The Hindu Business Line : When truth can be the deepest delusion

Con jobs and deceptions may never end, because ``they obligingly fill a particular need and satisfy a particular market,'' says Fakers, Forgers & Phoneys: Famous Scams and Scamps. Banks and other financial institutions are vulnerable to frauds reminds Nasty Riches, even as The New Golden Age cautions that "Bizarre events, talismans of an impending crisis, occur every day."

Scams come in all forms, as you can check among the nearly 6,000 finds that Google News offers. For instance, "Law enforcement is warning East Texans to be watchful for a clever new scam involving jury duty," says www.kltv.com. From Down Under, Courier Mail reports of `$250,000 stolen in rego scam'; the alleged offender, a transport employee, is said to have skimmed the money from motorists' car registration payments over more than four years, and "used some of the money to fund a five-week European holiday and to buy various items — including preserved insects and ornamental swords — on eBay". Daily Times, Pakistan says, ``SC resumes hearing in ISE (Islamabad Stock Exchange) scam case tomorrow''. Online job scam uses global hotel chain's logo to dupe victims, one learns from Gulf News, United Arab Emirates.

And there are lots more, such as: `Bogus letter scam in Wales' (www.newswales.co.uk), `More may be named in airport scanner scam' (Nation Multimedia, Thailand), `Police warn of fundraising scam' (StarPhoenix, Canada), and `Six netted in big ATM card scam' (Kathimerini, Greece). From closer home, though, we have a variety of scams, with prefixes ranging from salt to rice, IPO to photo ID card, job to cash-for-questions, and land to stamp paper.

"The psychology of hoaxes, and of the hoaxed, is as intriguing as their motivations," writes Magnus Magnusson in Fakers, Forgers & Phoneys: Famous Scams and Scamps, from Mainstream (www.mainstreampublishing.com). "Greed, a grudge or glory, compulsive opportunism, sibling rivalry, pure mischief, a desire to be someone or something else — all these have been identified as motives for forgery. Yet some of the fakers are every bit as skilful as the people or the works they copy."

The book is an anthology of 16 cases, grouped into four sections, namely, art forgeries, archaeological frauds, secret lives: Imposters and hoaxers, and literary forgeries. Con jobs and deceptions may never end, because `they obligingly fill a particular need and satisfy a particular market,' finds Magnusson. For one, scams make `excellent yarns' and great news. As the author concedes, "It is a pleasure to read about the ingenuity and diligence of their perpetrators and the detective work which finally exposes them." People have `a sneaking admiration for the rogues,' he says. Weird it may sound, but, at times, people like to see the hoaxer get away with it, "especially when the hoax pricks the pomposity of learned institutions and self-appointed arbiters of behaviour and taste."

Plus, there are those who `desperately want to believe the hoax', thus becoming `sitting-duck targets'. Credulous people can be persuaded to believe anything, frets the author. "There seems to be no end to people's gullibility, no matter how crude the forgeries might be."

The book ends on an enigmatic note, thus: "In the shadowy, illusory world of fakes, forgers and phoneys, truth is the most elusive and the deepest delusion." That can well be one more reason why scams manage to endure all investigation and research.

Systems do not execute themselves

M. P. Singh, an ex-banker, has compiled two dozen `real life stories on financial frauds' in Nasty Riches, from Prakash Books (www.prakashbooks.com). The book opens with `juggling funds' - a case about one Patel who manages to get loans from bank by pledging `old refrigerators, which neither had compressors nor any market value'.

Then comes Rattan who flicks transport receipts and converts them to their money's worth. Suri rushes in with forged travellers' cheques and dupes a bank branch in Connaught Place; Roshan, a manager in the Inspection Department of a bank, submits cooked up bills; and a currency racket surfaces in a chapter titled `tainted honesty'. Read also in the fast-paced book about kite-flying, real-estate scams, and the like.

Banks and other financial institutions are vulnerable to frauds in spite of the presence of foolproof systems, notes Singh. Since systems do not execute themselves, it is necessary to learn how and why things go wrong, he insists.

`Lies, damned lies, and economists'

Before you lose hope about the safety that systems can offer, here is The New Golden Age by Ravi Batra, from Palgrave (www.palgrave.com), a book about `the coming revolution against political corruption and economic chaos'.

The first priority of Batra is poverty, which continues to be widespread `in spite of impressive economic strides'. Poverty is not just a Third World cancer, he declares in chapter 1. "In fact, the richest country, the US, now resembles a banana republic, with its poverty ranks swelling by a million every year," writes Batra, who is professor of Economics at Southern Methodist University in Dallas.

The main cause of poverty, according to him, is "official corruption, which breeds economic policies that enrich the ruling elite and exacerbate income and wealth disparities." Trickle-down economics or tricklism is the culprit, says Batra.

"In developed economies, tricklism keeps wages as low as possible while maximising CEO incomes. This causes consumer demand to fall short of product supply, so that the demand-supply balance is maintained by the creation of more consumer and government debt," he explains. In developing economies too, tricklism leads to dirt-poor wages, along with high CEO salaries, so that demand again trails supply, says Batra.

Which may perhaps explain why India continues to be `the ringleader in terms of hunger and deprivation' with about 36 crore destitute, despite `superb economic performance since 2000', even as India's millionaire club grew the fastest - at 19 per cent, to touch 83,000 in 2005.

"Bizarre events, talismans of an impending crisis, occur every day," observes the author. "A company declares bankruptcy but rewards its executives with millions in bonuses and pensions. When the company fires workers, its share price soars. Just when oil companies are wallowing in profits, Congress showers them with subsidies. When officials bungle assignments, they get promotions... Our tax system has become a joke. When billionaires earn hefty dividends, the government lavishes them with tax breaks, but when a waiter earns tips, his tax bill jumps... " US examples, but these may be apt in many other countries too.

Housing and oil are `the twin bubbles', cautions chapter 2. "Economic or financial bubbles normally refer to sharply inflated prices moving at exceptional speeds. Most of these arise because of irrationality among buyers of a product or an asset, but they may also emerge because of some other reason, such as the formation of monopolising trusts or cartels," elaborates Batra.

Terrifyingly, the housing bubble, just like the earlier share-market balloon, has a global dimension, one learns. For, "Few phenomena or economic events remain localised today, especially if they spring from the US." More alarmingly, big money has targeted and cornered the oil market, ever since 2000.

"Energy investments are now high on the list of hedge funds, which speculate profusely in the energy futures market. The oil price has stayed up for so long that it is now moving into the realm of superspeculation."

And, if you are panicked enough to turn to economists for urgent help, wait. Because chapter 7 is titled, `Lies, damned lies, and economists'!

Gripping reads for the week.

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