Pot Calling Kettle Black, U.S. Authority Calls Online Poker Site a Global Ponzi Scheme

Sep 21 • Between the lines • 2622 Views • Comments Off on Pot Calling Kettle Black, U.S. Authority Calls Online Poker Site a Global Ponzi Scheme

Oh the irony. There must be many cynical readers of the various wires from Bloomberg, Reuters, The F.T etc who chuckled when they read the criticism of the poker site Full Tilt Poker. An indictment has accused three Internet poker companies; Full Tilt Poker, Absolute Poker and PokerStars and 11 people, including Full Tilt director Raymond Bitar, of various offenses such as; bank fraud, illegal gambling and money laundering.

The office of Manhattan U.S. Attorney Preet Bharara said in a statement;

In reality, Full Tilt Poker did not maintain funds sufficient to repay all players, and in addition, the company used player funds to pay board members and other owners more than $440 million since April 2007. Full Tilt was not a legitimate poker company, but a global Ponzi scheme.

The cynical amongst us, deeply critical of the stunning mismanagement central banks and policy makers have displayed since 2008, may question if it’s okay for governments and the banking system to peddle Ponzi schemes and to play fast and loose with trillions, (whilst treating those at the very top of the pyramid with billions), but not online poker firms who are simply a tiny, shrunken filtered down version of the Ponzi game play in play on the financial markets each and every day? The U.S. Attorney’s previous civil complaint did not contain allegations of the company defrauding players, or owners taking payments improperly.

Moving swiftly on the IMF has dramatically (and with perfect timing) offered a slam dunk for the Fed in its two-day meeting which starts tomorrow. The IMF has reduced it’s global growth forecast. This may provide the ammunition for the Fed’s chairman Ben Bernanke to regrettably ‘unleash his hounds’ and finally let QE3 loose to run amok through the global financial system. The IMF forecast is depressingly poor, yet possibly still wildly over optimistic.

Having repeatedly missed their own self imposed projections over recent years it’s safe to presume more of the same. This is the same IMF, in the form of the very media friendly Christine Lagarde, who have been suggesting that the central banks’ policy makers need to stop fiddling whilst Rome, Athens, Paris and Washington burns and organise bi lateral agreements on a ‘mega round’ of QE and bailouts. Ms. Lagarde needs to be careful phoning the hotel reception for room service whilst in the USA, the last vocal opponent of the current financial malaise and status quo was her predecessor DSK.

We’ve provided a link to the IMF report, the bullet points are;

  • Global growth forecast to moderate to 4 percent in 2011 and 2012
  • Advanced economies facing anaemic growth of only 1.6 percent in 2011
  • Multiple shocks combined with insufficient re-balancing stalling recovery

The most startling part of the narrative is their concerns that failure to act could cause a decade long recession. the IMF said in its September 2011 World Economic Outlook (WEO), “The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing.” The report says strong and coordinated action is necessary to avert a decade of lost growth in the advanced economies.


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“Strong policies are urgently needed to improve the outlook and to reduce the risks,” said IMF Chief Economist Olivier Blanchard. “Only if governments move decisively on fiscal policy, financial repairs, and external re-balancing, can we hope for stronger and more robust recovery.”


Any forex traders who decided to take a punt on Swissy appreciation this morning, after sitting on the sidelines for a week or so, must be licking their wounds..once again. The SNB apparently issued more directive that they’re about to raise their peg target versus the Euro to 1.25. The move in price versus CHF was instantaneous and parabolic. As stated before the Swissy is off limits, as a safe haven or tradable currency it’s about as useful at the moment as a Toblerone chocolate teapot. Sterling has in past hour (22:00) gmt suddenly collapsed versus the Swissy, then recovered its previous position, the dollar also suffered a massive losing spike versus CHF before recovering it’s previous price, no doubt both pair trades taking out a few thousand traders’ stops in seconds.

Due to the IMF report and the poor housing start numbers in the USA the leading USA indices pared most of their gains in the afternoon session. The SPX closed down 0.17% after being up circa 1.5% for the majority of the morning session. The SPX daily future is currently suggesting a flat open for tomorrow. Europe indices maintained their gains but the markets had closed as the SPX reacted to the IMF report. The ftse daily future is currently down circa 0.5%.

There are some key data publications that need to be observed tomorrow, the UK Nationwide consumer confidence survey could be revealing. There is a raft of info. from UK sources that could impact on the market, most notably the bank of England minutes and the current state of the UK’s public finances. However, the FOMC meeting will overshadow most of the micro economic news.

00:01 UK – Nationwide Consumer Confidence Aug
00:50 Japan – Merchandise Trade Balance Aug
01:30 Australia – Westpac Leading Index July
05:30 Japan – All Industry Activity Index July
09:30 UK – Bank of England Minutes
09:30 UK – Public Finances Aug
09:30 UK – Public Sector Net Borrowing Aug
12:00 US – MBA Mortgage Applications Sept 16
15:00 US – Existing Home Sales Aug
19:15 US – FOMC Policy Announcement Sept 21


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