Corporate* income tax plus capital gains. The corporation that you invested in is taxed on its earnings. Those earnings are where your gains come from.
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If you're talking about buying stock in a corporation, the corporate income (or income tax) has nothing to do with it. Your gains (or losses) are on the change in price of the stock, which is about what other investors perceive it to be worth. It has no direct relationship to the corporate income (or loss) and does not come from corporate income. Dividends paid to the stockholders may fall into being double taxed, but most corporations don't may much in dividends.
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If you're talking about buying stock in a corporation, the corporate income (or income tax) has nothing to do with it.
You're kidding, right? If Apple were to throw away $50 billion of its cash, what do you think would happen to the stock price? I'll bet its market capitalization will go down by about 50 billion dollars (excluding perception changes due to this extreme change). Corporate earnings do in fact *directly* affect stock prices. In fact current assets plus the estimated next X years of ear
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No, corporate profits ABSOLUTELY DO NOT directly affect stock price. If they did, corporations who were losing money would have worthless stock and those making money would always have a good stock price. Clearly that is not the case.
What affects stock price is perceived value of the company, and nothing else. Corporate profits impact that perceived value, but it's an indirect relationship, not a direct one. Stock prices are based not just upon how the company is doing now, but how people expect them to do
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Correlation is not causation.
If apple threw away $50 billion dollars, the stocks would tumble, but because investors are pissed off, not because apple lost $50 billion. Investors are pissed off that apple lost $50 billion. Thus, the stock value tumbling, is indirectly related to Apple throwing away money.
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Wow. Just... wow.
Read the last sentence in my previous post. It'll clear everything up for you.
If you're still left thinking that companies that do not currently have any assets, and will never make any money, can possibly have a positive stock price, then I don't know what to do for you. Perceived value == how much people think it will make in the next X years (exercise left up to the investor) + what it currently has.
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Just to clarify, "and will never make any money" in my example is known by any and all hypothetical potential investors.
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And you've just proved the point that the stock price is not directly related to corporate income (and therefore corporate income tax). Share price is based upon speculation and belief, not actual income. The capital gains are not corporate income, they're another investor's money. Completely separate pool of money, and the person who loses money in the transaction gets to offset his own capital gains and if there is more loss than gain, can even offset a portion of personal income tax.
There is no double ta
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i_ate_god: Stock prices are related to perceived worth of a company. Perceived worth is directly affected by what a company has, and what people believe it will make. I'll bet I can make a company, where *all* it does is hold 5 million dollars, and sell 5 million shares for just under a dollar each (probably 95 to 99 cents, due to risk, etc) (and let's say this isn't an IPO. I already have $5 million). If that money disappears, guess how much those shares are then worth.
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gstrickler: Speculation and belief of *income*! How hard is this for you to comprehend? The worth of my stock is what someone else is willing to pay for it, due to how much the corporation is perceived to be worth (based on what people think its income will be, and based on what its current assets *are*).
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Your gains (or losses) are on the change in price of the stock, which is about what other investors perceive it to be worth. It has no direct relationship to the corporate income (or loss) and does not come from corporate income.
Perception of a stock's worth is directly tied to corporate income both present and future. In fact, I'd go as far as to say that is the only variable considered by most traders.
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No. Capital gains tax is a form of double taxation. I don't know how you still don't get it. Let's say I own a corporation. When my corporation earns money, it gets taxed. Since I own the corporation, that money is mine. The value of my stock goes up because the corporation now has more cash. I then pay additional taxes, even though my money hasn't changed hands a second time.
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Wow, wrong in just about every declarative statement. You're either remarkably dense, deliberately obtuse, or an excellent troll. Let's take them one by one:
In which case it's privately held, and there isn't really such a thing as a 'stock price' since there's no market.
No, it belongs to the corporation, which is a legally separate person from yourself. That's the whole point of limited liability. You can have your corporation
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Since I own the corporation, that money is mine.
You can't own a person. That money is the corporation's money not yours. Form a sole proprietorship next time, or a non-corporate partnership.
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Uhm... if anything, Capital Gains is UNEARNED income, therefore it should be taxed at a higher rate than earned (e.g. worked for) income if we want to encourage people to work.
Or do you disagree?
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It IS taxed at a higher rate. It's taxed twice. Just because one of the two taxes is 15% doesn't mean that the money wasn't already taxed at a much higher rate (usually roughly 35%).
And besides, do you really want to encourage people to put their money under a mattress instead of investing it in companies that give people jobs?
So I shouldn't be paying ANY taxes? (Score:3)
Yeah, and so the pizza delivery guy shouldn't have to pay taxes because the money I use to buy the pizza has already been taxed before I use it to buy the pizza.
You're conflating capital-gains / earned-income / wealth / job-creation.
They aren't the same. I can invest money in a publicly traded company that opens an o
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Your pizza example is extremely flawed. Corporate earnings are taxed. What's left over *belongs* to the investors. The corporation isn't paying the investors--the investors *are* the corporation. They own it. Look at how taxes in an LLC work (it's a beautifully simple system!). What I think would make much more sense is this money being taxed once. Either as personal income tax for the investors (like in an LLC), or as corporate income tax. Having both allows people like you to misunderstand what's really h
No, it's correct. (Score:3)
As is my pay. As is every dollar in my wallet. The taxes have been paid.
And once I have paid the taxes on my income, what is "left over *belongs*" to me.
Therefore, the taxes have been paid and the pizza delivery guy does NOT owe any taxes (by your logic) on the money I pay him.
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You're still misinterpreting things. When you get pizza, that money is exchanging hands (again). Therefore it gets taxed. When I pay capital gains tax, that money is not exchanging hands a second time. It was taxed when it went to the company (which I own a part of, and is at that point mine, since this money affects how much my investment is worth), then, without exchanging hands (it's already mine), it gets taxed again.
And still you are conflating them. (Score:3)
At least you got that partially right.
Yes it is "exchanging hands a second time". It is a asset of the company's. It is NOT an asset of yours until the company pays a dividend (and is taxed).
You are a stockholder. That is all. That gives you certain rights in certain situations but that does NOT mean that a portion of the profit that the company m
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I think you're saying, that since my paycheque was taxed at source, then I have to pay a sales tax for the pizza, that I'm getting double taxed.
But I don't think most people would agree that this is a double tax. If you want a double tax, try this:
In Quebec, we pay provincial sales tax ontop of the federal sales tax. Total = (subtotal * 0.5) * 0.7. Now that is a double tax.
But what you're saying is Total = myBankAccount - ((paycheque * incomeTax) + (costOfPIzza * salesTax))
which isn't quite the same thing.
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Oh, but I can! assuming x% is the percent that I own. All I have to do is sell some of my shares, and since the company made a profit in your example, the price of my shares probably went up (excluding external changes), meaning I can hold just as much money in the company as before, but still take my share of the profit. Unfortunately for me, however, the rest of the investors decided to reinvest their earnings, so even though I have just as much money invested (after selling shares), I now own a smaller p
And ... you lose. (Score:3)
Then do it. Wait, there's going to be some caveat to that statement, isn't there?
And now you cannot tell the different between DIVIDENDS and capital gains from selling stock.
You lose.
For a c
And ... you lose, again! (Score:3)
Of course you don't. As I said, you are incorrectly conflating:
capital gains
earned income
wealth
job creation
THE STOCK MARKET
and DIVIDENDS.
If you really owned part of the company's profit then you could go into the company and take the portion of the profit that you own.
You failed to understand that concept and instead you switched to a tangent about selling stock.
Selling stock is NOT the same as taking a portion of the company's profit (that you claim you ow
This is too easy. (Score:3)
Except you were claiming that a portion of their profit was YOUR money because you were an investor.
So when you got some of that profit, it had already been taxed and you should not have to pay taxes on it.
So unless you're now trying to claim that you were talking about stock sales the whole time (which have NOTHING to do with corporate profits as you would know if y
I won't even say "nice try". (Score:3)
Do you really think that if I sold some IBM stock that IBM would get any of the money?
Wasn't that what you were talking about? You selling stock to get money that was "double taxed"?
Keep it going! This is GREAT!
No. Stock sold to stockholder A by stockholder B does NOT do ANYTHING for the corporate profits.
Allow me to continue repeating the items that you are incorrectly conflating:
capital gains
earned income
wealth
job creation
THE STOCK MA
Now you try to avoid the thread. Funny. (Score:3)
Again, allow me to reiterate the things you are incorrectly conflating:
capital gains
earned income
wealth
job creation
the stock market
dividends
BASEBALL
and TAXES.
You had claimed t
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Money that does not get paid as dividends, that is "reinvested in the company" is money that (since we are talking about this money in this way in the first place) originated as corporate profit. The fact that it's reinvested isn't the reason that it's profit, but the fact that it was considered to be paid as a dividend means that it WAS corporate profit (at least in financially sound corporations). Keeping it in the company means it now has extra money to use.
What the fuck are you yammering about? It do
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How many Pizza delivery guys do you think pay taxes on their tips?
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Among the many reasons long-term capital gains taxes are lower than income taxes is that they are not indexed for inflation over a potentially very long term. If you buy an asset for $250,000 and sell it ten years later for $300,000 then you lost money after adjusting for inflation. Nonetheless, you still have to pay capital gains taxes on the nominal gain of $50,000. You pay taxes on a real loss.
Long-term capital gains have to be much lower than income taxes or no sane investor would make long-term investm
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It turns out that primary homeowners are exempt from capital gains less than $250,000 when selling their house. And that's the gain, not the total value...if a $500,000 house sells for $700,000, no capital gains tax.
But, and this is interesting, apparently people are taxed normal capital gains for selling non-residential houses.
Of course, you just reminded me of something else...for some reason, we have property taxes on houses, but not stocks.
Assumptions that might skew things. (Score:2)
Capital gains is NOT the same as income tax. You are comparing apples and oranges. If you want to compare apples to apples, look at capital gains PLUS corporate income tax. It amounts to over 50%, except for companies that are in bed with the white house (GE).
That you have a normal job paying a taxable wage (you may not, actually.)
That you actually do anything to earn money off of your money (you may not do a whole lot other than make sure it is in a profitable investment.)
This isn't aimed at people that have a full time jobs and 'invest full time'. This is aiming at people that their whole 'income' is basically just living off their fat amounts of money, making more money than they can spend easily.
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Where do you think jobs come from, then? Jobs exist because people provide risky capital to companies, and no one will do that without the expectation of a fat prize if they guess right. And believe me that money can go elsewhere if investments aren't rewarded here!
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What you're forcing yourself to perceive is that somehow the owners of a company are actually being paid by the company. That isn't the case. The owners of a company *are* the company. The money isn't exchanging hands a second time. It goes to the company, which is made up of owners of said company. Yet somehow it gets taxed twice.
Re:When Mitt Romney asks, "Why punish success?"... (Score:4, Insightful)
Almost every ordinary person buys all the stuff they need using income from work that has been taxed, and in most states pay a sales tax of some kind. The corporation they bought the item from was also taxed in various ways, and some of that cost (not all of it - read about Tax incidence [wikipedia.org]) gets factored into the price, making the price higher than it would be without the taxes. And if whatever that person bought improves the value of their property, they'll get taxed again via their local property tax. And so on. The same dollars basically get taxed almost every time they change hands.
For some reason, though, the concept of "double taxation" only comes up when talking about taxing investments. Which suggests the objection is not really to taxing the same money twice (which would inevitably happen if there's more than 1 kind of tax in existence), but rather either (a) paying any kind of tax at all (a much more common position than you might think), or (b) really rich people paying taxes at all (which probably was why some think tank guy game up with "double taxation" in the first place). I simply see it as yet another expression of this gem by John Cleese in How to Irritate People [youtube.com]:
The rich don't say "We want more money." They say "This increased taxation is reducing personal incentive."
Re:When Mitt Romney asks, "Why punish success?"... (Score:5, Informative)
It's almost as bad as the confusion of "pay x% rate of income tax" versus "pay x% rate of income tax only for income over y amount", which can be a rather significant difference, although at least that's often an honest misunderstanding.
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All you really need to do is point people to here [thedailyshow.com].
If you took every single asset (Not their yearly income, but every single thing they own.) of the bottom 50% in this country, you'd end up with 2.5% of all assets, aka, 1.4 trillion dollars.
And Jon Stewart doesn't point this out, but the US budget deficit this year? 1.4 trillion dollars.
If we took every single dime owned by the bottom 50% in this country, their house, their car, their food, everything, and sold it and put the money towards the budget, we
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And how is this different than a bank? (Score:2)
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I think the difference is, tellers don't take home their cash drawers.
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Bank has given loans that when payed back they can pay all their customers.
Bank don't tell customers that they have all money they owe in an account that can be payed out directly if all customers wants that.
Full Tilt poker did that but had alot less money then they owed. Full tilt poker was basically bankrupt while telling their customers that all their money was safe.
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There is a good reason that casinos have to be able to cover every bet they make. Looking over the rules (beware, this thing is dense to the point of being dangerous) http://gaming.nv.gov/documents/pdf/06feb23_bankroll_instr.pdf [nv.gov] it seems that in Nevada casinos do, in fact, need to have enough cash on hand or available the very next business day to cover all bets and chance events that are conceivable to within a rather generous statistical margin.
The comparisons to fractional reserve banking, though provoki
Banks have assets and receivables to cover (Score:3)
Banks don't have cash on hand to pay every account holder should they all choose to cash out their accounts.
They don't have enough cash to pay every account holder if they came in to collect on same day. They do, however, have enough assets and accounts receivable (outstanding loans) to cover. It may take some time but, they could, in principle pay off all their account holders.
Full Tilt, on the other hand, doesn't have the money in any form. What they owe to their subscribers can not be paid. The money isn't on loan to another entity who is obligated to pay it back. It is "spent". That's a big difference.
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The bank loans out your money with the plausible expectation of being repaid, and a repayable debt is an asset. They may not have cash on hand to cover every depositor, but they have assets to do so. In the event of a bank run, they could borrow against those assets to get the cash they need.
Full-Tilt poker was actually removing money from the pool of player's money, and paying it to themselves, reducing the actual assets held by the company, not just cash-on-hand. If every player cashed out, there'd sim
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The bailouts from 2008 weren't about sound assets, they were about preventing the sociopaths in Manhattan from driving the world economy over a cliff. For all that we should have built a barrier around Wall St. and burned everything in it, the consequences of doing so were far worse than bailing them out.
That said, the banks did have normal banking arms that were typically sound operations with sufficient assets to guarantee their depositors. It's just that, in addition to all that, there was a pyramid sc
Casino Reserve (Score:4, Interesting)
Re:Casino Reserve (Score:5, Informative)
Ha Ha Poker fanboys (Score:2)
fractional reserve? (Score:2)
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Haven't you ever watched It's A Wonderful Life? In fractional reserve banking, the money has been lent by the bank. Those loans are assets. They are nonliquid assets, which means the bank can't just pull all the money out of their vault if everyone comes and wants to cash out, but they are assets, and they will eventually be repaid.
In a Ponzi scheme, there isn't enough money in the system - it has been taken out. It is gone. The only way to keep the system running and seemingly healthy is to keep adding new
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I wish parent hadn't posted as AC; parent needs to be modded up, and now nobody gets karma...
Gotta Cover The Chips In Play (Score:4, Interesting)
It may seem like a fractional reserve banking system... to those that don't know how a regulated casino is managed. A legitimate casino will always hold sufficient cash to cover all of the chips in play. What ever chips the croupier wins from the players at the point the table closes... only then can the casino take the money to the bank.
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You think America has a fractional reserve banking system? Think again. For many years now America has had a zero reserve banking system. Only demand (checking) accounts have even a fractional reserve requirement. There are no reserves required for svaings accounts, CDs, etc.
That's not necessarily a problem, if the consumer understands that his savings account is really just a share of outstanding loans, but of course no one thinks that way.
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At first jab I really wanted to take a jab at that, I really did. Some others have posted some excellent points this way and that about FRB (I'm tired of typing it) and looking at it all I'm inclined to think that FRB is done well. Really well. Take a look at all the wonderful things a healthy strong credit system can and has done. Lines of credit to smooth out payroll and unexpected expense, people building homes and investing into the community and economy at large, new business and old alike benefiting f
Know When to Hold Em (Score:3)
Know when to Fold Em.
If you don't know who mark is at the poker table, you are it.
So in other words is exactly like social security (Score:3, Interesting)
except for the fact that you don't go to jail if you choose not to play online poker.
Social Security For The Complete Idiot (Score:5, Informative)
>> So in other words is exactly like social security, except for the fact that you don't go to jail if you choose not to play online poker.
That's cute, and completely inaccurate.
Any retirement investment method is counting on the gradual growth of the value its investments over time. Most methods assume investment into activities that will result in value-added business from which surplus value can be extracted. Since any one investment has a risk of either under-performing or going completely tits-up, risk is managed by making a diverse group of investments.
The US Federal Government is "invested" in the prosperity of the US. Social Security is therefore diversified over an entire national economy, recovering taxes from a range of activities. The advantages of this "ultimate index fund" are low administrative overhead and risk.
Both private and public retirement plans are predicated on the assumption that there is long term growth in the investments, the basis for the continued function of a modern market economy. If/when this isn't the case, the paradigm falls apart, and members of a cash economy would need to salt away the entire value needed to provide for their post-earning years.
The complaint as PDF (Score:2)
Is there anyone surprised by this finding? (Score:2)
Not suprised (Score:3)
Consider these sites can close player's account at any time, without an explanation. Back in 2006 when UIGEA weren't enacted yet, some of my friends lost tens of thousands of dollars from account being frozen due to "management decision", with no chance of appeal.
Now we finally see some possibility to regulate the industry. But before full legalization can happen, there are previous scores that need to be settle first.
It's in better shape than most US banks (Score:3, Informative)
> accounts amounted to $390 million, but the company only has $60 million in the bank
So then Full Tilt Poker is just like a major US bank, except with more reserves.
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Are you suggesting that $330 million gone missing is a small problem?
I suppose it depends on who's money it is.
No. (Score:3)
Social security isn't a ponzi scheme, its just the victim of the United State's own success and radical advancements in medicine and thus life expectancy. The life expectancy in the US in 1935 was 58, in 2000 it was 74. The initial planners probably just didn't expect the majority of people to live long enough to collect. I guess that's gambling, but making it out to be ponzi scheme I think is an incorrect assessment. It looks like the retirement age started out with SS at 65 or 62 at half pay or whatever.
Re:No. (Score:4, Insightful)
SS is a ponzi scheme
Of course this is not true. First, the way that Social Security works is clear, whereas an actual Ponzi scheme is always disguised as something else. Second, Congress can always modify Social Security so as to keep it funded, even if there are fewer people paying into the system later than at present, e.g. by raising taxes or lowering payouts. This is not really possible with a Ponzi scheme. Really, the only thing that makes it even appear to be like a Ponzi scheme is that the population of the country is variable; if it were constant, it would be clear that it is merely pay-as-you-go.
SS is absolutely clearly NOT SHOWN TO BE CONSTITUTIONAL in this judgment. At the very minimum it's a "maybe", but it's definitely not a "YES", which is what SCOTUS is SUPPOSED to show.
I'm not familiar with that case, but I do know that standard procedure for courts in the US is to decide questions of law rather narrowly. If it's possible to resolve the case without deciding on the constitutionality of a law, that's what will be done; anything further would be superfluous. Likewise, if one part of the case is contingent on another part, the court will only worry about it if it absolutely has to. E.g. if it is alleged that Alice killed Bob, and Alice claims that she did not, but that if she did, it was in self defense, and the court finds that she didn't kill Bob, the question of self defense will be ignored since it's not important anymore.
Whether or not everyone is on tenterhooks about a particular issue that the court manages to sidestep isn't really something they care about. If you really want to find out the answer, come up with a better test case that will compel them to give you an answer.
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It's against my better judgment to go on with someone who is clearly as frothing-at-the-mouth-crazy as you appear to be, but I'll give it one last shot just for the hell of it.
Like I said, it doesn't matter whether they were asked a question, it matters whether they were asked an unavoidable question. I'm still not very interested in this case, but it sounds as though the Court could resolve it satisfactorily without bothering with each and every issue, and therefore declined to look into questions that the
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how can you have fraud when the books are open?
Social Security is an excellent example. All the money that goes into Social Security is used to purchase internal bonds, immediately transferring the money to the general budget. That's the first element of this "open" scam, namely, that there's no investment of Social Security funds. It's merely a tool so that Congress can spend more.
That's especially mendacious given the propaganda, particularly, the supposed "untouchable" nature of Social Security. The money goes into a "lock box", but that money is
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Re:Ha ha ha (Score:5, Insightful)
Look up Ponzi Scheme. It requires fraud, misrepresentation. US Govt is not lying about where the money goes. The Poker company is.
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Excuse me, but those "IOUs" you are referring to are Treasury Bonds.
Do you know what you call someone who owns a million dollars in Treasury Bonds? A "millionaire".
I don't understand why when they are in the Social Security Trust Fund everyone calls them "IOUs" but when they are in your 401k they're called "AAA rated, blue chip securities". (I guess technically, one of the three rating age
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A ponzi scheme is designed to enrich the ppl who created it. Social Security is not. Did FDR get rich by taking social security taxes? Using "Ponzi Scheme" to describe Social Security is clearly a blatant ploy to cloud the issue with emotion and ignore facts.
Re:Ha ha ha (Score:4, Insightful)
Similarly, the US postal service wouldn't be having a problem if the Republicans hadn't raided the fuck out of them in the 1980s (when they were profitable) while holding up and blocking bills this year that would have required the US to pay back the $50 billion stolen from it.
But this is rather like other Republican attitudes - raid raid raid, golden parachute.
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and this was marked -1. angry republican digg factor.
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Re:Ha ha ha (Score:5, Informative)
Social Security as it is now is robbing your children and grandchildren to pay for yourself, because the trust fund was spent and all payouts now come from the vastly-in-debt general fund. Call it what you want, it's certainly not a retirement savings plan.
And what does it matter what the intentions of the plan are. Nothing could matter less. What it is and what it does and what it will do are important. Not one person can retire on intentions.
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So you are for taking money away from those, who don't need the SS at all, and reducing their benefits, so that's direct mandatory subsidy from some people in the country to some other people, and you think that's a good policy?
You think that taking money away from people who invest it, because they are not spending it, and thus they are growing the wealth of economy by producing stuff via investments and giving this money to people who spend it on produced goods is a good thing for economy?
You don't see th
Re:Ha ha ha (Score:4, Informative)
Bzzzt. Wrong. "hoping to get paid by future workers". It is 100% clear how the system works: less workers in the future means less money in the future; it is funded ad hoc (in theory) by the current labor force. It is in NO WAY a guarantee! That's not a ponzi scheme.
My problem with SS is that it takes in more than it spends and then the surplus has been used by greedy politicians since it first funded the Vietnam War. The program isn't the problem, it is the theivery of the surplus. It should be saved to extend the program, or refunded to taxpayers every year.
But it is no way a Ponzi scheme.
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How would you have the SS funds stored? As pallets of dollar bills? Or perhaps something safer, that earns a return, like T-Bills?
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Social Securtiy no longer takes in more than it spends. It's been cashflow negative for a while now (since early 2011 IIRC).
When there was a trust fund, I'd agree that it was unfair to cal it a Ponzi scheme. But now? If you tried to make a private program that worked that way, you'd be arrested and the newpapers would certainly call it a Ponzi scheme.
Nice touch with tinyurl in your sig, friend! ;) (Score:2)
I tend to be more "in your face" type of guy, but can see your approach working better! ;)
To stay on topic, "US books are open" -- which books? Certainly not Federal Reserve Bank books, or why would it take Bloomberg a lawsuit to see *some* of dirty little dealing which were going on, like "shadow TARP" (http://www.politico.com/news/stories/0811/62358.html), and why original version of H.R. 1207 was never passed, again? ;)
For the record, if what prosecutors are alleging that poker company was doing is true
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Build a better Poker site, that doesn't rake as much and has better features and make your own rules on how you handle the cash. If you can't compete making a better product with better service for less money, then perhaps they aren't ripping you off.
We don't need more regulation, we need better business men.
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or Social Security
Re:It wasn't a Ponzi scheme (Score:5, Informative)
Actually, it is the very definition of a Ponzi scheme.
There should be two distinct piles of money here. First, we have the business's money. I don't know how they earn this (percentage of play maybe), but it doesn't really matter. This is the money they can use to operate the business. For this fund, it is perfectly reasonable to expect money to keep coming in, that is how businesses operate.
However, there should be a separate pile of money that belongs to the account holders. This is NOT the business's money. They should, at any time, be able to pay off every single account holder every penny they hold in the account. If you have to keep having new accounts (or more money added to them) to pay off other accounts, that is a Ponzi scheme.
Re:It wasn't a Ponzi scheme (Score:5, Informative)
Indeed... that's certainy fraudulent (unless they had a bank charter, and were paying insurance on their deposits, which they didn't and weren't), but it doesn't sound like the definition of a Ponzi scheme at all.
A Ponzi scheme relies on the promise of future returns. Poker is a zero-sum game (actually, less than zero if you take commission/table fees into account). Investors in a Ponzi scheme don't believe they're taking each other's money, they believe the investment strategy is paying profits to all investors.
It sounds like these guys just decided to give themselves some interest-free (and illegal) loans from their players' deposits.