Between the Lines
Make Money Off Your Reputation by Failing to Live Up to It
Fraud is just a particularly dishonest form of short-term borrowing
It’s always sad when a bull market ends, but there are two tragedies: The textbook tragedy, in which a lot of people lose money; and the more novelistic one, in which a few people have their reputations utterly ruined.
In 1929, at the height of the crash, WASP establishment icon Richard Whitney strode onto the floor of the New York Stock Exchange and placed large buy orders for U.S. Steel and other major companies. He was backed by the Morgan interests and was doing what J.P. Morgan himself had done a generation earlier. It was a bit of an anachronism, but this is what an establishment is for: periodically doing something both meaningful and tactical, at some personal risk, in order to serve the public good.
Whitney was not, as it happens, a servant of the public good. He was a bad investor, and covered up his losses with loans and embezzlement.
This happens, and it happens a lot.
Fraudsters can get away with a modest amount of fraud indefinitely as long as they can also borrow through traditional means.
