Bernie Madoff's $50 Billion Fraud thru country clubs

[Norbert P]

   There is an article at . . .

http://www.google.com/hostednews/afp/article/ALeqM5ioGbTMXj9tjQRGNXAXQGg4s3fZ5Q

. . . that speaks of the banks and nations involved.  E.g. Bank of Scotland claims 600 million US dollars in losses.

  An amazing scale of corruption over decades.

 

[Lou_Duran]

Slag,

I am a U.S. citizen.  I did not vote for Mr. Obama and vehemently oppose many if not most of his policies.  He is my president-elect literally, only.  I love it when the class warriors want to play nice after savaging the opposition and demagoguing whole classes of people.  Mr. Obama is certainly one of the most deft at playing the "evil rich" and race cards.  No lesser authorities than Senator and President Clinton said as much.   Perhaps I am being too harsh, but I suspect that the only things Mr. Obama wants from the likes of me are my money and my acquiescence.  I have no choice on the former and I certainly will be a lot more charitable and respectful toward him than most of his supporters have been to President Bush for the last eight years.

Richard Choi,

I don't know what you do for a living, maybe something to do with statistics and research?  But to characterize Art Laffer as a "bozo" is nothing short of breathtaking.  Perhaps you could share with the group your curriculum vitae, a list of your published books and articles, and a couple of client references so that we can assess your qualifications in rendering such an adverse opinion.  I can't imagine why all those companies pay his retainer and seek his advice.  They must be "bozos" too.  And to think that they could gain the benefit of your expertise just for the asking! 

Jeff Goldman,

You do seem to be doing a lot of that these days.  Messing up.   

Too bad Mr. Wanniski is no longer around to address your incorrect assertions.  As I recall, he theorized that government through its tax and regulatory policies had a huge impact on the well-being of the economy.  Like Milton Friedman, he believed that most government interventions to smooth cycles could never be timed properly and were, as a result, ineffective at best and often counterproductive.  I don't suppose you've bothered to read his book "How The World Works".  Of course, if you can't accept Henry Morganthau's own characterization of the failures of his and FDR's ND economic policies, it is unreasonable to think that you would give a supply-side "crank" his due consideration.  Why is it so hard to overcome our environment?

And please explain to me how the money supply has shrunk?  Are you perhaps referring to the couple plus trillion dollar loss in wealth?  I'll have to think about that.  I've been more concerned about how government was going to fund the trillions of promised bailouts if the Chicomms are too busy with their own problems to buy our IOUs.  I do have huge losses in a paper company, so maybe there is an upside if the mints have to work overtime to monetize our deficits.  Indeed, we are all Keynesians today!   

[Sean_A]

Hi George,

I don't quite follow you here.

We are in total agreement that a true free market system would have allowed these horseshit banks and brokerages to fail.  It appears that many are way underwater.  The greatest tragedy of all is the way these banks protected themselves by investing in so many unregulated, off-balance sheet transactions that the government decided it could not let them fail.  The whole thing smells of cronyism, though.

"Help!  We need 700 billion dollars.  Now!"  This after several years of the gaudiest paychecks in business history.  A middlin' guy working on Wall Street has been making $500-1000k per year, you know.  It's enough to make you scream.  These are the people least worthy of assistance.

I do agree with you, sorry if it didn't come cross that way. Folks on here love to rip the free markets, as though free market capitalism means anything goes, no laws whatsoever. My point to Dick is simply that free markets does not mean an absence of laws.

The existing laws may indeed not be sufficient, though I personally believe they are simply not being enforced vigorously, as opposed to being insufficient. And considering who has been charged with creating and enforcing the laws, it isn't surprising. What's surprising to me is the proposed solutions by many on here and many of the enlightened outsiders - more laws to make people feel better, while those making the laws and enforcing them (and I mean all of them in Washington, both parties) are complicit in covering up their own misdeeds.

Jeff -

Love the sarcasm (I really do, I'm not being sarcastic ) But seriously, do you see any difference between the recoveries after the panics you mention and the much deeper and longer lasting Great Depression? Some might say it shows how wrong the policies of both Hoover and Roosevelt were.

George or anybody

What is a free market if not a deregulated/tax free (?)/non duty market?  It sounds as if you are not really for a free market, but one with an appropriate amount (whatever that is) of regulation.  I can't pretend to know what is better between a free market and the other choices which are essentially shades of gray of what we call a free market.  But I do know that regardless of laws, there are people who will scam whenever they can.  It is clear that in this day and age it doesn't necessarily take many scams or turnings of blind eyes to cause serious convulsions in the world economy.  I have a deep seated distrust of the market and how it operates because I know that at any given moment sections of it are rigged.  I also have a deep seated distrust of governments.  I guess that leaves me between a rock and a hard place.  The thing is, the sensible folks like me who don't get involved in all this high fallutin finance crap are the ones who pay the price anyway with our savings threatened (then we are asked to remain calm so as to start a run), interest rates dropping as part of a bailout and our tax money stolen to pay for a bailout.  With that in mind, where else am I going to turn other than to governments to control markets as best they can (which  think they fall well short of doing at the moment)? 

Ciao     

[Patrick_Mucci]

I do know that some members of Boca Rio were hit very hard by the Ponzi scheme.  As were U.S. Senators and other intelligent, sophisticated investors.

This will result in additional membership losses at select clubs.
It comes at a bad time for any golf club.

How the bad economy, coupled with additional membership loss will affect maintainance and GCA remains an area of concern for many clubs whose members were affected by this scheme.

Having 20-20 hindsight makes geniuses of us all.

The guy was the former Chairman of Nasdaq, had 20-30 years of credibility, offered conservative returns and listed a clientele of highly reputable individuals.  He had been audited by outsiders and presented detailed monthly statements to investors.  If investors requested occassional funds for use, they were sent within a week.  So how would you know something was wrong ?

So how is it that the rocket scientists on this site knew that he was a phony ?

The only mistake made by some, and it's a significant mistake, is that many investors didn't diversify.  Many investors had the great majority of their net worth invested with him.

But, could you blame them for over-weighting their portfolio ?
The man had a 20-30 year PROVEN track record, a great reputation and a sophisticated clientele.

Some friends of mine have been wiped out.

I talked to some fellow members of my club in NJ and we're just glad he didn't come to our club because we would have lined up to give him some of our money.           Who amongst us wouldn't ?

If this scheme is as far reaching as some predict, some clubs may drastically alter their operations for 2009, including what goes on with the golf course.

I've heard that several clubs are thinking about mergers in order to stem costs.

Will confederations of golf clubs come into existance ?

Will clubs form collectives where purchasing and other functions are performed for a group of clubs, including the purchasing and leasing of maintainance equipment, by a committee of representatives from each club ?

Club revenues will NOT increase.

Therefore, the expense side of the ledger will be scrutinized with an eye toward cutting costs.

What's the largest budget at clubs ?

I'm concerned that distinctive features, especially those that present a maintainance challenge, will be softened or eradicated.

On the other hand, will the present and future economic environment cause more clubs to revert to "GOLF" clubs instead of "COUNTRY" clubs ?

Is that a trend in the right direction, or, is it contrary to the trend to make a club a full service family facility ?

[Mike Hendren]

The convicts will always devote more time and energy to plotting their escape than the guards will to confine them. 

Caveat Emptor.

Bogey

[Sam Morrow]

I think it's ridiculous to blame this on the Southeastern Conference.

Bogey

Barkley said it's because Auburn didn't hire a black guy.

[Mike Hendren]

Retracted.

[Craig Sweet]

Lou....Art Laffer can draw all kinds of graphs and call it what he will and say how wonderful his ideas are....but in reality...where the rubber meets the road....they do not work.

I find it sad, but laughable, when someone starts telling me that TOO MUCH regulation is the problem....we have two examples now...the 1920's and the 1980's thru 2008....of less regulation...and we see what has happened....unfortunately, we are following Hoover and throwing more money into the banks, cutting interest rates,and saying we need greater tax cuts....it did not work in the 1930's and it won't work today....especially when MOST of the TARP money is being horded by the banks,or used for mergers...we need to invest in job creation, putting money in the pockets of people, that will generate demand for goods....and more jobs.

Here's an interesting report from Dr. Ravi Batra, an economist at SMU

http://www.ravibatra.com/obamamccain.html

[John Keenan]

It is tragic that many smaller investors have been wiped out by Madoff. Today on the MarketWatch Web Site a column about a charitable foundation that has to close as it lost everything in this mess. To add insult to injury the laid off workers found out that their 401k were gone as well as they to were invested with Madoff. Never put all your eggs in one basket, if you do or are forced to you best watch that basket quite carefully.

I did read on a blog that some of the "smart money" (what ever that is) always suspected that he was doing something illegal or at the very least quite questionable. Insider trading was what was guessed at. I guess stepping over the line is ok for some if returns are good and consistent

[Steve_ Shaffer]

Speaking of "smaller investors"

http://today.msnbc.msn.com/id/26184891/vp/18424824#28250898

[Jeff Goldman]

Jeff Goldman,

You do seem to be doing a lot of that these days.  Messing up.   

Too bad Mr. Wanniski is no longer around to address your incorrect assertions.  As I recall, he theorized that government through its tax and regulatory policies had a huge impact on the well-being of the economy.  Like Milton Friedman, he believed that most government interventions to smooth cycles could never be timed properly and were, as a result, ineffective at best and often counterproductive.  I don't suppose you've bothered to read his book "How The World Works".  Of course, if you can't accept Henry Morganthau's own characterization of the failures of his and FDR's ND economic policies, it is unreasonable to think that you would give a supply-side "crank" his due consideration.  Why is it so hard to overcome our environment?

And please explain to me how the money supply has shrunk?  Are you perhaps referring to the couple plus trillion dollar loss in wealth?  I'll have to think about that.  I've been more concerned about how government was going to fund the trillions of promised bailouts if the Chicomms are too busy with their own problems to buy our IOUs.  I do have huge losses in a paper company, so maybe there is an upside if the mints have to work overtime to monetize our deficits.  Indeed, we are all Keynesians today!   

Lou, I have read "The Way the World Works"; that's what convinced me the guy was a crank.  And he would be greatly offended by you lumping him in with Milton Friedman.  He and the rest of the supply-siders believe(d) that Friedman was a hack.  That's right, they think he's an idiot clown with no knowledge of the economy.  No Keynsian would say that (we would say he was one of the most brilliant economists of the 20th century, who fudged his numbers at times to try to prove his theories).

Supply-side theory, as espoused by him, Robert Bartley (the WSJ guy), and Laffer, is a specific set of beliefs that, to my mind, have nothing to do with one another, and pretty much reject monetarism completely.  For example, supply side theory doesn't give a fig for deficits, and Friedman thought they were destructive.  Supply side theory believes in the gold standard (or a similar one), while Friedman, of course, rejects any such regulation.  Supply sider theory thinks that inflation is caused by currency fluctuation.  Friedman believed that it was an increase in the money supply above increases in productivity in the economy.  etc. etc.

You are correct on my view why the money supply has shrunk.  Less wealth means a lower supply, and a credit crunch means that even more.

I too am concerned about future government debts, but this is not the time for that.  This is a very serious and dangerous situation, and no time for finger wagging at people who borrowed too much, businesses that have been mismanaged, etc.  Cricket morality has no place in dealing with an oncoming depression.

Let me ask you a question:  Specifically, how would you have dealt with the depression (though our situation is really closer to the panic of 1873)?  

[Adam Clayman]

As an aside, one day, after one of FDR's radio chats, he made a comment that was not meant for public consumption. Basically the microphone was still on and he was still live. The words he spoke were this "I'm going to make every American an accountant."

Take it for what it's worth, as pointless as it may seem.

[tlavin]

The fact that this crook was allowed to slip between the cracks of our formerly vaunted regulatory system is an affront to common sense and yet another indictment of the free market champions.  Apparently what we have in America is free markets left to run amok without regulation or with flimsy regulation or with regulation that is negligent or corruptible.  This is not an anti-Republican party rant or a blown kiss to the new administration; it is simply a reminder that Wall Street was left to do its own thing in the past twelve years or so and the chickens have come home to shit on our heads.

[Rich Goodale]

As an aside, one day after one of FDR's radio chats, he made a comment that was not meant for public consumption. Basically the microphone was still on and he was still live. The words he spoke were this "I'm going to make every American an accountant."

Take it for what it's worth, as pointless as it may seem.

Adam

FDR really said that?  You have made Lou Duran's day!

Rich

"Accountants know the price of everything, but the value of nothing." Anon.

[Richard Choi]

But to characterize Art Laffer as a "bozo" is nothing short of breathtaking. 

Did you even see this video? http://www.youtube.com/watch?v=2I0QN-FYkpw

It is not just that he was wrong. He was SPECTACULARLY wrong. If that is not a bozo, than I do not know the meaning of the word...

It does not take PhD in Economics to know that the emperor has no clothes.

And he is not just a bozo, he is a weasel. Just look at how he backtracks on this video: http://www.youtube.com/watch?v=z3WjgKUf-kA

I cannot believe that anybody still believes that this guy is credible in anything.

[tlavin]

That video is the most amazing thing I've seen in many years.  Schiff was right about everything and he was laughed at by Ben Stein (who was wrong about EVERYTHING) and by Laffer (also dead f'ing wrong) and by the paragon of puffery, Neil Cavuto.  Thanks for sharing the link.

[Andy Hughes]

OK, as someone who has at best understood maybe every third word this thread, and none of the acronyms, could someone explain something to me?  Apparently Madoff took advantage of lots of really smart and sharp financial people as well as high-end institutions. This may sound leading and apologies if so but is it likely or not that government regulators would have been better at spotting things than the smart people and institutions? My hunch would be less likely but is that not the case?
 
How about Fannie and Freddie--as quasi-governmental, were they regulated or unregulated?

PS If Laffer really is a Bozo like Richard said, then isn't he well named?

[John Keenan]

I must admit the You Tube video is great. How wrong some of these experts turn out to be. Interesting to see a web site that shows the predictions/forecasts  compared to the reality.

Laffer and Stein could not have been more wrong.

All of these media experts are happy to get face time on TV and make their quotes. Far fewer ever talk about the forecasts latter. Best advice is to skip CNBC and Fox Business except for entertainment value.

[Norbert P]

  I love it when the class warriors want to play nice after savaging the opposition and demagoguing whole classes of people. 

Obama's campaign was the cleanest in decades.

Mr. Obama is certainly one of the most deft at playing the "evil rich" and race cards.  No lesser authorities than Senator and President Clinton said as much. 

History will show that Obama attempted to eliminate the race issue. Sardonic that you use the Clinton's "authority" as a source of valid concurrence.

 

Perhaps I am being too harsh, . . . but I certainly will be a lot more charitable and respectful toward him than most of his supporters have been to President Bush for the last eight years.

I suppose you think Karl Rove and Lee Atwater divvied up altruistic love to all the world's lovely people.
The person with the most power should be scrutinized the most. That, I hope, is what continues to happen throughout Obama's reign and into the future.

"Not on my watch." George Bush       
 I believe those words will haunt him and us for a very long time.



"When the Right becomes the wrong,
 The Left becomes the Right."    Mark Knopfler


BTW . . .  I have a little calculator that I was going to do some $ figgerin' with, about how much $50Billion is, but it doesn't even go to 1 billion.  Those numbers are not comprehensible to me but the sad stories posted here and in the news are.

$50 Billion   = Fifty thousand million dollars.   One thousand million dollars per state.   That's some serious Ponzi scheming.

http://www.reuters.com/article/topNews/idUSTRE4BE6LN20081216

[RJ_Daley]

Thanks for posting those U-Tube links, Richard. 

Maybe the best advertisement slogan for the highest best use of U-Tube:

"For those that can't or won't conveniently remember their past convictions, and are too recalcitrant to admit failure and step up to their responsibility for the future. "

At least Pat Mucci has been true to his never ending attempts (so often sidetracked in O.T.s by the likes of me) to draw this thread back to some semblence of GCA or GCM. 

[Jay Flemma]

I think this is funny...

http://blip.tv/file/1528079

Fred Thompson, crackin wise:)

[Craig Sweet]

So, it sounds, from the gist of the original post and link, that the country club is a good place to wheel and deal....

[Tony_Muldoon]

-----

Never ceases to amaze me how many smart folks fall for con men, legal or illegal. The lure of easy money...

One of the tactics of the scam artiste is to 'walk away from the deal'. The Mark's (aka sucker or in this case investor) greed then leads them to beg to be included and reason has gone out the window.

Amazing how he used one of the oldest hooks; he turned away the small guy and this made the big investors desperate to deal with him.


Anyone interested in scams needs to read The Big Con by David Maurer. 

Madoff's place in history now assured.
http://en.wikipedia.org/wiki/Confidence_trick

One of the credo's of the confidence trickster is 'You can't con an honest man'.  I don't know anyone who has lost on this but what they were buying into was a secret method that guaranteed to outperform the market.  Hindsight is a wonderful thing.

[John Keenan]

Shivas have you been taking the train to work again? 

[RJ_Daley]

Dave, had it ever ocurred to you while riding the train that Einstein's theory was wrong? 

http://www.youtube.com/watch?v=wteiuxyqtoM

and that this guy was right:

http://homepage.mac.com/ardeshir/Einstein'sTrain.html

It is sort of like you are riding on Bernie Madoff's gravy train to riches, at 12% per year constant speed, and your gravy train gets hit with a total financial sector meltdown lightening bolts on both ends of the train simultaneously - the liquidity end caboose, and the engine asset value end.   You as the rider on the train see that the asset engine end in front got hit first.  But a fellow from the SEC is standing on the side of the tracks and because he is blind, doesn't see a friggin thing.  But the rest of the observant world sees that the train is going too fast at 12% a year-no deviation while half the wheels are off the track.   You on the train come to the conclusion it was your ass(ets) that go hit first and you want SIPC to make you whole.   The fed says no, it was the liquidity end that got hit at the same time, and gives all the passengers the same amount of the TARP money to make you partially whole.  And the rest of the world just didn't see it that way... It is all relative, I guess.   

It just goes to prove that many wild and crazy ideas come while riding a choo-choo.