Wednesday, May 25, 2005

Republican Blowout Scam

Teresa Nielsen of Making Light has the Republicans pegged.

Huh. I've suddenly realized that I know the form of this scam: it's a blowout.

Here's the deal: Your basic blowout starts when crooks take control of a legitimate business that has a good credit rating, most often by entering into an agreement to buy it from its original owners, and possibly making a token initial payment.

In the next phase, the crooks start placing large orders for easily liquidated merchandise with the business's regular suppliers, and also with new suppliers who think they've acquired a valuable new customer. And since the orders are coming from an established business with a good credit rating, the suppliers don't ask for payment up front.

Meanwhile, the goods are being resold as fast as they come in, often at a fraction of their value. It's hugely wasteful, but the crooks don't care. Essentially, they're selling off other people's stuff and keeping the money, so anything they make off the deal is pure profit for them.

The suppliers send in their bills in due course, and meet with delays in payment. That's not an uncommon thing; and in the meantime, nobody wants to lose a customer that's obviously doing so much business. It takes some time for suppliers to start balking, and more time for them to start aggressive collection procedures.

At that point the business's new owners vanish, and all the money vanishes with them. Since they've never actually paid the agreed-upon price for the business, it reverts to the original owners. Unfortunately, what they get back is a plundered company that's deeply in debt to its suppliers and has a wrecked credit rating.

Thus with the national situation. The looting has been swift and efficient, but it's taken a while for the full extent of the plundering to become apparent. We're going to be feeling this one for a long time to come.


Blogger Kyle McCullough said...

But is it really a 'scam' when everyone knows what is going on? 'Scam' implies a certain amount of subterfuge. If the victims are helping the crooks with their bags, holding the door for them, joking and laughing about how deep in dept they and their children are going to be, throwing rocks at the police.... Huh, I guess Americans really are a lot like the people of Maybury.

9:59 PM  

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