Encyclopedia > Con artist
A confidence trick, confidence game, or con for short, (also known as a scam) is an attempt to intentionally mislead a person or persons (known as the mark) usually with the goal of financial or other gain. The confidence trickster, con man, scam artist or con artist often works with an accomplice called the shill, who tries to encourage the mark by pretending to believe the trickster. In a traditional con, the mark is encouraged to believe that he will obtain money dishonestly by cheating a third party, and is stunned to find that due to what appears to be an error in pulling off the scam he is the one who loses money; in more general use, the term con is used for any fraud in which the victim is tricked into losing money by false promises of gain.
Some confidence tricks exploit the inherent greed and dishonesty of their victims; it has been said by confidence tricksters that it is impossible to con a completely honest man. Often, the mark tries to out-cheat the conmen, only to discover that they have been manipulated into this.
Sometimes conmen rely on na�ve individuals who put their confidence in get-rich-quick schemes such as 'too good to be true' investments. It may take years for the wider community to discover that such 'investment' schemes are bogus, and usually it is too late as many people have lost their life savings in something they have been confident of investing in....
How to Spot a Con or Con Artist at work
June 20, 2008
Red Flags: Flattery, Inflated Credentials, Fast talking for fast decisions
Sooner or later, you will have a run-in with a sociopath or psychopath.
There are just too many of them and they aren’t necessarily locked up in jail. Sociopaths and psychopaths roam through all parts of society all over the world and are in all walks of life.
There is only one way to protect yourself from them. You must know what they are and put up your guard when you start seeing the symptoms or sense something is not right.
Sociopaths are prolific con artists. Here are some typical con artist tricks.
For even more information about how con artists work, read The Complete Idiot’s Guide to Frauds, Scams, and Cons, by Duane Swierczynski.
Lavish flattery
If you’ve just met someone who is overwhelming you with praise, attention and concern, be careful. Be particularly careful if you’re lonely and looking for love—con artists know exactly how to play that tune.
Credentials sound exaggerated and fabricated
Sure Hong Kong may have a high concentration of extremely rich people driving around in Maseratis, Lamborginis and Ferraris. However, Con artists may need to ”prove” themselves by namedropping, volunteering detailed resumes and credentials. If you’re at all suspicious, check their references. Really, if they were that rich would they tell you right off the bat?
Building your trust
Con artists will sometimes honor their commitments in the beginning so that you begin to trust them. They’ll pay back initial loans, or appear to be unselfishly helping other people. Their objective is to get you to drop your guard.
The story doesn’t quite add up
The con artist’s story may have small inconsistencies or unexplained loose ends. It’s a wonder how he keeps track of all the lies he fabricates.
If you ask questions, the con will glibly provide an explanation — which may also not add up. Or, he or she will sidestep the issue by accusing you of paranoia or mistrust.
“I need an answer now.”
A crisis needs to be averted, an opportunity will disappear — whatever the reason, a con artist will want an answer right away. If you have time to think, research or ask advice, you may realize that con artist’s plan is a ploy. The con will want your money before you figure it out.
Intense eye contact
Typically, when people talk to each other, they look each other in the eyes and then briefly look away. Sociopathic con artists often exhibit a “predatory stare” — unblinking, fixated and emotionless. It’s not a sign of empathy—it’s an effort to assert control. (In Kevin’s case, he’s also always on his Blackberry or mobile phone pretending to be super busy since he needs to keep track of his targets at any one time.)
Isolation
A con artist will slowly and subtly separate you from people who may question his plans. He may intercept phone calls from your friends. He may refuse to associate with your family. He’ll tell you, “It’s you and me against the world, baby.” Soon, you’re alone with him, snared in his net.
U.S. Stocks Slide After Economic Growth Trails Forecasts
``The data put the market on notice that the economy is slowing,'' said Quincy Krosby, who helps manage $380 billion as chief investment strategist at the Hartford in Hartford, Connecticut. ``It's not equity friendly.''
Caterpillar Inc., Boeing Co. and Walt Disney Co. led the retreat after the Commerce Department said the economy grew at a 1.9 percent rate last quarter and contracted at the end of 2007. Exxon Mobil fell, extending the worst monthly slump for S&P 500 energy companies since at least 1989, after declining production slowed earnings growth. Benchmark indexes extended their tumble late in the day after former Federal Reserve Chairman Alan Greenspan said the housing slump will worsen.
The S&P 500 slid 16.88 points, or 1.3 percent, to 1,267.38, leaving the benchmark index down 1 percent in July. The Dow Jones Industrial Average lost 205.67, or 1.8 percent, to 11,378.02. The Nasdaq Composite Index slipped 4.17, or 0.2 percent, to 2,325.55. Almost three stocks retreated for each that rose on the New York Stock Exchange.
Jobs Concern
The S&P 500 trimmed its rebound from an almost three-year low on July 15 to 4.3 percent. The 448,000 increase in jobless claims weighed on stocks as investors await tomorrow's government report forecast to show the nation lost 75,000 jobs in July. Even though the majority of companies have beaten estimates, S&P 500 profit growth has slumped 17 percent on average from a year earlier, according to data compiled by Bloomberg.
The Dow ended the month with a 0.3 percent gain, while the Nasdaq posted a 1.4 percent increase.
Caterpillar, the largest maker of bulldozers, slumped 3.5 percent to $69.52 today. Boeing, the world's second-biggest commercial airplane maker, lost 4.3 percent to $61.11.
Disney, the biggest theme-park operator, dropped $1.32, or 4.2 percent, to $30.35 even after posting a 9 percent gain in third-quarter profit and beating analysts' estimates.
The Commerce Department report on gross domestic product showed the drag from the worst housing slump since the Great Depression and rising unemployment blunted the impact of federal tax rebates. Economists surveyed by Bloomberg had forecast growth of 2.3 percent in the second quarter.
The economy shrank 0.2 percent in the fourth quarter last year, compared with a previously reported 0.6 percent gain. The report also contained annual revisions that lowered the growth rate back to 2005.
``The markets don't like it,'' said Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York. ``You listen to a market of optimists who think the worst is over and that it's gonna be OK, but this data is showing you it's not.''
Exxon, MasterCard
Exxon slid $3.95, or 4.7 percent, to $80.43. Production tumbled 7.8 percent after assets were seized in Venezuela, Nigerian workers went on strike and record prices triggered contract clauses that give oil-rich governments a bigger share of output.
The S&P 500 Energy Index slumped 3.4 percent, extending its July retreat to 14 percent.
MasterCard Inc. dropped $29.36, or 11 percent, to $241.37. The world's second-biggest credit-card company posted a $746.7 million loss on costs to settle an antitrust lawsuit with American Express Co.
Akamai Technologies Inc. fell the most in the S&P 500, losing $7.91, or 25 percent, to $23.34. The largest supplier of software to speed up Web services lowered its profit forecast.
U.S. stocks likely will keep falling until consumer and business loans are more readily available, Merrill Lynch & Co.'s chief investment strategist said.
`Pretty Hard'
``It's going to be pretty hard for the stock market to bottom and form a bull market without credit conditions easing,'' said Richard Bernstein in a Bloomberg Television interview. ``Clearly credit issues aren't easing just yet.''
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
Last Updated: July 31, 2008 16:09 EDTPSST...The more money the government borrows to fund deficit spending (see sidebar) the less money is available to private borrowers: businesses, mortgages and credit transactions...There are two ways to fund deficits, one is to borrow the money and the other is to get the Federal Reserve to print more, Bush has exhausted both options.--java
Economic Free Fall?
By William Greider
This article appeared in the August 18, 2008 edition of The Nation.
July 30, 2008
AVENGING ANGELS
Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street's titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven't seen "bipartisan cooperation" like this since Washington decided to invade Iraq.
The bailouts are rewarding the very people and institutions whose reckless behavior caused this financial mess. Yet government demands nothing from them in return--like new rules for prudent behavior and explicit obligations to serve the national interest. Washington ought to compel the financial players to rein in their appetite for profit in order to help save the country from a far worse fate: a depressed economy that cannot regain its normal energies. Instead, the Federal Reserve, the Treasury, the Democratic Congress and of course the Republicans meekly defer to the wise men of high finance, who no longer seem so all-knowing.
Let's review the bidding to date. After panic swept through the global financial community this spring, the Federal Reserve and Treasury rushed in to arrange a sweetheart rescue for Bear Stearns, expending $29 billion to take over the brokerage's ruined assets so JPMorgan Chase, the prestigious banking conglomerate, would agree to buy what was left. At the same time, the Fed and Treasury provided a series of emergency loans and liquidity for endangered investment firms and major banks. Investors were not persuaded. Their panic was not "mental," as former McCain adviser Phil Gramm recently complained. The collapse of the housing bubble had revealed the deep rot and duplicity within the financial system. When investors tried to sell off huge portfolios of spoiled financial assets like mortgage bonds, nobody would buy them. In fact, no one can yet say how much these once esteemed "safe" investments are really worth.
The big banks and investment houses are also stuck with lots of bad paper, and some have dumped it on their unwitting customers. The largest banks and brokerages have already lost enormously, but lending portfolios must shrink a lot more--at least $1 trillion, some estimate. So wary shareholders are naturally dumping financial-sector stocks.
Most recently, the investors' fears were turned on Fannie Mae and Freddie Mac, the huge quasi-private corporations that package and circulate trillions in debt securities with implicit federal backing. Treasury Secretary Henry Paulson (formerly of Goldman Sachs) boldly proposed a $300 billion commitment to buy up Fannie Mae stock and save the plunging share price--that is, save the shareholders from their mistakes. So much for market discipline. For everyone else, Washington recommends a cold shower.
Talk about warped priorities! The government puts up $29 billion as a "sweetener" for JP Morgan but can only come up with $4 billion for Cleveland, Detroit and other urban ruins. Even the mortgage-relief bill is a tepid gesture. It basically asks, but does not compel, the bankers to act kindlier toward millions of defaulting families.
A generation of conservative propaganda, arguing that markets make wiser decisions than government, has been destroyed by these events. The interventions amount to socialism, American style, in which the government decides which private enterprises are "too big to fail." Trouble is, it was the government itself that created most of these mastodons--including the all-purpose banking conglomerates. The mega-banks arose in the 1990s, when a Democratic President and Republican Congress repealed the New Deal-era Glass-Steagall Act, which prevented commercial banks from blending their business with investment banking. That combination was the source of incestuous self-dealing and fraudulent stock valuations that led directly to the Crash of 1929 and the Great Depression that followed.
Even before Congress and Bill Clinton repealed the law, the Federal Reserve had aggressively cleared the way by unilaterally authorizing Citigroup to cross the line. Wall Street proceeded, with accounting tricks described as "modernization," to re-create the same scandals from the 1920s in more sophisticated fashion. The financial crisis began when these gimmicky innovations blew up.
Democrats who imagine they can reap partisan advantage from this crisis don't know the history. The blame is bipartisan; so also is the disgrace. In 1980, before Ronald Reagan even came to town, Democrats deregulated the financial system by repealing federal interest-rate ceilings and other regulatory restraints--a step that doomed the savings and loan industry and eliminated a major competitor for the bankers. Democrats have collaborated with Republicans on behalf of their financial patrons every step of the way.
The same legislation also repealed the federal law prohibiting usury--the predatory practices that ruin debtors of modest means by lending on terms that ensure borrowers will fail. Usurious lending is now commonplace in America, from credit cards and "payday loans" to the notorious subprime mortgages. The prohibition on usury really involves an ancient moral principle, one common to Judaism, Christianity and Islam: people of great wealth must not be allowed to use it to ruin others who lack the same advantages. A decent society cannot endure it.
The fast-acting politicians may hope to cover over their past mistakes before the public figures out what's happening (that is, who is screwing whom). But the Federal Reserve has a similar reason to move aggressively: the Fed was a central architect and agitator in creating the circumstances that led to the collapse in Wall Street's financial worth. The central bank tipped its monetary policy hard in one direction--favoring capital over labor, creditors over debtors, finance over the real economy--and held it there for roughly twenty-five years. On one side, it targeted wages and restrained economic growth to make sure workers could not bargain for higher compensation in slack labor markets. On the other side, it stripped away or refused to enforce prudential regulations that restrained the excesses of banking and finance. In The Nation a few years back, I referred to Alan Greenspan as the "one-eyed chairman" [September 19, 2005] who could see inflation in the real economy--even when it didn't exist--but was blind to the roaring inflation in the financial system.
The Fed's lopsided focus on behalf of the monied interests, combined with its refusal to apply regulatory laws with due diligence, eventually destabilized the overall economy. Trying to correct for previous errors, the Fed, with its overzealous free-market ideology, swung monetary policy back and forth to extremes, first tightening credit without good reason, then rapidly cutting interest rates to nearly zero. This erratic behavior encouraged a series of financial bubbles in interest-sensitive assets--first the stock market, during the late 1990s tech-stock boom, then housing--but the Fed declined to do anything or even admit the bubbles existed. The nation is now stuck with the consequences of its blindness.
The Federal Reserve's dereliction of duty is central to the financial failures. It betrayed the purpose for which the central bank was first created, in 1913, abandoning the sense of balance the Fed had long pursued and that Congress requires. Most politicians, not to mention the press, are too intimidated to question the Fed's daunting power, but their ignorance is about to compound the problem. Instead of demanding answers, the political system is about to expand the Fed's governing powers--despite its failure to protect us. Treasury Secretary Paulson proposed and Democratic leaders have agreed to make the insulated Fed the "supercop" that oversees not only commercial banks and banking conglomerates but also the largest investment houses or anyone else big enough to destabilize the system. This "reform" would definitely reassure club members who are already too cozy with the central bankers. Everyone else would be left deeper in the dark.
The political system, once again, is rewarding failure. The Fed is an unreliable watchdog, ideologically biased and compromised by its conflicting obligations. Is it supposed to discipline the big money players or keep them afloat? Putting the secretive central bank in charge, with its unlimited powers to prop up troubled firms, would further eviscerate democracy, not to mention economic justice.
If Congress enacts this concept early next year, the privileged group of protected financial interests is sure to grow larger, because other nonfinancial firms could devise ways to reconfigure themselves so they too would qualify for club membership. A very large manufacturing conglomerate--General Electric, for instance--might absorb elements of banking in order to be covered by the Fed's umbrella (GE Capital is already among the largest pools of investment capital). Private-equity firms, with their buccaneer style of corporate management, are already trying to buy into banking, with encouragement from the Fed (the Service Employees International Union has mounted a campaign to stop them). A new President could stop the whole deal, of course, but John McCain has surrounded himself with influential advisers who were co-architects of this financial disaster. For that matter, so has Barack Obama.
The nation, meanwhile, is flirting with historic catastrophe. Nobody yet knows how bad it is, but the peril is vastly larger than previous episodes, like the savings and loan bailout of the late 1980s. The dangers are compounded by the fact that the United States is now utterly dependent on foreign creditors--Japan and China lead the list--who have been propping us up with their lending. Thanks to growing trade deficits and debt, foreign portfolio holdings of US long-term debt securities have more than doubled since 1994, from 7.9 percent to 18.8 percent as of June 2007. If these countries get fed up with their losses and pull the plug, the US economy will be a long, long time coming back.
The gravest danger is that the national economy will weaken further and spiral downward into a negative cycle that feeds on itself: as conditions darken, people hunker down and wait for the storm to pass--consumers stop buying, banks stop lending, producing companies cut their workforces. That feeds more defaulted loan losses back into the banking system's balance sheets. This vicious cycle is essentially what led to the Great Depression after the stock market crash of 1929. I offer not a prediction but a warning. The comparison may sound farfetched now, but US policy-makers and politicians are putting us at risk of historic deflationary forces that, once they take hold, are very difficult to reverse.
A more aggressive response from Washington would address the real economy's troubles as seriously as it does Wall Street's. Financial firms have lost capital on a huge scale--more of them will fail or be bought by foreign investors. But Wall Street cannot get well this time if the economy remains stuck in the ditch. Washington needs to revive the "animal spirits" of the nation at large. The $152 billion stimulus package enacted so far is piddling and ought to be three or four times larger. Instead of sending the money to Iraq, we should be spending it here on getting people back to work, building and repairing our tattered infrastructure, investing in worthwhile projects that can help stimulate the economy in rough weather.
An agenda of deeper reforms can boost public confidence even as it undoes a lot of the damage caused by the financiers and bankers. Some suggestions:
§ Nationalize Fannie Mae and other government-supported enterprises instead of coddling them. Restore them to their original status as nonprofit federal agencies that provide a valuable service to housing and other markets. Make the investors eat their losses. Buy the shares at 2 cents on the dollar. Without a federal guarantee, these firms are doomed anyway.
§ Resolve the democratic contradiction of "too big to fail" bailouts by dismantling the firms that are too big to fail--especially the newly created banking conglomerates that have done so much harm. Restore the boundaries between commercial banking and investment banking. In any case, market pressures are likely to shrink those behemoths as banks sell off their parts to survive. For the remaining big boys, revive antitrust enforcement. Set stern new conditions for emergency lending from government--supervised receivership, stricter lending rules to prevent recidivism and severe penalties for greed-crazed shareholders and executives.
§ Assign the Federal Reserve's regulatory role to a new public agency that is visible and politically accountable. Make the Fed a subsidiary agency of the Treasury Department and reform its decision-making on money and credit to restore an equitable balance between competing goals and interests--seeking full employment but also stable money and moderate inflation.
§ Begin the hard task of re-creating a regulated financial system Americans can trust, one that recognizes its obligations to the broad national interest. This requires regulatory reforms to cover moneypots like private-equity funds and to clear away the blatant conflicts of interest and double-dealing on Wall Street, and also to give responsible shareholders, workers and other interests a greater voice in corporate management and greater protection against rip-offs of personal savings.
§ Re-enact the federal law against usury. The details are difficult and can follow later, but this would be a meaningful first step toward restoring moral obligations in the financial sector. People would understand it, and so would a lot of the money guys. Maybe in the deepening crisis, Washington will begin to grasp that money is also a moral issue.
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