Quote from: copumpkin on July 11, 2012, 01:20:56 PM

Oh man, who knew that all those companies issuing corporate bonds with no borrowers of their own were Ponzis?? This will be the next major financial scandal of the century! The entire fixed income market (way larger than the equity market!) is the largest Ponzi in history. Madoff should hang his head in shame.

With a corporate bond, the company itself is the borrower. And all the lenders (bond buyers) know the business of the company selling the bond. Apple might not release schematics and construction details of the iPad, but all their devices being sold in stores is evidence of actual profit generation. That's the extraordinary evidence which everyone can see.

Of course, even with AAA ratings it turned out that all the mortgage-backed-securities was a just a network of ponzi paper (the largest in history). And companies selling shares on stock exchanges much more reputable than GLBSE turn out to be fraudulent. Look at the report on Huabao, China's largest flavor and fagrance company by Anon Analytics.

Watch some episodes of American Greed, my favorite one is The Rise and Fall of CyberNet. The guy created fake invoices of big orders from Boeing, IBM, etc. to convince banks that he had their business. When the bankers came for a visit, he gave them a tour of his datacenter of server racks and blinking LEDs. It turned out the boxes were empty! No actual servers, just blinking LEDs. And with that the banks became his lenders.

Most of the other episodes are much more mundane ponzi schemes ripping off far less sophisticated "investors". Fraud is so commonplace among people offering returns that its the rule. Not the exception.

Butterfly Labs took pre-orders and everyone was rightly skeptical. Then they shipped (extraordinary evidence). Same for Bitcoin Magazine. Does BitInstant or Bit-Pay, or MtGox or Bitcoinica or Bitstamp offer returns to investors? [edit: i mean crazy returns to most any investor]. Hell, does Silk Road? No, because those are all businesses actually generating profit.