U.S. elections and the Genneva case

The last couple of months have been great for anyone who enjoys a good dose of schadenfreude. First, in Malaysia we’ve had the implosion of the Genneva gold ponzi scheme. The LYN forums have had active threads on them for years. And for years we’ve seen dedicated Gennevarians pop up in the forum to defend the company and claim that it isn’t a ponzi scheme. But then after the raid on October 1st, all of them disappeared from LYN and instead regrouped to their Facebook page which actively censors dissenting opinions.

The amazing thing about the Genneva affair is how many of their so-called customers continue to insist that it is a legitimate business even after the raid. As the LYN crew is fond of pointing out, in Singapore Genneva customers sue the company to get back their money (and the company has repeatedly failed to mount a defense in court cases in Singapore). But in Malaysia, the customers seem likelier to sue the Malaysian Central Bank for killing their golden goose.

Even on superficial examination, their case doesn’t seem to make sense. Why are they repeatedly demanding the return of their gold when supposedly the vast majority of customers keep their gold in hand? Only the customers who have paid but have yet to receive the gold should be affected and if their claims of the company’s excellent track record were true, these would amount to very few customers. And what to make of their demands that their money be returned, when supposedly the hibah is discretionary and non-contractual anyway?

When challenged to explain how the company is able to sustainably offer returns in excess of 20% p.a., they resort to marketing buzz speak that mean nothing. Their favorite term appears to be “blue ocean” and they denigrate the intelligence of those who say that they cannot understand how the business model can possibly be sustainable. They also buy into the familiar conspiracy theories about how paper money is worthless and that the financial system founded on fractional banking is about to collapse at any moment.

Meanwhile, on the other side of the pond, U.S. voters have awarded President Barack Obama a second term with a rather impressive margin of victory. The fun here is watching the Republicans’ reaction to all of it. Apparently the Republicans really did expect to win by a landslide, Nate Silver’s widely respected statistical analyses and poll results notwithstanding. They really did buy into their own propaganda about how the media and the polls are all hopelessly skewed against them.

Note that I am not a natural Democratic fan. I am after all a fan of Ayn Rand and believe in individual responsibility. But the extreme social conservatism and religiosity of the Republicans in recent years have turned me off. That’s not to mention their growing anti-science and anti-intellectual sentiment. So I’m very happy to see that a majority of Americans do not agree with these views and that this demographic is likely to shrink in coming years.

What both cases have in common, apart from being very entertaining spectacles, is that they are both examples of both a closed and insular group soon deviates from reality as it doubles down on their core beliefs in spite of overwhelming evidence to the contrary. Even when it is contrary to their own interests. In the case of the Republicans, they need to drop their racist and anti-immigrant attitudes, together with the most extremist of the Tea Party wackos to make room for hispanics who are natural social conservatives. In the case of the Gennevarians, they need to break with the company and assist the authorities to recover whatever money they can from the assets of the company and possibly its directors and owners. But people hate to admit that they were wrong so the status quo is what you get.

Leave a Reply