I wouldn't normally comment on something like this in The Ticker, but one line at the end caught my eye:

Pensioners battered a financial adviser with Zimmer frames before kidnapping and torturing him for losing £2million of their savings.

The kidnappers were eventually arrested and the "adviser" set free.  A bit of vigilantism?  Certainly.  Something one can condone?  Well, no.  But something one can understand?  Uh, given the amount of outright fraud involved in the so-called "investing business" over the last decade or so, and the utter refusal of the authorities to prosecute any of it, yeah.

When the putative "good guys" refuse to enforce the law eventually the people will have had enough, and they will "enforce" it on their own.

One of the reasons we have law enforcement, by the way, is that when "the people" decide to take matters into their own hands they tend to be rather uncivilized about it, as certainly was the case here.

But this is what caught my eye about the story:

Chief public prosecutor Volker Ziegler said: 'They were angry because they invested money in properties in Florida and he lost it all.

Aha.  Germans "investing" in Florida eh?

Hmmm.....

See, back in 2001-04 I had a "friend" in the real estate business who tried to get me interested in flipping condos, most specifically in Panama City Beach Florida.  He spun tales of German folks buying blocks of units, 10 at a time, with much being made of the fact that these deals were structured in an interesting format:

• 10% in cash
• Another 10% in a letter-of-credit from your bank

The premise here was that while the units were under construction (typically 2-3 years) you had only 10% of the actual purchase price on the table, and as such if you managed to flip them for 10% more than you bought at (after expenses) you could quickly double your money.

Leverage of 10:1, writ large.

The bad news was that extra 10% LOC from the bank, you see.  That was an irrevocable commitment of course, which meant your "cash on the table" was 10% of the total but your maximum loss was at least 20%, and might be 100% if you failed to close and they came after you. 

The latter fact - that you were in fact exposed for twice your cash put up, and could be exposed for ten times the cash put up, was of course only evident if you read all the paperwork.  The salesfolk conveniently omitted discussion of that "small" risk to your financial well-being.

Now there were "outs" on the failure to close - the most important being the inability to secure permanent financing.  But nobody intended to actually take delivery of a block of 10 condos - the entire intent was to flip them before construction was complete.

Well, some of these "deals" failed spectacularly, with one of the development companies catching my eye a few months ago when CORUS foreclosed on the developer and one of the developments over in PCB.  I got a tremendous chuckle out of it at the time, and thanked myself for being too intelligent to fall for what was an obvious bubble play and being left without a chair when the music stopped.

Had I bought into that mess I would have been ruined, losing double what I had originally put up!

Needless to say my "buddy" doesn't call very often anymore.  He got screwed too by the way, as his "commissions" were earned but not paid until closing.  No closing, no check.  I suspect he lost a couple of million in supposedly-earned commissions he will never see.  Just desserts for pushing bubblenomics, says I.

At the time I was being solicited I wondered what German was dumb enough to be buying up blocks of 10 units at a time.

I guess now I have my answer eh?

There will be no justice for most of those who got rooked by these slick-tongued salesfolk with their ridiculously-overhyped projections of "profits" to be made by flipping these things, especially now that reality has struck home and those so-called "profits" have turned into losses exceeding the cash originally put up.