PC Cooling Specialist Zalman Goes Bankrupt Due To Fraud 208
An anonymous reader writes Zalman's parent company Moneual's CEO Harold Park, and vice presidents Scott Park and Won Duck-yeok, have apparently spent the last five years producing fraudulent documentation relating to the sales performance of Zalman. These documents inflated sales figures and export data for Zalman's products. The reason? Bank loans. By increasing sales and exports Park and his associates were able to secure bank loans totaling $2.98 billion. Someone has finally realized what has been going on, though, triggering Zalman's shares to be suspended on the stock market and the company filing for bankruptcy protection. The questions now turn to how this practice was allowed to continue unnoticed for so long and how the banks will go about getting their near $3 billion back.
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That said, Zalman will be missed as a passive cooling solution for many.
They wont be missed by me, i've had too many bad experiences with their products:
- my Zalman GM1 mouse emits a constant high pitched electronic noise
- My CNPS5X has a high pitched "whuring" fan noise. Louder than any other fan in my PC, even at lowest RPM. http://www.zalman.com/eng/prod... [zalman.com] . The contact plate also had metal fillings left on it, had to sand it down. The contact plate wasnt level and the copper pipes "dig" into the cpu.
Not a great experience i've had, shame because they are so tempting with t
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http://www.zalman.com/global/p... [zalman.com]
Re:Uncool (Score:5, Informative)
Presumably sold off to multiple interested parties by a curator if it gets to that stage.
All of their coolers - and we're not just talking fans here, but their vast library of heatsink and heatpipe designs (both functional and aesthetic targets), cooling pads, etc. will be an easy target for either a competitor, or for a company to keep Zalman going and focus only on those. It's what Zalman's known for - to the point of their own website suggesting for the VGA products that "Zalman cooler is equipped with VGA card", rather than the other way around ;) - so that would make some sense.
The peripherals.. well, most of them can probably die off. Not too many people seem to care about Zalman mice, keyboards, USB sticks, headsets, etc. - they're either a dime a dozen or too fancy for their own worth, and only a few get to be big brand names in that arena.
There's some niche products like their virtual device storage options that would make a good complementary offering in WD's lineup.
Given their financial numberfiddling, I can't help but imagine that some divisions were used to prop up others to help make things look good - so selling it all together seems, to me, unlikely; except for purposes of selling it on again
(yes, the IP vultures, whose day job is to make up ways in which popular products violate their IP in the hopes of landing settlements because that's cheaper than bothering with the court case even if you think they're on extremely shaky ground)
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I would love if some other company took over making something like the Zalman ZM-VE200. A hard drive that can do a virtual CD-ROM from ISO files. There have been some flash drives that do this, but none that have the storage capacity I was looking for.
Really, I'd like to see one of these that would do a virtual hard drive for EFI booting of OS X images or Windows 8.
Re:Uncool (Score:5, Informative)
I am familiar with US / western bankruptcy law. This is Korea so your mileage will vary.
First, the issue is one of finance, not operations. If that is true, that means the company is still viable – that is worth more as a operating entity than being sold off for parts. So it will probably keep on going.
Second, from a brief scan of the article, there are no allegations of fraud against Zalman. It is against Moneual, which owns 90% of Zalman's shares. It sounds like it is not the court seizing Zalman's assets, but freezing Moneual's assets.
Technically as a independent entity, Zalman should keep on ticking like it has. This assumes that Zalman did not assist Moneual's fraud. Since Moneual had a controlling interest in Zalman that is a big assumption that needs to be checked out. Probably another reason why the shares are frozen.
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I am familiar with US / western bankruptcy law. This is Korea so your mileage will vary.
Well its Korea so it'll involve having a big meeting with everyone; the people at the top can't make a decision without consulting with everyone all the way down to the janitors.
Then they will all get very very VERY drunk.
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You know, judging by how their manufacturing economy has been going for the last decade or so ... I would say they might be on to something.
Hyundai has caught up to Honda in terms of reliability and customer satisfaction. They also do some other major heavy manufacturing.
In common with Ho
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I wonder how their IP will be sold once this is all finalized with the banks. I'm unclear of the process.
The books (the real ones) will be independently audited; profitable divisions will be sold off with some insanely clever financial jiggery-pokery making sure that they exit the current Zalman corporate structure with a minimum of debt; probably the IP will be sold off to the highest bidder separately to those successful divisions; the remainder - the unprofitable elements and as much of the debt as possible, will be wound up in a bankruptcy proceding.
In cases like this, the component parts of the company ar
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How does that resolve anything, other then ensuring that Moneual cannot pay back it's creditors.
In what sense does the company owe the public anything, though they do own the banks who extended them the lines of credit. It's not like the public were the ones loaning them money.
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Fraudulent accounting is a problem, and no doubt the banks are angry and the books are thoroughly cooked; but none of that has any direct impact on Zalman's products, consumer perception of them, or how profitable or unprofitable Zalman's day-to-day operations would be. It is unlikely that they are even remotely profitable enough to make good on the loans obtained by fraud; but if they are otherwise healthy the cred
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Part of the bankruptcy will be to get as much cash back as possible. That's typically done by selling the assets and technologies of the company, along with things like brand names. The buyer does not assume any of the original company's financial responsibilities.
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I wonder how their IP will be sold once this is all finalized with the banks. I'm unclear of the process.
Maybe they'll be bought over and continue (almost) as normal, isn't that what happened with OCZ when they went bankrupt?
Then again, I don't think the OCZ brand came with baggage like a fraud case...
OCZ's entire catalog was essentially fraud.
Shit simply didn't fucking work as advertised.
That raises the question: (Score:5, Funny)
Will he be sent to the Cooler?
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Everyone knows better than to click gif links on Slashdot.
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I did, and it was funny.
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I'm surprised that no one caught on. At $10 a pop, they'd have to sell three-hundred-million cpu coolers even if they had no operating expenses. Factor those in and it's probably more like eight-hundred-million.
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You don't need to have prior profits of $X (or even revenue of $X) in order to borrow $X. You just need to be convince the lender that you will have enough to meet the repayment terms (which will end up being more than $X of course, but could be over the next 10 years...)
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This has nothing to do with Zelman selling $10 CPU coolers. No acquisitions of fraud against Zelman yet.
This is about Moneual and the fraud they committed. Moneual just happens to own 90% of Zelman.
3 billion on a fan company? (Score:2)
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Even with inflated sales numbers, I'd (probably naively) think that a bank would get nervous about that sort of borrowing unless they had some idea of th
Re:3 billion on a fan company? (Score:5, Informative)
Partial answers are given in this article [joins.com], where a whistleblower answers some of these questions. Some of the answers seem like they have suffered in translation, unfortunately.
By the way, the fraud was not committed by Zalman, but by the South Korean company, Moneual, that bought Zalman in 2011.
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Assumptions made here:
- 3B dollars were loaned from multiple banks
- the money wasn't loaned all at the same time.
- we might find out that some loans were taken to cover others, which is a well known and common practice.
- some money might have come from other sources (not necessarily banks).
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Except TFS makes this sound much more like a ponzi scheme to inflate the stock value.
I'm pretty sure you don't borrow several billion dollars without either a) knowing you have an awesome business plan and will pay it back, or b) knowing you have a terrible business plan and won't.
I should think it takes some pretty fancy fast talking to borrow that much money. And if it was predicated on writing fraudu
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I don't think it was Zalman but Moneual that got the loans. They own Zalman
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don't get me wrong, i love their fans... but come on, it's a fan.
those exec and investors are dreaming if you think that market is that large.
Its not just fans, they also make pretty good heatsinks. A lot of those heatsinks are pure copper. So Zalman must get through quite a lot of the stuff and it isn't cheap.
For example, I used to have a dual CPU machine with two large Zalman pure copper heatsinks, the sort that are really big and have fins in a fan-out arrangement. In total there was about half a kilo of copper hanging off of that motherboard. They didn't even need fans on them, just the case fan was enough.
Manufacturing this shit must involve
yeah but (Score:5, Funny)
In these situations everyone should just chill and take it easy. Clearly we don't need to let things spin out of control. I'm sure Zalman's lawyers can take the heat.
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But it looks like management really blew it. Will be a cold day before investors warm up to it again.
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Just take some time and let is sink in.
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Then fan it out.
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Let what sink in? The fact that 3 guys defrauded banks for a cool billion dollars each? The fact that a company with a large fan base is getting sucked under? The fact that this will have a chilling effect on the PC market? Obviously the banks blew it by not noticing the fraud occurring, yet tax payers will drawn in to fix the banks. Tax payers should really be hot about this. I really hope these guys get burned, or at least flow right into a long brisk term in "Federal Pound me in the Ass Prison"!
Int
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Auditors, auditors (Score:5, Interesting)
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Zelman is a public company and I assume has a vigorous outside auditor.
Moneual, which committed the fraud, is not a public company. I would assume that their audit standards are lower.
Of course, even public companies can commit financial shenanigans.
http://www.amazon.com/Financia... [amazon.com]
Re:Auditors, auditors (Score:5, Funny)
Moody's has rated this post AAA.
This post is fully insured by AIG.
(That said, South Korea has its own flavor of structurally problematic businesses, most notably the rather fraught interactions between the Chaebols and the banking sector and a certain amount of 'too big to fail', against which reform has had limited success.)
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The occurence of this sort of fraud in the 19th century led to the emergence of the role of auditors, whose responsibility is to ensure that the accounts are telling the truth; as a result this sort of fraud is rare in Western countries. The question now becomes one of who the auditors were - were they ones who should have done the job, or were the banks fooled into accepting a poor audit. In either case however the auditors will be on the hook unless they can prove that the CEO was doing a VERY good job of hiding the facts.
Auditors do not have omnipotent powers. Specifically, management and sysadmins could easily fool them if they so chose to. I maintain some large databases and could easily just hide records from the auditors when they came around. I don't and have no reason to, but if I were up to something? The effort would be trivial. Likewise, management could enact rules and policies that would force me to hide such info. It would be suspicious, but there are plenty of sysadmins that just do what they're told out there,
Re:Auditors, auditors (Score:4, Interesting)
I was on the brink for being fired because I didn't want to hide some data. Luckily, HR was on my side, which is almost unheard of, but thank God for the almost 1 GB of e-mails I had religiously saved to have my ass covered with full plate armor level 99.
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Auditors are there to prevent stupid and/or low level employees from robbing the company. When the CEO is involved? The auditors are useless.
I'd say that it's actually the opposite situation. Auditors are there so that all of the information doesn't come directly from upper management. If management needs the cooperation of all of the rank-and-file to commit fraud, then the whole organization is a criminal operation or somebody's going to blow the whistle.
Upper management are the people who benefit the most from fraudulent schemes like these. How many low level employees are going to take on criminal liability so that the CxOs can roll in their
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Actually, while your comment is correct in most cases, it's not applicable here. Apparently, according to a whistleblower, upper management paid lower level employees very generously to keep their mouths shut.
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I agree no system is perfect, but to some extent that's the job of enterprise risk departments in auditing firms: They look to determine who has access to the accounting databases etc, whether those accesses are logged and traceable and so on. They also look for discrepancies in the way those databases are managed and if they find them are obliged to recommend a more thorough financial audit rather than relying on electronic systems. If the entire company is systematically deceiving them then there's lit
easy (Score:2)
They shouldn't be getting their $3 billion back: they took a foolish risk and need to suffer the consequences.
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They shouldn't be getting their $3 billion back
It seems to me that the auditors, who passed the company accounts as being "true" should be held liable - and then get punished for negligence.
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They shouldn't be getting their $3 billion back
It seems to me that the auditors, who passed the company accounts as being "true" should be held liable - and then get punished for negligence.
That would depend on what type of "opinion" the auditors issued on the company's financial statements. However, if they did issue a clean opinion, then like in the Enron and MCI scandals, they will be held accountable. Then again different countries have different accounting standards, so what applies in the US or even Europe may not apply in SE Asia.
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They should, if the banks hired auditors that made such a guarantee and paid accordingly. The banks should also have the option of hiring auditors that don't make such guarantees, pay less for the audits, and assume the risk themselves.
The point is: this kind of risk management is up to the banks. Tax payers shouldn't have to pay for either bailing out the banks or m
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They shouldn't be getting their $3 billion back: they took a foolish risk and need to suffer the consequences.
I respectfully disagree. They are entitled to get their money back, per the contract that was signed. All debtors of the company have the same entitlement to get their contractually obligated money back.
Now, where that money comes from is a different story. Not a dime of it should come from anybody that wasn't directly involved in the fraud. Any executive/board level people that were involved should be stripped of any and all assets, then the company should be liquidated, restructured, or whatever it t
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That's my point: there is no money there; it's gone.
Actually, none of that is true either (in addition your misuse of "debtor"). You aren't always entitled to get your money back under a contract, and creditors have different priorities.
Re:easy (Score:5, Interesting)
The world sure would seem more just if the banks suffered more, right? Unfortunately, it's not that simple.
The loans were made specifically on the basis of Moneual's revenue statements. That is, the banks were trying to learn from mistakes they made last decade, and were relying on audited sales figures to make their loans, rather than "it's a technology company, it must be magic" like they were ten years ago. Unfortunately, the company lied about its sales figures, and then the auditing firm confirmed those falsified numbers. I'm not sure why the banks involved "should" have known that Moneual was lying and the auditing firm was incompetent. Maybe it's different in South Korea, but in the U.S., that kind of screwup would put the company's executives in jail for many years, and would lead to crippling fines and lawsuits for the auditing firm (how's Arthur Andersen doing these days?), so income statements and balance sheets tend to be considered fairly trustworthy.
Furthermore, bank loans like this are almost always collateralized by company assets, so in the event of default the bank gets first go at anything left over. Only large, well established companies can get away with issuing unsecured debt without crippling interest rates. Secured debt is precisely why lending to a startup (the Korean parent company is only four years old) is not a "foolish risk." Seriously, think about a world in which banks were not allowed to recover assets from their debtors. Why would any bank issue a loan, or at least a loan without double digit interest rates?
Actually, you don't have to imagine this - just look at the interest rates on a credit card, which is unsecured by any collateral. And before you tell me that those rates are so high only because banks are greedy, compare the credit card interest rate to the interest rate on a mortgage. Both credit cards and mortgages are issued by the same greedy banks, yet one usually has an interest rate of 15%-20% while the other has an interest rate of 4%-5%. The main reason for this difference is the fact that the mortgage is collateralized by the underlying house. That is precisely why lending $200,000 to a couple that makes $60,000 a year is not a foolish risk; the bank knows that it can get most or all of its money back by foreclosing on the house.
And lastly, how would you feel if the same logic got applied to every other fraud victim? Do you find it just as easy to say that the victims of Bernie Madoff "should" have known that something was suspicious, and that those investors took a foolish risk and should suffer the consequences? Why should these fraud victims (and make no mistake, the banks are fraud victims in this case, according to statements from at least one Moneual's own managers) be treated differently just because you don't like them?
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Are you daft or something? Nowhere did I say that the banks shouldn't be able to recover money from the perpetrators of the fraud. But that money is gone. That's why they need to eat the $3b loss themselves.
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And then they'll pass their losses on to the rest of their customers, and essentially we socialize the losses of corporations.
In the end, that doesn't really serve anybody except the bank, because they're not accountable for their own risk and due diligence.
Kind of like when Wall Street got bailed out of the mess they created with their own funny money problems.
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Correct.
False, because those customers will switch to another bank if they are not getting a good deal.
Blow (Score:2)
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Not even that, they make aftermarket versions of those. Not a single manufacturer makes devices with a Zalman cooler, only casemodders and those that put together their own computer do with the occasional repair or 'noise reduction' DIYer.
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You might want to do some research. Zalman does indeed make OEM heatsinks and fans, along with many other products not directly related to PC cooling.
One would think.... (Score:2)
One would think that before lending $3B, banks would ask to see audited financial statements. If they didn't, then they lost this money through their own negligence. If they did, then the accounting firm the provided the audits is liable (assuming it gave clean opinions). Neither of those mean the company itself wasn't fraudulent. I wonder if it was truly banks that made these loans or venture capitalists chasing after something that was obviously too good to be true?
False poorly written article (Score:5, Informative)
how the banks will get their $3 billion back (Score:2)
Higher fees to customers, less interest, ATM fees, credit card fees, checking fees, yadda yadda yadda. Banks have ways to fleece people like crazy.
If you want to rob a bank, you need a gun. If you want to rob the world, you need a bank.
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If your bank is so horrible, why do you continue to do business there? In the 14 years since I got my first checking and savings accounts, the only fee I have ever paid is a $7 fee to print a spare box of physical checks.
Unless you live in an extremely isolated rural area, you almost certainly have access to a not-for-profit credit union. Heck, even if you are in an isolated area, most credit unions will allow you to deposit checks by mail, and to make all other transactions via the Internet. At one poin
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Umm, I'm pretty sure that if you end up in jail and/or bankrupt, you did it wrong.
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Not it you stashed a good chunk of it in offshore accounts and your jail time consists of a few months in some minimum security country club.
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No one doing this shit ever believes they'll wind up in jail or bankrupt. It's like the Dilbert, where PHB insists that even if he winds up being wrong in the end, at least he's right at first. [dilbert.com]
Re:Just (Score:4, Insightful)
No. You're right that if you end up in jail, you did it wrong. But if you end up bankrupt, well, that's normal and shows you're good at taking risks. Lots of entrepreneurs wind up going through several bankruptcies. When they do the bankruptcy right, they still come out rich, and have something else already lined up. I know this sounds insane, but it's really quite normal. Fiscal responsibility, the kind we normal wage earners have to maintain, is a sign of not taking risks. It's a negative attribute, as far as the VCs are concerned. (Until it's their money being lost.)
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It's indeed "capitalism done right" if the banks don't get their money back: the people who were careless get punished automatically by the market. The nice thing about that is that the punishment is automatic and appropriate: you make a bad decision, you lose your money.
In non-capitalist systems, the people investing in fraudulent companies use other people's money, so they don't get punished automatically. Here's an example of how that works: http://en.wikipedia.org/wiki/3... [wikipedia.org]
Re:Just (Score:5, Insightful)
Except that, of course, in modern capitalism banks are too big to fail and take these risks because they know it's not their own money that's at stake, but that of tax payers.
But well obfuscated.
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Except that, of course, in modern capitalism banks are too big to fail and take these risks because they know it's not their own money that's at stake, but that of tax payers.
But well obfuscated.
More like simplified. The people whose money was lost were bank customers, the ones who lost it were bank employees. All the customer can do is choose a bank as best he can based on the bank's reputation. It is his money that is lost because the bank handed control of it's money to a bunch of morons. So the market punishes the customer not the moron who made the bad decision. It is the law that is supposed to punish the bank employee. However, in view of the fact that not a single bankster seems to have bee
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All the customer can do is choose a bank as best he can based on the bank's reputation
And that's why we have the FDIC. Because when banks go under and deposits aren't guaranteed, there is chaos all about as people lose their homes and then their jobs.
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If my bank makes a bad loan, I don't lose any money; the amount in my account stays the same. The bank may have to reduce interest payments, but that's not a loss: I simply switch to a different bank.
If you let a bank "handle your finances" you're a bloody fool anyway; most banks don't even pay enough to cover inflation. Ban
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That's not capitalism; that's progressivism and financial regulation; it's what Democrats preach, and both Democrats and Republicans practice.
Hence my point: let banks eat their losses and let the market take care of this.
But well obfuscated indeed.
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Agreed. How dare they punish this job creator!!
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Evidently, the Anonymous troll has never lived in the USSR...
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Capitalism done right.
Sorry fag, it stopped being capitalism the moment they started lying
Wait, you're saying it stopped being
an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
the moment they started lying? This was very much a case of private owners doing something for profit.
I think you're confusing it with the ideal free market, which assumes well-informed decision-makers. Do please try to be accurate when you are correcting others.
Re: Just (Score:4, Informative)
Classically, capitalism relies on producing goods that people want at prices people are willing to pay for them. It relies on consumers being rational actors in their own self interests. Deception throws the whole thing off; you can make rational, selfish decisions if important data needed for your purchase decisions is withheld; hence consumer protection laws.
Re: Just (Score:5, Informative)
Not necessarily. Elevated prices act as a "release valve" on demand; the higher things are priced, the less consumers are willing to buy them. In the aftermath of the Katrina crisis, Americans changed their driving habits significantly to reduce the need for gasoline. Without elevating prices, shortages become complete scarcities, and this happens often in South American socialist states with centrally planned economies, such as Venezuela.
And a note about collaboration: cartels are a function of lassaiz-faire economics, not free-market capitalism; they skirt the organic supply-demand relationship of capitalism by introducing artificial price points, when price fluidity is an essential component to capitalism.
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And a note about collaboration: cartels are a function of lassaiz-faire economics, not free-market capitalism
I think this is the real important point here: many fans of laissez-faire economics call that "real capitalism". According to them, you can't say capitalism is a failure, because it simply hasn't been tried yet. Any government interference makes it not really capitalism anymore. But the one gem in capitalism, the one really, truly unmitigatedly good thing about it, is the free market. But with everybody looking to dominate the market in some way, the only way to keep the market free is to regulate it in a s
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One thing that's currently regulated is "anticompetitive behavior". One example of such is lowering the price on your product enough to drive the competition out of business, absorbing the loss with your (presumably larger than theirs) cash reserves, and thereby becoming a monopoly provider.
Would you consider that behavior to be force, fraud, or okay? (Seriously, I'm curious how you would classify it. I could see arguments for each; they're pretty broad categories.)
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Cartels are collaborative efforts to raise prices through collusion. This only succeeds when the cost to enter a market is sufficiently high. It rarely survives long term, and crumbles horribly when the cartel breaks apart. Just watch OPEC as the US becomes the largest oil producing nation, not part of the cartel for a nice view of how cartels stop working.
The problem is, we are too fucking impatient as a people to wait for market forces to change the landscape. However, if you're aware of your surroundings
Re: Just (Score:5, Insightful)
So by your definition if I break into a house and steal everything, then sell it at my store... Thats Capitalism.
Sorry, you are wrong. What they have done is not capitalism, it is fraud and IMO Theft.
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I think you're trying to say is they haven't done good capitalism.
Literally the definition of capitalism is
an economic system in which trade, industry, and the means of production are largely or entirely privately owned and operated for profit.
(cite for that exact phrasing: http://en.wikipedia.org/wiki/C... [wikipedia.org]).
The word owned there is relevant. Theft is a subversion of ownership and thus stealing can legitimately be called anti-capitalist.
That said, the GP wasn't defining capitalism, he was saying capitalism relied on profitable manufacturing of goods. I would clarify that this is one of several things it relies on, I don't disagree that ca
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Does capitalism depend on people being truthful all the time?
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
Re: Just (Score:4, Insightful)
Does capitalism depend on people being truthful all the time? Somehow I don't see that working. I thought the robustness of capitalism came from relying on everybody to be selfish bastards.
That depends on what you mean by 'capitalism'(many people who use the term do mean something, though often not the same thing, so it's pretty rhetorically slippery).
Typically, when people say 'capitalism', they are implying 'free market' and implicitly or explicitly extolling the virtues of 'economic equilibrium'. This is where truthfulness becomes a direct requirement. The idealized model of a free market equilibrium requires rational actors, perfect information, absence of market power, and the like. Lying is about as aggressively contrary to perfect information as you can get, since it's usually a calculated attempt to ensure even more asymmetric information in the liar's favor. And the demonstrations of asymmetric information leading to market failure(both historical case studies and in theoretical models) are numerous.
So, while any real-world implementation can't rely on people to be honest, or even assume that the cheats will be caught all the time; there are good reasons to suspect that dishonesty imposes both direct costs on the victims of fraud and an overall drag on the market efficiency, so there is a strong incentive to punish, and attempt to minimize, dishonesty and fraud.
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The requirement for "perfect information" is a straw man created by people attempting to tear down capitalism. "Perfect information" is impossible.
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It's a 'strawman' in the same painfully weak sense that ignoring friction when a physics class starts talking about parabolic motion is an attempt to tear down Newtonian mechanics. Yes, it's an abstraction that doesn't exist in
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Of course, not. A liar will be caught — and pushed into bankruptcy. The banks will be punished for not being sufficiently careful by losing their monies and their customers (not taxpayers').
The company will, likely, be sold or otherwise placed in control of new management, which might — as Mitt Romney was doing before entering politics — turn it around into making profit again, possibly even repaying the debts.
That is, indeed,
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Rational action involves behaving in accordance with one's understanding of available information. Actors do not become irrational acting on bad information.
That's the advertising. In practice, communism is a particularly bad flavor of tyranny that relies on force and deception.
__People are individuals, and range from habitually honest to habitually dis
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I'll take free market capitalism over socialsim/communism ANY DAY!
At least in a democratic form, you have the ability to do better.
Under socialism, there is no reward, for doing better, and you become
LAZY, quality of work, goods & services suck.
You mean a free market capitalist democracy where wealth steadily gathers into the hands of an elite clique of super wealthy individuals with the result that the free market capitalist democracy inevitably evolves into a plutocracy where the clique of hereditary plutocrats (aka. the 1%) step on anybody who seeks to rise by his own merit while the underclasses become steadily impoverished. This is usually followed by a revolution of the underclasses and the free market capitalist democracy is replaced by som
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In your first statement, you make a false dichotomy. I'll take getting handed 2.5 million bucks in twenty-four Scooby-Doo lunch boxes over Germany invading Russia any day.
Your first statement is about "free market capitalism", then your second one is about something with a "democratic form" -- these two things are not related.
In your third statement, you're confusing Socialism with Communism.
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Spending your own money is for peasants.
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I think it's also a type of bird.
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Banks are on the hook? Too bad for them, someone in the banks organization didn't do due diligence.
But they probably got a nice fat bonus for making the loans.