Monday, July 30, 2018

1976 How to Build a House of Cards

(The following story is fiction. Any resemblance to anyone, living or dead is purely coincidental.)

It’s a house of cards.  But it also is a Ponzi scheme in which you are both the scammer and the victim.

You start with a business plan, maybe for a hotel, a casino or a golf course…  and a loan.

You implement the business plan.

It doesn’t work well.

You look for another loan using the first one as collateral.

You get the loan.

The business plan still isn’t working well.

The money is running out.  But no one knows that but you.  So you use to first two loans as collateral to borrow more and use some of the third loan to make payments on the first and second.

Things are looking pretty bleak.  You’re deep in hock, but you can claim a pile of cash in the bank… some of which you actually have.

What do you do with the some of it you actually have?  You hire a public relations company that gets you on the Entrepreneur Channel.

You brag about your business plan and your big pile of cash -- most of which you are spending on paying back the lenders.

More money arrives from people impressed with the big pile of cash and the business plan.  You then break ground on your headquarters building.

So far, you have produced nothing.  You’re up to your hips in debt you have no way of repaying. But you have that impressive headquarters building.

Your public relations company gets you on TV from your headquarters building to announce that because things are doing so well you will start a charity and read a list of the donations you are going to make.

But you don’t make the donations because you haven’t even got even enough cash to buy that membership in PBS in return for a box set of Victor Borge videos and an attractive reusable carry bag emblazoned with the PBS logo.  

But that’s okay.  Because people are coming to you with money in hand.  You are a famous success because of a mythical pile of cash, a big building, a handful of failed results from your business plan and your appearance at the ribbon cutting ceremony for a gambling joint in -- oh, say -- New Jersey.

You have arrived.  You are a star.  No new worlds to conquer.  And as long as you can play musical chairs with those loans and repayments, you’re in great financial shape and a Famous Rich Person.

What do you do next?  Import a third wife from a website that sells introductions to Russian women who already are married but believe you have that yoooj pile of cash. (When she kills you, she will have to give her real husband, Vodislav all your money.  When Vodislav finds out you don’t really have any money, he will kill the widow.)

So how do you guard against collection agents who come around with guns and baseball bats?  You get security guards.  But they’d be better than anything the banks and the Russians can throw at you.

Better find a way to enlist the Secret Service. Now how would we get them to help?  Oh. Wait! I know!

I’m Wes Richards. My opinions are my own but you’re welcome to them. ®
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© WJR 2018

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