THERE VERIFICATION – The mayor of Cannes used the name of the famous financial scam to warn about the future of the French pension system. Is right ?
The infamous Bernard Madoff, the terrifying Sergei Mavrodi or, more than a century ago, the shrewd Charles Ponzi. These three crooks have in common to have resorted shamelessly to a dangerous system of banking cavalry, to the point for one of them to leave his name as a legacy: the Ponzi pyramid. This financial arrangement consists in paying the return of existing investors thanks to the money collected from new investors. The house of cards inevitably collapses when the number of new entrants is no longer sufficient to remunerate all existing customers. The maneuver will have raised up to $ 65 billion with the most impressive Ponzi scheme in history, built by former Nasdaq leader Bernard Madoff a few years ago.
Far removed from Wall Street escapades, the Ponzi pyramid is regularly invoked in the public debate on pensions in France. At the end of January, the mayor of Cannes, David Lisnard, equated the pay-as-you-go system in force with a fraudulent financial arrangement. “Our pension system is a Ponzi scheme“, asserted this fervent defender of the balanced budget. The remark, alarming, comes to conclude a reasoning on “demographic change“which puts the pay-as-you-go pension system”at an impasse“. The hundreds of thousands of demonstrators defend, according to him, “a system which, in forty years, will suppose that each working person pays more than 1000 euros per month to pay the pension of retirees“.
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David Lisnard extends an analysis by Philippe Juvin, LR deputy for Hauts-de-Seine, in a forum at the World last October. “The fact that debt is becoming a normal and long-lasting method of financing pensions no longer stirs people. Although this financing resembles a Ponzi scheme and impoverishes us a little more each year, some persist in denying the need for reformhe was indignant. So, are we right to compare Social Security retirement insurance to a Ponzi scheme?