University of Tennessee

A green movement with its own rules

You should know that zero waste is a concept that has existed for many years, even before Western society. That is to say, zero waste applies to all activities of daily life.

In fact, the idea of zero waste is to stick to a minimum of packaging and waste (in the global sense) to be produced. Indeed, modern life leads us to be very dependent on products of all kinds. Moreover, a century ago, people produced their own beauty and hygiene products.

It’s not that the products in question were much more dietary, but the standard was different and more healthy. The objective of zero waste is to eliminate all the waste of daily life for the benefit of a better quality of life and harmony with nature. The favorite movement of consumer actors is based on several principles. Let’s take stock together.

Principle number 1: reduce your waste

To reduce your waste, you must start by changing your consumption habits. For household chores, it is better to use recommended doses, whether for laundry, cleaning or washing dishes. Also favor battery-free products, solar powered for example, or opt for rechargeable batteries. This will prevent you from accumulating batteries in your waste.

Choosing products without packaging or in the form of eco-refills helps reduce the quantity of waste produced. You just need to favor eco-refills and choose tap water over plastic bottles. No more individual portions, prefer the same quantity, a single packaging: a 1 kilo packet instead of 2 packets of 500 g for example.

The basis of zero waste is sustainable and reusable products: reusable bags, tot bags or shopping bags versus plastic bags, refillable razors and pens, etc.

Principle number 2: compost and sort your waste

One of the key players in zero waste: composting. But what is it really about?

Simple as pie, it involves sorting your biodegradable waste and composting it on site, in collective bins or using individual composters. We then speak of organic waste or biowaste, covering several categories such as gardening or cooking. Paper and cardboard are also considered biowaste.

These biodegradable materials are transformed, in the presence of air, water and micro-organisms (bacteria, fungi), into compost. This compost creates a natural fertilizer to fertilize the soil and promote plant growth. This gesture helps reduce our waste and wasted resources.

In recent years, there have been around 200,000 residents of Tenessee who have a specific bin for organic waste at home. Their community organizes the sorting and recovery of this waste as for glass or cardboard. Sorting not only concerns green waste but also plastic packaging, bottles and flasks. It’s called selective sorting, because no, nature does not know how to magically destroy all the waste that pollutes the planet.

The principle is to recover our waste to save raw materials such as wood in order to protect forests. Successfully sorting therefore aims to be able to reuse materials to make recycled products.

Principle number 3: recycle and buy used products

Here we are: recycling, one of zero waste’s best friends. Products at the end of their journey benefit from a second life thanks to this technique. Recycling is a process for treating waste from products that have reached the end of their life, which makes it possible to reintroduce some of their materials into the production of new products. Recyclable materials include certain metals, plastics and cardboard, glass, rubble, etc.

After recycling, comes second-hand purchasing, it allows you to add value to already existing products and avoid exploiting new resources. Giving an item a second life increases the reduction in the number of waste to be processed. For example, regarding second-hand clothing, if the fabric can be recycled when it is put in a clothing collection bin, this action still has a significant ecological cost!

To help you in your mission, do not hesitate to search for flea markets or closet clearances in your region of Tenessee such as Chattanooga
(sites list all the flea markets planned for the coming months around you). You can also go to your local thrift stores and even try selling by the kilo! One more nice gesture for the planet.

Principle number 4: sell or donate instead of throwing away

Conversely, after having sorted and therefore reduced your cupboards and other storage space, consider putting the products that you no longer use on sale via dedicated sites or even at a flea market instead of throwing them away. You can also give these items away, it will always make someone happy.

If you have broken items beyond repair, you need to know where to throw them away. For this, there are several sectors which recover and recycle materials through collection points or container parks. Here we find the principle of recycling to limit waste creation.

Principle number 5: repair instead of buying new

Thanks to the numerous tutorials the Internet is full of, repairing an object becomes easy. These are sustainable practices! If you don’t feel the manual fiber in you, you can always get help from a handyman or in a specialized store, this will sometimes cost you less than buying new. Repair helps extend the lifespan of products and contributes to reducing waste production!…

Kansas City kitchen

Kitchen renovations are suggested with the extent of wear and tear. The kitchen is usually the first area of the house that requires renovation. This comes as no surprise, as the kitchen is one of the major living areas, and is often considered the heart of the home.

It is usually the kitchen cabinet door knobs that wear out first, generally from constant use and movement over the years. The bench tops can also start to look worn out and tired as the years progress, and flooring from high traffic will also generally show wear.

Knobs can be replaced fairly easily and with little expense, but when it comes to bench tops, appliances or flooring, its time for a major renovation. A major kitchen renovation will have a number of positive benefits including increased home resale value, upgraded cooking appliances, and more space for the family to enjoy.

The best time to undertake a kitchen renovation is during the warmer months of spring and summer. With outdoor living being largely popular in Kansas City during this period, the kitchen is rarely used as a result of exterior BBQ’s and external entertaining.

Most kitchens are built in a modular format, with the longest part of the renovation process being the removal of the old kitchen cabinets. Once this is completed, the installation of the new cabinets, appliances, and bench tops can be achieved in a short space of time, with minimal disruption.

We suggest having a plan in mind prior to commencing your kitchen renovation project. One of the most important factors to consider before starting is your budget. Understanding what money you have to spend will not only ensure you stay within your constraints, but also assist the designer to develop a plan that fits within your expectations and desired outcome.

The five most important factors to consider when planning for your kitchen renovation are as follows:

1. Budget

We’ve already touched on budget, but ensuring you understand exactly what you have to spend and what you wish to achieve from your kitchen renovation will enable the best result for your circumstances.

2. Time

With demands of work and family life these days, choose an appropriate time of the year to undertake your renovation. As we’ve suggested, the best time to approach a kitchen renovation is during the warmer months of the year when most families enjoy outdoor living.

3. Style

Try to have your desired style in mind, including layout and particular appliances prior to seeking reference from professional designers. This way, you will be better situated to make choices with the help and guidance of the designer that best suit your requirements and lifestyle.

4. Usage

Is your kitchen the main hub of your home? Think about how often you use your kitchen for both meals and gathering, and consider your design and layout to accommodate for this. Many people like to entertain guests, so creating a design that will allow for additional people and still have room for cooking and preparation is therefore essential.

5. Preparation

Be prepared for the renovation process, as there is likely to be some disruption to your standard daily routine. If you decide to change and redo your entire kitchen, you may need to rent a dumpster to discard all the construction materials. You will need to schedule Kansas City dumpster rentals so that they remove the junk for you.

With the right preparation, your family will not be severely inconvenienced, and the job can be completed without issue.…

renovating your house

You can take on home improvement projects as a hobby, or they can turn into an obsession.

It can be valuable for your home, too. Conversely, it can detract from its value. The following article contains advice that will help you avoid pitfalls and make smart choices when tackling your next project.

Personalized house renovation

If you are considering a renovation on your home that adds a personalized aspect, think about the value and return that the investment will make. The more personal your renovations, the less likely you will have buyers that wish to purchase it for the price of your work.

Weather stripping is important to include around your windows for energy efficiency. It is a cheap fix that will seal the air leaks around the windows and doors and reduce the cost of heating and cooling your home. You will notice, too, that you can cut down on the drafts that you feel on those chilly nights.

There are two tips that can make your ceiling look higher. Paint your walls or add a floor lamp. When you do that to your rooms, there is an optical illusion your eyes must follow. Your eyes will then think the ceilings are higher in height than they really are.

You can really spice things up with a uniquely made coffee table vs a pre-made standard one. You can use an older chest or something else as a coffee table, and sometimes they can work out great. Put some high-brow magazines, coffee table books, and interesting decorations like geodes on the table to spice it up. A country look can be created with the addition of teacups and tablecloths.

Use the right tools

Don’t get rid of bathroom doors due to them being dirty. Instead, take your door off of the frame, and then sand it until you can see the bare wood. Then purchase an oil-based paint that you like and repaint your door using a roller. For a brand new feel, opt to change your doorknobs to a fancier design.

The right tools can make all the difference when working on a home improvement task. If you lack the appropriate tools and materials, it will be much more difficult to complete the project correctly and in a timely manner. You should also make sure to read the instructions on using the tool correctly for the best results on your project.

One thing not to forget is to know what you will do with all the construction debris once your renovation is complete. A solution many people use is renting a dumpster from a waste management company. This way you can drop all the junk into the bin and the company will take it away to the landfill for you.

Do not forget to have an exhaust fan in each of your bathrooms, as well as in your kitchen, to keep your home as safe as possible. Proper venting of moist air lowers the humidity of the room, reducing the chance of developing a mold or mildew problem. In addition, lower indoor humidity can keep moisture from being trapped inside walls, a leading cause of rot.

What do you use to clear out clogs? Not every cleaner is like the other, and some are very harsh. Drain cleaning crystals can adhere to pipes, creating long term damage. Be sure that the drain cleaner you use can work with the septic tank you have.

Buying extra bricks can be a great idea so that you’ll be able to match them in the future if necessary. When repairs are needed, or you wish to add on to your home, it can be hard to get an exact match for your style of brick. Brick styles are constantly changing. Keep a surplus of the original brick on hand for future projects.

Home improvements can both positively and negatively affect the value of your home. Some home improvement projects do little to increase the value of your home. By applying these simple rules of home improvement do’s and do-not’s, you can keep from making a disaster that you will be forced to live with.

Why are you doing home improvement

Home improvement is something many people do for many different reasons. Some get tired of the same old look. Some just want to boost property values. Some people get great enjoyment out of physical labor. The following advice can help you, no matter why you want to start improving your home.

Think about using stain instead of paint on your baseboards for your next home improvement. On top of their classic appeal, they also give an aura of warmth. In addition, stained baseboards hide scuff marks and are easier to maintain than painted baseboards. A number of different stain colors are available to suit different styles of decor.

Dust all your accessories at least one time every week. Dust will build up and you may have allergies that make you sick. By dusting you will remove those allergens as well those pests such as spiders or ants.

Before spending a lot of money on so-called “quality” supplies for any home improvement, make sure to shop around for better deals. For example, quality home flooring can be expensive, but if you shop around, you should be able to find the flooring in your price range. There are bargain places and discount supply stores that will help.

Pick out a unique coffee table as opposed to a pre-made one. An old trunk or chest look great in the center of a living room and provide storage, also. Toss your magazines, coffee table books, a tray or other items on top to define the piece. You can do some amazing treatments, like throwing on a table cloth with a tea set for a countrified style.

Building materials can easily be stored between floor joists or ceiling rafters. This is the best place to store large and long materials such as two by fours. Just put some furring strips across rafters or exposed joists and store the material beneath them.

Always know where the gas shutoff valve is when you start any gas-based DIY project. It is critical that you take extreme caution in these types of repairs. Don’t cause a gas explosion or otherwise injure yourself due to carelessness.

A normal wood fireplace used for heating might not be such a great idea. While a traditional fireplace looks great, it is an inefficient heat source. Most of the energy is lost through the chimney. Additionally, fires use of lots of oxygen, and that’s not good for your health.

Adding windows and incorporating light into your room can create a more spacious feel. You can make your ceilings seem higher by positioning your window treatment a good distance above the windows.

You can really improve the appearance of your windows by simply replacing your window treatments. Over time, blinds become faded and shabby from everyday use. Installing new blinds gives your windows an instant face lift and is a great beginner home improvement project.…

Investment opportunities in recycling

Investing in recycling means investing in communities and economies across the country. That’s the powerful, simple truth that keeps green bankers passionate about their work. They believe that everyone should have access to curbside recycling, and that investment in closed loop funds will help make this a reality in communities across the country.

The waste and recycling industry offers several opportunities for someone looking to start a small business with a modest investment. You just need to find one or more waste materials that are being discarded that can be reused, resold, or recycled.

Recycling comes naturally to America’s beverage companies. They are designing our plastic bottles to be 100% recyclable, including the caps. They are making them this way for a simple reason: so our bottles can be remade into new bottles. But there is always more to be done, such as in recycling of aluminium cans. You can choose to invest in the recycling of aluminium cans. Even if you don’t have the needed capital to go into it full scale, you can still make money by collecting the cans for big recycling firms.

Because recycling programs are often thought of as a “nice to do” rather than a financial investment, they are often not given priority for budget allocation. In reality, however, effective recycling programs can generate revenue for an organization and payback the initial investment in as little as 2 years.

Interest in recycling is looping back around. That’s evident from the launch of the Closed Loop Fund, a budding $100 million effort by a group of large companies to invest in recycling infrastructure and, in the process, put more recycled materials into manufacturing supply chains. A company specialized in dumpster rentals in Waco has recently invested in the fund as recycling and waste management go hand in hand.

Recycling provisions in private equity funds is part of this initiative. Recently while Professor David Wessels presented his excellent venture capital and the finance of innovation research, we were reminded of one of the fund terms that often ended up being carefully scrutinized and negotiated by limited partners: the recycling provision. Due to underdeveloped recycling and waste management sectors in the region, it is worth a closer examination of the effect these important bans might have on investment opportunities in the United States.

What do companies do when recycling rates are hitting a plateau, but a demand for recycled manufacturing goods is on the up? It’s called the Closed Loop Fund. In just the past few months alone, nine major companies have put $5 to $10 million into the fund, an effort to accelerate the growth of recycling infrastructure by getting more recycled materials into the manufacturing supply chain process.

State agencies can commit to recycling 50% or more of construction debris in all state-sponsored building projects. This will help reduce waste in the construction industry as well as stimulate investments in construction recycling facilities for aggregates (concrete, asphalt, brick) as well as clean lumber, metal, and cardboard.

Such investments in plastics recycling may become increasingly common as the hundreds of thousands of tons of plastic scrap that formerly headed to China no longer make that ocean voyage. The political, economic and cultural climate in the U.S. makes it an appealing place to make investments in the waste and recycling industry. These reasons help explain why the sector is estimated to be worth $21 billion and employs over 450,000 people, while continuing to grow quicker than the rest of the economy. Politically, the USA is committed to hitting both domestic and international targets.

Houston, Texas based Waste Management, Inc. (WM) has formed a strategic investment with Recycle Rewards, Inc, a subsidiary of Recyclebank, which rewards people for taking everyday green actions with discounts and deals from businesses. According to WM, the investment brings together all players in the economy, from low-income households to huge corporations.…

mutual funds

It is quite easy to get caught up with your daily responsibilities at home and at work. At times, you do not realize that you are already failing to put any attention on other critical areas in making your financial life more stable.

People will tell you that the best time to invest is now. While there is some truth here, you also need to understand that the return is never what you can expect. This is why you always hear people say that investing at a young age allows you more room for mistakes and lessons.

It is never too late to start investing. Whether you are 25 or nearing 60, you are still able of making wise investments as you were 10 to 30 years ago.

Here are some of the investments you might want to look into.

Real Estate

You can invest in real estate by buying a residential or commercial property. Depending on your capital, do not just look at nearby locations but consider the entire nation as prices are not uniform in the USA. For instance at the moment Chicago real estate is still very
affordable nut other cities could be much more pricey.

What most people know is you can earn money by renting your property out. However, you can talk to your real estate agent and ask about real estate investment trusts or also called REITs. This is when many investors pool in money and purchase a property.


You can invest your money by buying shares of stocks. This allows you to be a part of the company’s success. Shareholders have a claim on the assets of the company they invested in. This may occur when the company decides to liquidate. Buy buying stocks, you also have voting rights as a shareholder. You have rights to received dividends as well.

Investing in stocks is more risky than other ivestments in our list so exert cautious when making such investment. First of all do not put all your eggs in one basket, diversify your stock holdings, you should have a minimum of at least 10 different stocks in your portfolio. Secondly be conservative rather than aggressive, place your money in solid establish businesses rather than the latest fad.


Bonds are issued by corporations, the government, municipalities, and other agencies. They act as a debt instrument whereby an investor loans money to an agency. As an exchange, the investor eventually gets interested payments plus the return of the bond’s value when if finally matures.

Like for stocks, an investment in bonds can be more or less risky depending how established the company issuing the bond is. So it is not the same to invest in a Tucson dumpster rental service company which benefits from continuous waste management needs in the city, versus a crytocurrency startup that could as well go banrupt tomorrow.

Mutual Funds

If you are the type who does not have time to keep up with the updates of your investments, a mutual fund may be the best option for you. A mutual fund is when multiple investors pool in a managed vehicle where someone invests your money in stocks, bonds and other investments.

The investment will definitely pay more when you start early. However, you have less room for mistakes you begin late. So as early as possible, try to at least invest in one of these platforms above. it can afford you the feeling of security and can save you from unforeseen financial difficulties. …

New York real estate

Prices are still rising in Southeast Asia. The trend is also on the rise in America, as well as in the major European capitals. According to Kale Realty, a major real estate broker based in Chicago, most major cities in the world will continue to see their real estate valuations increase in 2019.

Paris is expensive. Very expensive according to the real estate consulting company CBRE. But it’s nothing next to Hong Kong. The company compared the prices of the residential stock in the main metropolises of the planet. Hong Kong, the vertical city, prevails, despite extremely small surfaces. The price per square meter is approximately $13,356.

Despite the introduction of a special registration fee and tougher mortgage lending conditions, prices have continued to rise, up 13.5% in 2017 and 7.2% of the first half of 2018. Next comes London ($9,663 / m²) and New York ($7,941 / m²).

The cities of the Old Continent still share the top of the table, with a special mention for the British capital: In Europe we find that the residential property market in central London has rebounded significantly, with an average 86% increase since 2009. In the suburbs of London, growth over the same period has been a little slower (63%), a gap that is gradually being reduced, however an overall price increase of 14.8%. % was observed in 2016 alone, which gives investors a very significant growth outlook.

Istanbul, an opportunity to seize?

If Paris remains a city dominated by tenants according to the study, the capital has seen a real jump in the interest of foreign investors and now attracts more foreign buyers than in the last 15 years.

Among the cities with the cheapest residential real estate, Istanbul ranks first ($1,059 / m²). The fifth largest city in the world with 14 million inhabitants is perceived by CBRE as an interesting investment opportunity. Last year real estate prices rose by 15%, as did the rental market (+ 12%). Follows Johannesburg ($1,146 / m²) and Cape Town ($1,558 / m²).

US cities on the rise

The other conclusion established by this study is the price increase in the major US cities. In Chicago, they recovered by 2.2% last year and should continue on this path in 2019. The average price of a house in the former industrial capital of the country is $165,018. On the West Coast, it is the imbalance between supply and demand that pushes up prices in Los Angeles, not to mention the large number of single-family homes and the strict management of rents in the city.

Miami continues its singular trajectory with prices higher than 59% compared to the national average. A period of limited supply has pushed real estate prices up and a rise in new housing construction has recently generated a more sustainable level of price growth.…

Ponzi schemes

The words Ponzi Scheme mean that a fraudulent investment operation was created and implemented; where returns were paid to its investors from “existing capital or new capital was paid by new investors” instead of profit that was earned by an individual or organization running an operation. In most cases people who operate Ponzi schemes entice new investors by offering higher returns than other forms of investments; such as “short term returns that are unusually high or unusually consistent.”

The Ponzi scheme was named after Charles Ponzi who became famous and notorious for first using this scheme way back in 1920. It is important to note that Ponzi did not invent the scheme but his scheme took in so much money and hurt so many people that he was the first to be known for this kind of scheme in the United States. His scheme was based on the “arbitrage of international reply coupons for postage stamps;” however, early on he diverted the money that was invested in them so that he could make payments to earlier investors and of course, himself.

Basically, a Ponzi scheme is an investment scam that is created by a person in order to take money from investors and later on, disappear with the money. Ponzi schemes can go into the millions and billions of dollars. The success of this kind of scheme depends on the personality of the person conducting the scheme. He or she is usually quite dynamic, successful, trustful and communicates smoothly and effortlessly with others.

Keep in mind that there are five basic elements of a Ponzi scheme:

1. A promise that an investment will give an above rate of return and an explanation of how the investment will achieve above normal rates of return,
2. Credibility from the person running the scheme, convincing more investors to invest in the scheme
3. Returning the investment money to some investors with interest
4. Later, the pattern of investment returns are broken
5. Instead of returning the investment money and paying the promised return, the person or persons escape with the money and start a new life.

Another famous Ponzi scheme is one that Sarah Howe conducted in 1880. She was a feminist who lived in Boston. She promised women 8% interest on a “Ladies Deposit.” She touted that it was only for women; giving many women a feeling of safety. Later, she took the money and ran.

Then there was a Ponzi scheme in Haiti that happened in the early 2,000s. These were government-backed schemes touted as “cooperatives.” Many people invested in this scheme because they sounded authentic and safe. As a result, 240 million was invested in this Ponzi scheme; which turned into a historic swindle where many were robbed of their savings, in an area of the world that is so poor.

Still another example of a Ponzi scheme came from a Scientology minister by the name of Reed Slatkin. He presented himself as a smart investment advisor for A-list Hollywood residents and corporate bosses. From his garage, he cheated the rich out of almost 600 million. He then gave the Church of Scientology millions of what he swindled from others. All of this occurred in the late 1990s. In 2,000 he was caught and put in jail.

Then there was Gerald Payne, minister of Greater Ministries International, based in Florida, who cheated his congregation out of 500 million. This occurred in the early 1990s where he offered his worshippers investments in gold coins. Later, he created an investment plan that would double a person’s blessings from what he or she would invest in his plan and then later funneled the money toward the “church’s fake precious metals investments.” Later, he was caught, but most of those who invested in his scheme, never got their money back.

To conclude, Ponzi schemes have been around for years and in some areas of the world continue to bilk millions and billions of dollars from unsuspecting people. Always remember the old saying, “If it sounds too good to be true; it is!…

The Libor fixing scandal

The scandal which rocked the financial markets around the globe known as the LIBOR fixing scandal has done much to undermine the already low public view of traders and banks operating on financial markets across Europe and many other areas of the world. The LIBOR scandal centers on the fixing of exchange rates used to secure funds for banks and financial institutions in London and across Europe. A far reaching scandal, the London Interbank Offered Rate reports the average level of interest banks offer unsecured loans to each other every day. Small changes to the LIBOR and its European relative, EURIBOR, cause widespread changes to occur in interest rates charged for consumer and commercial loans taken out daily.

Before examining the scandal it is important to understand how the LIBOR works and what effects it has on global finance. The LIBOR is basically the average rate at what banks in London lend each other money without asking for securities of any kind, each day London based banks submit their interest rates for lending, for publishing and to determining the average lending rate known as the LIBOR. To calculate the LIBOR, data collectors Thomson Reuters remove the highest and lowest rates from the calculation before calculating the average lending rate from the middle 50 percent of those reported by London banks. When this calculation is published the worlds banks and financial institutions use the LIBOR as the basis for determining interest rates for lenders at all levels.

Although the LIBOR fixing scandal only came to light in 2012, the basis of the scandal reaches back to 2005, when traders at the British based Barclays Bank began to manipulate the LIBOR rate to increase the profitability of their trades. Between 2005 and 2007, traders at Barclays Bank regularly requested a specific rate of lending by the bank to be reported to increase their profit margins, instead of the true lending rate being published. A number of other financial institutions and trading companies quickly followed suit, with a total number of LIBOR and EURIBOR fixing requests totaling 257 being reported between June 2005 and June 2009. As early as 2007, US regulators report receiving information about unrealistically low rates being reported on the LIBOR, warnings that appear to have been initially ignored in a bullish financial market.

With the 2008 global economic downturn the LIBOR fixing scandal took a distinct turn, which led to the interest rates reported by Barclays being fixed to increase consumer confidence and limit the effects of problems with the global economy. During the economic downturn Barclays managed to appear financially healthy despite concerns about vast losses by the company on the financial markets, largely because of the LIBOR fixing the bank undertook.

Barclays was not the only bank to be embroiled in the scandal. Thomas Hayes, a trader with UBS was arrested in 2012. Hayes is reported to have manipulated the LIBOR and EURIBOR to make hundreds of millions of dollars of profit for UBS and earn himself large bonuses. Regulators across the world have now investigated and continue to look into fixing of Interbank lending reports in the US, UK, Japan, Canada and in the European Union. To date around $6 billion in fines have been handed out to financial institutions and trading companies, including a $453 million fine paid by Barclays for its role in fixing the LIBOR.

Other companies that have been fined for their part in fixing the LIBOR and EURIBOR include UBS, Deutsche Bank, JP Morgan and RBS, which has a controlling interest held by the UK taxpayer. Criminal charges have been brought against a number of traders and bank officials, with the chairman of Barclays being forced to resign because of the LIBOR fixing scandal.…

Bernard Madoff

From 1960 until he was finally arrested in 2008, Bernard L. Madoff was the chairman of Bernard L. Madoff Investment Securities LLC. Over the years, the company eventually grew to become one of the largest companies of its kind in the world. Madoff’s company gained a reputation for making amazing returns for all of their investors.

For many people in the investment world, it seemed that the returns that Madoff routinely promised and eventually paid to his investors seemed too good to be true. As with most things in life, when something seems too good to be true, it probably is. As it turns out, Bernard Madoff had been running the largest Ponzi scheme in history for more than three decades. It is estimated that Madoff investors lost a total of $18 billion when it was exposed.

An excellent reputation

One of the reasons the scheme was successful was the fact that Madoff ran a legitimate business for the first 15 years that his company was in existence. During these crucial years, Madoff was able to make many influential contacts that would eventually benefit him greatly once his Ponzi scheme was in full swing. Some of these influential contacts came in the form of politicians.

He also was on good terms with the Securities and Exchange Commission. Years later, Madoff’s friendship with the SEC would allow his scheme to keep running for an additional 16 years. The rich and famous flocked to Madoff’s company. Director Steven Spielberg, actor Kevin Bacon and Fred Wilpon, one of the owners of the New York Mets beseball team, all lost money as a result of Madoff’s criminal activities.

How the scheme worked

Somewhere around 1974 or 1975, Madoff made the decision to turn his business into a highly illegal finance scam called a Ponzi scheme. While his company was doing well already, the money that could be potentially earned from this type of criminal activity was far more than he was making at the time. The term “Ponzi scheme” comes from Charles Ponzi, a con artist who developed this method in the early 1920s. The scheme is started when a person or company promises investment returns that are far greater than any of the other investment firms. As an added incentive, the returns are promised in a short period of time. This makes the offer harder to resist for potential investors.

Investors will deposit their money into the investment company, believing that the company is using their money to make wise and profitable investments. In reality, the money is not being invested at all. Fake investment information and trading reports are created and given to investors to make them think that their money is growing. In Madoff’s case, a computer program was used to manipulate account statements and backdate trades.

Whenever an investor would request some or all of the money from their account, there was always enough money in the central fund to pay the investors, even though no profits were being made on the deposited money. This was due to the fact that people would usually not take all of the money out of their account at once. Therefore, money from investor A could be used to pay off investor B, and so forth.

The beginning of the end

In 1992, the SEC received reports of possible fraud going on at Madoff’s company. Two investors filed a complaint. Madoff returned their money to them. Because of Madoff’s stellar reputation, the SEC did not do any further investigating. The scheme continued until 2008. At the time, the economy in the United States was in a free fall, especially the banking and housing industries.

Because of this, a large amount of investors wanted to withdraw their money from Madoff’s company during a very short period of time. The success of the scheme depended on the fact that many people would keep their money invested to allow other investors to be paid off. However, with so many investors demanding their money at once, Madoff did not have the necessary funds to pay them. It was at this time that Madoff’s Ponzi scheme was finally exposed.

Arrest, sentencing and fallout

Bernard Madoff was arrested on December 11, 2008. He was charged with securities fraud. He was eventually sentenced to 150 years in federal prison. His family’s assets were seized and sold to repay money to Madoff’s victims. A trustee was put in charge of recovering as much of the money as possible and returning it to defrauded parties. Mark Madoff, the 46-year-old son of Bernard, hanged himself on the second anniversary of his father’s arrest. He had always claimed he knew nothing about his father’s criminal activities.…

The Enron story

Enron was born in 1985 from the merger of two companies specializing in the transportation of gas. At that time the energy sector deregulation including the gas market created a new competitive arena where companies fought aggressively for market shares. Then came along the need for trading and financial hedging tools.

Enron embarked on this new business in 1995 when they held a good market share, modernizing their methods in 1999 with the creation of EnronOnline, an electronic trading platform via the internet. Given its success, Enron extended its activity to the sale of electricity and also engaged in brokering many other products of all kinds: up to 1600 including metals, weather derivatives, communication products, wood, paper, water, etc …

In a few years, the company had become a major international energy trading player involved in a multitude of products. From a four billion turnover in 1989, they reached 100 billion in 2000, of which 90% came from their trading activities. Fabulous it seems, this is what we could tell by reading this story: deregulation may allow all this profit.

The CFTC indirectly supported this business by granting an exemption from monitoring and control of these activities, also known as a loophole, which is a flaw introduced in the legislation that promotes some market practices that could be abnormal or even fraudulent. The CFTC (U.S. regulator of the commodities markets) and the U.S. Congress under both Reagan and Clinton, were fervent adherents of the free markets with minimal government intervention. Hence they created such loopholes that experts called the London, Dubai or Enron loopholes.

In 1992, the president of the CFTC was Wendy Gramm, whom Ronald Reagan liked to call his favorite economist, took the decision to exempt Enron energy derivatives transactions from the CFTC supervision. Enron will greatly benefit from this situation, including by manipulating the markets until its final collapse.

The following year, Wendy Gramm resigns to join the Board of Directors of Enron. In 2000, a law supposed to regulate the markets, the Commodity Futures Modernization Act law, consecrated the Enron loophole: in the case of the energy and metals markets, the law exempted Enron from virtually all control by the CFTC of their OTC transactions (which do not pass through the regulated markets ), but also of their transactions on their electronic platform.

Even after the fraudulent bankruptcy of Enron, a number of deregulated electronic platforms were allowed to continue to operate until the bursting of the sub-prime bubble: there were up to eighteen in the United States, twelve of which were specialized in the energy market.

Enron’s profits were made possible by the combination of three mechanisms:
– use of sophisticated financial processes,
– manipulations to make unprofitable assets profitable,
– accounting concealment using offshore companies in banking and regulatory paradises as well as off-balance sheet operations.

In total Enron had over 3,000 subsidiaries in banking, tax, regulatory and legal havens to remove unprofitable activities from their consolidated balance sheet. JP Morgan was sentenced to pay a fine of $135 million for this fraud. JP Morgan was lending money to one of these offshore subsidiaries in order to buy a futures contract on gas or oil to be delivered several years later but paid immediately.

For its part, Enron passed control of an equivalent amount of oil or gas to another clandestine company managed in a secretive way by a subsidiary of JP Morgan. But no one delivered anything: it was in fact a disguised loan with no interest. Enron recorded the entire contracts with subsidiaries as a sale by artificially inflating its turnover. Between 1997 and 2001, seven such operations were found, involving a total of $2.6 billion. And there were many other similar frauds.

Why Enron executives engaged in such a large fraud? The most convincing answer is that they did it simply because they had the opportunity to do so, thanks to new mechanisms of the economy and financial markets that appeared at the time. Fraud was integrated as a means of management or as a permanent adjustment variable rather than at the margin.…