On December 13, Josh Marshall at TPM wrote (in a post about Bernie Madoff):

… a lot of the firms on Wall Street were so massively leveraged, probably a good deal more than they’re letting on even now, and had so much obvious crap on their books that they were claiming had real value, that Ponzi Scheme would probably be a decent description of what they were up to as well.

I read that, and I thought to myself: “Does this man know what a Ponzi scheme actually is?” (Because there’s no meaningful sense at all in which the Wall Street firms with “crap on their books” can be said to be running Ponzi schemes.)

Then today Josh Marshall went:

But calling something a Ponzi scheme covers a lot of territory.

And I said to myself: “No, it doesn’t!” A Ponzi scheme is a very specific type of investment scam. The Wikipedia entry describes it quite well, for anyone who’s interested.

(Incidentally, the SEC also describes what a Ponzi scheme is, “as a service to investors”. Raise your hand if you’re surprised that the SEC’s description is thoroughly inadequate, and is really pathetic in comparison to Wikipedia’s basic description.)